Basis Of Presentation And Summary Of Significant Accounting Policies

6 Months Ended

Dec. 31, 2023

Basis Of Presentation And Summary Of Significant Accounting Policies [Abstract]

Basis Of Presentation And Summary Of Significant Accounting Policies

LESAKA TECHNOLOGIES, INC

Notes to the Unaudited Condensed Consolidated Financial Statements

for the three and six months ended December 31, 2023 and 2022

(All amounts in tables stated in thousands or thousands of U.S. dollars, unless otherwise stated)

1. Basis of Presentation and Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements include all majority-owned subsidiaries over which

the Company exercises control and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)

and the rules and regulations of the United States Securities and Exchange Commission for Quarterly Reports on Form 10-Q and

include all of the information and disclosures required for interim financial reporting. The results of operations for the three and six

months ended December 31, 2023 and 2022, are not necessarily indicative of the results for the full year. The Company believes that

the disclosures are adequate to make the information presented not misleading.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements,

accounting policies and financial notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June

30, 2023. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all

adjustments (consisting only of normal recurring adjustments), which are necessary for a fair representation of financial results for the

interim periods presented. 

References to “Lesaka” are references solely to Lesaka Technologies, Inc. References to the “Company” refer to Lesaka and its

consolidated subsidiaries, collectively, unless the context otherwise requires.

Recent accounting pronouncements adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance regarding

Measurement of Credit Losses on

Financial Instruments

. The guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that

reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit

loss estimates. For trade and other receivables, loans, and other financial instruments, an entity is required to use a forward-looking

expected loss model rather than the incurred loss model for recognizing credit losses, which reflects losses that are probable. Credit

losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction

in the amortized cost basis of the securities. The guidance became effective for the Company beginning July 1, 2023. The adoption of

this guidance did not have a material impact on the Company’s financial statements and related disclosures, refer to Note 2.

In November 2019, the FASB issued guidance regarding

 Financial Instruments—Credit Losses (Topic 326), Derivatives and

Hedging (Topic 815), and Leases (Topic 842).

 The guidance provides a framework to stagger effective dates for future major

accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to

certain types of entities, including Smaller Reporting Companies. The Company is a Smaller Reporting Company. Specifically, the

guidance changes some effective dates for certain new standards on the following topics in the FASB Codification, namely Derivatives

and Hedging (ASC 815); Leases (ASC 842); Financial Instruments — Credit Losses (ASC 326); and Intangibles — Goodwill and

Other (ASC 350). The guidance defers the adoption date of guidance regarding

Measurement of Credit Losses on Financial

Instruments

 by the Company from July 1, 2020 to July 1, 2023. The guidance became effective for the Company beginning July 1,

2023. The adoption of this guidance did not have a material impact on the Company’s financial statements and related disclosures,

refer to Note 2.

The Company’s updated accounting policy regarding allowance for credit losses is as follows:

Allowance for doubtful accounts receivable

Allowance for doubtful finance loans receivable

The Company uses historical default experience over the lifetime of loans in order to calculate a lifetime loss rate for its lending

books. The allowance for credit losses related to Consumer finance loans receivables is calculated by multiplying the lifetime loss rate

with the month-end outstanding lending book. The allowance for credit losses related to 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. Prior to July 1, 2023, the Company regularly reviewed the ageing of outstanding amounts due from borrowers and

adjusted its allowance based on management’s estimate of the recoverability of the finance loans receivable. The Company writes off

microlending finance loans receivable and related service fees and interest if a borrower is in arrears with repayments for more than

three months or is deceased. The Company writes off merchant and working capital finance receivables and related fees when it is

evident that reasonable recovery procedures, including where deemed necessary, formal legal action, have failed.

1. Basis of Presentation and Summary of Significant Accounting Policies (continued)

Allowance for doubtful accounts receivable (continued)

Allowance for doubtful accounts receivable

The Company uses a lifetime loss rate by expressing write-off experience as a percentage of corresponding invoice amounts (as

opposed to outstanding balances). The allowance for credit losses related to these receivables has been calculated by multiplying the

lifetime loss rate with recent invoice/origination amounts. Prior to July 1, 2023, a specific provision is established where it is considered

likely that all or a portion of the amount due from customers renting safe assets, point of sale (“POS”) equipment, receiving support

and maintenance or transaction services 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.

Recent accounting pronouncements not yet adopted as of December 31, 2023

In November 2023. the FASB issued guidance regarding

Segment Reporting (Topic 280)

 to improve reportable segment

disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the guidance

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

or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure

requirements. This guidance is effective for the Company beginning July 1, 2024 for its year ended June 30, 2025, and for interim

periods commencing from July 1, 2025 (i.e. for the quarter ended September 30, 2025). The Company is currently assessing the impact

of this guidance on its financial statements and related disclosures.

In December 2023, the FASB issued guidance regarding

Income Taxes (Topic 740)

 to improve income tax disclosure

requirements. The guidance requires entities, on an annual basis, to (1) disclose specific categories in the income tax rate reconciliation

and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items

is equal to or greater than five percent of the amount computed by multiplying pre-tax income or loss by the applicable statutory

income tax rate). This guidance is effective for the Company beginning July 1, 2025. The Company is currently assessing the impact

of this guidance on its financial statements and related disclosures.