What changed in this filing

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Item 9A. Controls and Procedures

2020-09-28 compared with 2019-09-23 · 1038 added, 1389 removed, 1647 unchanged (60% of the section changed)

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solely on copies of such forms furnished as provided above, or written representations that no such forms were required, the Company

believes that during the fiscal year ended June 30, 2019, all Section 16(a) filing requirements applicable to its executive

officers, directors and beneficial owners of more than 10% of its Common Stock were complied with.

believes that during the fiscal year ended June 30, 2020, all Section 16(a) filing requirements applicable to its executive officers,

directors and beneficial owners of more than 10% of its Common Stock were complied with.

IN MANAGEMENT AND BOARD OF DIRECTORS

the 2018 Annual Shareholders Meeting held in June 2019, a seven-member board stood for election.

the 2019 Annual Shareholders Meeting held in June 2020, a five-member board stood for election.

The members were elected and,

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The board of directors

is made up of:

is made up of Mr.

Ghauri (Chairman of the Board), Mr.

Mark Caton, Ms.

Malea Farsai, Mr.

Shahid Javed Burki, Mr.

Mark Caton, Mr.

Kausar Kazmi and Mr.

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Audit Committee is made up of Mr.

Burki, as Chairman, and Mr.

Kazmi and Mr.

Kazmi, as Chairman, with Mr.

Caton and Mr.

Tolentino as members.

The Compensation

Committee consists of Mr.

Caton, as Chairman, and Mr.

The Compensation Committee

consists of Mr.

Caton, as Chairman, with Mr.

Kazmi and Mr.

Tolentino as its members.

The Nominating

and Corporate Governance Committee consists of Mr.

Tolentino, as Chairman, and Mr.

The Nominating and Corporate Governance Committee

consists of Mr.

Tolentino, as Chairman, with Mr.

Caton and Mr.

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table below provides the membership for each of the committees during Fiscal Year 2020.

Beckert * (I)

Tolentino (I) (N)

Beckert was replaced by Mr.

Kazmi in June 2019.

Kazmi was elected to the Board in June 2019 but

did not join as a committee member until August 2019.

Denotes an Independent

Denotes the Chairperson

of the Committee.

Tolentino became

the Nominating Committee Chairman in August 2019.

Kazmi (I) (A)

Tolentino (I)

Ghauri and Mr.

Burki did not stand for reelection in June 2020.

an Independent Director.

the Chairperson of the Committee.

Kazmi became the Audit Committee Chairman in July 2020.

AND EXECUTIVE OFFICERS

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Executive Officer, Chairman and Director

to Naeem Ghauri

Financial Officer

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Secretary, General Counsel

to Najeeb Ghauri

Corporate Counsel

Experience of Officers and Directors:

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of NetSol Technologies, Inc.

was responsible for NetSol listing on NASDAQ in 1999, the NetSol subsidiary listing on KSE (Karachi Stock Exchange) in 2005, and

the NetSol listing on the NASDAQ Dubai exchange in 2008.

Ghauri served as the Company’s Chief Executive Officer from

1999 to 2001 and as the Chief Financial Officer from 2001 to 2005.

Ghauri is responsible for managing the day-to-day

operations of the Company, as well as the Company’s overall growth and expansion plan.

to joining the Company, Mr.

Ghauri was part of the marketing team of Atlantic Richfield Company (ARCO) (now acquired by BP), a

Fortune 500 company, from 1987-1997.

He was responsible for NetSol listing on NASDAQ in 1999, the NetSol subsidiary listing on KSE (Karachi

Stock Exchange) in 2005, and the NetSol listing on the NASDAQ Dubai exchange in 2008.

Ghauri served as the Company’s

Chief Executive Officer from 1999 to 2001 and as the Chief Financial Officer from 2001 to 2005.

Ghauri is responsible

for managing the day-to-day operations of the Company, as well as the Company’s overall growth and expansion plan.

Najeeb Ghauri as the CEO, implemented a Company-wide initiative cutting costs which saved the Company in excess of $7,000,000.

Ghauri was also instrumental in the substantial increase in revenue for fiscal year end 2015.

In addition, Mr.

Ghauri traveled

overseas multiple times to execute the largest contract for the Company, worth over $100 million, in December 2015.

Prior to joining

the Company, Mr.

Ghauri was part of the marketing team of Atlantic Richfield Company (ARCO) (now acquired by BP), a Fortune 500

company, from 1987-1997.

Prior to ARCO, he spent nearly five years with Unilever as brand and sales managers.

Ghauri attended Eastern Illinois University in 1977-78 for B.S Degree.

He earned an M.B.A.

in Marketing Management from Claremont

Graduate School in California in 1981.

Ghauri was elected Vice Chairman of US Pakistan Business Council in 2006, a Washington

Ghauri attended

Eastern Illinois University where he received a Bachelor of Science degree in Management/Economics in 1978.

He also received an

in Marketing Management from Claremont Graduate School in California in 1981.

Ghauri was elected Vice Chairman of US

Pakistan Business Council in 2006, a Washington D.C.

based council of US Chamber of Commerce.

He is also very active in several philanthropic activities in emerging markets and

is a founding director of Pakistan Human Development Fund, a non-profit organization, a partnership with UNDP to promote literacy,

health services and poverty alleviation in Pakistan.

Ghauri has participated in NASDAQ opening and/or closing bell ceremonies

in 2006, 2008 and 2009.

Ghauri was elected as Director custodian at NUST (National University of Science and Technology)

in Islamabad, Pakistan.

Ghauri is a frequent speaker at Anderson Business School at UCLA and keynote speaker in several US

and Pakistan based organizations and charitable institutions,

He is also very active in several

philanthropic activities in emerging markets and is a founding director of Pakistan Human Development Fund, a non-profit organization,

a partnership with UNDP to promote literacy, health services and poverty alleviation in Pakistan.

Ghauri has participated

in NASDAQ opening and/or closing bell ceremonies in 2006, 2008,2009 and 2020.

and Qualifications :

Ghauri has an extensive executive, operational and strategic leadership experience in a global setting.

Substantial experience in establishing management performance objective and establishing goals.

ALMOND was appointed Chief Financial Officer on September 9, 2013.

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Netherlands in 1991.

GHAURI has been a Director of the Company since 1999 and was the Company’s Chief Executive Officer from August 2001

to October 2006.

Ghauri is also a co-founder of the Company.

Currently, Mr.

Ghauri serves as the President and Director of

Global Sales of NetSol as well as the director of NetSol (UK) Ltd., a wholly owned subsidiary of the Company located in London.

While instrumental in numerous transactions, his most significant contribution to the revenue of the Company was his role in overseeing

and leading the closing of the largest contract to date for the Company worth $100 million signed in December 2015.

More recently,

Ghauri headed the sales team that signed a contract valued in excess of $35 million.

Ghauri has spearheaded the Innovation

practice of the Company while located in Thailand with an eye towards working with rideshare platforms as sustainable business

models for the Company as the CEO of OTOZ, Inc.

Prior to joining the Company, Mr.

Ghauri was Program Director for Mercedes-Benz

Finance Ltd., from 1994-1999.

Ghauri supervised over 200 project managers, developers, analysts and users in nine European

Ghauri is a board member of Drivemate Co., Ltd., the Company’s partner in Thailand, as a representative of

Ghauri earned his degree in computer science from Brighton University in England.

JAVED BURKI was first appointed to the Board of Directors in February 2003.

Before joining the World Bank in 1974 he was a

member of the Civil Service of Pakistan.

He had a distinguished career with the World Bank from 1974 to 1999 where he held a number

of senior positions including Chief of Policy Planning (1974-1981);

Director of International Relations Department (1981-87);

Director of China Department (1987-94);

and Vice President of Latin America and the Caribbean Region (1994-99).

Upon taking early

retirement from the Bank, he took up the position of Chief Executive Officer of EMP Financial Advisors, a consulting company linked

with the Washington based EMP Global, a private equity firm and worked there until 2005.

He is currently Chairman the Institute

of Public Policy, a think tank associated with the Beacon House National University, Lahore, Pakistan.

He also spends some time

each year as Senior Visiting Research Fellow at the Institute of South Asian Studies, National Singapore University.

he took leave of absence from the World Bank to take up the position of Finance Minister of Pakistan.

Burki was educated at Government College, Lahore from where he received M.Sc.

at Oxford University as a Rhodes Scholar

from where he received M.A.

(Hons) in Economics;

at Harvard University as a Mason Fellow from where he received M.P.A.

studied for Ph.D.

in Economics (not completed).

In 1997, he received a Diploma in Advanced Management from Harvard University’s

Business School.

Burki is the Chairman of the Shahid Javed Burki Institute of Public Policy located in Lahore, Pakistan.

Burki has authored

several books and articles on development issues including Rising Powers , Global Governance, in 2017;

Changing Perceptions,

Altered Reality:

Pakistan’s Economy Under Musharraf, 1999-2006 (Oxford University Press, 2007;

Pakistan Under Bhutto

(Macmillan, 1990;

and Study of Chinese Communes (Harvard University Press, 1969).

Burki’s latest book is

a collection of essays, Pakistan at 70 and he is also finishing another book called Pakistan’s Foreign Relations

to be published by Fall of 2019 by Oxford University Press.

Burki is a chairman of the Audit Committee and a member of the Compensation and Nominating and Corporate Governance Committees.

Burki is the Company’s Financial Expert on the Audit Committee.

CATON joined the Board of Directors in 2007.

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Caton received his BA from UCLA in psychology in 1971.

FARSAI was nominated and elected to the Board of Directors for the first time in June 2018.

Before joining NetSol in March

Farsai was an associate at the law firm of Horowitz and Beam where she represented both domestic and international private

and public clients from technology to apparel in various transactions.

She has also worked on the formation of business startups

Farsai was on the team that took the Company public and is the one who listed NetSol on NASDAQ in 1999 and has maintained

its listing since then to current.

and Qualifications :

Caton has over 25 years of experience in marketing and management.

FARSAI joined the Board of Directors for the first time in 2018 and is currently the Company’s Corporate Counsel.

joining NetSol in March 2000, Ms.

Farsai was an associate at the law firm of Horowitz and Beam where she represented both domestic

and international private and public clients from technology to apparel in various transactions.

She has also worked on the formation

of business startups and IPOs.

Farsai was on the team that took the Company public and is the one who listed NetSol on NASDAQ

in 1999 and has maintained its listing since then to current.

After nearly two decades with NetSol, Ms.

Farsai continues to work part-time as the Company’s

Corporate Counsel overseeing the Company’s insurance needs as well as day to day corporate legal needs.

During her tenure

as a Board member this past year, Ms.

Farsai has been actively updating and overseeing the Company’s Corporate and Social

Responsibilities (CSR) globally.

Prior to joining NetSol, she practiced law with the law firm of Horwitz and Beam in Irvine, California

from 1996-2000.

Farsai continues to work

part-time as the Company’s Corporate Counsel overseeing the Company’s insurance needs as well as day to day corporate

She has also obtained many of NetSol’s various trademarks for the Company.

During her tenure as a Board member this past year, Ms.

Farsai has been actively updating and overseeing the Company’s

Corporate and Social Responsibilities (CSR) globally.

Prior to joining NetSol, she practiced law with the law firm of Horowitz

and Beam in Irvine, California from 1996-2000.

Farsai received her B.A.

degree from University of California, Irvine and her J.D.

in 1996 from WSU, and has

been a member of the California State Bar since 1996.

She sits on the board of various charitable organizations in Los Angeles.

TOLENTINO brings more than 30 years of experience in the auto finance industry working with global manufacturers such as Toyota

and General Motors.

Prior to joining NetSol’s advisory board, Mr.

Tolentino held several executive positions at Toyota Leasing

(Thailand) Co., Ltd., including most recently as president from 2006 to 2014 and then served as an advisor from 2015 to 2016.

degree from University of California, Irvine and her

in 1996, and has been a member of the California State Bar since 1996.

She sits on the board of various charitable organizations

in Los Angeles.

and Qualifications:

Farsai has served the Company and its legal department since its inception and has a breadth of knowledge

and understanding about NetSol’s business through her role as Corporate Counsel.

She also has an understanding of Public

Company corporate governance as well as the management and retention of a diverse group of employees.

TOLENTINO joined the Board of Directors in 2018.

Tolentino brings more than 30 years of experience in the auto finance

industry working with global manufacturers such as Toyota and General Motors.

Prior to joining NetSol’s advisory board,

Tolentino has held several executive positions at Toyota Leasing (Thailand) Co., Ltd., including most recently as president

from 2006 to 2014 and then served as an advisor from 2015 to 2016.

Prior to Toyota Leasing, Mr.

Tolentino spent more than 10 years with Toyota Motor Credit Corporation, USA.

He began his career

in the auto finance industry with General Motors Acceptance Corporation.

Tolentino joined the advisory board of NetSol in

September 2017 where he provided strategic advice to the senior management of the Company.

He is a board member of Drivemate Co.

Ltd., the Company’s partner in Thailand representing NetSol.

Tolentino is Chairman of the Nominating and Corporate Governance

Committee and a member of the Audit and Compensation Committees.

He resides in Thailand.

KAUSAR KAZMI was elected to the Board of Directors in 2019.

Kazmi brings over 40 years of expertise in the banking industry

and is currently the Head of Commercial Banking and Business Development at Habib Bank Zurich PLC, located in London, where he

has served in this capacity since 2016.

Tolentino spent more than 10 years

with Toyota Motor Credit Corporation, USA.

He began his career in the auto finance industry with General Motors Acceptance Corporation.

Tolentino joined the advisory board of NetSol in September 2017 where he provided strategic advice to the senior management

of the Company.

Tolentino is the Chairman of the Nomination and Corporate Governance

Committee and member of the Audit and Compensation Committees.

and Qualifications :

Tolentino has significant knowledge in international automobile manufacturing, business strategy and

managing growth in the automotive industry.

KAUSAR KAZMI joined the Board of Directors in 2019.

Kazmi brings over 40 years of expertise in the banking industry and

is currently the Head of Commercial Banking and Business Development at Habib Bank Zurich PLC, located in London where he has

served in this capacity since 2016.

Prior to this position, Mr.

Kazmi served as the Head of Business Development for UK and

Europe at Habib Bank AG Zurich in London from 2012-2016, before which Mr.

Kazmi was the CEO of the UK operations of Habib Bank

AG Zurich from 2009-2012.

Kazmi was awarded by Power 100, Parliamentary Review in association with The British Publishing

Company a “Lifetime Achievement Award”

Kazmi served as the Head of Business Development for UK and Europe

at Habib Bank AG Zurich in London from 2012-2016, before which Mr.

Kazmi was the CEO of the UK operations of Habib Bank AG Zurich

from 2009-2012.

Kazmi was awarded by Power 100, Parliamentary Review in association with The British Publishing Company

a “Lifetime Achievement Award”

for his significant and lasting impact on the banking sector.

Kazmi has been awarded by the Asian Media Group the “GG2 Power List”

celebrating Britain’s 101 most influential

Asians from 2016-2018.

Kazmi received his BSc in Chemical Engineering with II Class Honors from Habib Institute of Technology

He sits on the board of many charitable organizations, with a focus on helping raise funds.

Kazmi is a member of

the Audit, Compensation and Nominating and Corporate Governance Committees.

In addition, Mr.

has been awarded by the Asian Media Group the “GG2 Power List”

celebrating Britain’s 101 most influential Asians

from 2016-2018.

Kazmi received his BSc in Chemical Engineering with II Class Honors from Habib Institute of Technology in 1974.

He sits on the

board of many charitable organizations, with a focus on helping raise funds.

Burki as the Chairman of the Audit Committee and is a member of the Nominating and Corporate Governance and Compensation

and Qualifications :

Kazmi has strong financial services and management expertise.

He directs the operations of a financial

services business, expending its focus on business development.

of Business Conduct & Ethics

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Company has an Audit Committee whose members are the independent directors of the Company, specifically, Mr.

Kazmi and Mr.

Burki is the current Chairman of the Audit Committee.

Kazmi is the current Chairman of the Audit Committee.

Committee Financial Expert

Company has identified its audit chairperson, Mr.

Shahid Javed Burki as its Audit Committee financial expert.

is an independent board member as the term is defined in the Nasdaq Listing Rules.

Burki’s experience as Finance Minister

of Pakistan, Chief Executive Officer of EMP Financial Advisors, his various roles at the World Bank, and his tenure as both an

Audit Committee member and chair for the Company, provides him with an understanding of generally accepted accounting

principles and financial reporting.

Additionally, this experience provides an ability to assess the general application of accounting

principles in connection with the accounting for estimates, accruals and reserves;

experience analyzing financial statements that

were comparable in the breadth and complexity of issues that can be reasonably expected to be raised by the Company’s financial

an understanding of internal control over financial reporting;

Kausar Kazmi as its Audit Committee financial expert.

Kazmi is an independent

board member as the term is defined in the Nasdaq Listing Rules.

Kazmi’s over 40 years of experience in the banking

industry including his current tenure as Head of Commercial Banking and Business Development for UK and Europe for Habib Bank

AG Zurich as well as his service as a board member on various charities as the board member responsible for fundraising, provides

him with an understanding of generally accepted accounting principles and financial reporting.

Additionally, this experience provides

an ability to assess the general application of accounting principles in connection with the accounting for estimates, accruals

and reserves;

experience analyzing financial statements that were comparable in the breadth and complexity of issues that can

be reasonably expected to be raised by the Company’s financial statements;

an understanding of internal control over financial

and an understanding of audit committee functions.

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Bonuses would be paid 60% in

cash and 40% in stock valued at the date in which the bonus is earned or June 30, 2019.

cash and 40% in stock valued at the share price on June 30 th of the fiscal year in which it was earned.

on the 2016 Annual Meeting of Shareholders vote on the Frequency of Say on Pay voting, we will continue to provide our stockholders

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Our stock ownership guidelines require our executive officers to align their long-term interests with those of our stockholders.

Our policy prohibits the named executive officers from selling any newly issued shares for a period of three months, in an open

market transaction.

Beginning with our fiscal year 2018-2019, we modified our compensation practices for our CEO to tie a significant portion

Our policy prohibits the named executive officers from selling any newly issued shares for a period of three months, in an

open market transaction.

Beginning with our fiscal year 2018 to current, we modified our compensation practices for our CEO to tie a significant portion

to financial results both on a top line and bottom-line basis.

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Committee considers the objectives and attributes described below.

Executive Compensation Principles

Shareholder Alignment

Our executive compensation programs are designed to create shareholder value.

Compensation Principles

executive compensation programs are designed to create shareholder value.

incentive awards, delivered in the form of equity, make up a portion of our executives’

total compensation and closely

align the interests of executives with the long-term interests of our shareholders.

Our policy prohibits the named executive

officers from selling any newly issued shares for a period of three months, on an open market transaction.

incentive awards are designed to reward our executive officers for creating long-term shareholder value.

Long-term incentive

awards, delivered in the form of equity, make up a portion of our executives’

total compensation and closely align the

interests of executives with the long-term interests of our shareholders.

Our policy prohibits the named executive officers

from selling any newly issued shares for a period of three months, on an open market transaction.

Performance based

Long-term incentive awards are designed to reward our executive officers for creating long-term shareholder value.

Long-term incentive awards are granted primarily in the form of stock options and/or shares.

Appropriate Risk

Our executive compensation programs are designed to encourage executive officers to take appropriate risks in managing their businesses to achieve optimal performance.

Competitive with

external talent markets

Our executive compensation programs are designed to be competitive within the relevant markets.

Simple and transparent

Our executive compensation programs are designed to be readily understood by our executives, and transparent to our investors.

awards are granted primarily in the form of stock options and/or shares.

executive compensation programs are designed to encourage executive officers to take appropriate risks in managing their businesses

to achieve optimal performance.

with external talent markets

executive compensation programs are designed to be competitive within the relevant markets.

and transparent

executive compensation programs are designed to be readily understood by our executives, and transparent to our investors.

Analysis Peer Group

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time the study was last conducted, the Compensation Committee established the following list of peer companies to provide a comparative

framework for use in setting executive compensation for 2019:

framework for use in setting executive compensation:

Information Systems

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on specific objectives within the officer’s area of responsibility.

provided a 4% increase in base salary for Mr.

Almond and Ms.

provided a 3% increase in base salary for Ms.

McGlasson in fiscal 2020.

Effective in 2020, Mr.

Almond and Ms.

received a 5% and 3% increase in base salary.

Due to the effects of COVID-19, the Company reduced her

base salary by 13%.

We provided a 4% increase in base salary for Mr.

Almond in fiscal 2020.

Due to the effects of COVID-19, the

Company reduced his salary by 13%.

In fiscal year 2020, Mr.

Ghauri’s base salary was increased by 16.7%, due

in part, to the peer analysis provided by our compensation consultant.

Ghauri did not seek an increase in his salary for fiscal

2020 and the Compensation Committee determined that the base salary remained appropriate.

The Compensation Committee set the salaries

of the remaining named executive officers for 2020 based on the relative compensation of the executive team, the contributions,

maturity and tenure of the executive team.

The Compensation Committee determined that salary alone was an adequate basis for short

term compensation, and that equity incentives would be used for the long-term elements of incentive programs for Ms.

Ghauri’s base salary did not increase.

Due to the effects of

COVID-19, Mr.

Ghauri’s base salary was reduced by 4.7%.

Ghauri’s perquisites were reduced by 8% for a total compensation

reduction of 5.4%.

The Compensation Committee determined that salary alone was an adequate basis for short term compensation,

and that equity incentives would be used for the long-term elements of incentive programs for Ms.

McGlasson and Mr.

compensation program includes eligibility for bonuses as rewarded by the Compensation Committee.

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by the compensation committee, Mr.

Ghauri earned $432,488 of which $110,325 is based on incremental revenue and $322,163 is based

on income from operations.

The bonus is split into $259,493 amount in cash and $172,995 amount in shares.

See bonus structure

as discussed below on page 41.

The Compensation Committee determined that Gross Revenue and Income from Operations structure used

in fiscal 2019 continues to be a proper measure for measuring Mr.

Ghauri’s performance in that it encourages his participation

in revenue generating activities and continues to incentivize him to monitor and maximize cost efficiency.

The Compensation Committee

elected to grant Mr.

Ghauri a $300,000 cash award in fiscal 2019 based on his initiative that saved the Company in excess of $7

million in fiscal year 2018.

Ghauri did not earn a bonus.

See bonus structure as discussed below on page 46.

The Compensation

Committee determined that Gross Revenue and Income from Operations structure used in fiscal 2020 continues to be a proper measure

for measuring Mr.

Ghauri’s performance in that it encourages his participation in revenue generating activities and continues

to incentivize him to monitor and maximize cost efficiency.

Equity Incentive Compensation

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including compensation percentiles, were among several factors the committee reviewed in determining compensation.

incentives provided to executives are determined by the Fair Market Value of our common stock on the grant date Each executive’s

incentives provided to executives are determined by the Fair Market Value of our common stock on the grant date.

Each executive’s

stock award was based on an analysis of the Compensation Committee of an appropriate overall cash compensation for each individual

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on a desired overall compensation cash value less the base salary as approved by the Compensation Committee.

fiscal 2019, Mr.

Almond received a grant of 10,000 shares of common stock vesting quarterly over a three-year period and Ms.

received a grant of 7,500 shares of common stock vesting quarterly over a two-year period.

Ghauri was eligible to receive

grants of shares based on the performance criteria connected to gross revenues and net income from operations as discussed below.

for fiscal 2020, Mr.

Almond will receive a grant of 10,000 shares of common stock vesting quarterly over a two-year period and

McGlasson will receive a grant of 7,500 shares of common stock vesting quarterly over a two-year period.

Ghauri is eligible

to receive grants of shares based on the performance criteria connected to gross revenues and net income from operations as discussed

The total compensation including equity grants is designed to bring the Chief Executive Officer to the mean market average.

fiscal year 2020, Ms.

McGlasson and Mr.

Almond received a grant of 7,500 and 10,000 shares of common stock, respectively, vesting

quarterly over a two-year period.

Ghauri is eligible to receive grants of shares based on the performance criteria connected to gross revenues and net income from

operations as discussed below.

The total compensation including equity grants is designed to bring the Chief Executive Officer

to the mean market average.

Ghauri’s bonus for fiscal year 2020 is based on the total revenues and income from operations on a graduated basis.

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of the goal achieved.

Bonuses will be paid 60% in cash and 40% in shares of common stock valued on the date in which the bonus

is earned, or June 30, 2019.

Total net revenues and income from operations are based on those values reported for the year ending

June 30, 2019 excluding any adjustments relating to changes in revenue recognition policy.

Bonuses will be paid 60% in cash and 40% in shares of common stock valued on June 30, 2020.

Total net revenues

and income from operations are based on those values reported for the year ending June 30, 2020 excluding any adjustments relating

to changes in revenue recognition policy.

from Operations

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be executive officers of the Company.

Name and Principle Position

Fiscal Year Ended

Stock Awards ($) (1)

Option Awards ($)

All Other Compensation ($)

Najeeb Ghauri

and Principle Position

Awards ($) (1)

Other Compensation ($)

$ 156,586 (4)

CEO & Chairman

$ 200,000 (4)

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$ 200,000 (4)

Roger K Almond

Chief Financial Officer

Secretary, General Counsel

Financial Officer

General Counsel

The stock was awarded as compensation to the officers.

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The life of 20,000 outstanding options, granted in February 2009, was extended for one year for the year ended June 30, 2019.

The life of 150,671 and 155,671 outstanding options, granted in June 2014, was extended for one year for the years ended June

30, 2017 and 2016, respectively.

Consists of $36,000, $36,000 and $36,000 paid for automobile and travel allowance, $16,758, $16,758 and $16,758 on account of

life insurance, $14,994, $14,731 and $12,987 paid for medical and dental insurance premiums, $24,000, $24,000 and $24,000 paid

for housing allowance and $108,248, $108,514 and $nil paid for temporary relocation paid by the Company.

Najeeb Ghauri’s compensation agreement, he received $156,586, $200,000 and $200,000 in allowances, perquisites and

benefits such as car allowance, insurance premiums, and home office allowance for the fiscal years ended June 30, 2020, 2019 and

2018, respectively.

Consists of $10,639, $10,191 and $9,952 paid for medical and dental insurance premiums for participation in the health insurance

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July 2018, Ms.

McGlasson was granted 7,500 shares of the Company’s common stock, which vest quarterly over the period of

Patti McGlasson was granted 7,500 shares of the Company’s common stock, which vest quarterly over

the period of two years.

The shares were approved by the Compensation Committee as an incentive for the named officer.

August 2019, Ms.

McGlasson was granted 7,500 shares of the Company’s common stock, which vest quarterly over the period

of two years.

Patti McGlasson was granted 7,500 shares of the Company’s common stock, which vest quarterly over

the period of two years.

The shares were approved by the Compensation Committee as an incentive for the named officer.

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Agreement”).

The CEO Agreement was amended effective January 1, 2008, January 1, 2010, July 25, 2013 and again on

June 30, 2014.

The CEO Agreement was amended effective January 1, 2008, January 1, 2010, July 25, 2013 and again on June 30,

Changes made in the June 30, 2014 amendment are effective July 1, 2014.

Pursuant to the CEO Agreement, as amended,

Pursuant to the CEO Agreement, as amended, between

Ghauri and the Company (the “CEO Agreement”), the Company agreed to employ Mr.

Ghauri as its Chief Executive

Officer for a five-year term.

The term of employment automatically renews for 12 additional months unless notice of intent to

terminate is received by either party at least 6 months prior to the end of the term.

Ghauri as its Chief Executive Officer

for a five-year term.

The term of employment automatically renews for 12 additional months unless notice of intent to terminate

is received by either party at least 6 months prior to the end of the term.

For the fiscal year 2020, Mr.

entitled to an annualized base salary of $900,000 consisting of salary, allowances, perquisites and benefits, and is eligible

for annual bonuses based on the bonus structure adopted by the Compensation Committee as described in Item 11 under Executive

Compensation beginning on page 36.

Ghauri is entitled to

an annualized compensation of $900,000 consisting of salary, allowances, perquisites and benefits, and is eligible for annual

bonuses based on the bonus structure adopted by the Compensation Committee as described in Item 11 under Executive Compensation

beginning on page 38.

As previously discussed, the $900,000 was temporarily reduced to $851,000 in response to the COVID-19 pandemic.

Ghauri is entitled to six weeks of paid vacation per calendar year.

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for annual bonuses at the discretion of the Chief Executive Officer.

As previously discussed, the $230,381 base salary was temporarily

reduced to $186,515 in response to the COVID-19 pandemic.

In addition, Mr.

Almond is entitled to participate in the

Company’s equity incentive plans and is entitled to four weeks of paid vacation per calendar year.

Almond is entitled to participate in the Company’s

equity incentive plans and is entitled to four weeks of paid vacation per calendar year.

CFO Agreement also includes provisions respecting severance, non-solicitation, non-competition, and confidentiality obligations.

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issued after each quarter of service through June 30, 2021 and is eligible for annual bonuses at the discretion of the Chief Executive

In addition, Ms.

McGlasson is entitled to participate in the Company’s equity incentive plans and, is entitled

to six weeks of paid vacation per calendar year.

As previously discussed, the $232,896 was temporarily reduced to $188,552 in response to the COVID-19 pandemic.

McGlasson is entitled to participate in the Company’s equity incentive plans and, is entitled to six weeks of paid vacation

per calendar year.

General Counsel Agreement also includes provisions respecting severance, non-solicitation, non-competition, and confidentiality

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Payments upon Termination or Change of Control

regardless of the manner in which a named executive officer’s employment terminates, he is entitled to receive amounts earned

during his term of employment.

Such amounts include the portion of the executive’s base salary that has accrued prior to

any termination and not yet been paid, and unused vacation pay.

regardless of the manner in which a named executive officer’s employment terminates, the executive officer is entitled to

receive amounts earned during the term of employment.

Such amounts include the portion of the executive’s base salary that

has accrued prior to any termination and not yet been paid, and unused vacation pay.

addition, we are required to make the additional payments and/or provide additional benefits to the individuals named in the Summary

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control occurred on June 30, 2020, the last day of our most recently completed fiscal year.

BENEFITS AND PAYMENTS

TERMINATION AFTER CHANGE OF CONTROL

TERMINATION UPON DEATH OR DISABILITY

TERMINATION BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Base Salary Continuance

Health Related Benefits

Salary Multiple Pay-out

Bonus or Revenue One-time Pay-Out

Net Cash Value of Options

AFTER CHANGE OF CONTROL

UPON DEATH OR DISABILITY

BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Salary Continuance

Related Benefits

Multiple Pay-out

or Revenue One-time Pay-Out

Cash Value of Options

Almond, Chief Financial Officer

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control occurred on June 30, 2020, the last day of our most recently completed fiscal year.

BENEFITS AND PAYMENTS

TERMINATION AFTER CHANGE OF CONTROL

TERMINATION UPON DEATH OR DISABILITY

TERMINATION BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Base Salary Continuance

Health related benefits

Salary Multiple Pay-out

Bonus or Revenue One-time Pay-Out

Net Cash Value of Options

AFTER CHANGE OF CONTROL

UPON DEATH OR DISABILITY

BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Salary Continuance

related benefits

Multiple Pay-out

or Revenue One-time Pay-Out

Cash Value of Options

McGlasson, Senior V.P.

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of control occurred on June 30, 2020, the last day of our most recently completed fiscal year.

BENEFITS AND PAYMENTS

TERMINATION AFTER CHANGE OF CONTROL

TERMINATION UPON DEATH OR DISABILITY

TERMINATION BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Base Salary Continuance

Health related benefits

Salary Multiple Pay-out

Bonus or Revenue One-time Pay-Out

Net Cash Value of Options

AFTER CHANGE OF CONTROL

UPON DEATH OR DISABILITY

BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Salary Continuance

related benefits

Multiple Pay-out

or Revenue One-time Pay-Out

Cash Value of Options

Compensation Table

following table sets forth a summary of the compensation earned by our Directors and/or paid to certain of our Directors pursuant

to the Company’s compensation policies for the fiscal year ended June 30, 2019, other than Najeeb Ghauri and Naeem

Ghauri who are paid as part of their employment agreements with the Company or its subsidiaries and not as directors.

SHARES AWARDS

Eugen Beckert

Shahid Javed Burki

Henry Tolentino

to the Company’s compensation policies for the fiscal year ended June 30, 2020, other than Najeeb Ghauri, Naeem Ghauri and

Malea Farsai who were paid as part of their employment agreements with the Company or its subsidiaries and not as directors.

EARNED OR PAID IN CASH ($)

AWARDS ($) (1)

fiscal 2020, the Directors’

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there were 15,171 shares issued to Mr.

Eugen Beckert, 9,884 shares issued to Mr.

Shahid Javed Burki, 9,623 shares issued to

Mark Caton and 6,857 shares issued to Mr.

Henry Tolentino.

Shahid Javed Burki, 14,734 shares issued to Mr.

Mark Caton, 12,317 shares issued to

Henry Tolentino and 11,445 shares issued to Mr.

Kausar Kazmi.

Compensation Policy

Najeeb and Naeem Ghauri and Ms.

Farsai are not paid any

fees or other compensation for services as members of our Board of Directors.

Farsai are not paid any fees or other compensation for services as members of our Board of Directors.

Committee relied on a survey conducted by Compensation Resources, Inc.

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year ended June 30, 2020.

BOARD ACTIVITY

CASH PAYMENTS

Board Member Fee

Chairperson for Audit Committee

Chairperson for Compensation Committee

Chairperson for Nominating and Corporate Governance Committee

for Audit Committee

for Compensation Committee

for Nominating and Corporate Governance Committee

members of our Board of Directors are also eligible to receive stock option or stock award grants both upon joining the Board

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September 12, 2016, the Compensation Committee granted independent board members 19,834 shares of common stock vesting at 50%

immediately and rest at the completion of each year served commencing with the period ending September 30, 2017 and ending September

June 29, 2018, the Compensation Committee granted independent board members 9,171 shares of common stock vesting immediately.

immediately and rest at the completion of each year served commencing with the period ended September 30, 2017 and ending

September 30, 2021.

Committee Interlocks and Insider Participation

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Caton (Chairman), Mr.

Burki, and Mr.

All current members

of the Compensation Committee are “independent directors”

Kazmi, and Mr.

All current members of the

Compensation Committee are “independent directors”

as defined under the NASDAQ Listing Rules.

None of these

individuals were at any time during the fiscal year ended June 30, 2019, or at any other relevant time, an officer or employee

of the Company.

None of these individuals

were at any time during the fiscal year ended June 30, 2020, or at any other relevant time, an officer or employee of the Company.

executive officer of the Company serves as a member of the board of directors or compensation committee of any entity that has

one or more executive officers serving as a member of the Company’s Board of Directors or Compensation Committee.

Number of Options Authorized

Options Grants Issued

Options Grants Cancelled / Expired

Available for Issue

Options Issued but Outstanding

The 2003 stock option plan

The 2005 stock option plan

The 2011 stock option plan

The 2013 stock option plan

The 2015 stock option plan

of Options Authorized

Grants Issued

Grants Cancelled / Expired

but Outstanding

2003 stock option plan

2005 stock option plan

2011 stock option plan

2013 stock option plan

2015 stock option plan

12- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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and officers, and (iii) all officers and directors as a group:

Number of Shares

Name of Beneficial Owner (1)

Beneficially Owned (2)

Najeeb Ghauri

Shahid Javed Burki

Patti McGlasson

Henry Tolentino

Moab Capital Partners LLC

All officers and directors as a group (eight persons)

of Beneficial Owner (1)

Capital Partners LLC

officers and directors as a group (nine persons)

Less than one percent

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power with respect to securities.

Shares of common stock relating to options currently exercisable or exercisable within 60 days

of September 16, 2019, are deemed outstanding for computing the percentage of the person holding such securities but are not deemed

outstanding for computing the percentage of any other person.

Except as indicated by footnote, and subject to community property

laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown

as beneficially owned by them.

Includes 20,000 and 7,886 shares issuable upon exercise of options exercisable within 60 days for

Najeeb Ghauri and Mr.

Naeem Ghauri, respectively.

Shares of common stock relating to share grants that will vest or options currently exercisable

or exercisable within 60 days of September 18, 2020, are deemed outstanding for computing the percentage of the person holding

such securities but are not deemed outstanding for computing the percentage of any other person.

Except as indicated by footnote,

and subject to community property laws where applicable, the persons named in the table above have sole voting and investment

power with respect to all shares shown as beneficially owned by them.

Address c/o NetSol Technologies, Inc.

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1, 2019 Note”) which was fully executed on April 1, 2019.

The maximum principal amount of the April 1, 2019 Note

is $600,000, and as of June 30, 2019, the Company had disbursed $400,000.

The April 1, 2019 Note bears interest at

10% per annum and all unpaid interest and principal is due and payable upon the Company’s request on or after March 31,

Subsequent to June 30, 2019, the Company disbursed an additional $35,000.

The maximum principal amount of the April 1, 2019 Note is $600,000,

and as of June 30, 2020, the Company had disbursed $600,000.

The April 1, 2019 Note bears interest at 10% per annum and all unpaid

interest and principal is due and payable upon the Company’s request on or after March 31, 2020.

Company entered into an agreement with WRLD3D, whereby the Company was issued a Convertible Promissory Note (the “August

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

audited the Company’s financial statements for the fiscal years ended June 30, 2019 and June 30, 2018.

The aggregate

fees billed by principal accountants for the annual audit and review of financial statements included in the Company’s Form

10-K, services related to providing an opinion in connection with our public offering of shares of common stock and/or services

that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the year ended

June 30, 2019 was $280,000 and for the year ended June 30, 2018 was $250,000.

The 2019 balances are comprised of audit and review

services of $280,000 for KSP Group, Inc.

The 2018 balances were comprised of audit and review services of $250,000 for KSP Group,

Borgers audited the Company’s financial statements for the fiscal year ended June 30, 2020 and KSP audited the Company’s

financial statements for the fiscal year ended June 30, 2019.

The aggregate fees billed by principal accountants for the annual

audit and review of financial statements included in the Company’s Form 10-K, services related to providing an opinion in

connection with our public offering of shares of common stock and/or services that are normally provided by the accountant in

connection with statutory and regulatory filings or engagements for the year ended June 30, 2020 was $250,000 and for the year

ended June 30, 2019 was $280,000.

fees for fiscal year 2020 were $15,000 and consisted of the preparation of the Company’s federal and state tax returns for

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annually by the Audit Committee:

the performance by the independent auditors of certain types of service (principally audit-related and tax), subject to restrictions

in some cases, based on the Committee’s determination that this would not be likely to impair the independent auditors’

Approves the performance by the independent auditors of certain types of service (principally audit-related and tax), subject

to restrictions in some cases, based on the Committee’s determination that this would not be likely to impair the independent

auditors’

independence from NetSol;

that management obtain the specific prior approval of the Audit Committee for each engagement of the independent auditors

Requires that management obtain the specific prior approval of the Audit Committee for each engagement of the independent auditors

to perform other types of permitted services;

the performance by the independent auditors of certain types of services due to the likelihood that their independence would

Prohibits the performance by the independent auditors of certain types of services due to the likelihood that their independence

would be impaired.

approval required under the policy must be given by the Audit Committee, by the Chairman of the Committee in office at the time,

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

Articles of Incorporation of Mirage Holdings, Inc., a Nevada corporation, dated March 18, 1997, incorporated by reference as Exhibit 3.1 to NetSol’s Registration Statement No.

of Incorporation of Mirage Holdings, Inc., a Nevada corporation, dated March 18, 1997, incorporated by reference as Exhibit

3.1 to NETSOL’s Registration Statement No.

333-28861 filed on Form SB-2 filed June 10, 1997.

Amendment to Articles of Incorporation dated May 21, 1999, incorporated by reference as Exhibit 3.2 to NetSol’s Annual Report for the fiscal year ended June 30, 1999 on Form 10K-SB filed September 28, 1999.

Amendment to the Articles of Incorporation of NetSol International, Inc.

dated March 20, 2002 incorporated by reference as Exhibit 3.3 to NetSol’s Annual Report on Form 10-KSB/A filed on February 2, 2001.

Amendment to the Articles of Incorporation of NetSol Technologies, Inc.

dated August 20, 2003 filed as Exhibit A to NetSol’s Definitive Proxy Statement filed June 27, 2003.

Amendment to the Articles of Incorporation of NetSol Technologies, Inc.

dated March 14, 2005 filed as Exhibit 3.0 to NetSol’s quarterly report filed on Form 10-QSB for the period ended March 31, 2005.

Amendment to the Articles of Incorporation dated October 18, 2006 filed as Exhibit 3.5 to NetSol’s Annual Report for the fiscal year ended June 30, 2007 on Form 10-KSB.

to Articles of Incorporation dated May 21, 1999, incorporated by reference as Exhibit 3.2 to NETSOL’s Annual Report

for the fiscal year ended June 30, 1999 on Form 10K-SB filed September 28, 1999.

to the Articles of Incorporation of NETSOL International, Inc.

dated March 20, 2002 incorporated by reference as Exhibit 3.3

to NETSOL’s Annual Report on Form 10-KSB/A filed on February 2, 2001.

to the Articles of Incorporation of NetSol Technologies, Inc.

dated August 20, 2003 filed as Exhibit A to NETSOL’s Definitive

Proxy Statement filed June 27, 2003.

to the Articles of Incorporation of NetSol Technologies, Inc.

dated March 14, 2005 filed as Exhibit 3.0 to NETSOL’s

quarterly report filed on Form 10-QSB for the period ended March 31, 2005.

to the Articles of Incorporation dated October 18, 2006 filed as Exhibit 3.5 to NETSOL’s Annual Report for the fiscal

year ended June 30, 2007 on Form 10-KSB.

to Articles of Incorporation dated May 12, 2008.

1 unchanged sentence

June 14, 2012.

Bylaws of Mirage Holdings, Inc., as amended and restated as of November 28, 2000 incorporated by reference as Exhibit 3.3 to NetSol’s Annual Report for the fiscal year ending in June 30, 2000 on Form 10K-SB/A filed on February 2, 2001.

Amendment to the Bylaws of NetSol Technologies, Inc.

dated February 16, 2002 incorporated by reference as Exhibit 3.5 to NetSol’s Registration Statement filed on Form S-8 filed on March 27, 2002.

and Restated Bylaws of NetSol Technologies, Inc.

dated February 9, 2018*.

of Common Stock Certificate.

Company 2003 Incentive and Nonstatutory incorporated by reference as Exhibit 99.1 to NetSol’s Definitive Proxy Statement filed February 6, 2004.

Stock Purchase Agreement dated May 6, 2006 by and between the Company, McCue Systems, Inc.

and the shareholders of McCue Systems, Inc.

Purchase Agreement dated May 6, 2006 by and between the Company, McCue Systems, Inc.

and the shareholders of McCue Systems,

incorporated by reference as Exhibit 2.1 to NETSOL’s Current Report filed on form 8-K on May 8, 2006.

Employment Agreement by and between NetSol Technologies, Inc.

McGlasson dated May 1, 2006 incorporated by reference as Exhibit 10.20 to NetSol’s Annual Report on form 10-KSB dated September 18, 2006.

Employment Agreement by and between the Company and Najeeb Ghauri dated January 1, 2007 filed as Exhibit 10.11 to the Company’s Annual Report filed on Form 10-KSB for the year ended June 30, 2007.

Employment Agreement by and between the Company and Naeem Ghauri dated January 1, 2007 filed as Exhibit 10.11 to the Company’s Annual Report filed on Form 10-KSB for the year ended June 30, 2007.

Amendment to Employment Agreement by and between Company and Najeeb Ghauri dated effective January 1, 2007.

Amendment to Employment Agreement by and between Company and Naeem Ghauri dated effective January 1, 2007.

Company 2005 Stock Option Plan incorporated by reference as Exhibit 1.1 to NetSol’s Definitive Proxy Statement filed on March 3, 2006.

Amendment to Employment Agreement by and between Company and Najeeb Ghauri dated effective January 1, 2010.

Amendment to Employment Agreement by and between Company and Naeem Ghauri dated effective January 1, 2010.

Amendment to Employment Agreement by and between Company and Patti L.

Agreement by and between NetSol Technologies, Inc.

McGlasson dated May 1, 2006 incorporated by reference as

Exhibit 10.20 to NETSOL’s Annual Report on form 10-KSB dated September 18, 2006.

Agreement by and between the Company and Najeeb Ghauri dated January 1, 2007 filed as Exhibit 10.11 to the Company’s

Annual Report filed on Form 10-KSB for the year ended June 30, 2007.

Agreement by and between the Company and Naeem Ghauri dated January 1, 2007 filed as Exhibit 10.11 to the Company’s

Annual Report filed on Form 10-KSB for the year ended June 30, 2007.

to Employment Agreement by and between Company and Najeeb Ghauri dated effective January 1, 2007.

to Employment Agreement by and between Company and Naeem Ghauri dated effective January 1, 2007.

2005 Stock Option Plan incorporated by reference as Exhibit 1.1 to NETSOL’s Definitive Proxy Statement filed on March

to Employment Agreement by and between Company and Najeeb Ghauri dated effective January 1, 2010.

to Employment Agreement by and between Company and Naeem Ghauri dated effective January 1, 2010.

to Employment Agreement by and between Company and Patti L.

McGlasson dated effective April 1, 2010.

Company’s 2011 Equity Incentive and Nonstatutory Plan incorporated by reference as Appendix A to NetSol’s Proxy Statement filed on April 11, 2011.

Company’s 2013 Equity Incentive Plan incorporated by reference as Appendix A to NetSol’s Definitive Proxy Statement filed on May 29, 2013.

Amendment to Employment Agreement between NetSol Technologies, Inc.

Company’s

2011 Equity Incentive and Nonstatutory Plan incorporated by reference as Appendix A to NETSOL’s Proxy Statement filed

on April 11, 2011.

Company’s

2013 Equity Incentive Plan incorporated by reference as Appendix A to NETSOL’s Definitive Proxy Statement filed on May

to Employment Agreement between NetSol Technologies, Inc.

and Najeeb Ghauri dated effective July 25, 2013.

Amendment to Employment Agreement between NetSol Technologies, Inc.

to Employment Agreement between NetSol Technologies, Inc.

and Patti L.W.

McGlasson dated effective July 25, 2013.

Restated Charter of the Compensation Committee dated effective September 10, 2013.

Restated Charter of the Nominating and Corporate Governance Committee dated effective September 10, 2013.

Charter of the Compensation Committee dated effective September 10, 2013.

Charter of the Nominating and Corporate Governance Committee dated effective September 10, 2013.

Charter of the Audit Committee dated effective September 10, 2013.

Code of Business Conduct & Ethics dated effective September 10, 2013.

Company’s 2015 Equity Incentive Plan incorporated by reference as Appendix A to NetSol’s Definitive Proxy Statement filed on April 15, 2015.

A list of all subsidiaries of the Company (1)

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO) (1)

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO) (1)

Certification pursuant to 18 U.S.C.

Company’s

2015 Equity Incentive Plan incorporated by reference as Appendix A to NETSOL’s Definitive Proxy Statement filed on April

list of all subsidiaries of the Company (1)

Certification

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO) (1)

Certification

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO) (1)

Certification

pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO) (1)

Certification pursuant to 18 U.S.C.

Certification

pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002 (CFO) (1)

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September 28, 2020

SHAHID JAVED BURKI

September 28, 2020

September 23, 2019

HENRY TOLENTINO

3 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of June 30, 2019 and 2018

of Independent Registered Public Accounting Firm

Balance Sheets as of June 30, 2020 and 2019

Statements of Operations and Comprehensive Income (Loss) for the Years Ended June 30, 2020 and 2019

Consolidated Statement of Equity for the Years Ended June 30, 2019 and 2018

Consolidated Statements of Cash Flows for the Years Ended June 30, 2019 and 2018

Notes to Consolidated Financial Statements

Statement of Equity for the Years Ended June 30, 2020 and 2019

Statements of Cash Flows for the Years Ended June 30, 2020 and 2019

to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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on the Financial Statements

have audited the accompanying consolidated balance sheets of NetSol Technologies, Inc.

have audited the accompanying consolidated balance sheet of NetSol Technologies, Inc.

and subsidiaries (the “Company”)

as of June 30, 2019 and 2018, and the related consolidated statements of operations, comprehensive income (loss), stockholders’

equity and cash flows for each of the two years in the period then ended.

In our opinion, the consolidated financial statements

present fairly, in all material respects, the consolidated financial positions of NetSol Technologies, Inc.

and subsidiaries as

of June 30, 2019 and 2018 and the results of their operations and their cash flows for each of the two years in the period then

ended in conformity with accounting principles generally accepted in the United States of America.

as of June 30, 2019, and the related consolidated statement of operations, comprehensive income (loss), stockholders’

and cash flow for the period then ended.

In our opinion, the consolidated financial statements present fairly, in all material

respects, the consolidated financial positions of NetSol Technologies, Inc.

and subsidiaries as of June 30, 2019 and the results

of their operations and their cash flows for the period then ended in conformity with accounting principles generally accepted

in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on these consolidated financial statements based on our audits.

opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public

2 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

conducted our audits of these consolidated financial statements in accordance with the standards of the Public Company Accounting

conducted our audit of these consolidated financial statements in accordance with the standards of the Public Company Accounting

Oversight Board (United States).

4 unchanged sentences

As part of our

audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

1 unchanged sentence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We believe that our audit provides a reasonable basis for our opinion.

KSP Group, Inc.

1 unchanged sentence

have served as the Company’s auditor since 2017.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Technologies, Inc.

and subsidiaries

Consolidated Balance Sheets

As of June 30,

on the Financial Statements

have audited the accompanying consolidated balance sheet of NetSol Technologies, Inc.

and subsidiaries (the “Company”)

as of June 30, 2020, and the related consolidated statement of operations, comprehensive income (loss), stockholders’

and cash flow for the period then ended.

In our opinion, the consolidated financial statements present fairly, in all material

respects, the consolidated financial positions of NetSol Technologies, Inc.

and subsidiaries as of June 30, 2020 and the results

of their operations and their cash flows for the period then ended in conformity with accounting principles generally accepted

in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an

opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

conducted our audit of these consolidated financial statements in accordance with the standards of the Public Company Accounting

Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about

whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is

not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our

audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

BF Borgers CPA PC.

PUBLIC ACCOUNTANTS

have served as the Company’s auditor since 2020.

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Balance Sheets

and cash equivalents

receivable, net of allowance of $435,611 and $192,786

receivable, net of allowance of $90,594 and $166,075 - related party

in excess of billings, net of allowance of $188,914 and $194,684

in excess of billings - related party

current assets

Cash and cash equivalents

Accounts receivable, net of allowance of $192,786 and $610,061

Accounts receivable, net of allowance of $166,075 and $0 - related party

Revenues in excess of billings, net of allowance of $194,684 and $0

Revenues in excess of billings - related party

current assets

in excess of billings, net - long term

Convertible note receivable - related party

Other current assets

Total current assets

Revenues in excess of billings, net - long term

Property and equipment, net

Long term investment

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’

and equipment, net

of use of assets - operating leases

term investment

AND STOCKHOLDERS’

payable and accrued expenses

portion of loans and obligations under finance leases

portion of operating lease obligations

stock to be issued

current liabilities

Accounts payable and accrued expenses

Current portion of loans and obligations under capitalized leases

Unearned revenues

Common stock to be issued

Total current liabilities

Loans and obligations under capitalized leases;

and obligations under finance leases;

less current maturities

Total liabilities

Commitments and contingencies

lease obligations;

less current maturities

and contingencies

Stockholders’

Preferred stock, $.01 par value;

stock, $.01 par value;

500,000 shares authorized;

Common stock, $.01 par value;

stock, $.01 par value;

14,500,000 shares authorized;

11,911,742 shares issued and 11,664,239 outstanding as of June 30, 2019 and 11,708,469 shares issued and 11,502,616 outstanding as of June 30, 2018

Additional paid-in-capital

Treasury stock (At cost, 247,503 shares and 205,853 shares as of June 30, 2019 and June 30, 2018, respectively)

Accumulated deficit

12,122,149 shares issued and 11,874,646 outstanding as of June 30, 2020

and 11,911,742 shares issued and 11,664,239 outstanding as of June 30, 2019

paid-in-capital

stock (at cost, 247,503 shares as of June 30, 2020 and 2019)

(34,269,817 )

(35,206,898 )

Stock subscription receivable

Other comprehensive loss

comprehensive loss

(34,085,047 )

(33,125,006 )

Total NetSol stockholders’

Non-controlling interest

Total stockholders’

Total liabilities and stockholders’

NetSol stockholders’

Non-controlling

stockholders’

liabilities and stockholders’

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

Consolidated Statements of Operations

For the Years

Ended June 30,

Net Revenues:

Maintenance fees

License fees - related party

Maintenance fees - related party

Services - related party

Total net revenues

Statements of Operations

- related party

and consultants

and amortization

cost of revenues

Salaries and consultants

Depreciation and amortization

Total cost of revenues

and marketing

and amortization

and administrative

and development cost

operating expenses

Selling and marketing

Depreciation and amortization

General and administrative

Research and development cost

Total operating expenses

Income (loss) from operations

Other income and (expenses)

Gain (loss) on sale of assets

Interest expense

Interest income

Gain on foreign currency exchange transactions

Share of net loss from equity investment

Total other income (expenses)

Net income before income taxes

Income tax provision

Non-controlling interest

Net income attributable to NetSol

Net income per share:

Net income per common share

Weighted average number of shares outstanding

(loss) from operations

income and (expenses)

on sale of assets

on foreign currency exchange transactions

of net loss from equity investment

other income (expenses)

income before income taxes

tax provision

Non-controlling

income attributable to NetSol

income per share:

income per common share

Weighted average

number of shares outstanding

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

For the Years

Ended June 30,

Other comprehensive income (loss):

Translation adjustment

(13,463,469 )

Translation adjustment attributable to non-controlling interest

Net translation adjustment

Comprehensive loss attributable to NetSol

Statements of Comprehensive Income (Loss)

comprehensive income (loss):

(13,463,469 )

adjustment attributable to non-controlling interest

translation adjustment

Comprehensive

income (loss) attributable to NetSol

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

Consolidated Statement of Stockholders’

For the Years Ended June 30, 2019 and 2018

Statement of Stockholders’

the Years Ended June 30, 2020 and 2019

Stockholders’

Balance at June 30, 2017

at June 30, 2018

$ 126,479,147

1 unchanged sentence

$ (37,994,502 )

Exercise of common stock options

Exercise of subsidiary common stock options

Common stock issued for:

Purchase of treasury shares

Equity component shown as current liability at

June 30, 2017

June 30, 2018

Acquisition of non-controlling interest in subsidiary

Dividend to non-controlling interest

Payment received for stock subscription

Foreign currency translation adjustment

Net income for the year

Balance at June 30, 2018

$ (24,386,071 )

in retained earnings on adoption of ASC 606

of common stock options

of subsidiary common stock options

stock issued for:

of treasury shares

component shown as current liability at

value of options extended

of non-controlling interest in subsidiary

to non-controlling interest

in subscription receivable

currency translation adjustment

income for the year

at June 30, 2019

$ 127,737,999

1 unchanged sentence

$ (35,206,898

$ (33,125,006

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

Consolidated Statement of Stockholders’

For the Years Ended June 30, 2019 and 2018

Statement of Stockholders’

the Years Ended June 30, 2020 and 2019

Stockholders’

Balance at June 30, 2018

$ 126,479,147

$ (1,205,024 )

at June 30, 2019

$ 127,737,999

$ (1,455,969 )

Adjustment in retained earnings on adoption of ASC 606

$ (35,206,898 )

$ (33,125,006 )

Exercise of common stock options

Exercise of subsidiary common stock options

of subsidiary common stock options

common stock issued for:

Purchase of treasury shares

Equity component shown as current liability at

June 30, 2018

June 30, 2019

Fair value of options extended

Acquisition of non-controlling interest in subsidiary

Dividend to non-controlling interest

Adjustment in subscription receivable

Foreign currency translation adjustment

(13,463,469 )

Net income for the year

Balance at June 30, 2019

stock issued for:

component shown as current liability at

of non-controlling interest in subsidiary

to non-controlling interest

currency translation adjustment

income for the year

at June 30, 2020

$ 128,677,754

5 unchanged sentences

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Years

Ended June 30,

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Provision for bad debts

Impairment of assets

Share of net loss from investment under equity method

Gain on sale of assets

Stock based compensation

Fair market value of stock options

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable - related party

Revenues in excess of billing

Statements of Cash Flows

flows from operating activities:

to reconcile net income to net cash provided by operating activities:

and amortization

for bad debts

of net loss from investment under equity method

on sale of assets

based compensation

market value of stock options

in operating assets and liabilities:

receivable - related party

in excess of billing

(10,764,428 )

Revenues in excess of billing - related party

Other current assets

Accounts payable and accrued expenses

Unearned revenue

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sales of property and equipment

Convertible note receivable - related party

Investment in associates

Purchase of subsidiary shares

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from the exercise of stock options and warrants

Proceeds from exercise of subsidiary options

Purchase of treasury stock

Dividend paid by subsidiary to non-controlling interest

Proceeds from bank loans

Payments on capital lease obligations and loans - net

Net cash provided by (used in) financing activities

Effect of exchange rate changes

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of period

in excess of billing - related party

current assets

payable and accrued expenses

cash provided by operating activities

flows from investing activities:

of property and equipment

note receivable - related party

in associates

of subsidiary shares

cash used in investing activities

flows from financing activities:

from the exercise of stock options and warrants

from exercise of subsidiary options

of treasury stock

paid by subsidiary to non-controlling interest

from bank loans

on finance lease obligations and loans - net

cash provided by financing activities

of exchange rate changes

decrease in cash and cash equivalents

and cash equivalents at beginning of the period

and cash equivalents at end of period

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

For the Years

Ended June 30,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Provided services for investment in WRLD3D

Assets acquired under capital lease

Amount accrued for the purchase of VLS

Statements of Cash Flows (Continued)

paid during the period for:

INVESTING AND FINANCING ACTIVITIES:

acquired under finance lease

accrued for the purchase of VLS

recognized under operating lease

accompanying notes are an integral part of these consolidated financial statements.

NETSOL TECHNOLOGIES, INC.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

13 unchanged sentences

owned Subsidiaries

NetSol Technologies Americas, Inc.

Technologies Americas, Inc.

(“NTA”)

NetSol Connect (Private), Ltd.

Connect (Private), Ltd.

(“Connect”)

NetSol Technologies Australia Pty Ltd.

Technologies Australia Pty Ltd.

(“Australia”)

NetSol Technologies Europe Limited (“NTE”)

NTPK (Thailand) Co.

Technologies Europe Limited (“NTE”)

(Thailand) Co.

Limited (“NTPK Thailand”)

3 unchanged sentences

Lease Services Holdings Limited (“VLSH”)

Virtual Lease Services Limited (“VLS”)

Virtual Lease Services (Ireland) Limited (“VLSIL”)

Lease Services Limited (“VLS”)

Lease Services (Ireland) Limited (“VLSIL”)

Majority-owned

NetSol Technologies, Ltd.

Technologies, Ltd.

(“NetSol PK”)

NetSol Innovation (Private) Limited (“NetSol Innovation”)

NetSol Technologies Thailand Limited (“NetSol Thai”)

Innovation (Private) Limited (“NetSol Innovation”)

Technologies Thailand Limited (“NetSol Thai”)

(“OTOZ”)

(Thailand) Limited (“OTOZ Thai”)

Company consolidates any variable interest entities of which it is the primary beneficiary.

5 unchanged sentences

material inter-company accounts have been eliminated in the consolidation.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

comparative purposes, prior year’s consolidated financial statements have been reclassified to conform to report classifications

of the current period.

Below is the table of reclassified amounts:

the Year ended

fees - related party

- related party

Cost of revenues:

and administrative

of Presentation

10 unchanged sentences

Actual results could differ from those estimates.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

and Cash Equivalents

8 unchanged sentences

Balances at financial institutions within certain foreign countries are not

covered by insurance.

As of June 30, 2019 and 2018, the Company had uninsured deposits related to cash deposits in accounts maintained

within foreign entities of approximately $16,124,339 and $20,933,224, respectively.

The Company has not experienced any losses

in such accounts.

covered by insurance, except balances maintained in China are insured for RMB500,000 ($70,721) in each bank.

The Company maintains

two bank accounts in China.

As of June 30, 2020 and 2019, the Company had uninsured deposits related to cash deposits

in accounts maintained within foreign entities of approximately $18,210,378 and $16,124,339, respectively.

The Company has not

experienced any losses in such accounts.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

Company’s operations are carried out globally.

28 unchanged sentences

Receivable.”

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

Company uses the cost method to account for investments in businesses that are not publicly traded and for which the Company does

not control or have the ability to exercise significant influence over operating and financial policies.

In accordance with the

cost method, these investments are recorded at lower of cost or fair value, as appropriate, and are classified as long-term.

Company uses the equity investment without readily determinable fair value method to account for investments in businesses

that are not publicly traded and for which the Company does not control or have the ability to exercise significant influence

over operating and financial policies.

In accordance with this method, these investments are recorded at lower of cost

or fair value, as appropriate, and are classified as long-term.

held by the Company in businesses that are not publicly traded and for which the Company has the ability to exercise significant

6 unchanged sentences

and losses are recognized when realized and recorded in other income (expense) in the accompanying Consolidated Statements of

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

and Equipment

28 unchanged sentences

loss based on the excess of the carrying amount over the fair value of the assets.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

Development Costs

12 unchanged sentences

development costs are being amortized ratably based on the projected revenue associated with the related software or on a straight-line

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

and Development Costs

37 unchanged sentences

financial assets that are measured at fair value on a recurring basis as of June 30, 2020 are as follows:

Revenues in excess of billing - long term

in excess of billings - long term

financial assets that are measured at fair value on a recurring basis as of June 30, 2019, are as follows:

Revenues in excess of billing - long term

reconciliation from June 30, 2018 to June 30, 2019 is as follows:

Revenues in excess of billing - long term

Fair value discount

Balance at June 30, 2017

Transfers to short term

Amortization during the period

Balance at June 30, 2018

Effect of ASC 606 adoption

Balance at June 30, 2019

Company used the discounted cash flow method with interest rates ranging from 3.87% to 4.43% during the years ended June 30, 2019

in excess of billing - long term

reconciliation for the years ended June 30, 2020 and 2019 is as follows:

in excess of billings - long term

value discount

at June 30, 2018

of ASC 606 adoption

June 30, 2019

during the period

of Translation Adjustment

at June 30, 2020

Company used the discounted cash flow method with an interest rate of 4.35% during the years ended June 30, 2020 and 2019.

analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities

58 unchanged sentences

NetSol PK, Connect, Omni and NetSol Innovation use Pakistan Rupees;

NTPK Thailand and NetSol Thai use Thai

NTPK Thailand, NetSol Thai and OTOZ Thai

use Thai Baht;

NetSol Australia uses the Australian dollar;

and NetSol Beijing uses the Chinese Yuan as the functional currencies.

Technologies, Inc., and its subsidiary, NTA, use the U.S.

NetSol Technologies, Inc., and its subsidiaries, NTA and OTOZ, use the U.S.

dollar as the functional currency.

Consequently, revenues and expenses

of operations outside the United States are translated into U.S.

Dollars using average exchange rates while assets and liabilities

of operations outside the United States are translated into U.S.

Dollars using exchange rates at the balance sheet date.

of foreign currency translation adjustments are recorded to other comprehensive income.

Accumulated translation losses classified

as an item of accumulated other comprehensive loss in the stockholders’

equity section of the consolidated balance sheets

were $33,125,006 and $24,386,071 as of June 30, 2019 and 2018, respectively.

During the years ended June 30, 2019 and 2018, comprehensive

income (loss) in the consolidated statements of operations included NetSol’s share of translation loss of $8,738,935 and

$6,311,501, respectively.

foreign exchange transaction gains (losses) included in non-operating income (expense) in the accompanying consolidated statements

of operations were gains of $6,345,859 and $5,010,383 for the years ended June 30, 2019 and 2018, respectively.

Consequently, revenues

and expenses of operations outside the United States are translated into U.S.

Dollars using average exchange rates while assets

and liabilities of operations outside the United States are translated into U.S.

Dollars using exchange rates at the balance sheet

The effects of foreign currency translation adjustments are recorded to other comprehensive income.

TECHNOLOGIES, INC.

12 unchanged sentences

Accounting Standards Adopted by the Company:

August 2018, the Securities and Exchange Commission issued Release No.

33-10532 that amends and clarifies certain financial reporting

requirements.

The principal change to the Company’s financial reporting is the inclusion of the annual disclosure requirement

of changes in stockholders’

equity in Rule 3-04 of Regulation S-X to interim periods.

The Company adopted this new rule

beginning the quarter ended September 30, 2018.

May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue

recognition requirements in Revenue Recognition (Topic 605) and Subtopic 985-605 Software - Revenue Recognition .

Topic 605 and Subtopic 985-605 are collectively referred to as “Topic 605”

or “prior GAAP.”

606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration

to which the entity expects to be entitled in exchange for those goods or services.

In addition, Topic 606 requires enhanced disclosures,

including disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Company adopted Topic 606 on the first day of fiscal 2019 using the modified retrospective transition method.

Under this method,

the Company evaluated contracts that were in effect at the beginning of fiscal 2019 as if those contracts had been accounted for

under Topic 606.

The Company did not evaluate individual modifications for those periods prior to the adoption date, but the aggregate

effect of all modifications as of the adoption date and such effects are provided below.

Under the modified retrospective transition

method, periods prior to the adoption date were not adjusted and continue to be reported in accordance with historical, pre-Topic

606 accounting.

A cumulative catch-up adjustment was recorded to beginning accumulated deficit to reflect the impact of all existing

arrangements under Topic 606.

a result of adopting ASC 606, the Company recorded a net decrease of $5,795,795 to opening accumulated deficit and $2,957,860

to non-controlling interest as of July 1, 2018 as a cumulative catch-up adjustment for all open contracts as of the date of adoption.

The most significant drivers of this adjustment related to the allocation of revenue to certain performance obligations on a stand-alone

selling price basis.

Specifically, contracts with one customer were required to be aggregated under the guidance of ASC 606, resulting

in additional revenue allocated to the maintenance services under these contracts.

Under the guidance of ASC 605, the Company

had recognized one of these contracts as a stand-alone and separate contract with this customer, which resulted in additional

revenue allocated to the license and services that had previously been delivered to this customer.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

following table presents the cumulative effect adjustments, net of income tax effects, to beginning consolidated balance sheet

accounts for the new accounting standards adopted by the Company on the first day of fiscal 2019:

June 30, 2018

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance of $610,061 and $571,511

Accounts receivable, net - related party

Revenues in excess of billings

Convertible note receivable - related party

Other current assets

Total current assets

Revenues in excess of billings, net - long term

Property and equipment, net

Long term investment

Intangible assets, net

$ (8,535,481 )

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

Accounts payable and accrued expenses

Current portion of loans and obligations under capitalized leases

Unearned revenues

Common stock to be issued

Total current liabilities

Loans and obligations under capitalized leases;

less current maturities

Total liabilities

Commitments and contingencies

Stockholders’

Preferred stock, $.01 par value;

500,000 shares authorized;

Common stock, $.01 par value;

14,500,000 shares authorized;

11,708,469 shares issued and 11,502,616 outstanding as of

June 30, 2018 and 11,225,385 shares issued and 11,190,606 outstanding as of June 30, 2017

Additional paid-in-capital

Treasury stock (At cost, 205,853 shares and 34,779 shares as of June 30, 2018 and June 30, 2017, respectively)

Accumulated deficit

(37,994,502 )

(43,790,297 )

Stock subscription receivable

Other comprehensive loss

(24,386,071 )

Total NetSol stockholders’

Non-controlling interest

Total stockholders’

Total liabilities and stockholders’

$ (8,535,481 )

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

following table presents the cumulative effect adjustments, net of income tax effects, to beginning consolidated balance sheet

accounts for the new accounting standards adopted by the Company as of June 30, 2019:

As reported under

Balances under

June 30, 2019

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance of $192,786 and $610,061

Accounts receivable, net of allowance of $166,075 and $0 - related party

Revenues in excess of billings, net of allowance of $194,684 and $0

Revenues in excess of billings - related party

Convertible note receivable - related party

Other current assets

Total current assets

Revenues in excess of billings, net - long term

Property and equipment, net

Long term investment

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

Accounts payable and accrued expenses

Current portion of loans and obligations under capitalized leases

Unearned revenues

Common stock to be issued

Total current liabilities

Loans and obligations under capitalized leases;

less current maturities

Total liabilities

Commitments and contingencies

Stockholders’

Preferred stock, $.01 par value;

500,000 shares authorized;

Common stock, $.01 par value;

14,500,000 shares authorized;

11,911,742 shares issued and 11,664,239 outstanding as of

June 30, 2019 and 11,708,469 shares issued and 11,502,616 outstanding as of June 30, 2018

Additional paid-in-capital

Treasury stock (At cost, 247,503 shares and 205,853 shares as of June 30, 2019 and June 30, 2018, respectively)

Accumulated deficit

(35,206,898 )

(27,516,325 )

Stock subscription receivable

Other comprehensive loss

(33,125,006 )

Total NetSol stockholders’

Non-controlling interest

Total stockholders’

Total liabilities and stockholders’

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

following table summarizes the effects of adopting Topic 606 on the Company’s Consolidated Statement of Income

for the year ended June 30, 2019:

Ended June 30, 2019

As reported under

Net Revenues:

Maintenance fees

License fees - related party

Maintenance fees - related party

Services - related party

Total net revenues

Cost of revenues:

Salaries and consultants

Depreciation and amortization

Total cost of revenues

Operating expenses:

Selling and marketing

Depreciation and amortization

General and administrative

Research and development cost

Total operating expenses

Income from operations

Other income and (expenses)

Gain (loss) on sale of assets

Interest expense

Interest income

Gain on foreign currency exchange transactions

Share of net loss from equity investment

Total other income (expenses)

Net income before income taxes

Income tax provision

Non-controlling interest

Net income attributable to NetSol

Net income per share:

Net income per common share

Weighted average number of shares outstanding

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

following table summarizes the effects of adopting Topic 606 on the financial statement line items of the Company’s Consolidated

Statement of Cash Flows for the year ended June 30, 2019:

Ended June 30, 2019

As reported under

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Provision for bad debts

Share of net loss from investment under equity method

Loss on sale of assets

Stock based compensation

Fair market value of stock options

Accounts receivable

Accounts receivable - related party

Revenues in excess of billing

(10,764,428 )

(12,936,705 )

Revenues in excess of billing - related party

Other current assets

Accounts payable and accrued expenses

Unearned revenue

Net cash provided

by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sales of property and equipment

Convertible note receivable - related party

Investment in associates

Purchase of subsidiary shares from open market

Net cash used in

investing activities

Cash flows from financing activities:

Proceeds from the exercise of stock options and warrants

Proceeds from exercise of subsidiary options

Purchase of treasury stock

Dividend paid by subsidiary to non-controlling interest

Proceeds from bank loans

Payments on capital lease obligations and loans - net

Net cash provided

by financing activities

Effect of exchange rate changes

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of period

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

Standards Recently Issued but Not Yet Adopted by the Company:

February 2016, the FASB issued ASU 2016-02, Leases , which requires lessees to recognize right-of-use assets and lease liabilities,

for all leases, with the exception of short-term leases, at the commencement date of each lease.

This ASU requires lessees to

apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease

is effectively a financed purchase by the lessee.

This classification will determine whether lease expense is recognized based

on an effective interest method or on a straight-line basis over the term of the lease.

This ASU is effective for annual periods

beginning after December 15, 2018 and interim periods within those annual periods.

Early adoption is permitted.

The amendments

of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and

measure leases at the beginning of the earliest period presented.

The Company is currently evaluating its lease portfolio;

system needs to support adoption of the new lease standard;

and analyzing procedural changes, including updating our lease accounting

policy as needed to reflect the new requirements of this standard.

The Company continues to evaluate the impact that these changes

in methodology will have on its financial condition, results of operations and disclosures.

January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment .

Under the new standard, goodwill

impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed

the carrying value of goodwill.

This ASU eliminates existing guidance that requires an entity to determine goodwill impairment

by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its

assets and liabilities as if that reporting unit had been acquired in a business combination.

This update is effective for annual

periods beginning after December 15, 2019, and interim periods within those periods.

Early adoption is permitted for interim or

annual goodwill impairment test performed on testing dates after January 1, 2017.

The Company will apply this guidance to applicable

impairment tests after the adoption date.

February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016-02, Leases (Topic 842).

This pronouncement requires lessees to recognize a liability for lease obligations, which represents

the discounted obligation to make future lease payments, and a corresponding right-of-use (“ROU”) asset on the balance

The Company adopted ASU 2016-02, along with related clarifications and improvements, as of July 1, 2019, using the modified

retrospective approach, which allows the Company to apply ASC 840, Leases, in the comparative periods presented in the year of

Accordingly, the comparative periods and disclosures have not been restated.

Company elected the package of practical expedients to not reassess:

a contract is or contains a lease

classification

Additionally,

the Company adopted the policy election to not recognize ROU assets and lease liabilities for short-term leases for all asset

of the new standard resulted in the recording of a non-cash transitional adjustment to ROU assets and lease liabilities of approximately

$3,011,814 and $3,091,236, respectively, as of July 1, 2019.

The difference between the ROU assets and lease liabilities represented

existing deferred rent expense and prepaid rent that were derecognized and adjusted ROU assets in the Consolidated Balance

The adoption of ASU 2016-02 did not materially impact the results of operations or cash flows.

July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260);

12 unchanged sentences

Early adoption is permitted, including adoption in an interim period.

The Company is currently in the process of evaluating the

impact of the adoption of this standard on its consolidated financial statements.

February 2018, the FASB issued ASU 2018-02, “

Income Statement—Reporting Comprehensive Income (Topic 220):

Reclassification

of Certain Tax Effects from Accumulated Other Comprehensive Income.”

This ASU allows a reclassification from accumulated

other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act.

Consequently, the amendments

eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial

statement users.

However, because the amendments only relate to the reclassification of the income tax effects of the Tax Act,

the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations

is not affected.

The amendments in this ASU also require certain disclosures about stranded tax effects.

The amendments in this

ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the

change in the U.S.

federal corporate income tax rate in the Tax Act is recognized.

The amendments in this ASU are effective for

all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

The Company is

currently in the process of evaluating the impact of adoption of this standard on its consolidated financial statements.

The adoption of this standard did not materially impact

the results of operations or cash flows.

Standards Recently Issued but Not Yet Adopted by the Company:

January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment .

Under the new standard, goodwill

impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed

the carrying value of goodwill.

This ASU eliminates existing guidance that requires an entity to determine goodwill impairment

by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its

assets and liabilities as if that reporting unit had been acquired in a business combination.

This update is effective for annual

periods beginning after December 15, 2019, and interim periods within those periods.

Early adoption is permitted for interim or

annual goodwill impairment test performed on testing dates after January 1, 2017.

The Company will apply this guidance to applicable

impairment tests after the adoption date.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

June 2018, the FASB issued ASU 2018-07 “Compensation —

Stock compensation —

Improvements to Nonemployee Share-Based

Payment Accounting”

This update aims to simplify the accounting for share-based payments awarded to non-employees for

goods or services acquired.

The update specifies that the measurement date is the grant date and that awards are required to be

measured at fair value.

The amendments in this update are effective for fiscal years beginning after December 15, 2018, including

interim periods within those fiscal years.

The Company is currently in the process of evaluating the impact of adoption of this

standard on its consolidated financial statements.

August 2018, the FASB issued ASU No.

2018-13, “

Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to

the Disclosure Requirements for Fair Value Measurement,”

which is designed to improve the effectiveness of disclosures

by removing, modifying and adding disclosures related to fair value measurements.

The update is effective for the Company on July

1, 2020, with early adoption permitted.

The Company is currently assessing the impact this update will have on its consolidated

financial statements.

August 2018, the FASB issued ASU 2018-15, “

Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s

Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract .”

The amendments

in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service

contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and

hosting arrangements that include an internal-use software license).

The accounting for the service element of a hosting arrangement

that is a service contract is not affected by the amendments in this update.

The amendments in this update are effective for the

Company on July 1, 2020, with early adoption permitted.

The amendments in this update should be applied either retrospectively

or prospectively to all implementation costs incurred after the date of adoption.

The Company is in the process of assessing the

impact of the amendments in this update but does not expect it to have a material impact on the Company’s consolidated financial

June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (“ASU 2016-13”) .

accounting standard update changes the accounting for recognizing impairments of financial assets.

Under the update, credit losses

for certain types of financial instruments will be estimated based on expected losses.

The update also modifies the impairment

models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination.

This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company is currently in the process of evaluating

the impact of the adoption of this standard on its consolidated financial statements.

other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

26 unchanged sentences

do not have the contractual right to take possession of the software.

Company generates its non-core revenue by providing business process outsourcing (“BPO”), other IT services and internet

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

Company generates its non-core revenue by providing business process outsourcing (“BPO”), other IT services and internet

performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account

30 unchanged sentences

payment within 30 days of invoice.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

from professional services is typically comprised of implementation, development, data migration, training or other consulting

10 unchanged sentences

upon consumption of the hourly resources and payments are typically due 30 days after invoice.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

and Internet Services

8 unchanged sentences

Company’s disaggregated revenue by category is as follows:

For the Years

Ended June 30,

License - related party

Maintenance fees - related party

Services - related party

Total core revenue, net

Services - related party

Total non-core revenue, net

Total net revenue

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

- related party

core revenue, net

non-core revenue, net

judgments and estimates are required under Topic 606 than were required under Topic 605.

16 unchanged sentences

the Company’s software license, and the (2) the method of recognizing revenue for installation/customization, and other

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

stand-alone selling price of the licenses was measured primarily through an analysis of pricing that management evaluated when

35 unchanged sentences

in the contract price only when it is probable that a significant reversal in the amount of revenue recognized will not occur.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in receivables,

7 unchanged sentences

completion of a milestone.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

Company’s revenues in excess of billings and deferred revenue are as follows:

June 30, 2020

Revenues in excess of billings

Deferred Revenue

June 30, 2019

in excess of billings

the year ended June 30, 2020, the Company recognized revenue of $5,977,736, which was included in the deferred revenue balance

as adjusted for Topic 606, at the beginning of the period.

All other activity in deferred revenue is due to the timing of invoicing

in relation to the timing of revenue recognition.

at the beginning of the period.

All other activity in deferred revenue is due to the timing of invoicing in relation to the timing

of revenue recognition.

allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that

17 unchanged sentences

in future periods are included in accounts receivable and deferred revenue.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

Expedients and Exemptions

3 unchanged sentences

from the transfer of the promised items to the customer.

The Company generally expenses sales commissions and sales agent fees when incurred when the amortization period would have

been one year or less or the commissions are based on cashed received.

These costs are recorded within sales and marketing

expense in the Consolidated Statement of Operations.

The Company generally expenses sales commissions and sales agent fees when incurred when the amortization period would have been

one year or less or the commissions are based on cashed received.

These costs are recorded within sales and marketing expense

in the Consolidated Statement of Operations.

The Company does not disclose the value of unsatisfied performance obligations for contracts for which the Company recognizes

revenue at the amount to which it has the right to invoice for services performed (applies to time-and-material

engagements).

revenue at the amount to which it has the right to invoice for services performed (applies to time-and-material engagements).

Retrospective Transition Adjustments

For contract modifications, the Company reflected the aggregate effect of all modifications that occurred prior to the

adoption date when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and

allocating the transaction price to satisfied and unsatisfied performance obligations for the modified contract at

For contract modifications, the Company reflected the aggregate effect of all modifications that occurred prior to the adoption

date when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating

the transaction price to satisfied and unsatisfied performance obligations for the modified contract at transition.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

to Obtain a Contract

7 unchanged sentences

The Company’s sales

personnel are required to perform additional duties beyond new customer contract inception dates, including fulfilment duties

and collections efforts.

personnel are required to perform additional duties beyond new customer contract inception dates, including fulfillment

duties and collections efforts.

EARNINGS PER SHARE

4 unchanged sentences

outstanding stock options and stock awards.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

components of basic and diluted earnings per share were as follows:

For the year ended June 30, 2019

Basic income per share:

Net income available to common shareholders

Effect of dilutive securities

Stock options

Diluted income per share

For the year ended June 30, 2018

Basic income per share:

Net income available to common shareholders

Effect of dilutive securities

Stock options

Diluted income per share

RELATED PARTY TRANSACTIONS

NetSol-Innovation

November 2004, the Company entered into a joint venture agreement called NetSol Innovation with 1insurer, formerly Innovation

NetSol-Innovation provides support services to 1insurer.

During the years ended June 30, 2019 and 2018, NetSol Innovation

provided services of $67,286 and $3,286,649, respectively.

Accounts receivable, net of allowance at June 30, 2019 and 2018 were

$2,130,041 and $2,521,533, respectively.

Asset Finance

October 2011, NTE entered into an agreement with Investec Asset Finance to acquire VLS.

NTE and VLS provide support services to

During the years ended June 30, 2019 and 2018, NTE and VLS provided maintenance and services of $1,150,254 and $2,111,315,

respectively.

Accounts receivable at June 30, 2019 and 2018 were $115,970 and $379,521, respectively.

May 31, 2017, Faizaan Ghauri, son of CEO Najeeb Ghauri, and an employee of the Company was appointed CEO of WRLD3D, a non-public

On March 2, 2017, the Company purchased a 4.9% interest in WRLD3D for $1,111,111 and the Company’s subsidiary Netsol

PK purchased a 12.2% investment in WRLD3D for $2,777,778 which was earned by providing IT and enterprise software solutions.

Note 7 “Convertible Note Receivable –

Related Party”

and Note 11 “Long Term Investment”)

Ghauri, CEO and Chairman of the Board, and Naeem Ghauri, Director, have a financial interest in G-Force, LLC which purchased a

4.9% investment in WRLD3D, Inc.

for $1,111,111.

(See Note 11 “Long Term Investment”)

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

the year ended June 30, 2020

income available to common shareholders

of dilutive securities

income per share

the year ended June 30, 2019

income available to common shareholders

of dilutive securities

income per share

MAJOR CUSTOMERS

the year ended June 30, 2019, revenues from two customers were $23,912,605 and $12,522,867 representing 35.3% and 18.5% of revenues.

During the year ended June 30, 2018, revenues from one customer was $22,129,568 representing 36.3% or revenues.

The revenue from

these customers are shown in the Asia –

the year ended June 30, 2020, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”)

were $14,869,030 and $8,904,809, respectively representing 26.4% and 15.8%, respectively of revenues.

During the year ended June

30, 2019, revenues from DFS and BMW were $23,912,605 and $12,522,867 representing 35.3% and 18.5%, respectively of revenues.

revenue from these customers are shown in the Asia –

Pacific segment.

receivable from the two customers at June 30, 2019, were $7,917,814 and $159,322, respectively.

receivable from DFS and BMW at June 30, 2020, were $4,821,468 and $474,271, respectively.

Accounts receivable at June 30, 2019,

2018, were $4,417,709 and $nil, respectively.

Revenues in excess of billings at June 30, 2019, were $4,371,081 and $5,472,043,

respectively.

Revenues in excess of billings at June 30, 2018, were $12,508,815 and $nil, respectively.

Included in this amount

was $1,281,492 and $1,206,669 shown as long term at June 30, 2019 and 2018, respectively.

were $7,917,814 and $159,322, respectively.

Revenues in excess of billings at June 30, 2020 were $5,709,226 and $6,977,375, respectively.

Revenues in excess of billings at June 30, 2019, were $4,371,081 and $5,472,043, respectively.

Included in this amount was $1,300,289

and $1,281,492 shown as long term at June 30, 2020 and 2019, respectively.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

CONVERTIBLE NOTE RECEIVABLE –

22 unchanged sentences

Note (the “Thai Convertible Note”) which was fully executed on February 9, 2018.

The maximum principal amount of the

Thai Convertible Note is $2,500,000, and as of June 30, 2019, NetSol Thai had disbursed $2,500,000.

The maximum principal amount

of the Thai Convertible Note is $2,500,000, and as of June 30, 2020, NetSol Thai had disbursed $2,500,000.

The Thai Convertible

12 unchanged sentences

or the like with respect to WRLD3D’s Series BB Preferred Stock after the date of the Thai Convertible Note.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

Note Receivable –

9 unchanged sentences

the proceeds thereof.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

April 1, 2019 Note is convertible upon the occurrence of the following events:

8 unchanged sentences

or the like with respect to WRLD3D’s Series BB Preferred Stock after the date of the April 1, 2019 Note.

Note Receivable –

August 19, 2019

Company entered into an agreement with WRLD3D, whereby the Company was issued a Convertible Promissory Note (the “August

19, 2019 Note”) which was fully executed on August 19, 2019.

The maximum principal amount is $400,000, and as of June

30, 2020, the Company had disbursed $400,000.

The August 19, 2019 Note bears interest at 10% per annum and all unpaid interest

and principal is due and payable upon request on or after March 31, 2020.

The Company has a security interest in all of WRLD3D’s

personal property, inventory, equipment, general intangibles, financial assets, investment property, securities, deposit accounts,

and the proceeds thereof.

August 19, 2019 Note is convertible upon the occurrence of the following events:

upon a qualified financing which is an equity financing of at least $1,000,000.

conversion upon an equity financing less than $1,000,000.

conversion after the maturity date.

the Company converts the August 19, 2019 Note upon the occurrence of a financing, then the conversion price will be equal to the

(A) the price paid per share for the equity securities by the investors multiplied by (B) a calculated conversion

rate which is determined based on the amount of the principal and interest outstanding and the Company’s ownership percentage.

the Company converts the August 19, 2019 Note either as an optional conversion after the maturity date or due to a change of control,

then the conversion price is equal to $0.6788 per share (adjusted for any stock dividends, combinations, splits, recapitalizations

or the like with respect to WRLD3D’s Series BB Preferred Stock after the date of the August 19, 2019 Note.

following table summarizes the convertible notes receivable from WRLD3D.

April 1, 2019

Company has accrued interest of $701,062 and $328,748 at June 30, 2020 and 2019, respectively, which is included in “Other

current assets.

8 - OTHER CURRENT ASSETS

current assets consisted of the following:

June 30, 2019

June 30, 2018

Prepaid Expenses

Advance Income Tax

Employee Advances

Security Deposits

Other Receivables

current assets”.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

7 - OTHER CURRENT ASSETS

current assets consisted of the following:

REVENUES IN EXCESS OF BILLINGS –

in excess of billings, net consisted of the following:

June 30, 2019

June 30, 2018

Revenues in excess of billing - long term

Present value discount

in excess of billings - long term

value discount

to revenue recognition for contract accounting, the Company had recorded revenues in excess of billings long-term for amounts

billable after one year.

During the years ended June 30, 2019 and 2018, the Company accreted $0 and $252,281, respectively, which

During the years ended June 30, 2020 and 2019, the Company accreted $55,344 and $Nil, respectively, which

was recorded in interest income for that period.

The Company used the discounted cash flow method with interest rates ranging

from 3.87% to 4.43% during the years ended June 30, 2019 and 2018.

The Company used the discounted cash flow method with an interest rate of 4.35%

during the years ended June 30, 2020 and 2019.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

9 - PROPERTY AND EQUIPMENT

and equipment consisted of the following:

June 30, 2019

June 30, 2018

Office Furniture and Equipment

Computer Equipment

Assets Under Capital Leases

Accumulated Depreciation

Furniture and Equipment

Under Capital Leases

Work In Progress

(21,288,868 )

(20,371,589 )

Property and Equipment, Net

and Equipment, Net

the years ended June 30, 2020 and 2019, depreciation expense totaled $1,903,640 and $2,285,225, respectively.

2 unchanged sentences

is a summary of fixed assets held under capital leases as of June 30, 2020 and 2019:

and Other Equipment

Accumulated Depreciation - Net

Company leases certain office space, office equipment and autos with remaining lease terms of one year to 10 years under leases

classified as financing and operating.

For certain leases, the Company has options to extend the lease term for additional periods

ranging from one year to 10 years.

Company treats a contract as a lease when the contract conveys the right to use a physically distinct asset for a period of time

in exchange for consideration, or the Company directs the use of the asset and obtains substantially all the economic benefits

of the asset.

These leases are recorded as right-of-use (“ROU”) assets and lease obligation liabilities for leases

with terms greater than 12 months.

ROU assets represent the Company’s right to use an underlying asset for the entirety

of the lease term.

Lease liabilities represent the Company’s obligation to make payments over the life of the lease.

asset and a lease liability are recognized at commencement of the lease based on the present value of the lease payments over

the life of the lease.

Initial direct costs are included as part of the ROU asset upon commencement of the lease.

Since the interest

rate implicit in a lease is generally not readily determinable for the operating leases, the Company uses an incremental borrowing

rate to determine the present value of the lease payments.

The incremental borrowing rate represents the rate of interest the

Company would have to pay to borrow on a collateralized basis over a similar lease term to obtain an asset of similar value.

Company used the incremental borrowing rate on July 1, 2019 for all leases that commenced prior to that date.

For finance leases,

the Company used the incremental borrowing rate implicit in the lease.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

Company reviews the impairment of ROU assets consistent with the approach applied for the Company’s other long-lived assets.

The Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the

carrying value of the asset may not be recoverable.

The assessment of possible impairment is based on the Company’s ability

to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.

Company elected the practical expedient to exclude short-term leases (leases with original terms of 12 months or less) from ROU

asset and lease liability accounts.

expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

payments change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not

result in a re-measurement of lease liabilities.

The Company’s variable lease payments include payments for finance leases

that are adjusted based on a change in the Karachi Inter Bank Offer Rate.

The Company’s lease agreements do not contain

any significant residual value guarantees or restrictive covenants.

balance sheet information related to leases was as follows:

lease assets, net

Lease Liabilities

components of lease cost were as follows:

June 30, 2020

of finance lease assets

on finance lease obligation

term lease cost

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

term and discount rate were as follows:

average remaining lease term - Operating leases

average discount rate - Operating leases

disclosures of cash flow information related to leases were as follows:

June 30, 2020

Computers and Other Equipment

Furniture and Fixtures

Accumulated Depreciation - Net

flows related to lease liabilities

cash flows related to operating leases

of operating lease liabilities were as follows as of June 30, 2020:

Lease Payments

Imputed interest

Present Value

of lease liabilities

Current portion

of June 30, 2020, future minimum lease payments, as defined under the previous lease accounting guidance of ASC Topic 840,

under non-cancelable operating leases for the following five fiscal years and thereafter were as follows:

Within year 1

Within year 2

Within year 3

Within year 4

Within year 5

Company is a lessor for certain office space leased by the Company and sub-leased to others under non-cancelable leases.

lease agreements provide for a fixed base rent and terminate by July 2021.

All leases are considered operating leases.

no rights to purchase the premises and no residual value guarantees.

For the year ended June 30, 2020, the Company received $33,426

of lease income.

TECHNOLOGIES, INC.

3 unchanged sentences

Company and Drivemate Co., Ltd.

(“Drivemate”) entered into a subscription agreement (“Drivemate Agreement”)

whereby the Company will purchase an equity interest of 30% in Drivemate.

Per the Drivemate Agreement, the Company will purchase

5,469 preferred shares for $1,800,000 consisting of $500,000 cash and $1,300,000 in services.

The Company paid $250,000 on May

2, 2019 and received 760 shares for a 5.27% holding in Drivemate.

The remaining $250,000 will be paid in $62,500 increments beginning

15 months from the date of the Drivemate Agreement signing with the final payment due 24 months from the date of the Drivemate

Agreement signing.

Per the Drivemate Agreement, the Company appointed two directors to the Drivemate board.

The Company determined

that it met the significant influence criteria since two of the four directors are appointed by the Company and the Company is

to own 30% of Drivemate at the final payment date;

therefore, the Company accounts for the investment using the equity method

of accounting.

the year ended June 30, 2019, the Company performed $245,280 of services.

the equity method of accounting, the Company recorded its share of net loss of $3,235 for the year ended June 30, 2019.

(“Drivemate”) entered into a subscription agreement on April 25, 2019, (“Drivemate

Agreement”) whereby the Company will purchase an equity interest of 30% in Drivemate.

Per the Drivemate Agreement, the Company

will purchase 5,469 preferred shares for $1,800,000 consisting of $500,000 cash and $1,300,000 in services.

The Company paid $250,000

on May 2, 2019 and received 760 shares for a 5.27% holding in Drivemate.

The remaining $250,000 will be paid in $62,500 increments

beginning 15 months from the date of the Drivemate Agreement signing with the final payment due 24 months from the date of the

Drivemate Agreement signing.

During the year ended June 30, 2020, the Company paid $94,500 leaving a balance of $155,500 to be

As of June 30, 2020, the Company owns 5.05% of Drivemate.

Per the Drivemate Agreement, the Company appointed two directors

to the Drivemate board.

The Company determined that it met the significant influence criteria since two of the four directors

are appointed by the Company and the Company is to own 30% of Drivemate at the final payment date;

therefore, the Company accounts

for the investment using the equity method of accounting.

the year ended June 30, 2020 and 2019, the Company performed $1,054,372 and $245,280 of services, respectively.

the equity method of accounting, the Company recorded its share of net loss of $16,714 and $3,235 for the years ended June 30,

2020 and 2019, respectively.

WRLD3D-Related

6 unchanged sentences

earned by NetSol PK was $2,777,778.

As of June 30, 2020, NTI and NTPK own 1,636,876 and 4,092,189, respectively, of Series

BB Preferred Stock.

connection with the investment, the Company and NetSol PK received a warrant to purchase preferred stock of WRLD3D which included

the following key terms and features:

The warrants are exercisable into shares of the “Next Round Preferred”, only if and when the Next Round Preferred is issued by WRLD3D in a “Qualified Financing”.

The warrants expire on March 2, 2020.

“Next Round Preferred”

is defined as occurring if WRLD3D’s preferred stock (or securities convertible into preferred stock) are issued in a Qualified Financing that occurs after March 2, 2016.

“Qualified Financing”

warrants are exercisable into shares of the “Next Round Preferred”, only if and when the Next Round Preferred

is issued by WRLD3D in a “Qualified Financing”.

warrants expired on March 2, 2020.

Round Preferred”

is defined as occurring if WRLD3D’s preferred stock (or securities convertible into preferred

stock) are issued in a Qualified Financing that occurs after March 2, 2016.

“Qualified

Financing”

is defined as financing with total proceeds of at least $2 million.

The total number of common stock shares to be issued is equal to $1,250,000 divided by the per share price of the Next Round Preferred.

The exercise price of the warrants is equal to the greater of

total number of common stock shares to be issued is equal to $1,250,000 divided by the per share price of the Next Round Preferred.

exercise price of the warrants is equal to the greater of

of the per share price of the Next Round Preferred sold in a Qualified Financing, or

25,000,000 divided by the total number of shares of common stock outstanding immediately prior to the Qualified Financing (on a fully-diluted basis, excluding the number of common stock shares issuable upon the exercise of any given warrant).

divided by the total number of shares of common stock outstanding immediately prior to the Qualified Financing (on a fully-diluted

basis, excluding the number of common stock shares issuable upon the exercise of any given warrant).

Company determined that it met the significant influence criteria since the CEO of WRLD3D is the son of the CEO, Najeeb Ghauri,

4 unchanged sentences

Accounts receivable at June 30, 2020 and 2019 were $1,373,099 and $1,020,589, respectively.

excess of billing at June 30, 2019 and 2018 were $110,827 and $Nil, respectively.

Under the equity method of accounting, the Company

recorded its share of net loss of $838,610 and $262,556 for the years ended June 30, 2019 and 2018, respectively.

Revenue in excess of billing at June 30, 2020 and 2019 were $8,163 and $110,827, respectively.

Under the equity method of accounting,

the Company recorded its share of net loss of $589,150 and $838,610 for the years ended June 30, 2020 and 2019, respectively.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

following table reflects the above investments at June 30, 2020.

net loss on investment

other comprehensive income (loss)

12 - INTANGIBLE ASSETS

assets consisted of the following:

As of June 30,

Product Licenses - Cost

Effect of Translation Adjustment

Licenses - Cost

of Translation Adjustment

(16,045,322 )

Accumulated Amortization

(15,343,727 )

(25,808,598 )

(24,568,320 )

Product Licenses

8 unchanged sentences

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2024

represents the excess of the aggregate purchase price over the fair value of the net assets acquired in prior period business

combinations.

Goodwill was comprised of the following amounts:

As of June 30,

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

represents the excess of the aggregate purchase price over the fair value of the net assets acquired in prior period business

combinations.

Goodwill was comprised of the following amounts:

PK (Asia - Pacific)

(North America)

14 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

As of June 30,

Accounts Payable

Accrued Liabilities

Accrued Payroll & Taxes

Taxes Payable

Other Payable

payable and capital leases consisted of the following:

As of June 30, 2019

D&O Insurance

Bank Overdraft Facility

Loan Payable Bank - Export Refinance

Loan Payable Bank - Running Finance

Loan Payable Bank - Export Refinance II

Loan Payable Bank - Running Finance II

Related Party Loan

Subsidiary Capital Leases

As of June 30, 2018

D&O Insurance

Bank Overdraft Facility

Loan Payable Bank - Export Refinance

Loan Payable Bank - Running Finance

Loan Payable Bank - Export Refinance II

Loan Payable Bank - Running Finance II

Related Party Loan

Subsidiary Capital Leases

Payroll & Taxes

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

payable and capital leases consisted of the following:

of June 30, 2020

Protection Program Loans

Overdraft Facility

Finance Facility

Payable Bank - Export Refinance

Payable Bank - Running Finance

Payable Bank - Export Refinance II

Payable Bank - Running Finance II

Payable Bank - Export Refinance III

Finance Facility

Finance Leases

of June 30, 2019

Protection Program Loans

Overdraft Facility

Finance Facility

Payable Bank - Export Refinance

Payable Bank - Running Finance

Payable Bank - Export Refinance II

Payable Bank - Running Finance II

Payable Bank - Export Refinance III

Finance Facility

Finance Leases

The Company finances Directors’

5 unchanged sentences

6.0% and 7.0% as of June 30, 2019.

The Company and its subsidiary, NTA, received Paycheck Protection Program loans of $469,721 introduced by the U.S.

during the COVID-19 Pandemic.

This loan is forgivable if the Company meets the criteria set by the U.S.

carry an interest rate of 1% and have a maturity date of two years from the date of the disbursement of the loan.

As of June 30,

2020, the Company has not applied for the loan forgiveness.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

The Company’s subsidiary, NTE, has an overdraft facility with HSBC Bank plc whereby the bank would cover any overdrafts

6 unchanged sentences

As of June 30, 2020, NTE was in compliance with this covenant.

The Company’s subsidiary, NetSol PK, has a term finance facility from Askari Bank Limited, approved by the Government

of Pakistan to protect the employment situation during Pandemic COVID-19.

This is a term loan payable in three years.

facility amount is Rs.

232,042,664 or $1,380,878, at June 30, 2020, of which $354,337 is show as current and the remaining $1,026,541

is shown as long term.

The interest rate for the loan was 3% at June 30, 2020.

The Company’s subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by NetSol PK’s

6 unchanged sentences

Total facility amount is Rs.

75,000,000 or $459,953, at June 30, 2019.

75,000,000 or $446,322 and Rs.

75,000,000 or $459,953, at June 30, 2020 and 2019, respectively.

NetSol PK used Rs.

53,000,000 or $325,034, at June 30, 2019.

The interest rate for the loan was 13.0% and 8.2% at June 30, 2019 and 2018, respectively.

facility requires NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1.

The interest rate for the loan was 7.2% and 13.0% at June 30, 2020

and 2019, respectively.

facilities require NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1.

As of June 30, 2020,

11 unchanged sentences

The interest rate for the loan was 7.7% and 14.3% at June 30, 2020 and 2019, respectively.

the tenure of loan, the facilities from Samba Bank Limited require NetSol PK to maintain at a minimum a current ratio of 1:1,

an interest coverage ratio of 4 times, a leverage ratio of 2 times, and a debt service coverage ratio of 4 times.

the loan tenure, the facilities from Samba Bank Limited require NetSol PK to maintain at a minimum a current ratio of 1:1, an

interest coverage ratio of 4 times, a leverage ratio of 2 times, and a debt service coverage ratio of 4 times.

As of June 30,

2020, NetSol PK was in compliance with these covenants.

In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement with Investec a related party.

The loan amount

was £69,549, or $88,037, for a period of 5 years with monthly payment of £1,349, or $1,708.

The Company’s subsidiary, NetSol PK, has an export refinance facility with Habib Metro Bank Limited, secured by NetSol PK’s

This is a revolving loan that matures every nine months.

Total facility amount is Rs.

900,000,000 or $5,355,868 and NetSol

500,000,000 or $2,975,482 at June 30, 2020.

The interest rate for the loan was 3% at June 30, 2020.

In March 2020, the Company’s subsidiary, VLS, entered into a loan agreement with Investec Bank PLC.

The loan amount was

£69,549, or $85,863, for a period of 5 years with monthly payments of £1,349, or $1,665.

As of June 30, 2020, the

subsidiary has used this facility up to $82,969, of which $67,131 was shown as long-term and $15,838 as

The interest rate was 6.14% at June 30, 2019.

subsidiary has used this facility up to $65,473, of which $49,050 was shown as long-term and $16,311 as current.

rate was 6.14% at June 30, 2020.

The Company leases various fixed assets under capital lease arrangements expiring in various years through 2024.

9 unchanged sentences

is the aggregate minimum future lease payments under capital leases as of June 30, 2020:

Lease Payments

Minimum Lease Payments

Due FYE 6/30/20

Due FYE 6/30/21

Due FYE 6/30/22

Due FYE 6/30/23

Due FYE 6/30/24

Total Minimum Lease Payments

Interest Expense relating to future periods

Present Value of minimum lease payments

Expense relating to future periods

Value of minimum lease payments

Current portion

Non-Current portion

is the aggregate future long term debt payments as of June 30, 2020:

Loan Payments

Current portion

Company is incorporated in the State of Nevada and registered to do business in the State of California.

2 unchanged sentences

pre-tax income (loss) consists of the following:

Years Ended June 30,

US operations

$ (1,941,611 )

Ended June 30,

$ (1,941,611 )

Foreign operations

components of the provision for income taxes are as follows:

Years Ended June 30,

State and Local

Provision for income taxes

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

components of the provision for income taxes are as follows:

Ended June 30,

for income taxes

reconciliation of taxes computed at the statutory federal income tax rate to income tax expense (benefit) is as follows:

Years Ended June 30,

Income tax (benefit) provision at statutory rate

State income (benefit) taxes, net of federal tax benefit

Foreign earnings taxed at different rates

Change in valuation allowance for deferred tax assets

Provision for income taxes

income tax assets and liabilities as of June 30, 2019 and 2018 consist of tax effects of temporary differences related

to the following:

Years Ended June 30,

Net operating loss carry forwards

Net deferred tax assets

Valuation allowance for deferred tax assets

Net deferred tax assets

Reconciliation

of effective income tax rate

Ended June 30,

tax (benefit) provision at statutory rate

income (benefit) taxes, net of federal tax benefit

earnings taxed at different rates

in valuation allowance for deferred tax assets

for income taxes

income tax assets and liabilities as of June 30, 2020 and 2019 consist of tax effects of temporary differences related to the

of deferred tax asset

Ended June 30,

operating loss carry forwards

deferred tax assets

allowance for deferred tax assets

deferred tax assets

Company has established a full valuation allowance as management believes it is more likely than not that these assets will not

be realized in the future.

The valuation allowance increased by 64,901 for the year ended June 30, 2019.

The valuation allowance decreased by $181,930 for the year ended June 30, 2020.

June 30, 2020, federal and state net operating loss carry forwards in the United States of America were $30,196,241 and $7,347,063,

respectively.

Federal net operating loss carry forwards begin to expire in 2020, while state net operating

loss carry forwards are expiring each year.

Due to both historical and recent changes in the capitalization structure of the Company,

the utilization of net operating losses may be limited pursuant to section 382 of the Internal Revenue Code.

Net operating losses

related to foreign entities were $1,650,165 at June 30, 2019.

Federal net operating loss carry forwards begin to expire in 2028, while state net operating loss carry forwards

are expiring each year.

Due to both historical and recent changes in the capitalization structure of the Company, the utilization

of net operating losses may be limited pursuant to section 382 of the Internal Revenue Code.

Net operating losses related to foreign

entities were $1,330,673 at June 30, 2020.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

of June 30, 2020, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters.

5 unchanged sentences

The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

cumulative amount of undistributed earnings of foreign subsidiaries that the Company intends to permanently invest and upon which

6 unchanged sentences

to determine unrecognized deferred tax liability associated with the unremitted earnings attributable to the foreign subsidiaries.

from the export of computer software and its related services developed in Pakistan is exempt from tax through June 30, 2025.

The aggregate effect of the tax holiday for June 30, 2019 and 2018 is $2,147,473 and $2,771,078, respectively.

The effect on basic

and diluted earnings per share is $0.19 and $0.18, respectively, for June 30, 2019 and $0.25 for June 30, 2018.

Income from the export of computer software

and its related services developed in Pakistan is exempt from tax through June 30, 2025.

The aggregate effect of the tax holiday

for June 30, 2020 and 2019 is $47,477 and $2,771,078, respectively.

The effect on basic and diluted earnings per share is $0.004,

for June 30, 2020 and $0.19 and $0.18 for June 30, 2019.

17 - STOCKHOLDERS’

12 unchanged sentences

respectively, and recorded as compensation expense in the accompanying consolidated financial statements.

the years ended June 30, 2019 and 2018, the Company collected subscription receivable of $0 and $76,511, respectively, related

to the exercise of stock options in previous years.

the years ended June 30, 2019 and 2018, the Company received $85,000 and $235,800, respectively pursuant to a stock option agreement

for the exercise of 13,076 and 60,773 shares of common stock, respectively at $6.50 and $3.88 per share, respectively.

the year ended June 30, 2018, the Company issued 112,747 shares of common stock for the cashless exercise of options pursuant

to stock option agreements, and canceled 247,151 options which will be available for re-issuance in the future.

the years ended June 30, 2019 and 2018, the Company purchased 41,650 and 171,074 shares of its common stock from the open market

at an average price of $6.03 and $4.39 per share pursuant to the Company’s stock buy-back plan.

the years ended June 30, 2019, the Company received $85,000 pursuant to a stock option agreement for the exercise of 13,076 shares

of common stock at $6.50 per share.

the years ended June 30, 2019, the Company purchased 41,650 shares of its common stock from the open market at an average price

of $6.03 per share pursuant to the Company’s stock buy-back plan.

18 - INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN

4 unchanged sentences

prior to one (1) year from the date of grant unless the Board of Directors specifically determines otherwise, as provided.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

types of options may be granted under these Plans:

9 unchanged sentences

to forfeiture.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

Plans provide for the grant of equity-based awards, including options, stock appreciation rights, restricted stock awards or performance

44 unchanged sentences

As of June 30, 2020,

the remaining shares to be granted are 1,000 under 2003 Plan, 7,723 under the 2011 Plan, 249,746 under the 2013 Plan and 296,503

under the 2015 Plan.

the remaining shares to be granted are 40,386 under 2005 Plan, 98,196 under the 2013 Plan and 306,422 under the 2015 Plan.

TECHNOLOGIES, INC.

2 unchanged sentences

summary of option and warrant activity for the years ended June 30, 2020 and 2019 is presented below:

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (in years)

Aggregated Intrinsic Value

Outstanding and exercisable, June 30, 2017

Expired / Cancelled

Outstanding and exercisable, June 30, 2018

Expired / Cancelled

Outstanding and exercisable, June 30, 2019

aggregate intrinsic value at June 30, 2019 represents the difference between the Company’s closing stock price of $5.59

and the exercise price of the options.

The aggregate intrinsic value at June 30, 2018 represents the difference between the Company’s

closing stock price of $5.55 and the exercise price of the options.

following table summarizes information about stock options outstanding and exercisable at June 30, 2019.

Exercise Price

Number Outstanding and Exercisable

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Average Exercise Price

Average Remaining Contractual Life (in years)

Intrinsic Value

and exercisable, June 30, 2018

and exercisable, June 30, 2019

and exercisable, June 30, 2020

the year ended June 30, 2019, the Company extended the life of 40,386 options with an exercise price of $6.50, for a period of

The Company recorded $43,612 in compensation expense for the extension of these options in the accompanying consolidated

financial statements.

The fair market value was calculated using the Black-Scholes option pricing model with the following assumptions:

interest rate

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2020 and 2019

the year ended June 30, 2019, the Company extended the life of 40,386 options with an exercise price of $6.50, for a period of

The Company recorded $43,612 in compensation expense for the extension of these options in the accompanying

consolidated financial statements.

The fair market value was calculated using the Black-Scholes option pricing model with the

following assumptions:

June 30, 2019

Risk-free interest rate

Expected life

Expected volatility

Expected dividend

following table summarizes stock grants awarded as compensation:

Weighted Average Grant Date Fair Value ($)

Unvested, June 30, 2017

Forfeited / Cancelled

Unvested, June 30, 2018

Forefieted / Cancelled

Unvested, June 30, 2019

Average Grant Date Fair Value ($)

June 30, 2018

June 30, 2019

June 30, 2020

the years ended June 30, 2020 and 2019, the Company recorded compensation expense of $808,458 and $1,131,013, respectively.

The compensation expense related to the unvested stock grants as of June 30, 2019 was $455,505 which will be recognized during

the fiscal years 2020 through 2022.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

CONTINGENCIES

Non-cancellable

operating leases

Company’s headquarters is located in Calabasas California with approximately 5,000 rentable square feet for $16,828

The term of the lease is for five years and five months and expires April 30, 2023.

Australia lease is a three-year lease that expires in June 2021 with a monthly rent of approximately $4,848.

Beijing lease is a three-year lease that expires in August 2019 with a monthly rent of approximately $33,756.

Bangkok lease is a three years lease expiring in May 2020 with a monthly rent of approximately $10,728.

NetSol Europe facilities, located in Horsham, United Kingdom, are leased until June 23, 2021 with a monthly rent of approximately

facilities, located in Chester, United Kingdom, are leased until July 2026 with a monthly rent of approximately $3,004.

expiration of the leases, the Company does not anticipate any difficulty in obtaining renewals or alternative space.

amounted to $1,941,310 and $1,722,019 for the years ended June 30, 2019 and 2018, respectively.

total annual lease commitment for the next five years is as follows:

time to time, the Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business including

tax assessments.

The Company defends itself vigorously against any such claims.

When (i) it is probable that an asset has been

impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, the Company records the

estimated loss.

The Company provides disclosure in the notes to the consolidated financial statements for loss contingencies that

do not meet both conditions if there is a reasonable possibility that a loss may have been incurred that would be material to

the financial statements.

Significant judgment is required to determine the probability that a liability has been incurred and

whether such liability is reasonably estimable.

The Company bases accruals on the best information available at the time, which

can be highly subjective.

The final outcome of these matters could vary significantly from the amounts included in the accompanying

consolidated financial statements.

compensation expense related to the unvested stock grants as of June 30, 2020 was $373,129 which will be recognized during the

fiscal years 2021 through 2022.

COMMITMENTS AND CONTINGENCIES

or about July 13, 2020, the Company was named as a defendant in a civil lawsuit based on an alleged breach of contract claim filed

by Royal News Corp.

d/b/a Royal Media Group (“RMG”).

The lawsuit is captioned Royal News Corp.

d/b/a Royal Media

Netsol Techs., Inc.

District Court Case No.

1:20-cv-05381-PAE (S.D.N.Y.) (the “Lawsuit”).

about August 24, 2020, the Company and RMG reached an agreement to fully resolve the case and are in the process of documenting

the agreement, which includes a release of each other from all obligations, contractual or otherwise, claims, disputes or other

matters, in exchange for (i) a payment by the Company to RMG in the amount of $100,000;

and (ii) RMG dismissing the Lawsuit, with

prejudice, pursuant to Rule 41(a) of the Federal Rules of Civil Procedure.

On September 22, 2020, a notice of dismissal with

prejudice was filed with the United States District Court Southern District of New York.

RETIREMENT PLANS

5 unchanged sentences

respectively, to these plans.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2019 and 2018

SEGMENT INFORMATION AND GEOGRAPHIC AREAS

1 unchanged sentence

North America, Europe and Asia-Pacific.

Our reportable segments

The reportable segments

are business units located in different global regions.

6 unchanged sentences

parties and eliminates them in the consolidation.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

following table presents a summary of identifiable assets as of June 30, 2020 and 2019:

Identifiable assets:

Corporate headquarters

North America

Asia - Pacific

following table presents a summary of investment under equity method as of June 30, 2019 and 2018:

Investment in associates under equity method:

Corporate headquarters

Asia - Pacific

following table presents a summary of investments under the equity method as of June 30, 2020 and 2019:

in associates under equity method:

TECHNOLOGIES, INC.

2 unchanged sentences

following table presents a summary of operating information for the years ended June 30:

Revenues from unaffiliated customers:

North America

Asia - Pacific

Revenue from affiliated customers

Asia - Pacific

Intercompany revenue

Asia - Pacific

Net income (loss) after taxes and before non-controlling interest:

Corporate headquarters

$ (2,296,409 )

from unaffiliated customers:

from affiliated customers

income (loss) after taxes and before non-controlling interest:

$ (2,296,409 )

North America

Asia - Pacific

Depreciation and amortization:

North America

Asia - Pacific

Interest expense:

Corporate headquarters

North America

Asia - Pacific

Income tax expense:

Corporate headquarters

Asia - Pacific

and amortization:

TECHNOLOGIES, INC.

2 unchanged sentences

following table presents a summary of capital expenditures for the years ended June 30:

Capital expenditures:

North America

Asia - Pacific

in the table below is geographic information for each country that comprised greater than five percent of total revenues for the

years ended June 30, 2019 and 2018.

Long-lived Assets

Pakistan & India

Australia & New Zealand

Other Countries

expenditures:

in the table below is the geographic information of total revenues by country for the years ended June 30, 2020 and 2019.

& New Zealand

TECHNOLOGIES, INC.

2 unchanged sentences

in the table below is the reconciliation of revenue by each entity and country disclosed above for the years ended June 30, 2020

Revenues 2019

Pakistan & India

Other Countries

North America:

& New Zealand

Asia-Pacific:

Revenues 2018

Pakistan & India

Other Countries

North America:

& New Zealand

Asia-Pacific:

2 unchanged sentences

The balance of non-controlling interest was as follows:

Non-Controlling Interest %

Non-Controlling Interest at

June 30, 2019

Non-Controlling

NetSol-Innovation

VLS, VLSH & VLSIL Combined

Non-Controlling Interest %

Non-Controlling Interest at June 30, 2018

Non-Controlling

NetSol-Innovation

VLS, VLHS & VLSIL Combined

TECHNOLOGIES, INC.

3 unchanged sentences

PK received cash of $11,261 and $2,650, respectively.

During the year ended June 30, 2018, the Company purchased 55,500 shares

of common stock of NetSol PK from the open market for $33,987.

Due to the exercise of options, the non-controlling interest increased

from 33.79% at June 30, 2018 to 33.80% at June 30, 2019.

Due to the exercise of options, the non-controlling interest increased from

33.80% at June 30, 2019 to 33.88% at June 30, 2020.

the years ended June 30, 2020 and 2019, NetSol PK paid a cash dividend of $1,610,909 and $1,675,936, respectively.

June 30, 2019, NTE entered into a share purchase agreement with Investec (“Investec Agreement”) to acquire the reaming

49% from Investec whereby VLS would become a wholly owned subsidiary.

The Company purchased the remaining shares in an effort

to consolidate minority interests and streamline operations.

The purchase price was £500,000 ($635,000) with £250,000

being paid on June 30, 2019 and £250,000 ($317,500) due on December 31, 2019.

The purchase price includes a contingency

payment based on VLS achieving certain revenues.

The maximum amount due under the contingency formula is £230,000 ($292,100).

The Company determined the fair value of the contingency to be £230,000 ($292,100) at June 30, 2019 which is recorded in

“Other Payables”.

the year ended June, 30, 2020, the Company’s subsidiary NetSol PK purchased NetSol Innovation, from 1insurer for

Due to this purchase, the non-controlling interest decreased from 49.90% at June 30, 2019 to 33.88% at June 30, 2020.

the year ended June 30, 2020, NetSol Innovation paid a cash dividend of $2,778,453.

SUBSEQUENT EVENTS

Note Receivable –

Company entered into an agreement with WRLD3D, whereby the Company was issued a Convertible Promissory Note (the “August

2019 Note”) which was fully executed on August 19, 2019.

The maximum principal amount of $400,000 was paid on September

The August 2019 Note bears interest at 10% per annum and all unpaid interest and principal is due and payable upon request

on or after March 31, 2020.

The Company has a security interest in all of WRLD3D’s personal property, inventory, equipment,

general intangibles, financial assets, investment property, securities, deposit accounts, and the proceeds thereof.

August 2019 Note is convertible upon the occurrence of the following events:

upon a qualified financing which is an equity financing of at least $1,000,000.

conversion upon an equity financing less than $1,000,000.

conversion after the maturity date.

the Company converts the August 2019 Note upon the occurrence of a financing, then the conversion price will be equal to the product

(A) the price paid per share for the equity securities by the investors multiplied by (B) a calculated conversion rate which

is determined based on the amount of the principal and interest outstanding and the Company’s ownership percentage.

the Company converts the August 2019 Note either as an optional conversion after the maturity date or due to a change of control,

then the conversion price is equal to $0.6788 per share (adjusted for any stock dividends, combinations, splits, recapitalizations

or the like with respect to WRLD3D’s Series BB Preferred Stock after the date of the August 2019 Note).

July 30, the Company’s, Board of Directors authorized the repurchase of up to two million dollars’

worth of the Company’s

issued and outstanding common shares.

The repurchase plan is authorized commencing July 30, 2020, and ending December 24,

2020, subject to an additional six-month extension at the discretion of management.

Although no shares were repurchased

during fiscal year 2020, the Company purchased 147,052 shares at an average price of $3.16 per share subsequent to the fiscal

year ended June 30, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures