| Stock-Based Compensation |
17. STOCK-BASED COMPENSATION Amended and Restated Stock Incentive Plan The Company’s Amended and Restated 2022 Stock Incentive Plan (“2022 Plan”) was most recently amended and restated on November 16, 2022. On each of April 11, 2024, and September 2, 2025, respectively, the Company’s Board amended the 2022 Plan to increase the number of shares available for issuance by 3,000,000 6,000,000 ). On each of June 3, 2024, and December 8, 2025, respectively, the Company’s shareholders approved the amendment. No evergreen provisions are included in the 2022 Plan. This means that the maximum number of shares issuable under the 2022 Plan is fixed and cannot be increased without shareholder approval, the 2022 Plan expires by its terms upon a specified date, and no new stock options are awarded automatically upon exercise of an outstanding stock option. Shareholder approval is required for the repricing of awards or the implementation of any award exchange program. The Plan permits Lesaka to grant to its employees, directors and consultants incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance-based awards and other awards based on its common stock. The Remuneration Committee of the Company’s Board of Directors (“Remuneration Committee”) administers the 2022 Plan. The total number of shares of common stock issuable under the 2022 Plan is 19,552,580 . The maximum number of shares for which stock options, stock appreciation rights (other than performance-based awards that are not options) may be granted during a calendar year to any participant is 600,000 shares. Shares covered by awards that expire, terminate or lapse without payment will again be available for the grant of awards under the 2022 Plan, as well as shares that are delivered to us by the holder to pay withholding taxes or as payment for the exercise price of an award, if permitted by the Remuneration Committee. The shares deliverable in connection with awards granted under the 2022 Plan may consist, in whole or in part, of authorized but unissued shares or treasury shares. To account for stock splits, stock dividends, reorganizations, recapitalizations, mergers, consolidations, spin-offs and other corporate events, the 2022 Plan requires the Remuneration Committee to equitably adjust the number and kind of shares of common stock issued or reserved pursuant to the 2022 Plan or outstanding awards, the maximum number of shares issuable pursuant to awards, the exercise price for awards, and other affected terms of awards to reflect such event. No awards may be granted under the 2022 Plan a fter September 7, 2032, but awards granted on or before such date may extend to later dates. 17. STOCK-BASED COMPENSATION (continued) Amended and Restated Stock Incentive Plan (continued) Options Option awards are generally granted with an exercise price equal to the market price of the Company's stock at the date of grant, with vesting conditioned upon the recipient’s continuous service through the applicable vesting date and expire 10 of grant. The options generally become exercisable in accordance with a vesting schedule ratably over a period of three years date of grant. The Company issues new shares to satisfy stock option award exercises but may also use treasury shares. The fair value of each option is estimated on the date of grant using the Cox Ross Rubinstein binomial model that uses the assumptions noted in the table below. The estimated expected volatility is calculated based on the Company’s 730 , 1095 1460 - day volatility (as applicable). The estimated expected life of the option was determined based on the historical behavior of employees who were granted options with similar terms. No stock options were granted during the year ended June 30, 2026. The table below presents the range of assumptions used to value options granted during the years ended June 30, 2025 and 2024:
2025 2024 43 % 56 % 0 % 0 % 2.0 5.0 4.32 % 2.09 % Restricted Stock Shares of restricted stock are considered to be participating non-vested equity shares (specifically contingently returnable shares) for the purposes of calculating earnings per share (refer to Note 19) because, as discussed in more detail below, the recipient is obligated to transfer any unvested restricted stock back to the Company for no consideration and these shares of restricted stock are eligible to receive non-forfeitable dividend equivalents at the same rate as common stock. Restricted stock generally vests ratably over a three year period, with vesting conditioned upon the recipient’s continuous service through the applicable vesting date and under certain circumstances, the achievement of certain performance targets, as described below. Recipients are entitled to all rights of a shareholder of the Company except as otherwise provided in the restricted stock agreements. These rights include the right to vote and receive dividends and/or other distributions, however, any or all dividends or other distributions paid related to restricted stock during the period of such restrictions shall be accumulated (without interest) or reinvested in additional shares of common stock, which in either case shall be subject to the same restrictions as the underlying award or such other restrictions as the Remuneration Committee may determine. The restricted stock agreements generally prohibit transfer of any nonvested and forfeitable restricted stock. If a recipient ceases to be a member of the Board of Directors or an employee for any reason, all shares of restricted stock that are not then vested and non-forfeitable will be immediately forfeited and transferred to the Company for no consideration , except as otherwise agreed between the parties. Forfeited shares of restricted stock are available for future issuances by the Remuneration Committee. The Company issues new shares to satisfy restricted stock awards. The fair value of restricted stock is generally based on the closing price of the Company’s stock quoted on The Nasdaq Global Select Market on the date of grant. 17. STOCK-BASED COMPENSATION (continued) Amended and Restated Stock Incentive Plan (continued) Restricted Stock (continued) Market Conditions - Restricted Stock Granted in November 2025 In November 2025, the Company awarded 245,000 shares of restricted stock to a group comprising employees and which are subject to a time-based vesting condition and a market condition and vest in full only on the date, if any, that the following conditions are satisfied: (1) a compounded annual 15 % appreciation in the Company’s stock price off a base price of $ 4.31 period commencing on November 1, 2025 through October 31, 2028, and (2) the recipient is employed by the Company on a full-time basis through to October 31, 2028. If either of these conditions is not satisfied, then none of the shares of restricted stock will vest and they will be forfeited. The Company’s closing price on October 31, 2025, was $ 4.30 . The appreciation levels (times and price) and annual target percentages to earn the awards as of each period ended are as follows: ● Prior to the first anniversary of the grant date: 0 %; ● Fiscal 2027, the Company’s 30-day volume weighted-average stock price (“VWAP”) before October 31, 2026 is approximately 1.15 4.96 4.31 : 33 %; ● Fiscal 2028, the Company’s VWAP before October 31, 2027 is 1.32 5.70 4.31 : 67 %; ● Fiscal 2029, the Company’s VWAP before October 31, 2028 is 1.52 6.55 ) than $ 4.31 : 100 %. The fair value of these shares of restricted stock was calculated using a Monte Carlo simulation. In scenarios where the shares do not vest, the final vested value at maturity is zero. In scenarios where vesting occurs, the final vested value on maturity is the share price on vesting date. In its calculation of the fair value of the restricted stock, the Company used an equally weighted volatility of 41.2 % for the closing price (of $ 4.35 ), a discounting based on U.S. dollar overnight indexed swap rates for the grant date, and no future dividends. The equally weighted volatility was extracted from the time series for closing prices as the standard deviation of log prices for the three years preceding the grant date. Restricted Stock Units The Remuneration Committee may approve the grant of other stock-based awards. In April 2022, the Company granted 1,250,486 shares of restricted stock to employees of Connect pursuant to the terms of the acquisition. The award included an equalization mechanism to maintain a return of $ 7.50 per share of restricted stock upon vesting through the issue of restricted stock units. The conversion of restricted stock units to shares cannot exceed 50 % under the terms of the award and therefore no more than 625,243 1,250,486 divided by two) would be issued upon vesting. During the years ended June 30, 2025 and 2024, respectively, 380,775 388,908 shares of restricted stock vested, and 190,378 194,454 restricted stock units vested, the maximum amount possible, and were converted to shares of common stock. Employees elected for 173,354 166,087 shares to be withheld from 173,468 166,167 restricted stock units which vested, and which were converted to shares, in order to satisfy the withholding tax liability on the vesting of these and other shares. The 173,354 166,087 shares have been included as a reduction of the Company’s shares of common stock (these shares were included in treasury shares prior to the recast discussed in Note 1). Stock Appreciation Rights The Remuneration Committee may also grant stock appreciation rights, either singly or in tandem with underlying stock options. Stock appreciation rights entitle the holder upon exercise to receive an amount in any combination of cash or shares of common stock (as determined by the Remuneration Committee) equal in value to the excess of the fair market value of the shares covered by the right over the grant price. No stock appreciation rights have been granted. 17. STOCK-BASED COMPENSATION (continued) Stock option and restricted stock activity Options The following table summarizes stock option activity for the years ended June 30, 2026, 2025 and 2024:
Number of shares Weighted average exercise price ($) Weighted average remaining contractual term (in years) Aggregate intrinsic value ($'000) Weighted average grant date fair value ($) Outstanding - July 1, 2023 673,274 4.37 5.14 239 1.67 Granted – June 2024 500,000 3.50 5.17 880 1.76 Granted – June 2024 1,000,000 6.00 4.60 1,690 1.69 Granted – June 2024 1,000,000 8.00 4.60 1,300 1.30 Granted – June 2024 1,000,000 11.00 4.60 920 0.92 Granted – June 2024 1,000,000 14.00 4.60 685 0.69 Exercised (54,287) 2.25 - 71 - Forfeited (200,739) 3.96 - 1.42 Outstanding - June 30, 2024 4,918,248 8.70 4.51 889 1.77 Granted – December 2024 350,000 6.00 2.00 433 1.24 Granted – December 2024 250,000 8.00 2.00 177 0.71 Granted – January 2025 100,000 8.00 2.00 71 0.71 Granted – January 2025 150,000 11.00 2.00 107 0.71 Granted – January 2025 150,000 14.00 2.00 123 0.82 Exercised (38,011) 3.02 - 72 - Forfeited (13,333) 11.23 - 8.83 Outstanding - June 30, 2025 5,866,904 8.71 3.55 703 1.20 Exercised (21,196) 3.02 - 41 - Outstanding - June 30, 2026 5,845,708 8.73 2.29 979 1.20 These options have an exercise price range of $ 3.01 14.00 . No stock options were awarded during the year ended June 30, 2026. The Company awarded 1,000,000 4,500,000 options to employees during the years ended June 30, 2025 and 2024, respectively. The Company awarded 1,000,000 stock options during the year ended June 30, 2025 with strike prices ranging from $ 6 14 . These stock options will vest on December 31, 2026, and vesting is subject to the executive officers continued employment with the Company through to the vesting date. The 1,000,000 stock options expire on January 31, 2029. The 4,500,000 stock options awarded during the year ended June 30, 2024, were awarded to Mr. Mazanderani, the Company’s Executive Chairman, and 500,000 of these stock options were granted pursuant to the 2022 Plan and 4,000,000 to shareholder approval which was obtained on June 3, 2024. The 500,000 options vested on December 3, 2024, the first anniversary of the grant date, and were subject to Mr. Mazanderani’s continued services as Executive Chair through the vesting date. The 500,000 options were scheduled to vest immediately if Mr. Mazanderani’s employment was terminated by the Company without cause on or before the first anniversary of the grant date. In March 2025, the Company’s Remuneration Committee amended the exercise terms of the 500,000 stock options from being exercisable during a period commencing from January 31, 2028 to January 31, 2029, to being exercisable from March 2025, however, any stock options exercised may only be sold during a period commencing from January 31, 2028 to January 31, 2029. The 4,000,000 options vested on January 31, 2026, and were subject to Mr. Mazanderani’s ongoing service through to this date. The 4,000,000 stock options may only be exercised during a period commencing from January 31, 2028 to January 31, 2029. On August 3, 2026, the Company awarded Mr. Mazanderani, an option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $ 5.00 per share. These stock options may only be exercised during the period commencing from April 1, 2029 to April 1, 2030. Vesting of these stock options is subject to Mr. Mazanderani’s continuous employment with the Company t 17. STOCK-BASED COMPENSATION (continued) Stock option and restricted stock activity (continued) Options (continued) During the year ended June 30, 2026, 4,000,000 stock options vested and are exercisable during a period commencing from January 31, 2028 to January 31, 2029. During the years ended June 30, 2025 and 2024, an additional 26,982 500,000 options discussed earlier), and 116,063 stock options became exercisable, respectively. During the years ended June 30, 2026, 2025 and 2024, the Company received approximately $ 0.06 0.1 0.2 million from the exercise of 21,196 , 38,011 , and 54,287 stock options, respectively. No stock options were forfeited during the year ended June 30, 2026. During the years ended June 30, 2025 and 2024, employees forfeited 13,333 200,739 stock options, respectively. The stock options forfeited had strike prices ranging from $ 3.01 11.23 . The following table presents stock options vested and expected to vest as of June 30, 2026:
Number of shares Weighted average exercise price ($) Weighted average remaining contractual term (in years) Aggregate intrinsic value ($’000) Vested and expected to vest - June 30, 2026 5,845,708 8.73 2.29 979 These options have an exercise price range of $ 3.01 14.00 , and include the 4,000,000 options awarded in June 2024. The following table presents stock options that are exercisable as of June 30, 2026:
Number of shares Weighted average exercise price ($) Weighted average remaining contractual term (in years) Aggregate intrinsic value ($’000) Exercisable - June 30, 2026 845,708 4.01 2.68 979 17. STOCK-BASED COMPENSATION (continued) Stock option and restricted stock activity (continued) Restricted stock The following table summarizes restricted stock activity for the years ended June 30, 2025 and 2024:
Number of shares of restricted stock Weighted average grant date fair value ($’000) Non-vested – June 30, 2023 2,614,419 11,869 Total granted 1,002,241 3,942 Granted – October 2023 333,080 1,456 Granted – October 2023, with performance conditions 310,916 955 Granted – October 2023 225,000 983 Granted – January 2024 56,330 197 Granted – February 2024 9,195 31 Granted - June 2024 67,720 320 Total vested (1,232,251) 5,208 (78,800) 302 (109,833) 429 (67,073) 234 (14,811) 53 (69,286) 256 (394,932) 1,630 (88,617) 391 (350,247) 1,639 Vested – June 2024, with performance conditions (58,652) 274 Total forfeitures (299,463) 1,315 Forfeitures - employee terminations (82,077) 298 Forfeitures – May and July 2021 awards with market condition (217,386) 1,017 Non-vested – June 30, 2024 2,084,946 8,736 Total granted 1,433,610 5,381 Granted – August 2024 32,800 154 Granted – October 2024 100,000 490 Granted – November 2024, with performance conditions 1,198,310 4,206 Granted – January 2025 65,000 354 Granted – April 2025 37,500 177 Total vested (1,197,944) 5,742 (78,801) 394 (213,687) 1,134 Vested – November 2024, with performance conditions (103,638) 524 (77,306) 417 (13,922) 68 (69,287) 328 (385,787) 1,737 (255,516) 1,140 Total forfeitures (150,712) 728 Forfeitures - employee terminations (121,591) 571 Forfeitures – December 2021 awards with market condition (29,121) 157 Non-vested – June 30, 2025 2,169,900 7,833 17. STOCK-BASED COMPENSATION (continued) Stock option and restricted stock activity (continued) Restricted stock (continued) The following table summarizes restricted stock activity for the year ended June 30, 2026:
Number of shares of restricted stock Weighted average grant date fair value ($’000) Non-vested – June 30, 2025 2,169,900 7,833 Total granted 1,054,095 4,228 Granted – July 2025 3,772 17 Granted – August 2025 5,323 25 Granted – September 2025 200,000 922 Granted – October 2025 215,000 905 Granted – November 2025 160,000 708 Granted – November 2025, with performance conditions 245,000 598 Granted – February 2026 150,000 698 Granted – March 2026 30,000 139 Granted – May 2026 45,000 216 Total vested (400,394) 1,691 (10,933) 50 (33,333) 139 (120,434) 465 (52,479) 196 (21,666) 99 (12,499) 61 (149,050) 681 Total forfeitures (361,413) 1,437 Forfeitures - employee terminations (103,545) 475 Forfeitures - December 2022 award with market conditions (257,868) 962 Non-vested – June 30, 2026 2,462,188 9,381 Awards granted In July, August, September, October and November 2025, and February, March and May 2026, respectively, the Company granted 3,772 ; 5,323 ; 200,000 ; 215,000 ; 160,000 ; 150,000 ; 30,000 ; and 45,000 shares of restricted stock to employees which have time-based vesting conditions and which are subject to the employees’ continued employment with the Company through the applicable vesting dates. In November 2025, the Company awarded 245,000 shares of restricted stock to employees which contained time and performance-based (market conditions related to share price performance) vesting conditions. In August 2024, October 2024, January 2025 and April 2025, respectively, the Company granted 32,800 ; 100,000 ; 65,000 ; and 37,500 shares of restricted stock to employees which have time-based vesting conditions and which are subject to the employee’s continued employment with the Company through the applicable vesting dates. In November 2024, the Company awarded 1,198,310 shares of restricted stock to executive officers and employees which contained time and performance-based (market conditions related to share price performance) vesting conditions. In October 2023, the Company awarded 333,080 shares of restricted stock with time-based vesting conditions to approximately 150 employees, which are subject to the employees continued employment with the Company through the applicable vesting dates. In October 2023, the Company awarded 310,916 shares of restricted stock to executive officers which contained time and performance- based (market conditions related to share price performance) vesting conditions. The Company also awarded 225,000 restricted stock to an executive officer in October 2023, which vest on June 30, 2025, except if the executive officer is terminated for cause, in which case the award will be forfeited. In January 2024, February 2024 and June 2024, the Company awarded 56,330 ; 9,195 ; and 67,720 shares of restricted stock with time-based vesting conditions to employees. 17. STOCK-BASED COMPENSATION (continued) Stock option and restricted stock activity (continued) Restricted stock (continued) Awards granted (continued) The Company had previously agreed to grant an advisor 5,500 shares per month in lieu of cash for ad hoc consulting services provided to the Company. The Company and the advisor have agreed that the Company will issue the shares to the advisor, in arrears, on a quarterly basis. During the year ended June 30, 2026, the Company recorded a stock-based compensation charge of $ 0.1 and included the issuance of 27,500 shares of common stock in its issued and outstanding share count. During the year ended June 30, 2026, the Company and the consultant agreed that 49,500 shares of the Company’s common stock that were previously issued would be forfeited and a cash payment of $ 0.2 million was made in lieu of the forfeited shares. During the year ended June 30, 2025, the Company recorded a stock-based compensation charge of $ 0.4 million and included the issuance of 66,000 in its issued and outstanding share count. Overall, the Company issued a total of 44,000 27,500 66,000 49,500 ) of the Company’s common stock to the consultant during the year ended June 30, 2026. Awards vested During the years ended June 30, 2026, 2025 and 2024, respectively, 400,394 ; 1,197,944 ; and 1,002,241 shares of restricted stock with time-based and performance-based vesting conditions vested. The June 30, 2025, shares include 78,801 shares of restricted stock granted to Mr. Meyer, our former Group CEO, which vested in July 2024, and 103,638 shares of restricted stock with performance conditions (share price targets) which vested in November 2024, following the achievement of the agreed performance condition. The June 30, 2024, shares of stock vesting includes 58,652 shares with a performance-based condition related to the achievement of the 2021 to 2024 financial services plan. The fair value of restricted stock which vested during the years ended June 30, 2026, 2025 and 2024, was $ 4.2 5.9 5.2 In August, November and December 2025 and January and April 2026, an aggregate of 192,936 shares of restricted stock granted to employees vested and they elected for 84,758 shares to be withheld to satisfy the withholding tax liability on the vesting of these shares. In November 2024, 27,546 shares of restricted stock granted to Mr. Mali vested and he elected for 12,396 to satisfy the withholding tax liability on the vesting of these shares. In addition, in November and December 2024 and February, April, May and June 2025, an aggregate of 556,889 shares of restricted stock granted to employees vested and they elected for 185,437 shares to be withheld to satisfy the withholding tax liability on the vesting of these shares. 55,598 shares of restricted stock granted to Mr. Mali vested and he elected for 25,020 satisfy the withholding tax liability on the vesting of these shares. In addition, in November and December 2023 and February, April, May and June 2024, an aggregate of 556,889 shares of restricted stock granted to employees vested and they elected for 128,415 to be withheld to satisfy the withholding tax liability on the vesting of these shares. These 84,758 , 197,833 12,396 185,437 ) and 153,435 25,020 128,415 ) shares have been included in the Company’s shares of common stock (these shares were included in treasury shares prior to the recast discussed in Note 1) for the years ended June 30, 2026, 2025 and 2024, respectively. Awards forfeited During the year ended June 30, 2026, 257,868 shares of restricted stock were forfeited by executive officers (including a former Group CEO) as the market condition (related to share price performance) were not achieved. During the year ended June 30, 2026, employees forfeited 103,545 shares of restricted stock following their termination of employment with the Company. During the year ended June 30, 2025, 29,121 shares of restricted stock were forfeited by an employee as the market condition (related to share price performance) were not achieved. During the year ended June 30, 2025, employees forfeited 121,591 restricted stock following their termination of employment with the Company. During the year ended June 30, 2024, 217,386 shares of restricted stock were forfeited by executive officers (including former executive officers) as the market condition (related to share price performance) were not achieved. During the year ended June 30, 2 024, employees forfeited 82,077 shares of restricted stock following their termination of employment with the Company. 17. STOCK-BASED COMPENSATION (continued) Lesaka ESOP Trust On November 14, 2024, the Company announced that its shareholders voted on and approved the funding and issuance of shares to the Lesaka ESOP Trust at its annual general meeting. The Lesaka Employee Share Ownership Plan (“ESOP”) is designed to create alignment with the Company's long-term growth objectives. The Lesaka ESOP Trust is also expected to advance the Company’s transformation initiatives and plays an important role in improving the company’s Broad-Based Black Economic Empowerment (“BBBEE”) rating. As of November 2024, when shareholders approved the plan, the Company’s employee base was comprised of approximately 87 % designated groups for BBBEE purposes. Through the creation of a broader base of employee ownership, the Company is helping to promote economic inclusion and contribute to transformation in the broader South African economy. The Lesaka ESOP Trust is structured as an evergreen trust, ensuring the permanence of the plan and allowing for the inclusion of future employees as the Company continues to grow. The Lesaka ESOP Trust was required to have an effective holding of 3 % of the Company’s issued shares at the date of implementation, and in February 2025, the Company issued 2,490,000 shares of its common stock to the Lesaka ESOP Trust. The subscription price payable by the Lesaka ESOP Trust for the shares was vendor funded by the Company through a notional vendor funding (“NVF”) structure whereby the Company provided a notional loan to the Lesaka ESOP Trust representing the fair value of the shares, facilitating the acquisition by the Lesaka ESOP Trust of the shares without requiring any upfront payment by the Lesaka ESOP Trust except for the payment of a nominal value of $ 0.001 per share. The NVF structure will achieve the same economic effect as a traditional loan structure from the Company to the Lesaka ESOP Trust to enable the Lesaka ESOP Trust to subscribe for shares in the Company, but without any actual flow of funds from the Company to the Trust. A notional amount on the date of issue was ascribed to each share that the Lesaka ESOP Trust subscribed for, which is equal to the fair market value of one of the Company shares of common stock (which is the amount the Lesaka ESOP Trust would have paid for one of the Company’s shares in an ordinary course cash transaction with the Company) less a 10 % discount. The principal amount on the NVF loan will accrue interest at a fixed rate of 3 % per annum. The NVF will have a five-year term. The notional amount was not recognized in the Company’s financial statements because it represents a formula to calculate the number of the Company’s shares of common stock to be returned by the Lesaka ESOP Trust to the Company after five years . On or about the 5 th anniversary of the implementation date of the ESOP (“Maturity Date”), the Company will have the option to repurchase a portion of the shares held by the Lesaka ESOP Trust at the nominal aggregate amount to settle the total NVF loan outstanding. The number of shares to be repurchased will be determined by using a formula set out in the transaction documents that considers the total NVF loan outstanding on the Maturity Date and the market value of one of the Company’s shares held by the Lesaka ESOP Trust. The purchase consideration that would have been payable for the shares the Company will repurchase (which is the fair market value the Company would have paid for the shares in an ordinary course cash transaction with the Lesaka ESOP Trust on the Maturity Date) will be set off against the total NVF loan outstanding. After settlement of the NVF loan, 50 % of the remaining shares held by the Lesaka ESOP Trust, if any, will be distributed to eligible employees. The Lesaka ESOP Trust will hold shares of the Company’s common stock. The Lesaka ESOP Trust will therefore be entitled to receive its proportionate share of any dividends and other distributions declared by the Company to its shareholders and vote its shares held on matters requiring shareholder approval. The Lesaka ESOP Trust is administered by the board of trustees made up of five members nominated by the Company’s Board and the participants in the ESOP. The Company’s Board has the right to nominate two members to the board of trustees. The balance of the trustees, one of which must be an independent trustee, are nominated by the participants. The nominees appointed to the board of trustees may not be members of the Company’s Board or an officer as contemplated in Rule 16a-(f) of the Securities and Exchange Act of 1934. The nominees of the participants need to meet an election criteria to be eligible for nomination which requires participant nominees to have been employed by the Group for a continuous and uninterrupted period of at least three years . The trustees have the discretion to determine how the Lesaka ESOP Trust should vote shares of the Company common stock held on matters requiring the Company’s shareholders approval. The decisions by the trustees are decided by a majority vote. The Company is responsible for all reasonable operating expenses incurred by the Lesaka ESOP Trust until such time as the Lesaka ESOP Trust has sufficient cash resources of its own to settle its operating expenses. The Company controls the Lesaka ESOP Trust because the Lesaka ESOP Trust is considered to be a variable interest entity (“VIE”) in which the Company has a controlling financial interest. Accordingly, the Lesaka ESOP Trust is consolidated by the Company. As the Lesaka ESOP Trust is consolidated 2,490,000 shares of the Company’s common stock held by Lesaka ESOP Trust are accounted for as treasury shares at the nominal amount of $ 0.001 per share. Purchases and sales of the Company’s common stock between the Company and the Lesaka ESOP Trust will be recognized within equity with no profit or loss being recognized in the statement of operations on such 17. STOCK-BASED COMPENSATION (continued) Lesaka ESOP Trust (continued) Qualifying employees were allocated A and B units. An A unit represents an option for the employees to acquire shares of the Company’s common stock in future. The A unit represents an equity-settled share-based payment, requiring the recognition of a stock- based compensation charge over a five year service period. The A units were measured at their grant date fair value using a Black Scholes valuation model. A B unit represent s an employees’ entitlement to cash payments based on dividends paid by the Company to the Lesaka ESOP Trust, and consequently distributions that the Lesaka ESOP Trust makes to qualifying employees who are beneficiaries of the Lesaka ESOP Trust. These payments represent an employee benefit, requiring that the Company to recognize an expense to the value of the payment made when each payment is made. Initial qualifying employees are required to have a minimum of two year ’s service with the Company, with criteria being determined on December 31, 2024. Initial qualifying employees received invitation and allocation notices on or around April 1, 2025. two years ’ service to any subsidiary of the Company they will become eligible for consideration as a beneficiary of the Lesaka ESOP Trust. Qualifying employees include employees of recent acquisitions, including Adumo. On April 1, 2025, the Lesaka ESOP Trust awarded 2,030 1,989,400 2,030 closing price on the Nasdaq on April 1, 2025 was $ 5.00 per share and each A unit was issued with an initial strike price of $ 4.50 10 % discount) and is expected to grow by 3 % per annum through to April 1, 2030. The Company estimated a forfeiture rate of 8 % per annum. The fair value of each A unit is estimated on the date of grant using Black-Scholes model that uses the assumptions noted in the table below. The estimated expected volatility is generally calculated based on the Company’s 1,251 -day volatility. The estimated expected life of the option was determined as the period from grant date through to the vesting date in On April 1, 2026, the Lesaka ESOP Trust awarded 348 278,400 348 B units. Lesaka’s closing price on the Nasdaq on April 1, 2026 was $ 4.92 per share and each A unit was issued with an initial strike price of $ 4.50 price less a 10 % discount) and is expected to grow by 3 % per annum through to April 1, 2030. The Company estimated a forfeiture 8 % per annum. The fair value of each A unit is estimated on the date of grant using Black-Scholes model that uses the assumptions noted in the table below. The estimated expected volatility is generally calculated based on the Company’s 1,251 -day volatility. The estimated expected life of the option was determined as the period from grant date through to the vesting date in February 2030. The table below presents the range of assumptions used to value options granted during the years ended June 30, 2026 and 2025:
2026 2025 44 % 46 % 0 % 0 % 3.9 4.9 4.18 % 4.17 % 17. STOCK-BASED COMPENSATION (continued) Stock-based compensation charge and unrecognized compensation cost The Company has recorded a net stock compensation charge of $ 7.0 9.6 7.9 million for the years ended June 30, 2026, 2025 and 2024, respectively, which comprised:
Allocated to IT processing, servicing and support Allocated to selling, general and administration Stock-based compensation charge $ 6,616 $ - $ 6,616 Stock-based compensation charge related to ESOP 655 - 655 Reversal of stock compensation charge related to stock options and restricted stock forfeited (302) - (302) Total - year ended June 30, 2026 $ 6,969 $ - $ 6,969 Stock-based compensation charge $ 9,482 $ - $ 9,482 Stock-based compensation charge related to ESOP 157 - 157 Reversal of stock compensation charge related to stock options and restricted stock forfeited (89) - (89) Total - year ended June 30, 2025 $ 9,550 $ - $ 9,550 Stock-based compensation charge $ 8,045 $ - $ 8,045 Reversal of stock compensation charge related to stock options and restricted stock forfeited (134) - (134) Total - year ended June 30, 2024 $ 7,911 $ - $ 7,911 The stock-based compensation charges and reversal have been allocated to selling, general and administration based on the allocation of the cash compensation paid to the relevant employees. As of June 30, 2026, the total unrecognized compensation cost related to stock options was approximately $ 2.7 the Company expects to recognize over approximately two years . As of June 30, 2026, the total unrecognized compensation cost related to restricted stock awards was approximately $ 5.3 million, which the Company expects to recognize over approximately three years . Income tax consequences During the years ended June 30, 2026, 2025 and 2024, the Company recorded a deferred tax benefit of $ 0.6 1.0 0.7 million, respectively, related to the stock-based compensation charge recognized related to employees of Lesaka. During these periods the Company recorded a valuation allowance related to the full deferred tax benefit recognized because it does not believe that the stock-based compensation deduction would be utilized as it does not anticipate generating sufficient taxable income in the United States. The Company deducts the difference between the market value on the date of exercise by the option recipient and the exercise price from income subject to taxation in the United States. Lesaka recharges its subsidiaries for stock-based compensation charges related to service provided by employees of its subsidiaries. During the years ended June 30, 2026, 2025 and 2024, these subsidiaries deducted stock-based compensation charges of $ 3.6 4.3 4.6 |