What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-11-16 compared with 2020-05-13 · 755 added, 1131 removed, 766 unchanged (71% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2020

June 30, 2019

Condensed Consolidated Balance Sheets

and cash equivalents

receivable, net of allowance of $279,903 and $435,611

receivable - related party, net of allowance of $1,373,099 and $90,594

in excess of billings, net of allowance of $91,250 and $188,914

in excess of billings - related party, net of allowance of $8,163 and $0

current assets, net of allowance of $1,243,633 and $0

current assets

Cash and cash equivalents

Accounts receivable, net of allowance of $364,383 and $192,786

Accounts receivable, net of allowance of $54,307 and $166,075 - related party

Revenues in excess of billings, net of allowance of $190,811 and $194,684

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

Right of use of assets - operating leases

Long term investment

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’

in excess of billings, net - long term

note receivable - related party, net of allowance of $4,250,000 and $0

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 finance leases

Current portion of operating lease obligations

Unearned revenues

Common stock to be issued

Total current liabilities

Loans and obligations under finance leases;

and obligations under finance leases;

less current maturities

Operating lease obligations;

lease obligations;

less current maturities

Total liabilities

Commitments and contingencies

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;

12,038,697 shares issued and 11,791,194 outstanding as of March 31, 2020 and

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

Additional paid-in-capital

Treasury stock (At cost, 247,503 shares and 247,503 shares as of March 31, 2020 and June 30, 2019,

respectively)

Accumulated deficit

12,137,045 shares issued and 11,742,490 outstanding as of September 30,

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

paid-in-capital

stock (at cost, 394,555 shares and 247,503 shares as of September 30, 2020 and June 30, 2020, respectively)

(39,861,985 )

(34,269,817 )

Other comprehensive loss

comprehensive loss

(33,210,231 )

(34,085,047 )

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 unaudited condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

Consolidated Statements of Operations

For the Three Months

For the Nine Months

Ended March 31,

Net Revenues:

Maintenance fees

Services - related party

Total net revenues

Condensed Consolidated Statements of Operations

the Three Months

September 30,

- 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 (loss) on foreign currency exchange transactions

Share of net loss from equity investment

Total other income (expenses)

Net income before income taxes

Income tax provision

Net income (loss)

Non-controlling interest

Net income (loss) attributable to NetSol

Net income (loss) per share:

Net income (loss) per common share

Weighted average number of shares outstanding

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

NETSOL TECHNOLOGIES, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three Months

For the Nine Months

Ended March 31,

Net income (loss)

Other comprehensive income (loss):

Translation adjustment

Translation adjustment attributable to non-controlling interest

Net translation adjustment

Comprehensive income (loss) attributable to NetSol

$ (2,607,946 )

(loss) from operations

income and (expenses)

on sale of assets

(loss) on foreign currency exchange transactions

of net loss from equity investment

other income (expenses)

income (loss) before income taxes

tax provision

income (loss)

Non-controlling

income (loss) attributable to NetSol

$ (1,827,947 )

income per share:

income per common share

average number of shares outstanding

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

1 unchanged sentence

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’

statement of the changes in equity for the three months ended March 31, 2020 is provided below:

Stockholders’

Balance at December 31, 2019

$ 128,197,589

$ (1,455,969 )

$ (36,448,870 )

$ (30,456,632 )

Common stock issued for:

Foreign currency translation adjustment

Balance at March 31, 2020

$ 128,374,098

$ (1,455,969 )

$ (35,448,063 )

$ (34,065,385 )

statement of the changes in equity for the three months ended December 31, 2019 is provided below:

Stockholders’

Balance at September 30, 2019

$ 128,052,079

$ (1,455,969 )

$ (37,034,845 )

$ (32,221,661 )

Common stock issued for:

Dividend to non-controlling interest

Foreign currency translation adjustment

Balance at December 31, 2019

$ 128,197,589

$ (1,455,969 )

$ (36,448,870 )

$ (30,456,632 )

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’

statement of the changes in equity for the three months ended September 30, 2019 is provided below:

Stockholders’

Balance at June 30, 2019

$ 127,737,999

$ (1,455,969 )

$ (35,206,898 )

$ (33,125,006 )

Exercise of subsidiary common stock options

Common stock issued for:

Foreign currency translation adjustment

Balance at September 30, 2019

$ 128,052,079

$ (1,455,969 )

$ (37,034,845 )

Condensed Consolidated Statements of Comprehensive Income (Loss)

the Three Months

September 30,

income (loss)

$ (1,827,947 )

comprehensive income (loss):

adjustment attributable to non-controlling interest

translation adjustment

Comprehensive

income (loss) attributable to NetSol

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

1 unchanged sentence

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’

statement of the changes in equity for the three months ended March 31, 2019 is provided below:

Stockholders’

Balance at December 31, 2018

$ 127,398,738

$ (1,205,024 )

$ (39,972,079 )

$ (28,446,811 )

Exercise of common stock options

Common stock issued for:

Fair value of options extended

Foreign currency translation adjustment

Balance at March 31, 2019

$ 127,551,606

$ (1,205,024 )

$ (38,704,519 )

$ (28,474,832 )

statement of the changes in equity for the three months ended December 31, 2018 is provided below:

Consolidated Statement of Stockholders’

statement of the changes in equity for the three months ended September 30, 2020 is provided below:

Stockholders’

Balance at September 30, 2018

at June 30, 2020

$ 128,677,754

2 unchanged sentences

$ (34,085,047 )

Exercise of common stock options

effect adjustment (1)

common stock issued for:

Dividend to non-controlling interest

Foreign currency translation adjustment

Balance at December 31, 2018

stock issued for:

of treasury shares

currency translation adjustment

income for the period

at September 30, 2020

$ 128,764,618

2 unchanged sentences

$ (33,210,231 )

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’

effect adjustment relates to the adoption of Accounting Standard Update No.

2016-13, Financial Instruments –

Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

Refer to Note 2 –

Accounting Policies for

more information.

statement of the changes in equity for the three months ended September 30, 2019 is provided below:

Stockholders’

Balance at June 30, 2018

at June 30, 2019

$ 127,737,999

2 unchanged sentences

$ (33,125,006 )

Adjustment in retained earnings on adoption of ASC 606

Exercise of subsidiary common stock options

Common stock issued for:

Foreign currency translation adjustment

Balance at September 30, 2018

of subsidiary common stock options

stock issued for:

currency translation adjustment

loss for the period

at September 30, 2019

$ 128,052,079

5 unchanged sentences

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Nine Months

Ended March 31,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

Provision for bad debts

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

Revenues in excess of billing - related party

Other current assets

Accounts payable and accrued expenses

Unearned revenue

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sales of property and equipment

Convertible note receivable - related party

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

Dividend paid by subsidiary to non-controlling interest

Proceeds from bank loans

Payments on finance lease obligations and loans - net

Net cash provided by (used in) 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

Condensed Consolidated Statements of Cash Flows

the Three Months

September 30,

flows from operating activities:

income (loss)

$ (2,261,259 )

to reconcile net income (loss) 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

in operating assets and liabilities:

receivable - related party

in excess of billing

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

cash used in investing activities

flows from financing activities:

from exercise of subsidiary options

of treasury stock

from bank loans

on finance lease obligations and loans - net

cash provided by (used in) financing activities

of exchange rate changes

increase 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 unaudited condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Nine Months

Ended March 31,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Assets acquired under finance lease

Assets recognized under operating lease

CONSOLIDATED STATEMENTS OF CASH FLOWS

the Three Months

September 30,

paid during the period for:

INVESTING AND FINANCING ACTIVITIES:

recognized under operating lease

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

4 unchanged sentences

banking, and financial services industries worldwide.

The Company also provides system integration,

consulting, and IT products and services in exchange for fees from customers.

The Company also provides system integration, consulting, and IT products

and services in exchange for fees from customers.

consolidated condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant

13 unchanged sentences

of operations for the interim periods are not indicative of annual results.

accompanying condensed consolidated financial statements include the accounts of NetSol Technologies, Inc.

and subsidiaries (collectively,

the “Company”) as follows:

accompanying consolidated financial statements include the accounts of the Company as follows:

owned Subsidiaries

1 unchanged sentence

(“NTA”)

(“OTOZ”)

Connect (Private), Ltd.

16 unchanged sentences

Technologies Thailand Limited (“NetSol Thai”)

(“OTOZ”)

(Thailand) Limited (“OTOZ Thai”)

TECHNOLOGIES, INC.

3 unchanged sentences

Below is the table of reclassified amounts:

For the Three Months Ended

For the Nine Months Ended

March 31, 2019

Originally reported

Maintenance fees

Maintenance fees - related party

Services - related party

Total net revenues

the Three Months Ended

- related party

ACCOUNTING POLICIES

16 unchanged sentences

Balances at financial institutions within certain foreign countries are not

covered by insurance.

As of March 31, 2020, and June 30, 2019, the Company had uninsured deposits related to cash deposits in

accounts maintained within foreign entities of approximately $14,677,110 and $16,124,339, respectively.

The Company has not experienced

any losses in such accounts.

covered by insurance except balances maintained in China are insured for RMB 500,000 ($73,529) in each bank and in UK for GBP

85,000 ($108,974) in each bank.

The Company maintains two bank accounts in China and six bank accounts in the UK.

As of September

30, 2020, and June 30, 2020, the Company had uninsured deposits related to cash deposits in accounts maintained within foreign

entities of approximately $22,070,760 and $18,210,378, respectively.

The Company has not experienced any losses in such accounts.

Company’s operations are carried out globally.

26 unchanged sentences

measurement and are less observable and thus have the lowest priority.

Company’s assets that were measured at fair value on a recurring basis as of March 31, 2020, were as follows:

Revenues in excess of billings - long term

Company’s financial assets that were measured at fair value on a recurring basis as of June 30, 2020, were as follows:

Revenues in excess of billings - long term

reconciliation from June 30, 2019 to March 31, 2020 is as follows:

Revenues in excess

of billings - long term

Fair value discount

Balance at June 30, 2018

Effect of ASC 606 adoption

Balance at June 30, 2019

Amortization during the period

Effect of Translation Adjustment

Balance at March 31, 2020

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

in excess of billing - long term

reconciliation from June 30, 2020 to September 30, 2020 is as follows:

in excess of billings - long term

value discount

at June 30, 2019

during the period

of Translation Adjustment

at June 30, 2020

to short term

at September 30, 2020

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

8 unchanged sentences

as warrants and option derivatives are valued using the Black-Scholes model.

Accounting Pronouncements

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Accounting Standards Adopted by the Company:

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

January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, Simplifying the Test for Goodwill

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

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.

Company adopted this standard on July 1, 2020 and the adoption did not have a material effect on our condensed consolidated

financial statements.

June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments .

ASU 2016-13 introduced a new forward-looking approach, based on expected losses, to estimate credit

losses on certain types of financial instruments, including trade receivables, contract assets and held-to-maturity debt securities,

which requires the Company to incorporate considerations of historical information, current information and reasonable and supportable

ASU 2016-13 also expands disclosure requirements.

Company adopted the standard on July 1, 2020 using the modified retrospective approach.

The adoption of ASU 2016-13 resulted in

changes to the Company’s accounting policies for trade and other receivables, contract assets and convertible notes receivable.

Based on the results of the Company’s evaluation, the adoption of ASU 2016-13 resulted in a one-time cumulative-effect adjustment

through retained earnings of $6,784,300 to increase its allowance for credit losses related to the convertible notes receivable,

interest receivable, accounts receivable, revenues in excess of billings, and other receivables.

following table presents the impact of adopting ASC Topic 326 as of July 1, 2020:

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 $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 the ROU assets in the Condensed Consolidated Balance

The adoption of ASU 2016-02 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.

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

Distinguishing Liabilities from Equity (Topic 480);

Derivatives and Hedging (Topic 815):

(Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II)

Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain

Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.

The ASU was issued to address the complexity associated

with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities

The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible

debt, warrants and other financing instruments.

As a result, a freestanding equity-linked financial instrument (or embedded conversion

option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round

The amendments are effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively.

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.

for credit losses - accounts receivable

for credit losses - accounts receivable - related party

for credit losses - revenue in excess of billings - related party

for credit losses - convertible notes receivable - related party

for credit losses - other current assets

receivable includes trade accounts receivables from the Company’s customers, net of an allowance for credit risk.

receivable are recorded at the invoiced amount and do not bear interest.

In establishing the required allowance, management regularly

reviews the composition of accounts receivable and analyzes customer credit worthiness, customer concentrations, current economic

trends and changes in customer payment patterns.

Account balances are charged off against the allowance after all means of collection

have been exhausted and the potential for recovery is considered remote.

in excess of billings, relates to services performed which were not billed, net of an allowance for credit risk.

are billed under the terms of the contract, the corresponding amount is transferred to accounts receivable.

In establishing the

required allowance, management regularly reviews the composition of and analyzes customer credit worthiness, customer concentrations,

current economic trends, changes in customer payment patterns, the project status and assesses individual unbilled contract assets

over a specific aging and amount.

Account balances are charged off against the allowance after all means of collection have been

exhausted and the potential for recovery is considered remote.

convertible notes receivable represents loans provided to WRLD3D.

The allowance for credit risk for the convertible notes is established

based on various quantitative and qualitative factors including customer credit worthiness, current economic trends and changes

in payment patterns.

Account balances are charged off against the allowance after all means of collection have been exhausted

and the potential for recovery is considered remote.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

REVENUE RECOGNITION

16 unchanged sentences

(1) software licenses, (2) services, which include implementation

and consulting services, and (3) maintenance, which includes post contract support, of its enterprise software solutions for the

lease and finance industry.

The Company offers its software using the same underlying technology via two models:

a traditional

on-premises licensing model and a subscription model.

The on-premises model involves the sale or license of software on a perpetual

basis to customers who take possession of the software and install and maintain the software on their own hardware.

subscription delivery model, the Company provides access to its software on a hosted basis as a service and customers generally

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

and consulting services, and (3) subscription and support, which includes subscription revenue and post contract customer support,

of its enterprise software solutions for the lease and finance industry.

The Company offers its software using the same underlying

technology via two models:

a traditional on-premises licensing model and a subscription model.

The on-premises model involves

the sale or license of software on a perpetual basis to customers who take possession of the software and install and maintain

the software on their own hardware.

Under the subscription delivery model, the Company provides access to its software on a hosted

basis as a service and customers generally 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

15 unchanged sentences

obligation using its best estimate for the SSP.

revenue is recognized ratably over the initial subscription period committed to by the customer commencing when the product is

made available to the customer.

The initial subscription period is typically 12 to 60 months.

The Company generally invoices its

customers in advance in quarterly or annual installments and typical payment terms provide that customers make payment within

30 days of invoice.

TECHNOLOGIES, INC.

3 unchanged sentences

payment terms tend to vary by region, but its standard payment terms are within 30 days of invoice.

from support services and product updates, referred to as maintenance revenue, is recognized ratably over the term of the maintenance

period, which in most instances is one year.

Software license updates provide customers with rights to unspecified software product

updates, maintenance releases and patches released during the term of the support period on a when-and-if available basis.

Company’s customers purchase both product support and license updates when they acquire new software licenses.

a majority of customers renew their support services contracts annually and typical payment terms provide that customers make

payment within 30 days of invoice.

from subscriptions is recognized ratably over the initial subscription period committed to by the customer commencing when the

product is made available to the customer.

The initial subscription period is typically 12 to 60 months.

The Company generally

invoices its customers in advance in quarterly or annual installments and typical payment terms provide that customers make payment

within 30 days of invoice.

from support services and product updates, referred to as post contract customer support revenue, is recognized ratably over the

term of the maintenance period, which in most instances is one year.

Software license updates provide customers with rights to

unspecified software product updates, maintenance releases and patches released during the term of the support period on a when-and-if

available basis.

The Company’s customers purchase both product support and license updates when they acquire new software

In addition, a majority of customers renew their support services contracts annually and typical payment terms provide

that customers make payment within 30 days of invoice.

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

15 unchanged sentences

half yearly in advance to the customers and revenue is recognized ratably overtime on a monthly basis.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Disaggregated

2 unchanged sentences

how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Company’s disaggregated revenue by category is as follows:

For the Three Months

For the Nine Months

Ended March 31,

Services - related party

Total core revenue, net

Services - related party

Total non-core revenue, net

Total net revenue

the Three Months

September 30,

- related party

core revenue, net

non-core revenue, net

to the complexity of certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s

16 unchanged sentences

quoting prices to customers.

Although the Company has no history of selling its software separately from maintenance and other

services, the Company does have historical experience with amending contracts with customers to provide additional modules of

its software or providing those modules at an optional price.

This information guides the Company in assessing the stand-alone

selling price of the Company’s software, since the Company can observe instances where a customer had a particular component

of the Company’s software that was essentially priced separate from other goods and services that the Company delivered

to that customer.

Although the Company has no history of selling its software separately from post contract customer

support and other services, the Company does have historical experience with amending contracts with customers to provide additional

modules of its software or providing those modules at an optional price.

This information guides the Company in assessing the

stand-alone selling price of the Company’s software, since the Company can observe instances where a customer had a particular

component of the Company’s software that was essentially priced separate from other goods and services that the Company

delivered to that customer.

Company recognized revenue from implementation and customization services using the percentage of estimated “man-days”

7 unchanged sentences

to Condensed Consolidated Financial Statements

is recognized over time for the Company’s subscription, maintenance and fixed fee professional services that are separate

performance obligations.

For the Company’s professional services, revenue is recognized over time, generally using costs

incurred or hours expended to measure progress.

Judgment is required in estimating project status and the costs necessary to complete

A number of internal and external factors can affect these estimates, including labor rates, utilization, specification

variances and testing requirement changes.

is recognized over time for the Company’s subscription, post contract customer support and fixed fee professional services

that are separate performance obligations.

For the Company’s professional services, revenue is recognized over time, generally

using costs incurred or hours expended to measure progress.

Judgment is required in estimating project status and the costs necessary

to complete projects.

A number of internal and external factors can affect these estimates, including labor rates, utilization,

specification variances and testing requirement changes.

a group of agreements are entered at or near the same time and so closely related that they are, in effect, part of a single arrangement,

22 unchanged sentences

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

March 31, 2020

June 30, 2019

Revenues in excess of billings

Deferred Revenue

the three and nine months ended March 31, 2020, the Company recognized revenue of $586,899 and $5,638,097, respectively, that

was included in the deferred revenue balance 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.

in excess of billings

the three months ended September 30, 2020, the Company recognized revenue of $3,027,636 that was included in the deferred revenue

balance 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.

TECHNOLOGIES, INC.

3 unchanged sentences

revenue in future periods.

Contracted but unsatisfied performance obligations were approximately $63,609,872 as of March 31, 2020,

of which the Company estimates to recognize approximately $13,066,505 in revenue over the next 12 months and the remainder over

an estimated 5 years thereafter.

Actual revenue recognition depends in part on the timing of software modules installed at various

customer sites.

Accordingly, some factors that affect the Company’s revenue, such as the availability and demand for modules

within customer geographic locations, is not entirely within the Company’s control.

In instances where the timing of revenue

recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant

financing component.

The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing

the Company’s products and services, and not to facilitate financing arrangements.

Contracted but unsatisfied performance obligations were approximately $55,260,261 as of September 30,

2020, of which the Company estimates to recognize approximately $11,819,660 in revenue over the next 12 months and the remainder

over an estimated 5 years thereafter.

Actual revenue recognition depends in part on the timing of software modules installed at

various customer sites.

Accordingly, some factors that affect the Company’s revenue, such as the availability and demand

for modules within customer geographic locations, is not entirely within the Company’s control.

In instances where the timing

of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include

a significant financing component.

The primary purpose of invoicing terms is to provide customers with simplified and predictable

ways of purchasing the Company’s products and services, and not to facilitate financing arrangements.

Company typically invoices its customers for subscription and support fees in advance on a quarterly or annual basis, with payment

33 unchanged sentences

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

the three months ended March 31, 2020

the nine months ended March 31, 2020

Basic income (loss) per share:

the three months ended September 30, 2020

income per share:

income available to common shareholders

of dilutive securities

income per share

the three months ended September 30, 2019

loss per share:

loss available to common shareholders

Effect of dilutive securities

Stock options

Diluted income

$ (1,827,947 )

of dilutive securities

loss per share

the three months ended March 31, 2019

the nine months ended March 31, 2019

Basic income per share:

available to common shareholders

Effect of dilutive securities

Stock options

Diluted income

$ (1,827,947 )

following potential dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion

would be anti-dilutive.

For the Three Months

For the Nine Months

Ended March 31,

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

the Three Months

September 30,

OTHER COMPREHENSIVE INCOME AND FOREIGN CURRENCY

15 unchanged sentences

equity section of the consolidated balance sheet were $33,210,231 and $34,085,047

as of March 31, 2020 and June 30, 2019, respectively.

During the three and nine months ended March 31, 2020, comprehensive income

(loss) in the consolidated statements of comprehensive income (loss) included a translation loss attributable to NetSol of $3,608,753

and $940,379, respectively.

During the three and nine months ended March 31, 2019, comprehensive income (loss) in the consolidated

statements of comprehensive income (loss) included a translation loss attributable to NetSol of $28,021 and $4,088,761, respectively.

RELATED PARTY TRANSACTIONS

NetSol-Innovation

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

NetSol-Innovation provided support services to 1insurer.

During the three and nine months ended March 31, 2020, NetSol Innovation

provided $Nil services.

During the three and nine months ended March 31, 2019, NetSol Innovation provided services of $Nil and

$67,286, respectively.

Accounts receivable at March 31, 2020 and June 30, 2019 were $Nil and $2,130,041, respectively.

as of September 30, 2020 and June 30, 2020, respectively.

During the three months ended September 30, 2020 and 2019, comprehensive

income (loss) in the consolidated statements of comprehensive income (loss) included a translation gain attributable to NetSol

of $874,816 and $903,345, respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

MAJOR CUSTOMERS

the nine months ended March 31, 2020, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”)

the three months ended September 30, 2020, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”)

were $2,598,652 and $2,485,229, respectively representing 20.6% and 19.7%, respectively of revenues.

During the nine months ended

March 31, 2019, revenues from DFS and BMW were $17,137,545 and $10,339,704, respectively representing 33.9% and 20.5%, respectively

The revenue from these customers are shown in the Asia –

During the three months ended

September 30, 2019 revenues from these two customers were $5,041,367 and $951,369 representing 37.1% and 7.0% of revenues.

revenue from these customers are shown in the Asia –

Pacific segment.

receivable from DFS and BMW at March 31, 2020, were $5,186,256 and $3,271,459, respectively.

receivable from DFS and BMW at September 30, 2020, were $1,994,215 and $190,217, respectively.

Accounts receivable at June 30,

2020, were $4,821,468 and $474,271, respectively.

Revenues in excess of billings at March 31, 2020 were $5,982,097 and $5,365,137, respectively.

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

Included in this amount was $1,282,898

and $1,281,492 shown as long term at March 31, 2020 and June 30, 2019, respectively.

CONVERTIBLE NOTE RECEIVABLE –

Revenues in excess of billings at September 30, 2020 were $5,287,222 and $6,873,337

for DFS and BMW, respectively.

Revenues in excess of billings at June 30, 2020, were $5,709,226 and $6,977,375 for DFS and BMW,

respectively.

Included in this amount was $Nil and $1,300,289 shown as long term at September 30, 2020 and June 30, 2020, respectively.

CONVERTIBLE NOTES RECEIVABLE –

RELATED PARTY

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.

Company has entered into multiple convertible note receivable agreements with WRLD3D.

The convertible notes bear interest ranging

from 5% to 10% with various maturity dates.

The convertible notes have conversion features which allow the Company to convert

the notes into shares of WRLD3D stock upon the occurrence of certain events.

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.

following table summarizes the convertible notes receivable from WRLD3D.

allowance for doubtful account

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

current assets”.

As of July 1, 2020, the Company is not accruing interest.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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).

following table summarizes the convertible notes receivable from WRLD3D.

February 9, 2018

April 1, 2019

March 31, 2020

August 19, 2019

March 31, 2020

Company has accrued interest of $604,452 and $328,748 at March 31, 2020 and June 30, 2019, respectively, which is included in

“Other current assets.

8 - OTHER CURRENT ASSETS

current assets consisted of the following:

March 31, 2020

June 30, 2019

Prepaid Expenses

Advance Income Tax

Employee Advances

Security Deposits

Other Receivables

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

REVENUES IN EXCESS OF BILLINGS –

in excess of billings, net consisted of the following:

March 31, 2020

June 30, 2019

Revenues in excess of billings - 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 three and nine months ended March 31, 2020, the Company accreted $13,940 and $41,621 which

was recorded in interest income for that period.

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

During the three months ended September 30, 2020 and 2019, the Company accreted $14,060 and $13,860,

respectively, which was recorded in interest income for that period.

The Company used the discounted cash flow method with an

interest rate of 4.35%.

During the quarter, the long-term amount was reclassified as short term upon meeting the billing criteria.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

10 - PROPERTY AND EQUIPMENT

and equipment consisted of the following:

March 31, 2020

June 30, 2019

Office Furniture and Equipment

Computer Equipment

Assets Under Capital Leases

Capital Work In Progress

Accumulated Depreciation

Furniture and Equipment

Under Capital Leases

Work In Progress

(21,998,614 )

(21,288,868 )

Property and Equipment, Net

the three and nine months ended March 31, 2020, depreciation expense totaled $479,350 and $1,429,463, respectively.

Of these amounts,

$273,315 and $805,562, respectively, are reflected in cost of revenues.

For the three and nine months ended March 31, 2019, depreciation

expense totaled $606,641 and $1,704,606, respectively.

Of these amounts, $354,199 and $1,046,153, respectively, are reflected

in cost of revenues.

and Equipment, Net

the three months ended September 30, 2020 and 2019, depreciation expense totaled $496,267 and $465,451, respectively.

amounts, $274,477 and $263,064, respectively, are reflected in cost of revenues.

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

and Other Equipment

Less:Accumulated

Depreciation - Net

lease term and discount rate were as follows:

average remaining lease term - Finance leases

average discount rate - Finance leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

is a summary of fixed assets held under finance leases as of March 31, 2020 and June 30, 2019:

March 31, 2020

June 30, 2019

Computers and Other Equipment

Furniture and Fixtures

Accumulated Depreciation - Net

lease term and discount rate were as follows:

March 31, 2020

Weighted average remaining lease term - Finance leases

Weighted average discount rate - Finance leases

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

28 unchanged sentences

asset and lease liability accounts.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

6 unchanged sentences

balance sheet information related to leases was as follows:

March 31, 2020

Operating lease assets, net

Total Lease Liabilities

components of lease cost were as follows:

For the Nine Months

Ended March 31, 2020

Amortization of finance lease assets

Interest on finance lease obligation

Operating lease cost

Short term lease cost

Sub lease income

Total lease cost

term and discount rate were as follows:

March 31, 2020

Weighted average remaining lease term - Operating leases

Weighted average discount rate - Operating leases

lease assets, net

Lease Liabilities

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

components of lease cost were as follows:

the Three Months

September 30,

of finance lease assets

on finance lease obligation

term lease cost

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:

For the Nine Months

Ended March 31, 2020

Cash flows related to lease liabilities

Operating cash flows related to operating leases

of operating lease liabilities were as follows as of March 31, 2020:

Within year 1

Within year 2

Within year 3

Within year 4

Within year 5

Total Lease Payments

the Three Months Ended

flows related to lease liabilities

cash flows related to operating leases

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

Lease Payments

Imputed interest

Present Value of lease liabilities

Current portion

Non-Current portion

of June 30, 2019, 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

Value of lease liabilities

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

2 unchanged sentences

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

For the three and nine months ended March 31, 2020, the Company

received $8,514 and $25,227 of lease income.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

For the three months ended September 30, 2020 and 2019, the

Company received lease income of $8,624 and $8,199, respectively.

LONG TERM INVESTMENT

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.

(“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 has paid

$405,000 and has received 1,267 shares.

The remaining $95,000 will be paid in increments based on the contract with the final

payment due 24 months from the date of the Drivemate Agreement signing.

As of September 30, 2020, the Company owns 6.23% 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 three and nine months ended March 31, 2020, the Company performed $355,051 and $862,767 of services, respectively.

the equity method of accounting, the Company recorded its share of net loss of $5,667 and $16,915 for the three and nine months

ended March 31, 2020, respectively.

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 three months ended September 30, 2020 and 2019, the Company performed $Nil and $204,615 of services, respectively.

the equity method of accounting, the Company recorded its share of net income of $595 and share of net loss of $5,392 for the

three months ended September 30, 2020 and 2019, respectively.

WRLD3D-Related

4 unchanged sentences

in WRLD3D, for $2,777,778 which was earned by providing IT and enterprise software solutions.

the three and nine months ended March 31, 2020, NetSol PK provided services valued at $61,842 and $202,199, respectively, which

is recorded as services-related party.

During the three months and nine months ended March 31, 2019, NetSol PK provided services

valued at $156,996 and $494,333, respectively, which is recorded as services-related party.

Accounts receivable at March 31, 2020

and June 30, 2019 were $1,332,575 and $1,020,589, respectively.

Revenue in excess of billings at March 31, 2020 and June 30, 2019

were $8,245 and $110,827, respectively.

the equity method of accounting, the Company recorded its share of net loss of $72,835 and $415,607 for the three and nine months

ended March 31, 2020, respectively, and the Company recorded its share of net loss of $245,389 and $843,373 for the three and

nine months ended March 31, 2019, respectively.

following table reflects the above investments at March 31, 2020.

Initial investment

Cumulative net loss on investment

Cumulative Other comprehensive income (loss)

Net Investment

NetSol PK has not provided services

to WRLD3D for the three months ended September 30, 2020, and has provided services of $82,933 for the three months ended

September 30, 2019, which is recorded as services-related party.

Accounts receivable and revenue in excess of billing were

$1,373,099 and $8,163 at June 30, 2020, respectively.

Upon adoption of ASC 326, an allowance was established for the full amounts

of these accounts.

The net balances of accounts receivable and revenues in excess of billing were $Nil at September 30, 2020.

the equity method of accounting, the Company recorded its share of net loss of $108,445 and $183,832 for the three months ended

September 30, 2020 and 2019, respectively.

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

net loss on investment

other comprehensive income (loss)

TECHNOLOGIES, INC.

2 unchanged sentences

assets consisted of the following:

March 31, 2020

June 30, 2019

Product Licenses - Cost

Effect of Translation Adjustment

Licenses - Cost

of Translation Adjustment

(15,659,211 )

(16,045,322 )

Accumulated Amortization

(26,553,156 )

4 unchanged sentences

will be amortized over the next 3 years.

Amortization expense for the three and nine months ended March 31, 2020 was $464,322

Amortization expense for the three months ended September 30, 2020 and 2019 was $432,772

and $456,601, respectively.

Amortization expense for the three and nine months ended March 31, 2019 was $520,455 and $1,646,153,

respectively.

Future Amortization

amortization expense of intangible assets over the next five years is as follows:

March 31, 2021

March 31, 2022

March 31, 2023

March 31, 2024

14 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

March 31, 2020

June 30, 2019

Accounts Payable

Accrued Liabilities

Accrued Payroll & Taxes

Taxes Payable

Other Payable

Payroll & Taxes

TECHNOLOGIES, INC.

1 unchanged sentence

payable and finance leases consisted of the following:

As of March 31, 2020

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

Loan Payable Bank - Export Refinance III

Related Party Loan

Subsidiary Finance Leases

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

Loan Payable Bank - Export Refinance III

Related Party Loan

Subsidiary Finance Leases

of September 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, 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

The Company finances Directors’

3 unchanged sentences

such, are recorded in current maturities.

The interest rate on these financings were ranging from 5.0% to 7.0% as of March 31,

The interest rate on these financings were ranging from 5.0% to 7.0% as of September

30, 2020 and June 30, 2020.

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 September

30, 2020, the Company has not applied for the loan forgiveness.

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

up to £300,000, or approximately $384,615.

The annual interest rate was 5.12% as of March 31, 2020.

Total outstanding balance

as of March 31, 2020 was £Nil.

overdraft facility requires that the aggregate amount of invoiced trade debtors (net of provisions for bad and doubtful debts

and excluding intra-group debtors) of NTE, not exceeding 90 days old, will not be less than an amount equal to 200% of the facility.

As of March 31, 2020, NTE was in compliance with this covenant.

The annual interest rate was 5.12% as of September 30, 2020.

The total outstanding

balance as of September 30, 2020 was £Nil.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

overdraft facility requires that the aggregate amount of invoiced trade debtors (net of provisions for bad and doubtful debts

and excluding intra-group debtors) of NTE, not exceeding 90 days old, will not be less than an amount equal to 200% of the facility.

As of September 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 the Pandemic COVID-19.

This is a term loan payable in three years.

facility amount was Rs.

348,509,008 or $2,103,507, at September 30, 2020, of which $719,364 is shown as current and the remaining

$1,384,143 is shown as long term.

The availed facility amount was Rs.

232,042,664 or $1,380,878, at June 30, 2020, of which $354,337

is shown as current and the remaining $1,026,541 is shown as long term.

The interest rate for the loan was 3% at September 30,

2020 and June 30, 2020.

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

This is a revolving loan that matures every nine months.

Total facility amount is Rs.

500,000,000 or $3,005,350 at March

31, 2020 and Rs.

The total facility amount is Rs.

500,000,000 or $3,017,867 at

September 30, 2020 and Rs.

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

The interest rate for the loan was 3% at March 31, 2020 and June

The interest rate for the loan was 3% at September 30,

2020 and June 30, 2020.

The Company’s subsidiary, NetSol PK, has a running finance facility with Askari Bank Limited, secured by NetSol PK’s

Total facility amount is Rs.

75,000,000 or $450,802, at March 31, 2020.

NetSol PK used Rs.

Nil, or $Nil at March 31, 2020.

The interest rate for the loan was 13.2% and 13.0% at March 31, 2020 and June 30, 2019, respectively.

The total facility amount is Rs.

75,000,000 or $452,680, at September 30, 2020.

The balance outstanding at September 30,

2020 and June 30, 2020 was Rs.

The interest rate for the loan was 9.25% and 7.2% at September 30, 2020 and June 30, 2020,

respectively.

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

As of March 31, 2020,

As of September 30,

2020, NetSol PK was in compliance with this covenant.

1 unchanged sentence

This is a revolving loan that matures every nine months.

Total facility amount is Rs.

380,000,000 or $2,284,065 and Rs.

380,000,000 or $2,330,431 at March 31, 2020 and June 30, 2019, respectively.

The interest rate for the loan was 3% at March 31,

2020 and June 30, 2019.

The total facility amount is Rs.

380,000,000 or $2,297,577 and

380,000,000 or $2,261,366 at September 30, 2020 and June 30, 2020, respectively.

The interest rate for the loan was 3% at

September 30, 2020 and June 30, 2020.

The Company’s subsidiary, NetSol PK, has a running finance facility with Samba Bank Limited, secured by NetSol PK’s

Total facility amount is Rs.

The total facility amount is Rs.

120,000,000 or $724,288 and Rs.

120,000,000 or $735,925, at March 31, 2020 and June 30, 2019,

respectively.

The interest rate for the loan was 12.9% and 14.3% at March 31, 2020 and June 30, 2019, respectively.

Total outstanding

balance at March 31, 2020 was Rs.

120,000,000 or $714,116, at September 30, 2020

and June 30, 2020, respectively.

The interest rate for the loan was 8.75% and 7.7% at September 30, 2020 and June 30, 2020, respectively.

The balance outstanding at September 30, 2020 and June 30, 2020 was Rs.

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.

As of September

30, 2020, NetSol PK was in compliance with these covenants.

1 unchanged sentence

This is a revolving loan that matures every nine months.

Total facility amount is Rs.

900,000,000 or $5,409,629 and NetSol

500,000,000 or $3,005,350 at March 31, 2020.

The interest rate for the loan was 3% at March 31, 2020.

The total facility amount is Rs.

900,000,000 or $5,432,158 and

NetSol PK used Rs.

500,000,000 or $3,017,867 at September 30, 2020.

The total facility amount is Rs.

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

and NetSol PK used Rs.

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

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

and June 30, 2020.

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

The loan amount was £69,549, or $85,863,

for a period of 5 years with monthly payment of £1,349, or $1,666.

As of March 31, 2020, the subsidiary has used this facility

up to $69,425, of which $53,251 was shown as long-term and $16,174 as current.

The interest rate was 6.14% at March 31, 2020.

for a period of 5 years with monthly payments of £1,349, or $1,666.

As of September 30, 2020, the subsidiary has used this

facility up to $61,462, of which $44,785 was shown as long-term and $16,677 as current.

The interest rate was 6.14% at September

The Company leases various fixed assets under finance lease arrangements expiring in various years through 2024.

4 unchanged sentences

Depreciation of assets under finance leases is included in depreciation

expense for the three months ended March 31, 2020 and 2019.

expense for the three months ended September 30, 2020 and 2019.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

is the aggregate minimum future lease payments under finance leases as of March 31, 2020:

is the aggregate minimum future lease payments under finance leases as of September 30, 2020:

Lease Payments

Minimum Lease Payments

Within year 1

Within year 2

Within year 3

Within year 4

Total Minimum Lease Payments

Interest Expense relating to future periods

Present Value of minimum lease payments

Current portion

Non-Current portion

Expense relating to future periods

Value of minimum lease payments

16 - STOCKHOLDERS’

the nine months ended March 31, 2020, the Company issued 42,818 shares of common stock for services rendered by officers of the

the three months ended September 30, 2020, the Company issued 3,020 shares of common stock for services rendered by officers of

These shares were valued at the fair market value of $17,068.

the nine months ended March 31, 2020, the Company issued 21,615 shares of common stock for services rendered by the independent

the three months ended September 30, 2020, the Company issued 1,983 shares of common stock for services rendered by the independent

members of the Board of Directors as part of their board compensation.

These shares were valued at the fair market value of $11,997.

the nine months ended March 31, 2020, the Company issued 62,522 shares of its common stock to employees pursuant to the terms

the three months ended September 30, 2020, the Company issued 9,893 shares of its common stock to employees pursuant to the terms

of their employment agreements valued at $57,948.

17 - INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN

stock purchase options consisted of the following:

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (in years)

Aggregated Intrinsic Value

Outstanding and exercisable, June 30, 2019

Expired / Cancelled

Outstanding and exercisable, March 31, 2020

the nine months ended March 31, 2020, 40,386 options outstanding and exercisable, became expired.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table summarizes stock grants awarded as compensation:

Weighted Average Grant Date Fair Value ($)

Unvested, June 30, 2019

Forfeited / Cancelled

Unvested, March 31, 2020

the three and nine months ended March 31, 2020, the Company recorded compensation expense of $236,702 and $565,287, respectively.

For the three and nine months ended March 31, 2019, the Company recorded compensation expense of $110,939 and $980,682, respectively.

The compensation expense related to the unvested stock grants as of March 31, 2019 was $539,603 which will be recognized during

Average Grant Date Fair Value ($)

June 30, 2020

September 30, 2020

the three months ended September 30, 2020 and 2019, the Company recorded compensation expense of $90,617 and $164,293, respectively.

The compensation expense related to the unvested stock grants as of September 30, 2020 was $282,612 which will be recognized during

the fiscal years 2021 through 2022.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

CONTINGENCIES

26 unchanged sentences

parties and eliminates them in the consolidation.

following table presents a summary of identifiable assets as of September 30, 2020 and June 30, 2020:

following table presents a summary of investment under equity method as of September 30, 2020 and June 30, 2020:

in associates under equity method:

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table presents a summary of identifiable assets as of March 31, 2020 and June 30, 2019:

March 31, 2020

June 30, 2019

Identifiable assets:

Corporate headquarters

North America

Asia - Pacific

following table presents a summary of investment under equity method as of March 31, 2020 and June 30, 2019:

March 31, 2020

June 30, 2019

Investment in associates under equity method:

Corporate headquarters

Asia - Pacific

following table presents a summary of operating information for the three and nine months ended March 31:

For the Three Months

For the Nine Months

Ended March 31,

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

$ (1,003,798 )

following table presents a summary of operating information for the three months ended September 30:

the Three Months

September 30,

from unaffiliated customers:

from affiliated customers

income (loss) after taxes and before non-controlling interest:

$ (2,261,259 )

North America

Asia - Pacific

following table presents a summary of capital expenditures for the three months ended September 30:

the Three Months

September 30,

expenditures:

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table presents a summary of capital expenditures for the nine months ended March 31:

For the Nine Months

Ended March 31,

Capital expenditures:

North America

Asia - Pacific

NON-CONTROLLING INTEREST IN SUBSIDIARY

1 unchanged sentence

The balance of non-controlling interest was as follows:

Non-Controlling Interest %

Non-Controlling Interest at

March 31, 2020

Non-Controlling

Interest at September 30, 2020

NetSol-Innovation

Non-Controlling Interest %

Non-Controlling Interest at

Non-Controlling

June 30, 2020

NetSol-Innovation

the nine months ended March 31, 2020, employees of NetSol PK exercised 114,000 options of common stock and NetSol PK received

cash of $11,261.

Due to the exercise of options, the non-controlling interest increased from 33.80% to 33.88%.

During the nine

months ended March 31, 2020, NetSol PK paid a cash dividend of $1,610,909.

the nine months ended March 31, 2020, NetSol Innovation paid a cash dividend of $2,778,453.

current tax provision is based on taxable income for the year determined in accordance with the prevailing law for taxation of

The charge for tax on income is calculated at the current rates of taxation as applicable after considering tax credit

and tax rebates available, if any.

We are subject to income taxes in the U.S.

and numerous foreign jurisdictions.

Our effective

tax rate is lower than the U.S.

statutory rate primarily because of more earnings realized in countries that have lower statutory

Our effective tax rate in the future will depend on the portion of our profits earned within and outside the United

Income from the export of computer software and its related services developed in Pakistan is exempt from tax through

June 30, 2025;

however, tax at the applicable rates is charged to the income from revenue generated from other than core business

the three months ended September 30, 20120 and 2019, the Company recorded an income tax provision of $264,294 and $238,238, respectively,

resulting in an effective tax rate of 19.0% and (14.9%), respectively.

SUBSEQUENT EVENTS

recent outbreak of the coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide

economic activity.

Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented

emergency measures to mitigate the spread of the virus.

The outbreak and the related mitigation measures have had and will continue

to have a material adverse impact on global economic conditions as well as on the Company's business activities.

The extent to

which COVID-19 may impact the Company's business activities will depend on future developments, such as the ultimate geographic

spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions

taken in the United States and other countries to contain and treat the disease.

These events are highly uncertain and, as such,

the Company cannot determine their financial impact at this time.

No adjustments have been made to the amounts reported in these

condensed consolidated financial statements as a result of this matter.

to September 30, 2020, the Company purchased an additional 102,023 shares at an average price of $2.94 per share pursuant to the

stock repurchase plan approved by the Company’s Board of Directors on July 30, 2020.

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

following discussion is intended to assist in an understanding of the Company’s financial position and results of operations

for the three and nine months ended March 31, 2020.

The following discussion should be read in conjunction with the information

included within our Annual Report on Form 10-K for the year ended June 30, 2019, and the Condensed Consolidated Financial Statements

and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

for the three months ended September 30, 2020.

The following discussion should be read in conjunction with the information included

within our Annual Report on Form 10-K for the year ended June 30, 2020, and the Condensed Consolidated Financial Statements and

notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

website is located at www.netsoltech.com , and our investor relations website is located at http://ir.netsoltech.com .

93 unchanged sentences

and auditing as well as allowing end customers to access their contract details through a self-service mobile application.

Mobility Orchestration System

is a digital platform that helps automotive asset-holders (auto-manufacturers, auto-captives and fleet owners) and start-ups to

launch, orchestrate and scale mobility businesses.

Otoz platform is built on cutting-edge technology stack which comprises of

Cloud-Native Architecture, Microservices, Artificial Intelligence, Machine Learning, Blockchain, DevOps and APIs.

Otoz powerful

feature-set allows automotive asset-holders with the ability to orchestrate a range of car-share and vehicle subscription services.

The data-driven nature of platform empowers automotive asset-holders to maximize optimize and utilize mobility offerings.

enables customers to book car-share and subscribe to vehicles through its intuitive, digital, and easy to use interface.

driven architecture allows quick integration of ecosystem partners such as maintenance, roadside and offline jobs providers to

allow seamless operation of mobility services.

North America, NTA has and continues to develop the LeasePak CMS product which is now tailored to be an offering on the Microsoft

23 unchanged sentences

is similar to LeaseSoft, but optimized for the consumer loan market.

below are a few of NetSol’s highlights for the quarter ended March 31, 2020:

generated close to $2.0 million from the successful implementation of change requests from various customers across multiple

of the largest independently owned finance companies in the UK had a successful go live with our LeaseSoft application.

signed a contract with one of the leading banks in the UK to implement its NFS Ascent ®

Retail Platform.

has now marked the first retail customer of NFS Ascent ®

innovation lab project “OTOZ”

entered into a contract with the captive auto finance company of a leading German

auto manufacturer in China to launch its pilot program in China.

upsold system enhancements during the implementation phase worth approximately $4.0 million of additional revenue to the captive

auto finance company of a leading German Auto manufacturer in China.

delivered our NFS Ascent ®

Retail system to the first NFS Ascent ®

customer in North America.

delivered our NFS Ascent ®

Retail platform to the captive auto finance company of a notable Japanese equipment

manufacturer in Australia/New Zealand.

leading captive finance company of a notable Japanese bank in Indonesia implemented the i-OPS (i-operations) system in a bid

to extend their market reach by allowing their call center workforce contact prospects and act as an additional channel for

lead generation.

success, in the near term, will depend, in large part, on the Company’s ability to continue to grow revenues and improve

profits, adequately capitalize for growth in various markets and verticals, make progress in the North American and European markets

and, continue to streamline sales and marketing efforts in every market we operate.

However, management’s outlook for the

continuing operations, which has been consolidated and has been streamlined, remains optimistic.

below are a few of NetSol’s highlights for the quarter ended September 30, 2020:

Lease Corp, our first North American Ascent™

customer, successfully went live with NFS Ascent™.

Minshall was appointed Executive Vice President for NetSol Technologies Americas.

leading captive finance company of a notable U.S.

based auto manufacturer went live with LeasePak cloud.

NETSOL’s

majority owned mobility startup, Otoz, is partnering to launch its digital automotive retail platform for a U.S.

based subsidiary

of a renowned German Auto Manufacturer for one of its key brands.

effectively generated approximately $1.3 million by successfully implementing change requests from various customers

across multiple regions.

Financial Services went live with NFS Ascent™

Retail Platform on a single code, single instance and involving multi-tenancy

setup in Singapore.

began the implementation process for Daimler Financial Services in New Zealand and Australia.

has identified the following material trends affecting NetSol.

SaaS offering is gaining traction in mid-size auto captives in North American and European markets.

and digital transformation is the new norm showing acceleration in every sector particularly in auto and banking.

SaaS offering is gaining traction in mid-size auto captives in the North American and European markets.

and digital transformation are the new norm showing acceleration in every sector particularly in auto and banking.

Cloud demand for our solution is on the rise.

-19 has created new dynamics for businesses and corporations to have employees and executives work from home.

the decreased office and maintenance costs as well as the sharply reduced travel expenses, should positively impact our financials.

is creating newer opportunities in our space or complementary sectors while our R&D teams are exploring new windows to

American markets, primarily in Mexico, remain largely untapped.

developing markets, new interests are emerging from existing clients for upgradation and mobility platform.

has created new dynamics for businesses and corporations with employees and executives working from home.

Essentially, the

decreased office and maintenance costs, as well as the sharply reduced travel expenses, should positively impact our financials.

is creating new opportunities for our R&D teams to expand and monetize mobile and digital solutions in our space and complementary

developing markets, new interests are emerging from existing clients for upgrades and mobility platforms.

opportunities and dynamics of shared car ownership either through ride hailing and car sharing encouraging our innovation

and development tools.

engagement and continued traction by tier 1 existing and new customers in the OTOZ platform.

stability in US and Pakistan relationship boosting confidence and trade relations.

platform is showing positive trajectory of interest from existing and new auto leasing and Tier 1 companies in all of our

markets, including China, the US and Europe.

stability in U.S.

and Pakistan relationship boosting confidence and trade relations.

China’s

1 unchanged sentence

on Pakistan energy and infrastructure sectors.

auto sector remains strong as our customers are constantly demanding ‘Change Requests’

or additional services

and reflects resilience.

has caused a global recession that will adversely impact every one of our business sectors.

NetSol Board member, Shahid

Burki, a renowned World Bank economist (1974 to 1999), warns that the COVID-19 crisis will bring about important global change.

The United States is heading towards a major economic slowdown and what we are seeing, therefore, is not a typical recession

but a hurricane.

OEMs and auto sectors are experiencing major slowdown due to lockdowns and health concerns.

OEMs and auto sectors are experiencing a major slowdown due to lockdowns and health concerns.

C-level decision making to acquire new systems or even upgrade will be elongated due to uncertainty of the COVID-19 virus.

steep drop of global oil prices reflects a sudden drop in transportation, air travels and road travels.

The lockdowns worldwide

present layers of challenges for every business worldwide.

tensions between US and Iran could further accelerate.

from the office poses its own risk of virus spread until it vanishes completely.

and China trade conflicts tend to further aggravate the global business environment.

outlook for auto sector is uncertain if the recessionary impact worsens.

IN FINANCIAL CONDITION

Ended March 31, 2020 Compared to the Quarter Ended March 31, 2019

following table sets forth the items in our unaudited condensed consolidated statement of operations for the quarter ended March

31, 2020 and 2019 as a percentage of revenues.

For the Three Months

Ended March 31,

Net Revenues:

Maintenance fees

Services - related party

Total net revenues

Ended September 30, 2020 Compared to the Quarter Ended September 30, 2019

following table sets forth the items in our unaudited condensed consolidated statement of operations for the three months ended

September 30, 2020 and 2019 as a percentage of revenues.

the Three Months

September 30,

- 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 from operations

Other income and (expenses)

Gain (loss) on sale of assets

Interest expense

Interest income

Gain (loss) on foreign currency exchange transactions

Share of net loss from equity investment

Total other income (expenses)

Net income (loss) before income taxes

Income tax provision

Net income (loss)

Non-controlling interest

Net income (loss) attributable to NetSol

(loss) from operations

income and (expenses)

on sale of assets

(loss) on foreign currency exchange transactions

of net loss from equity investment

other income (expenses)

income (loss) before income taxes

tax provision

income (loss)

Non-controlling

income (loss) attributable to NetSol

$ (1,827,947 )

significant portion of our business is conducted in currencies other than the U.S.

16 unchanged sentences

(Unfavorable)

the Three Months

(Unfavorable)

$ (2,593,911 )

$ (1,002,307 )

$ (3,596,218 )

(Unfavorable)

September 30,

(loss) from operations

$ (2,486,719 )

$ (2,468,971 )

revenues for the quarter ended March 31, 2020 and 2019 are broken out among the segments as follows:

North America

fees for the three months ended March 31, 2020 were $312,133 compared to $2,536,320 for the three months ended March 31, 2019

revenues for the quarter ended September 30, 2020 and 2019 are broken out among the segments as follows:

fees for the three months ended September 30, 2020 were $3,475 compared to $2,464,216 for the three months ended September 30,

2019 reflecting a decrease of $2,460,741 with a change in constant currency of $2,465,909.

During the three months ended March 31,

2019, we recognized approximately $2,100,000 related to the DFS contract, to implement our NFS Ascent ®

Retail Platform.

During the three months ended March 31, 2020, license fees were for additional licenses being sold with our other regional offerings.

fees for the three months ended March 31, 2020 were $4,934,635 compared to $3,704,756 for the three months ended March 31, 2019

reflecting an increase of $1,229,879 with a change in constant currency of $1,597,826.

The increase is primarily due to the DFS

markets going live with NFS Ascent®.

Maintenance fees begin once a customer has “gone live”

During the three months ended September

30, 2019, we recognized approximately $2,455,000 related to the DFS contract.

and support fees for the three months ended September 30, 2020 were $5,171,863 compared to $4,606,376 for the three months ended

September 30, 2019 reflecting an increase of $565,487 with a change in constant currency of $682,173.

Subscription and support

fees begin once a customer has “gone live”

with our product.

We anticipate maintenance fees to gradually increase as we implement both our NFS legacy product and NFS Ascent ®

income for the three months ended March 31, 2020 was $8,222,227 compared to $10,728,983 for the three months ended March 31, 2019

reflecting a decrease of $2,506,756 with a decrease in constant currency of $1,880,980.

The decrease in services revenue was due

to a decrease in services revenue associated with new implementations for DFS and BMW and change requests.

Services revenue is

derived from services provided to both current customers as well as services provided to new customers as part of the implementation

Subscription and support fees are recurring in nature,

and we anticipate these fees to gradually increase as we implement both our NFS legacy products and NFS Ascent ®

income for the three months ended September 30, 2020 was $7,472,040 compared to $6,418,891 for the three months ended September

30, 2019 reflecting an increase of $1,053,149 with an increase in constant currency of $1,127,724.

Services revenue is derived

from services provided to both current customers as well as services provided to new customers as part of the implementation process.

related party

income from related party for the three months ended March 31, 2020 was $61,842 compared to $156,996 for the three months ended

March 31, 2019 reflecting a decrease of $95,154 with a change in constant currency of $87,779.

The decrease in related party service

revenue is due to a decrease in revenue from WRLD3D.

gross profit was $6,022,238, for the three months ended March 31, 2020 as compared with $8,557,320 for the three months ended

March 31, 2019.

This is a decrease of $2,535,082 with a change in constant currency of $2,192,410.

income from related party for the three months ended September 30, 2020 was $Nil compared to $82,933 for the three months ended

September 30, 2019 reflecting a decrease of $82,933 with a change in constant currency of $82,933.

The decrease in related party

service revenue is due to a decrease in service revenue related to services performed for WRLD3D.

gross profit was $6,381,575, for the three months ended September 30, 2020 as compared with $6,110,628 for the three months ended

September 30, 2019.

This is an increase of $270,947 with a change in constant currency of $272,784.

The gross profit percentage

for the three months ended March 31, 2020 also decreased to 44.5% from 50.0% for the three months ended March 31, 2019.

of sales was $7,508,599 for the three months ended March 31, 2020 compared to $8,569,735 for the three months ended March 31,

2019 for a decrease of $1,061,136 and on a constant currency basis a decrease of $401,501.

As a percentage of sales, cost of sales

increased from 50.0% for the three months ended March 31, 2019 to 55.5% for the three months ended March 31, 2020.

and consultant fees increased by $16,827 from $4,833,611 for the three months ended March 31, 2019 to $4,850,438 for the three

months ended March 31, 2020 and on a constant currency basis increased $426,558.

The increase, based on constant currency, is

due to annual salary increases and the hiring of technical personnel.

As a percentage of sales, salaries and consultant expense

increased from 28.2% for the three months ended March 31, 2019 to 35.9% for the three months ended March 31, 2020.

costs decreased by $741,931 from $1,793,964 for the three months ended March 31, 2019 to $1,052,033 for the three months ended

March 31, 2020 and on a constant currency basis decreased by $652,344.

The decrease in travel expense is due to the spread of

As a percentage of sales, travel expense decreased from 10.5% for the three months ended March 31, 2019 to 7.8% for

the three months ended March 31, 2020.

and amortization expense decreased to $737,637 compared to $874,654 for the three months ended March 31, 2019 or a decrease of

$137,017 and on a constant currency basis a decrease of $48,712.

Depreciation and amortization expense decreased as some products

became fully amortized.

expenses were $6,398,300 for the three months ended March 31, 2020 compared to $6,464,411, for the three months ended March 31,

2019 for a decrease of 1.0% or $66,111 and on a constant currency basis an increase of 4.6% or $294,309.

As a percentage of sales,

it increased from 37.7% to 47.3%.

The increase in operating expenses was primarily due to increases in general and administrative

expenses, and salaries and wages offset by decreases in selling and marketing expenses, and professional services.

for the three months ended September 30, 2020 also increased to 50.5% from 45.0% for the three months ended September 30, 2019.

The cost of sales was $6,265,803 for the three months ended September 30, 2020 compared to $7,461,788 for the three months ended

September 30, 2019 for a decrease of $1,195,985 and on a constant currency basis a decrease of $1,011,729.

As a percentage of

sales, cost of sales decreased from 55.0% for the three months ended September 30, 2019 to 49.5% for the three months ended September

and consultant fees increased by $71,685 from $4,454,964 for the three months ended September 30, 2019 to $4,526,649 for the three

months ended September 30, 2020 and on a constant currency basis increased $199,662.

The increase is due to annual salary raises

offset by a reduction in salaries as part of our cost savings measure due to the COVID-19 pandemic.

As a percentage of

sales, salaries and consultant expense increased from 32.8% for the three months ended September 30, 2019 to 35.8% for the three

months ended September 30, 2020.

expense was $103,752 for the three months ended September 30, 2020 compared to $1,342,635 for the three months ended September

30, 2019 for a decrease of $1,238,883 with a decrease in constant currency of $1,238,430.

The decrease in travel expense is due

to the travel restrictions associated with the COVID-19 pandemic.

and amortization expense decreased to $707,249 compared to $719,665 for the three months ended September 30, 2019 or a decrease

of $12,416 and on a constant currency basis an increase of $26,144.

expenses were $5,345,019 for the three months ended September 30, 2020 compared to $6,537,838, for the three months ended September

30, 2019 for a decrease of 18.2% or $1,192,819 and on a constant currency basis a decrease of 17.9% or $1,171,910.

As a percentage

of sales, it decreased from 48.2% to 42.3%.

The decrease in operating expenses was primarily due to decreases in selling and marketing

expenses, professional services, research and development and general and administrative expenses.

and marketing expenses decreased $134,264 or 7.7% and on a constant currency basis decreased $97,150 or 5.6%.

was primarily due to a decrease in salaries and commissions.

and administrative expenses were $4,151,394 for the three months ended March 31, 2020 compared to $3,833,209 for the three months

ended March 31, 2019 or an increase of $318,185 or 5.8% and on a constant currency basis an increase of $528,536 or 13.8%.

increase is primarily due to the increase in withholding taxes on funds received from China, , provision for doubtful debts, salaries,

and rent expense, offset by decreases in professional services.

and development cost were $453,050 for the three months ended March 31, 2020 compared to $513,770 for the three months ended March

The decrease in

selling and marketing expenses based on constant currency is due to a decrease in travel expenses and business development costs

to market and sell NFS Ascent ®

and administrative expenses were $3,427,636 for the three months ended September 30, 2020 compared to $3,918,613 at September

30, 2019 or a decrease of $490,977 or 12.5% and on a constant currency basis a decrease of $509,864 or 13.0%.

(loss) from Operations

from operations was $376,062 for the three months ended March 31, 2020 compared to income of $2,092,909 for the three months ended

March 31, 2019.

This represents a decrease of $2,468,971 with a decrease of $2,486,719 on a constant currency basis.

During the three

months ended September 30, 2020, salaries increased by approximately $33,860 or $38,692 on a constant currency basis, other general

and administrative expenses decreased approximately $423,507 or $446,399 on a constant currency basis, and professional services

decreased approximately $101,330 or $102,157 on constant currency bases.

from Operations

from operations was $1,036,556 for the three months ended September 30, 2020 compared to a loss from operations of $427,210 for

the three months ended September 30, 2019.

This represents an increase of $1,463,766 with an increase of $1,444,694 on a constant

currency basis for the three months ended September 30, 2020 compared with the three months ended September 30, 2019.

As a percentage

of sales, loss from operations was 2.8% for the three months ended March 31, 2020 compared to income of 12.2% for the three months

ended March 31, 2019.

of sales, income from operations was 8.2% for the three months ended September 30, 2020 compared to a loss of 3.1% for the three

months ended September 30, 2019.

Income and Expense

income was $2,063,506 for the three months ended March 31, 2020 compared to other expense of $48,038 for the three months ended

March 31, 2019.

income was $351,215 for the three months ended September 30, 2020 compared to other expense of $1,595,811 for the three months

ended September 30, 2019.

This represents an increase of $1,947,026 with an increase of $1,935,075 on a constant currency basis.

is primarily due to the foreign currency exchange transactions.

The majority of the contracts with NetSol PK are either in U.S.

The increase is primarily due to the foreign currency exchange transactions.

The majority of the contracts with NetSol PK are

either in U.S.

dollars or Euros;

therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the

value of the PKR compared to the U.S.

dollar and the Euro.

During the three months ended March 31, 2020, we recognized a gain

of $1,770,894 in foreign currency exchange transactions compared to $47,218 for the three months ended March 31, 2019.

the three months ended March 31, 2020, the value of the U.S.

dollar increased 7.4% and the value of the Euro increased 5.4%, respectively,

compared to the PKR.

During the three months ended March 31, 2019, the value of the U.S.

dollar and the Euro increased 0.8% and

1.2%, respectively, compared to the PKR.

Non-controlling

the three months ended March 31, 2020, the net income attributable to non-controlling interest was $468,286, compared to $501,835

for the three months ended March 31, 2019.

The change in non-controlling interest is primarily due to the decrease in net income

of NetSol PK.

Income attributable to NetSol

income was $1,000,807 for the three months ended March 31, 2020 compared to $1,267,560 for the three months ended March 31, 2019.

This is a decrease of $266,753 with a decrease of $169,054 on a constant currency basis, compared to the prior year.

For the three

months ended March 31, 2020, net income per share was $0.09 for basic and diluted shares compared to $0.11 for basic and diluted

shares for the three months ended March 31, 2019.

Months Ended March 31, 2020 Compared to the Nine Months Ended March 31, 2019

following table sets forth the items in our unaudited condensed consolidated statement of operations for the nine months ended

March 31, 2020 and 2019 as a percentage of revenues.

For the Nine Months

Ended March 31,

Net Revenues:

Maintenance fees

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 (loss) on foreign currency exchange transactions

Share of net loss from equity investment

Total other income (expenses)

Net income (loss) before income taxes

Income tax provision

Net income (loss)

Non-controlling interest

Net income (loss) attributable to NetSol

significant portion of our business is conducted in currencies other than the U.S.

We operate in several geographical

regions as described in Note 20 “Operating Segments”

within the Notes to the Condensed Consolidated Financial Statements.

Weakening of the value of the U.S.

dollar compared to foreign currency exchange rates generally has the effect of increasing our

revenues but also increasing our expenses denominated in currencies other than the U.S.

Similarly, strengthening of the

dollar compared to foreign currency exchange rates generally has the effect of reducing our revenues but also reducing our

expenses denominated in currencies other than the U.S.

We plan our business accordingly by deploying additional resources

to areas of expansion, while continuing to monitor our overall expenditures given the economic uncertainties of our target markets.

In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency

fluctuations, we compare the changes in results from one period to another period using constant currency.

In order to calculate

our constant currency results, we apply the current period results to the prior period foreign currency exchange rates.

table below, we present the change based on actual results in reported currency and in constant currency.

(Unfavorable)

For the Nine Months

Change due to

(Unfavorable)

Ended March 31,

Net Revenues:

$ (2,887,868 )

$ (4,845,087 )

$ (7,732,955 )

Cost of revenues:

Operating expenses:

Income (loss) from operations

$ (5,776,537 )

$ (5,980,594 )

revenues for the nine months ended March 31, 2020 and 2019 are broken out among the segments as follows:

North America

fees for the nine months ended March 31, 2020 were $3,375,241 compared to $13,310,002 for the nine months ended March 31, 2019

reflecting a decrease of $9,934,761 with a change in constant currency of $9,248,402.

The decrease in license revenue for the

nine months ended March 31, 2020 compared to the nine months ended March 31, 2019 is primarily due to the decrease in license

revenue recognized for the DFS and BMW contracts to implement our NFS Ascent ®

Retail Platform.

fees for the nine months ended March 31, 2020 were $14,291,959 compared to $11,106,155 for the nine months ended March 31, 2019

reflecting an increase of $3,185,804 with a change in constant currency of $4,689,011.

The increase is primarily due to the DFS

markets going live with NFS Ascent®.

Maintenance fees begin once a customer has “gone live”

with our product.

We anticipate maintenance fees to gradually increase as we implement both our NFS legacy product and NFS Ascent ®

income for the nine months ended March 31, 2020 was $24,923,873 compared to $25,548,451 for the nine months ended March 31, 2019

reflecting a decrease of $624,578 with an increase in constant currency of $1,934,545.

The services revenue increase in constant

currency was due to an increase in services revenue associated with new implementations and change requests.

Services revenue

is derived from services provided to both current customers as well as services provided to new customers as part of the implementation

related party

income from related party for the nine months ended March 31, 2020 was $202,199 compared to $561,619 for the nine months ended

March 31, 2019 reflecting a decrease of $359,420 with a decrease in constant currency of $263,022.

The decrease in related party

service revenue is due to a decrease in revenue from our joint venture with 1insurer of approximately $67,286 and approximately

$292,134 in service revenue related to services performed for WRLD3D.

gross profit was $19,934,826, for the nine months ended March 31, 2020 as compared with $25,653,949 for the nine months ended

March 31, 2019.

This is a decrease of $5,719,123 with a change in constant currency of $3,954,141.

The gross profit percentage

for the nine months ended March 31, 2020 decreased to 46.6% from 50.8% for the nine months ended March 31, 2019.

The cost of sales

was $22,858,446 for the nine months ended March 31, 2020 compared to $24,872,278 for the nine months ended March 31, 2019 for

a decrease of $2,013,832 and on a constant currency basis an increase of $1,066,273.

As a percentage of sales, cost of sales increased

from 49.2% for the nine months ended March 31, 2019 to 53.4% for the nine months ended March 31, 2020.

and consultant fees decreased by $419,953 from $14,351,227 for the nine months ended March 31, 2019 to $13,931,274 for the nine

months ended March 31, 2020 and on a constant currency basis increased $1,379,014.

The increase on a constant currency basis is

due to annual salary increases and the hiring of technical personnel.

As a percentage of sales, salaries and consultant expense

increased from 28.4% for the nine months ended March 31, 2019 to 32.6% for the nine months ended March 31, 2020.

expenses decreased by $684,552 from $4,652,143 for the nine months ended March 31, 2019 to $3,967,591 for the nine months ended

March 31, 2020 and on a constant currency basis decreased by $155,239.

The decrease in travel expenses is due to the spread of

As a percentage of sales, travel expense increased from 9.2% for the nine months ended March 31, 2019 to 9.3% for the

nine months ended March 31, 2020.

and amortization expense decreased to $2,191,654 for the nine months ended March 31, 2020 compared to $2,692,306 for the nine

months ended March 31, 2019 or a decrease of $500,652 and on a constant currency basis a decrease of $97,478.

Depreciation and

amortization expense decreased as some products became fully amortized.

expenses were $20,033,108 for the nine months ended March 31, 2020 compared to $19,771,637, for the nine months ended March 31,

2019 for an increase of 1.3% or $261,471 and on a constant currency basis an increase of 9.2% or $1,822,396.

As a percentage of

sales, it increased from 39.1% to 46.8%.

The increase in operating expenses was primarily due to increases in general and administrative

expenses, professional services and research and development cost.

and marketing expenses decreased by $424,834 or 7.6% and on a constant currency basis increased $37,065 or 0.7%.

and administrative expenses were $12,638,797 for the nine months ended March 31, 2020 compared to $12,241,988 at March 31, 2019

or an increase of $396,809 or 3.2% and on a constant currency basis an increase of $1,167,758 or 9.5%.

The increase is primarily

due to the increase in withholding taxes on dividends received from Pakistan and funds received from China, travel costs and rent

expense, offset by decreases in salaries due to less share grants expensed during the current quarter.

and development cost were $1,580,625 for the nine months ended March 31, 2020 compared to $1,256,577 for the nine months ended

March 31, 2019 or an increase of $324,048 or 25.8% and on a constant currency basis an increase of $603,654 or 48.0%.

(loss) from Operations

from operations was $98,282 for the nine months ended March 31, 2020 compared to income of $5,882,312 for the nine months ended

March 31, 2019.

This represents a decrease of $5,980,594 with a decrease of $5,776,537 on a constant currency basis.

As a percentage

of sales, loss from operations was 0.2% for the nine months ended March 31, 2020 compared to income of 11.6% for the nine months

ended March 31, 2019.

Income and Expense

income was $920,151 for the nine months ended March 31, 2020 compared to $2,276,464 for the nine months ended March 31, 2019.

This represents a decrease of $1,356,313 with a decrease of $1,563,686 on a constant currency basis.

The decrease is primarily

due to the foreign currency exchange transactions.

The majority of the contracts with NetSol PK are either in U.S.

therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the value of the

PKR compared to the U.S.

therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending

on the value of the PKR compared to the U.S.

dollar and the Euro.

During the nine months ended March 31, 2020, we recognized gain of $71,765 in foreign

currency exchange transactions compared to $2,594,885 for the nine months ended March 31, 2019.

During the nine months ended March

31, 2020, the value of the U.S.

dollar increased 2.0% and the Euro decreased 1.3% , respectively, compared to the PKR.

the nine months ended March 31, 2019, the value of the U.S.

dollar and the Euro increased 15.4% and 10.8%, respectively, compared

During the three months ended September 30, 2020, we recognized

a gain of $296,041 in foreign currency exchange transactions compared to a loss of $1,760,190 for the three months ended September

During the three months ended September 30, 2020, the value of the U.S.

dollar decreased 1.4% and the value of the Euro

increased 3.0%, respectively, compared to the PKR.

During the three months ended September 30, 2019, the value of the U.S.

and the Euro decreased 3.7% and 7.6%, respectively, compared to the PKR.

Non-controlling

the nine months ended March 31, 2020 and 2019, the net loss attributable to non-controlling interest was $4,065 compared to net

income of $2,295,736, respectively.

The change in non-controlling interest is primarily due to the increase in net loss of NetSol

the three months ended September 30, 2020, the net income attributable to non-controlling interest was $405,923, compared to a

loss of $433,312 for the three months ended September 30, 2019.

The increase in non-controlling interest is primarily due to the

increase in net income of NetSol PK.

Income / Loss attributable to NetSol

loss was $241,165 for the nine months ended March 31, 2020 compared to net income of $5,085,778 for the nine months ended March

This is a decrease of $5,326,943 with a decrease of $5,428,055 on a constant currency basis, compared to the prior year.

For the nine months ended March 31, 2020, net loss per share was $0.02 for basic and diluted shares compared to net income of

$0.44 for basic and diluted shares for the nine months ended March 31, 2019.

income was $717,554 for the three months ended September 30, 2020 compared to a net loss of $1,827,947 for the three months ended

September 30, 2019.

This is an increase of $2,545,501 with an increase of $2,493,546 on a constant currency basis, compared to

the prior year.

For the three months ended September 30, 2020, net income per share was $0.06 for basic and diluted shares compared

to net loss of $0.16 for basic and diluted shares for the three months ended September 30, 2019.

Financial Measures

35 unchanged sentences

reconciliation of the non-GAAP financial measures of adjusted EBITDA and non-GAAP earnings per basic and diluted share to the

most comparable GAAP measures for the three and nine months ended March 31, 2020 and 2019 are as follows:

For the Three Months Ended

For the Nine Months Ended

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

Net Income (loss) attributable to NetSol

Non-controlling interest

Depreciation and amortization

Interest expense

Interest (income)

Non-cash stock-based compensation

Adjusted EBITDA, gross

Less non-controlling interest (a)

Adjusted EBITDA, net

Weighted Average number of shares outstanding

Basic adjusted EBITDA

Diluted adjusted EBITDA

(a)The reconciliation of adjusted EBITDA of non-controlling interest to net income attributable

to non-controlling interest is as follows

Net Income attributable to non-controlling interest

Depreciation and amortization

Interest expense

Interest (income)

Non-cash stock-based compensation

Adjusted EBITDA of non-controlling interest

most comparable GAAP measures for the three months ended September 30, 2020 and 2019 are as follows:

the Three Months Ended

Income (loss) attributable to NetSol

$ (1,827,947 )

Non-controlling

and amortization

$ (1,436,535 )

stock-based compensation

EBITDA, gross

$ (1,272,242 )

non-controlling interest (a)

$ (1,081,007 )

Average number of shares outstanding

adjusted EBITDA

The reconciliation of adjusted EBITDA of non-controlling interest to net income attributable to non-controlling interest is

Income (loss) attributable to non-controlling interest

and amortization

stock-based compensation

EBITDA of non-controlling interest

AND CAPITAL RESOURCES

cash position was $15,743,328 at March 31, 2020, compared to $17,366,364 at June 30, 2019.

cash provided by operating activities was $411,119 for the nine months ended March 31, 2020 compared to $255,382 used in operating

activities for the nine months ended March 31, 2019.

At March 31, 2020, we had current assets of $53,129,075 and current liabilities

of $20,578,474.

We had accounts receivable of $14,232,987 at March 31, 2020 compared to $15,599,314 at June 30, 2019.

cash position was $24,885,365 at September 30, 2020, compared to $20,166,830 at June 30, 2020.

cash provided by operating activities was $4,711,604 for the three months ended September 30, 2020 compared to $266,080 for the

three months ended September 30, 2019.

At September 30, 2020, we had current assets of $52,665,475 and current liabilities of

We had accounts receivable of $6,732,575 at September 30, 2020 compared to $11,414,257 at June 30, 2020.

We had revenues

in excess of billings of $16,592,293 at March 31, 2020 compared to $16,111,366 at June 30, 2019 of which $1,282,898 and $1,281,492

is shown as long term at March 31, 2020 and June 30, 2019, respectively.

The long-term portion was discounted by $54,893 and $99,139

at March 31, 2020 and June 30, 2019, respectively, using the discounted cash flow method with an interest rate of 4.35%.

the nine months ended March 31, 2020, our revenues in excess of billings were reclassified to accounts receivable pursuant to

billing requirements detailed in each contract.

The combined totals for accounts receivable and revenues in excess of billings

decreased by $885,400 from $31,710,680 at June 30, 2019 to $30,825,280 at March 31, 2020.

Accounts payable and accrued expenses,

and current portions of loans and lease obligations amounted to $7,107,933 and $8,794,858, respectively at March 31, 2020.

payable and accrued expenses, and current portions of loans and lease obligations amounted to $7,476,560 and $6,905,597, respectively

at June 30, 2019.

average days sales outstanding for the nine months ended March 31, 2020 and 2019 were 201 and 174 days, respectively, for each

in excess of billings of $18,430,766 at September 30, 2020 compared to $18,506,733 at June 30, 2020 of which $Nil and $1,300,289

is shown as long term as of September 30, 2020 and June 30, 2020, respectively.

The long-term portion was discounted by $Nil and

$41,286 at September 30, 2020 and June 30, 2020, respectively, using the discounted cash flow method with an interest rate of

During the three months ended September 30, 2020, our revenues in excess of billings were reclassified to accounts receivable

pursuant to billing requirements detailed in each contract.

The combined totals for accounts receivable and revenues in excess

of billings decreased by $4,757,649 from $29,920,990 at June 30, 2020 to $25,163,341 at September 30, 2020.

Accounts payable and

accrued expenses, and current portions of loans and lease obligations amounted to $6,005,999 and $9,677,277, respectively at September

Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $5,680,837 and

$9,139,561, respectively at June 30, 2020.

average days sales outstanding for the three months ended September 30, 2020 and 2019 were 200 and 205 days, respectively, for

The days sales outstanding have been calculated by taking into consideration the average combined balances of accounts

receivable and revenues in excess of billings.

cash used in investing activities was $1,577,465 for the nine months ended March 31, 2020, compared to $2,711,588 for the nine

months ended March 31, 2019.

We had purchases of property and equipment of $1,011,285 compared to $2,590,302 for the nine months

ended March 31, 2019.

For the nine months ended March 31, 2020 and 2019, we invested $600,000 and $1,126,500, respectively, in

a short-term convertible notes receivable from WRLD3D.

cash used in financing activities was $18,080 for the nine months ended March 31, 2020, compared to $559,667 provided by financing

activities for the nine months ended March 31, 2019.

The nine months ended March 31, 2020 included the cash inflow of $2,312,968

from bank proceeds compared to $1,337,092 for the same period last year.

During the nine months ended March 31, 2020, we had net

payments for bank loans and finance leases of $422,051 compared to $298,610 for the nine months ended March 31, 2019.

We are operating

in various geographical regions of the world through our various subsidiaries.

Those subsidiaries have financial arrangements

from various financial institutions to meet both their short and long-term funding requirements.

These loans will become due at

different maturity dates as described in Note 16 of the financial statements.

We are in compliance with the covenants of the financial

arrangements and there is no default, which may lead to early payment of these obligations.

We anticipate paying back all these

obligations on their respective due dates from its own sources.

cash used in investing activities was $517,116 for the three months ended September 30, 2020, compared to $755,167 for the three

months ended September 30, 2019.

We had purchases of property and equipment of $489,289 compared to $321,125 for the three months

ended September 30, 2019.

For the three months ended September 30, 2020 and 2019, we invested $Nil and $435,000, respectively,

in a short-term convertible note receivable from WRLD3D.

For the three months ended September 30, 2020 and 2019, we invested $60,500

and $Nil, respectively, in DriveMate.

cash provided by financing activities was $89,113 for the three months ended September 30, 2020, compared to cash used in financing

activities of $135,755 for the three months ended September 30, 2019.

For the three months ended September 30, 2020, we purchased

147,052 shares of our own stock for $464,676 compared to $Nil for the same period last year.

The three months ended September

30, 2020 included the cash inflow of $697,295 from bank proceeds compared to $Nil for the same period last year.

During the three

months ended September 30, 2020, we had net payments for bank loans and finance leases of $143,506 compared to $147,376 for the

three months ended September 30, 2019.

We are operating in various geographical regions of the world through our various subsidiaries.

Those subsidiaries have financial arrangements from various financial institutions to meet both their short and long-term funding

requirements.

These loans will become due at different maturity dates as described in Note 15 of the financial statements.

are in compliance with the covenants of the financial arrangements and there is no default, which may lead to early payment of

these obligations.

We anticipate paying back all these obligations on their respective due dates from its own sources.

typically fund the cash requirements for our operations in the U.S.

through our license, services, and maintenance agreements,

intercompany charges for corporate services, and through the exercise of options and warrants.

As of March 31, 2020, we had approximately

$15.7 million of cash, cash equivalents and marketable securities of which approximately $14.7 million is held by our foreign

subsidiaries.

As of June 30, 2019, we had approximately $17.4 million of cash, cash equivalents and marketable securities of which

approximately $16.1 million is held by our foreign subsidiaries.

through our license, services, and subscription and support

agreements, intercompany charges for corporate services, and through the exercise of options and warrants.

As of September 30,

2020, we had approximately $24.9 million of cash, cash equivalents and marketable securities of which approximately $22.1 million

is held by our foreign subsidiaries.

As of June 30, 2020, we had approximately $20.2 million of cash, cash equivalents and marketable

securities of which approximately $18.2 million is held by our foreign subsidiaries.

remain open to strategic relationships that would provide value added benefits.

2 unchanged sentences

a growing company, we have on-going capital expenditure needs based on our short term and long-term business plans.

requirements for capital expenses vary from time to time, for the next 12 months, we anticipate needing $2.5 million for APAC,

requirements for capital expenses vary from time to time, for the next 12 months, we anticipate needing $2 million for APAC, U.S.

and Europe new business development activities and infrastructure enhancements, which we expect to provide from current operations.

8 unchanged sentences

facility for export refinance from Askari Bank Limited amounting to Rupees 500 million ($3,007,866) and a running finance facility

of Rupees 75 million ($450,802) which requires NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio

of Rupees 75 million ($452,680).

NetSol PK has an approved facility for export refinance from another Habib Metro Bank Limited

amounting to Rupees 900 million ($5,432,158).

These facilities require NetSol PK to maintain a long-term debt equity ratio of

60:40 and the current ratio of 1:1.

NetSol PK also has an approved export refinance facility of Rs.

380 million ($2,284,065) and a running finance facility

380 million ($2,293,577) and

a running finance facility of Rs.

120 million ($724,288) from Samba Bank Limited.

NetSol PK has another approved export refinance facility of Rs.

($5,409,629) from Habib Metro Bank Limited.

During the tenure of loan, these facilities 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

During the tenure of loan, these two facilities

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.

of the date of this report, we are in compliance with the financial covenants associated with our borrowings.

24 unchanged sentences

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-Q

Item 1. Financial Statements