What changed in this filing

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Item 9A. Controls and Procedures

2021-09-28 compared with 2020-09-28 · 2042 added, 1964 removed, 721 unchanged (85% of the section changed)

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of Disclosure Controls and Procedures

management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of

our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by

this Annual Report on Form 10-K.

Based upon that evaluation, the Chief Financial Officer and Chief Executive Officer concluded

that our disclosure controls and procedures were effective.

management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure

controls and procedures pursuant to Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Annual Report on

Based upon that evaluation, the Chief Financial Officer and Chief Executive Officer concluded that our disclosure controls

and procedures were effective.

Management’s

Report on Internal Control over Financial Reporting

management has the responsibility to establish and maintain adequate internal controls over our financial reporting, as defined

in Rule 13a-15(f) under the Securities and Exchange Act of 1934.

Our internal controls are designed to provide reasonable assurance

regarding the reliability of our financial reporting and the preparation of our external financial statements in accordance with

generally accepted accounting principles (GAAP).

to inherent limitations of any internal control system, management acknowledges that there are limitations as to the effectiveness

of internal controls over financial reporting and therefore recognize that only reasonable assurance can be gained from any internal

control system.

Accordingly, our internal control system may not detect or prevent material misstatements in our financial statements

and projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

management has the responsibility to establish and maintain adequate internal controls over our financial reporting, as defined in Rule

13a-15(f) under the Securities and Exchange Act of 1934.

Our internal controls are designed to provide reasonable assurance regarding

the reliability of our financial reporting and the preparation of our external financial statements in accordance with generally accepted

accounting principles (GAAP).

to inherent limitations of any internal control system, management acknowledges that there are limitations as to the effectiveness of

internal controls over financial reporting and therefore recognize that only reasonable assurance can be gained from any internal control

Accordingly, our internal control system may not detect or prevent material misstatements in our financial statements and projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

the supervision and participation of management, including the Chief Executive Officer and Chief Financial Officer, we have performed

an assessment of the effectiveness of our internal controls over financial reporting as of June 30, 2021.

This assessment was

based on the criteria established in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations

of the Treadway Commission.

This assessment was based on

the criteria established in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the

Treadway Commission.

Based on the results of our assessment, the Company has determined that as of June 30, 2021, the Company’s

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in Internal Control over Financial Reporting

have been no changes in our internal controls over financial reporting during the fourth quarter of fiscal year 2020, that have

materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting

(as defined in Exchange Act Rules 13a –

have been no changes in our internal controls over financial reporting during the fourth quarter of fiscal year 2021, that have materially

affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting (as defined in

Exchange Act Rules 13a –

15(f) and 15d –

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

16(a) Beneficial Ownership Reporting Compliance

16(a) of the Securities Exchange Act of 1934, as amended, requires that the Company’s directors and executive officers and

persons owning more than 10% of the outstanding Common Stock, file reports of ownership and changes in ownership with the Securities

and Exchange Commission (“SEC”).

Executive officers, directors and beneficial owners of more than 10% of the Company’s

Common Stock are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

16(a) of the Securities Exchange Act of 1934, as amended, requires that the Company’s directors and executive officers and persons

owning more than 10% of the outstanding Common Stock, file reports of ownership and changes in ownership with the Securities and Exchange

Commission (“SEC”).

Executive officers, directors and beneficial owners of more than 10% of the Company’s Common Stock

are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

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

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the 2020 Annual Shareholders Meeting held in June 2021, a five-member board stood for election.

The members were elected and,

according to the bylaws of the company shall retain their position as directors until the next meeting.

The board of directors

is made up of Mr.

The members were elected and, according

to the bylaws of the Company shall retain their position as directors until the next meeting.

The board of directors is made up

Ghauri (Chairman of the Board), Mr.

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Tolentino as members.

The Compensation Committee

consists of Mr.

The Compensation Committee consists

Caton, as Chairman, with Mr.

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Tolentino as its members.

The Nominating and Corporate Governance Committee

consists of Mr.

The Nominating and Corporate Governance Committee consists

Tolentino, as Chairman, with Mr.

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table below provides the membership for each of the committees during Fiscal Year 2021.

Kazmi (I) (A)

Tolentino (I)

Ghauri and Mr.

Burki did not stand for reelection in June 2020.

an Independent Director.

the Chairperson of the Committee.

Kazmi became the Audit Committee Chairman in July 2020.

Denotes an Independent Director.

Denotes the Chairperson of the Committee.

AND EXECUTIVE OFFICERS

following table sets forth the names and ages of the current directors and executive officers of the Company, the principal offices

and positions with the Company held by each person and the date such person became a director or executive officer of the Company.

The Board of Directors elects the executive officers of the Company annually.

following table sets forth the names and ages of the current directors and executive officers of the Company, the principal offices and

positions with the Company held by each person and the date such person became a director or executive officer of the Company.

of Directors elects the executive officers of the Company annually.

Each year the stockholders elect the Board of Directors.

The executive officers serve varying terms until their death, resignation or removal by the Board of Directors.

In addition, there

was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected

as an executive officer.

The executive

officers serve varying terms until their death, resignation or removal by the Board of Directors.

In addition, there was no arrangement

or understanding between any executive officer and any other person pursuant to which any person was selected as an executive officer.

directors and executive officers of the Company are as follows:

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Executive Officer, Chairman and Director

of Naeem Ghauri

of Najeeb Ghauri

Financial Officer

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GHAURI is the Chief Executive Officer and Chairman of NETSOL.

He has been a Director of the Company since 1997, Chairman

since 2003 and Chief Executive Officer from January 1998 to September 2002 and from October 2006 to present.

Ghauri is a co-founder

of NetSol Technologies, Inc.

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

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

Ghauri served as the Company’s

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

Ghauri is responsible

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

He has been the Co-founder and director of the Company since 1997,

Chairman since 2003 and Chief Executive Officer from January 1998 to September 2002 and from October 2006 to present.

responsible for NETSOL listing on NASDAQ in 1999 and NETSOL Pakistan subsidiary listing on the Karachi Stock Exchange in 2005.

served as the Company’s Chief Executive Officer from 1999 to 2001 and as the Chief Financial Officer from 2001 to 2005.

Ghauri is responsible for managing the day-to-day operations of the Company, as well as the Company’s overall growth and expansion

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

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In addition, Mr.

Ghauri traveled

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

Prior to joining

the Company, Mr.

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

company, from 1987-1997.

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

Ghauri attended

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

He also received an

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

Ghauri was elected Vice Chairman of US

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

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

watch, NETSOL has become a leading player in China with innovation and a cutting-edge technology.

September 2020, Mr.

Ghauri was presented with the highest civilian award in Pakistan, “Sitar e Imtiaz”, a medal of pride,

in recognition for his work in IT and charitable causes in Pakistan.

This medal was conferred by the President of Pakistan at the President

House in Islamabad, Pakistan.

Prior to joining the Company, Mr.

Ghauri was part of the marketing team of Atlantic Richfield Company (ARCO)

(now acquired by BP), a Fortune 500 company, from 1987-1997.

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

Ghauri attended Eastern Illinois University in 1977-78 for Bachelor of Science degree in Management/Economics.

in Marketing Management from Peter F.

Drucker School of Management, Claremont, California in 1981.

Ghauri was elected Vice

Chairman of US Pakistan Business Council in 2006, a Washington D.C.

based council of US Chamber of Commerce.

He is also very active in several

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

He is also very active in

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

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

Ghauri has participated

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

Ghauri has participated in NASDAQ

opening and/or closing bell ceremonies in 2006, 2008,2009, 2015 and 2020.

and Qualifications :

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

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

substantial experience in establishing management performance objective and establishing goals.

GHAURI was a Director of the Company from 1999 through 2020 and was the Company’s Chief Executive Officer

from August 2001 to October 2006.

Ghauri is also a co-founder of the Company.

Currently, Mr.

Ghauri serves as the President and Director

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

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

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

recently, Mr.

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

Ghauri has spearheaded the Innovation

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

for the Company as the CEO of OTOZ, Inc.

Prior to joining the Company, Mr.

Ghauri was Program Director for Mercedes-Benz Finance Ltd.,

from 1994-1999.

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

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

Ghauri earned his

degree in computer science from Brighton University in England.

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

Since 2007, Roger Almond held the position of Senior Manager

at Pickard & Green Certified Public Accountants where he and his team were responsible for assisting national and international

companies with their financial reporting requirements to the SEC.

Roger Almond’s duties also included overseeing multiple

entity consolidations, converting financial data to US GAAP, preparing financials statements, footnotes and MD&A.

his current position, Roger Almond held the position of Assurance Manager at Grant Thornton LLP, in Los Angeles, California from

From November 1999 to August 2003, he was the Chief Financial Officer of Keysor Century Corporation located in Saugus,

Almond received his BS in Accounting from Brigham Young University in 1991 and he is a Certified Public Accountant licensed in

Since 2007, Roger Almond held the position of Senior Manager at

Pickard & Green Certified Public Accountants where he and his team were responsible for assisting national and international companies

with their financial reporting requirements to the SEC.

Roger Almond’s duties also included overseeing multiple entity consolidations,

converting financial data to US GAAP, preparing financials statements, footnotes and MD&A.

Prior to his current position, Roger Almond

held the position of Assurance Manager at Grant Thornton LLP, in Los Angeles, California from 2003-2006.

From November 1999 to August

2003, he was the Chief Financial Officer of Keysor Century Corporation located in Saugus, California.

Almond received his BS in Accounting from Brigham Young University in 1991 and he is a Certified Public Accountant licensed in California.

He has also completed executive management courses at UCLA in 2001.

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McGlasson is responsible for leading NETSOL’s legal department company-wide.

responsible for the implementation of the Company’s internal corporate governance and policy plans, ethics and business

responsible for the implementation of the Company’s internal corporate governance and policy plans, ethics and business conduct.

She oversees all board meetings in her executive position as corporate secretary.

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to practice in California in 1991.

received her Bachelor of Arts in Political Science in 1987 from the University of California, San Diego and, her Juris Doctor

and Masters in Law in Transnational Business from the University of the Pacific, McGeorge School of Law, in 1991 and 1993, respectively.

As part of her Masters in Law in Transnational Business, she interned at the law firm of Loeff Claeys Verbeke in Rotterdam, the

Netherlands in 1991.

received her Bachelor of Arts in Political Science in 1987 from the University of California, San Diego and, her Juris Doctor and Masters

in Law in Transnational Business from the University of the Pacific, McGeorge School of Law, in 1991 and 1993, respectively.

of her Masters in Law in Transnational Business, she interned at the law firm of Loeff Claeys Verbeke in Rotterdam, the Netherlands in

CATON joined the Board of Directors in 2007.

Caton is currently President of Ciena Financial, Inc.

a diversified financial

services company, a position he has held since 2006.

Prior to joining Ciena, Mr.

Caton was President of NetSol Technologies USA,

responsible for US sales, from June 2002 to December 2003.

Caton was employed by ePlus from 1994 to 2002 as Senior Vice President-Business

He was a member of the UCLA Alumni Association Board of Directors and served on the Board of Directors of NetSol

from 2002-2003.

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

Caton received his BA from UCLA in psychology in 1971.

Caton is currently President of Centela Capital, Inc.

a diversified financial services

company, a position he has held since 2006.

Prior to joining Centela Capital, Mr.

Caton was President of NETSOL Technologies USA, responsible

for US sales, from June 2002 to December 2003.

Caton was employed by ePlus from 1994 to 2002 as Senior Vice President-Business Development.

He was a member of the UCLA Alumni Association Board of Directors and served on the Board of Directors of NETSOL from 2002-2003.

Caton is a Chairman of the Compensation Committee and a member of the Audit and Nominating and Corporate Governance Committees.

received his BA from UCLA in psychology in 1971.

and Qualifications:

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

Caton has over 35 years of experience in sales, marketing and management in the financial leasing and software

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

joining NetSol in March 2000, Ms.

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

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

She has also worked on the formation

of business startups and IPOs.

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

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

After nearly two decades with NetSol, Ms.

Farsai continues to work

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

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

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

Before joining

NETSOL in March 2000, Ms.

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

private and public clients from technology to apparel in various transactions from 1996-2000.

She has also worked on the formation of

business startups and IPOs.

Farsai was on the team that took NETSOL public and is the one who listed NETSOL on NASDAQ in 1999 and

has maintained its listing since then to current.

After nearly two decades with the Company, Ms.

Farsai continues to work part-time as

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

has also obtained many of NETSOL’s various trademarks.

Farsai has been actively updating and overseeing the Company’s

Corporate and Social Responsibilities (CSR) globally.

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

and Beam in Irvine, California from 1996-2000.

Corporate and Social Responsibilities (CSR) globally and has effectively established a 501(c)(3) foundation for NETSOL to continue its

charitable work internationally.

Farsai received her B.A.

degree from University of California, Irvine and her

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

She sits on the board of various charitable organizations

in Los Angeles.

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

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

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

and Qualifications:

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

She also has an understanding of Public

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

TOLENTINO joined the Board of Directors in 2018.

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

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

She also has an understanding of Public Company

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

TOLENTINO joined the Board of Directors for the first time in 2018.

Tolentino brings more than 30 years of experience in the

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

Prior to joining NETSOL’s advisory board,

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

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

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

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

Prior to Toyota Leasing, Mr.

Tolentino spent more than 10 years

with Toyota Motor Credit Corporation, USA.

Tolentino spent more than 10 years with Toyota

Motor Credit Corporation, USA.

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

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

of the Company.

Tolentino is the Chairman of the Nomination and Corporate Governance

Committee and member of the Audit and Compensation Committees.

joined the advisory board of NETSOL in September 2017 where he provided strategic advice to the senior management of the Company.

Tolentino is the Chairman of the Nomination and Corporate Governance Committee and member of the Audit and Compensation Committees.

and Qualifications :

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

managing growth in the automotive industry.

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

growth in the automotive industry.

KAUSAR KAZMI joined the Board of Directors in 2019.

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

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

served in this capacity since 2016.

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

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

Prior to this position, Mr.

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

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

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

from 2009-2012.

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

a “Lifetime Achievement Award”

Kazmi served as the Head of Business Development for UK and Europe at Habib Bank AG Zurich in

London from 2012-2016, before which Mr.

Kazmi was the CEO of the UK operations of Habib Bank AG Zurich from 2009-2012.

was awarded by Power 100, Parliamentary Review in association with The British Publishing Company a “Lifetime Achievement Award”

for his significant and lasting impact on the banking sector.

In addition, Mr.

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

celebrating Britain’s 101 most influential Asians

from 2016-2018.

Kazmi has been awarded by the Asian Media Group the “GG2

Power List”

celebrating Britain’s 101 most influential Asians from 2016-2018.

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

He sits on the

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

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

He sits on the board

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

Kazmi is the Chairman

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

and Qualifications :

Kazmi has strong financial services and management expertise.

He directs the operations of a financial

services business, expending its focus on business development.

He directs the operations of a financial services

business, expending its focus on business development.

of Business Conduct & Ethics

Company adopted its Code of Business Conduct & Ethics, as amended and restated on September 9, 2013, applicable to every officer,

director and employee of the Company, including, but not limited to the Company’s principal executive officer, principal

financial officer, and principal accounting officer or controller, or persons performing similar functions.

Our Code of Business

Conduct & Ethics has been posted on our website and may be viewed at http://ir.netsoltech.com/governance-docs.

director and employee of the Company, including, but not limited to the Company’s principal executive officer, principal financial

officer, and principal accounting officer or controller, or persons performing similar functions.

Our Code of Business Conduct &

Ethics has been posted on our website and may be viewed at http://ir.netsoltech.com/governance-docs .

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

Caton, and Mr.

Kazmi is the current Chairman of the Audit Committee.

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Kausar Kazmi as its Audit Committee financial expert.

Kazmi is an independent

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

Kazmi’s over 40 years of experience in the banking

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

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

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

Additionally, this experience provides

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

and reserves;

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

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

an understanding of internal control over financial

Kazmi is an independent board

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

Kazmi’s over 40 years of experience in the banking industry including

his current tenure as Head of Commercial Banking and Business Development for UK and Europe for Habib Bank AG Zurich as well as his service

as a board member on various charities as the board member responsible for fundraising, provides him with an understanding of generally

accepted accounting principles and financial reporting.

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

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

experience analyzing financial statements

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

an understanding of internal control over financial reporting;

and an understanding of audit committee functions.

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compensation philosophy.

As described in this Compensation Discussion and Analysis (“CD&A”), the Compensation

Committee follows a disciplined process for setting executive compensation.

This process involves analyzing factors such as company

performance, individual performance, strategic goals and competitive market data to arrive at each element of compensation.

Compensation Committee approves compensation decisions for all executive officers.

An independent compensation consultant helps

the Compensation Committee by providing advice, information, and an objective opinion.

This CD&A will focus on the compensation

awarded to NetSol’s “named executive officers”—the Chief Executive Officer, Chief Financial Officer, and

General Counsel, Corporate Secretary.

You can find more complete information about all elements of compensation for the named

executive officers in the following discussion and in the Summary Compensation table that appears on page 45.

As described in this Compensation Discussion and Analysis (“CD&A”), the Compensation Committee

follows a disciplined process for setting executive compensation.

This process involves analyzing factors such as company performance,

individual performance, strategic goals and competitive market data to arrive at each element of compensation.

The Compensation Committee

approves compensation decisions for all executive officers.

An independent compensation consultant helps the Compensation Committee by

providing advice, information, and an objective opinion.

This CD&A will focus on the compensation awarded to NetSol’s “named

executive officers”—the Chief Executive Officer, Chief Financial Officer, and General Counsel, Corporate Secretary.

find more complete information about all elements of compensation for the named executive officers in the following discussion and in

the Summary Compensation table that appears on page 45.

2021 Executive Compensation Highlights and Governance

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Approval of Compensation

the last annual general meeting held on June 26, 2020, shareholders expressed support for our executive compensation programs,

with 80.40% of votes cast at the meeting voting to ratify the compensation of our named executive officers.

Although the advisory

shareholder vote on executive compensation is non-binding, the Compensation Committee has considered, and will continue to consider,

the outcome of the vote and the sentiments of our shareholders when making future compensation decisions for the named executive

Based on the results from our last annual general meeting, the Compensation Committee believes shareholders support

the Company’s executive compensation philosophy and the compensation paid to the named executive officers.

the last annual general meeting held on June 14, 2021, shareholders expressed support for our executive compensation programs, with 95.72%

of votes cast at the meeting voting to ratify the compensation of our named executive officers.

Although the advisory shareholder vote

on executive compensation is non-binding, the Compensation Committee has considered, and will continue to consider, the outcome of the

vote and the sentiments of our shareholders when making future compensation decisions for the named executive officers.

results from our last annual general meeting, the Compensation Committee believes shareholders support the Company’s executive

compensation philosophy and the compensation paid to the named executive officers.

into account the marked increase in support of this plan at the June 14, 2021 Annual Shareholders Meeting, the Compensation Committee

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to tie long term incentives of the Chief Executive Officer to performance criteria.

The Compensation Committee continues to reach

out to its shareholders regarding their positions on the Company’s compensation program.

The Compensation Committee continues to reach out

to its shareholders regarding their positions on the Company’s compensation program.

In connection with the proxy solicitations,

the executive compensation was discussed with certain of our top shareholders and their general acceptance of the compensation

structure is reflected in the proxy vote results.

Accordingly, the Compensation Committee will continue to provide the CEO with

a bonus criterion that is based on total revenues and income from operations on a graduated basis.

Bonuses would be paid 60% in

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

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

with an annual opportunity to cast an advisory vote on the compensation programs for our named executive officers and as always,

the stockholders are welcome to contact Investor Relations with any questions.

the executive compensation was discussed with certain of our top shareholders and their general acceptance of the compensation structure

is reflected in the proxy vote results.

Accordingly, the Compensation Committee will continue to provide the CEO with a bonus criterion

that is based on total revenues and income from operations on a graduated basis.

Bonuses would be paid 60% in cash and 40% in stock valued

at the share price on June 30 th of the fiscal year in which it was earned.

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

an annual opportunity to cast an advisory vote on the compensation programs for our named executive officers and as always, the stockholders

are welcome to contact Investor Relations with any questions.

and Evolving Compensation Practices

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we have adopted and/or maintained certain policies and practices that are in keeping with “best practices”

The Compensation Committee engages an independent compensation consultant to evaluate our chief executive officer’s

executive compensation practices in comparison to a peer group.

in many areas.

The Compensation Committee engages an independent compensation consultant to evaluate our chief executive officer’s executive

compensation practices in comparison to a peer group.

We do not provide excessive executive perquisites to our named executive officers.

Our incentive plans expressly prohibit repricing of options (directly or indirectly) without prior shareholder approval.

Our policy on the prevention of insider trading prohibits various types of transactions involving Company stock or securities,

including short sales, options trading, hedging, margin purchases and pledges.

Our policy on the prevention of insider trading prohibits various types of transactions involving Company stock or securities, including

short sales, options trading, hedging, margin purchases and pledges.

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

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

open market transaction.

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

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

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

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

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

Compensation Overview

2021, compensation designed for our executive officers consisted of:

awards at the discretion of the Compensation Committee

term equity in the form of time-based restricted stock;

to participate generally in all group health and welfare benefit programs and tax-qualified retirement plans on the same basis

as applicable to all of our employees.

Cash awards at the discretion

of the Compensation Committee

Long term equity in the form

of time-based restricted stock;

Ability to participate generally

in all group health and welfare benefit programs and tax-qualified retirement plans on the same basis as applicable to all of our

response to discussions we have had with certain shareholders and given the percentage voting in favor of our executive compensation,

beginning with the 2019 fiscal year, Chief Executive Officer compensation shall consist of:

cash awards conditioned upon achieving objective performance targets

equity in the form of time and objective performance targets;

to participate generally in all group health and welfare benefit programs and tax-qualified retirement plans on the same basis

as applicable to all of our employees.

Short-term cash awards conditioned

upon achieving objective performance targets

Long-term equity in the form

of time and objective performance targets;

Ability to participate generally

in all group health and welfare benefit programs and tax-qualified retirement plans on the same basis as applicable to all of our

Compensation Committee administers the cash and non-cash compensation programs applicable to our executive officers.

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after discussion with our Chief Executive Officer about his direct reports.

The Compensation Committee has often refined the direct

reports’

The Compensation Committee has often refined the direct reports’

compensation recommendations made by the Chief Executive Officer.

Our Chief Executive Officer’s compensation

is determined solely by the Compensation Committee, which, consistent with NASDAQ requirements, is comprised exclusively of independent

directors, and the Chief Executive Officer does not participate in Committee decisions surrounding his compensation.

Our Chief Executive Officer’s compensation is determined solely

by the Compensation Committee, which, consistent with NASDAQ requirements, is comprised exclusively of independent directors, and the

Chief Executive Officer does not participate in Committee decisions surrounding his compensation.

Compensation Consultant

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as its independent compensation consultant.

Compensation Resources

provided chief executive officer and director compensation consulting services to the Compensation Committee, including a competitive

market analysis of peers and the base salary, total cash compensation and total direct compensation.

Interactions with Compensation

Resources was limited to the Compensation Committee Chair and interaction with executives was generally limited to discussions

as required to compile information at the Compensation Committee’s direction.

During fiscal year 2020, Compensation Resources

did not provide services to the Company.

Based on these factors and its own evaluation of Compensation Resources independence

pursuant to the requirements approved and adopted by the SEC, the Compensation Committee has determined that the work performed

by Compensation Resources does not raise any conflicts of interest.

Compensation Resources provided

chief executive officer and director compensation consulting services to the Compensation Committee, including a competitive market analysis

of peers and the base salary, total cash compensation and total direct compensation.

Interactions with Compensation Resources was limited

to the Compensation Committee Chair and interaction with executives was generally limited to discussions as required to compile information

at the Compensation Committee’s direction.

During fiscal year 2021, Compensation Resources did not provide services to the Company.

Based on these factors and its own evaluation of Compensation Resources independence pursuant to the requirements approved and adopted

by the SEC, the Compensation Committee has determined that the work performed by Compensation Resources does not raise any conflicts

Philosophy and Objectives

executive compensation philosophy calls for competitive total compensation that will reward executives for achieving individual

and corporate performance objectives and will attract, motivate and retain leaders who will drive the creation of shareholder

It incorporates elements that create shareholder value by driving financial performance, retaining a high-performing and

talented executive team, and aligning the interests of the executive team with the interests of shareholders.

The Compensation

Committee reviews the compensation and benefit programs for executive officers, including the named executive officers, and performs

an annual assessment of the Company’s executive compensation policy.

In determining total compensation, the Compensation

Committee considers the objectives and attributes described below.

executive compensation philosophy calls for competitive total compensation that will reward executives for achieving individual and corporate

performance objectives and will attract, motivate and retain leaders who will drive the creation of shareholder value.

It incorporates

elements that create shareholder value by driving financial performance, retaining a high-performing and talented executive team, and

aligning the interests of the executive team with the interests of shareholders.

The Compensation Committee reviews the compensation

and benefit programs for executive officers, including the named executive officers, and performs an annual assessment of the Company’s

executive compensation policy.

In determining total compensation, the Compensation Committee considers the objectives and attributes

described below.

Compensation Principles

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

total compensation and closely

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

Our policy prohibits the named executive

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

total compensation and closely align

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

Our policy prohibits the named executive officers from

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

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

Long-term incentive

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

Long-term incentive awards

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

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

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Analysis Peer Group

consideration of business models, company revenue and market capitalization of other companies in the Company’s technology

industry segment, and with the input from Compensation Resources, Inc., the compensation consultant used by the Company at the

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

framework for use in setting executive compensation:

consideration of business models, company revenue and market capitalization of other companies in the Company’s technology industry

segment, and with the input from Compensation Resources, Inc., the compensation consultant used by the Company at the time the study

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

use in setting executive compensation:

Information Systems

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plans are developed by utilizing publicly available compensation data in the information technology and software services industries.

We believe that the practices of these groups of companies provide us with appropriate compensation benchmarks, because these

groups of companies are in similar businesses and tend to compete with us for executives and other employees.

For benchmarking

executive compensation, we typically review the compensation data we have collected from these groups of companies, as well as

a subset of the data from those companies that have a similar number of employees as the Company.

The Compensation Committee has

determined to utilize the services of a consultant for purposes of comparing our compensation program with similarly situated

companies in like industries.

The recommendations of these consultants will be utilized by the Compensation Committee in determining

the appropriate compensation packages in addition to taking into account the unique global scale of the Company’s business.

While these consultants may make general recommendations about the size and components of compensation, we anticipate our philosophy

to continue on the basis of a pay-for-performance philosophy.

establishing the compensation of our named Chief Executive Officer, we based the amounts primarily on the market data and advice

provided by Compensation Resources, Inc.

with respect to the compensation paid to individuals who perform substantially similar

functions within the peer group companies.

In connection with the other named executive officers, we also relied on the recommendations

of the Chief Executive Officer’s analysis relative to those individuals’

We believe that the practices of these groups of companies provide us with appropriate compensation benchmarks, because these groups

of companies are in similar businesses and tend to compete with us for executives and other employees.

For benchmarking executive compensation,

we typically review the compensation data we have collected from these groups of companies, as well as a subset of the data from those

companies that have a similar number of employees as the Company.

The Compensation Committee has determined to utilize the services of

a consultant for purposes of comparing our compensation program with similarly situated companies in like industries.

The recommendations

of these consultants will be utilized by the Compensation Committee in determining the appropriate compensation packages in addition

to taking into account the unique global scale of the Company’s business.

While these consultants may make general recommendations

about the size and components of compensation, we anticipate our philosophy to continue on the basis of a pay-for-performance philosophy.

establishing the compensation of our named Chief Executive Officer, we based the amounts primarily on the market data and advice provided

by Compensation Resources, Inc.

with respect to the compensation paid to individuals who perform substantially similar functions within

the peer group companies.

In connection with the other named executive officers, we also relied on the recommendations of the Chief Executive

Officer’s analysis relative to those individuals’

performance and compensation.

We also examined

the outstanding stock options and equity grants held by the executive officers for the purpose of considering the retention value

of any additional equity awards.

a general guideline, for our named executive officers, we aim to set base salary, cash compensation and total compensation at

approximately the mean market range.

Our analysis determined that the base salary of our Chief Executive officer was slightly

above the mean, cash compensation was generally within the mean, but the total direct compensation was below the mean.

it was determined to develop a long-term, performance-based element of the compensation that brought the total direct compensation

within the mean.

We also examined the outstanding stock options

and equity grants held by the executive officers for the purpose of considering the retention value of any additional equity awards.

a general guideline, for our named executive officers, we aim to set base salary, cash compensation and total compensation at approximately

the mean market range.

Our analysis determined that the base salary of our Chief Executive officer was slightly above the mean, cash

compensation was generally within the mean, but the total direct compensation was below the mean.

As such, it was determined to develop

a long-term, performance-based element of the compensation that brought the total direct compensation within the mean.

Executive Compensation Components

executive’s base salary is a fixed element of the executive’s compensation intended to attract and retain executives.

It is evaluated together with components of the executive’s other compensation to ensure that the executive’s total

compensation is consistent with our overall compensation philosophy.

is evaluated together with components of the executive’s other compensation to ensure that the executive’s total compensation

is consistent with our overall compensation philosophy.

Base salaries are adjusted annually by the Compensation Committee.

base salaries were established in arms-length negotiations between the executive and the Company, considering their extensive

experience, knowledge of the industry, track record, and achievements on behalf of the Company.

The Company expects each named

executive officer to contribute to the Company’s overall success as a member of the executive team rather than focus solely

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

base salaries were established in arms-length negotiations between the executive and the Company, considering their extensive experience,

knowledge of the industry, track record, and achievements on behalf of the Company.

The Company expects each named executive officer

to contribute to the Company’s overall success as a member of the executive team rather than focus solely on specific objectives

within the officer’s area of responsibility.

provided a 3% increase in base salary for Ms.

McGlasson in fiscal 2020.

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

base salary by 13%.

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

salary by 13%.

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

Almond in fiscal 2020.

Due to the effects of COVID-19, the

Company reduced his salary by 13%.

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

his salary by 13%.

In fiscal year 2020, Mr.

Ghauri’s base salary did not increase.

Due to the effects of

COVID-19, Mr.

Ghauri’s base salary was reduced by 4.7%.

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

reduction of 5.4%.

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

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

Due to the effects of COVID-19, Mr.

Ghauri’s

base salary was reduced by 4.7%.

Ghauri’s perquisites were reduced by 8% for a total compensation reduction of 5.4%.

The Compensation

Committee determined that salary alone was an adequate basis for short term compensation, and that equity incentives would be used for

the long-term elements of incentive programs for Ms.

McGlasson and Mr.

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

All executives are eligible for

annual performance-based cash bonuses in accordance with Company policies.

The Compensation Committee takes into consideration

the executive’s performance during the previous year to determine eligibility for discretionary bonuses.

Further, the compensation

committee will review, if applicable, the performance criteria set forth in an executive’s previous year’s agreement

and will determine if the executive has met such criteria in order to achieve the bonus.

The Company’s bonus criteria at

the executive management level, is typically based on a gross revenue and income from operations targets.

Cash bonuses, if any

for 2020 are reflected in the summary of compensation discussed below starting on page 48.

For 2020, based on structured KPI’s

by the compensation committee, Mr.

Ghauri did not earn a bonus.

All executives are eligible for annual

performance-based cash bonuses in accordance with Company policies.

The Compensation Committee takes into consideration the executive’s

performance during the previous year to determine eligibility for discretionary bonuses.

Further, the compensation committee will review,

if applicable, the performance criteria set forth in an executive’s previous year’s agreement and will determine if the executive

has met such criteria in order to achieve the bonus.

The Company’s bonus criteria at the executive management level, is typically

based on a gross revenue and income from operations targets.

Cash bonuses, if any for 2021 are reflected in the summary of compensation

discussed below starting on page 43.

For 2021, based on structured KPI’s by the compensation committee, Mr.

Ghauri earned a bonus

See bonus structure as discussed below on page 41.

The Compensation

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

for measuring Mr.

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

to incentivize him to monitor and maximize cost efficiency.

The Compensation Committee determined that Gross Revenue and Income from

Operations structure used in fiscal 2021 continues to be a proper measure for measuring Mr.

Ghauri’s performance in that it encourages

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

Equity Incentive Compensation

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in equity-based awards.

Because base salary and equity awards are such basic elements of compensation within our industry, as

well as the high technology and software industries in general, and are generally expected by employees, we believe that these

components must be included in our compensation mix in order for us to compete effectively for talented executives.

We award time

based vested stock from our Equity Incentive Plans for several reasons.

Because base salary and equity awards are such basic elements of compensation within our industry, as well as

the high technology and software industries in general, and are generally expected by employees, we believe that these components must

be included in our compensation mix in order for us to compete effectively for talented executives.

We award time based vested stock

from our Equity Incentive Plans for several reasons.

First, such awards facilitate retention of our executives.

Restricted stock generally vests only if the executive remains employed by the Company.

Second, time-based stock awards align

executive compensation with the interests of our shareholders and thereby focuses executives on increasing value for the shareholders.

Time vested stock generally only provides a superior return if the stock price appreciates, and results in materially less dilution

to the shareholders than options while frequently providing equivalent value to the employee at less cost to the Company than

In determining the number of shares to be granted to executives, we take into account the individual’s position,

scope of responsibility, ability to affect profits and shareholder value, past and recent performance, and the estimated value

of shares at the time of grant.

Assuming individual performance at a level satisfactory to the Compensation Committee, the size

of total equity compensation is generally targeted at the 50th percentile for the peer group.

As indicated above, market data,

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

Restricted stock generally

vests only if the executive remains employed by the Company.

Second, time-based stock awards align executive compensation with the interests

of our shareholders and thereby focuses executives on increasing value for the shareholders.

Time vested stock generally only provides

a superior return if the stock price appreciates, and results in materially less dilution to the shareholders than options while frequently

providing equivalent value to the employee at less cost to the Company than options.

In determining the number of shares to be granted

to executives, we take into account the individual’s position, scope of responsibility, ability to affect profits and shareholder

value, past and recent performance, and the estimated value of shares at the time of grant.

Assuming individual performance at a level

satisfactory to the Compensation Committee, the size of total equity compensation is generally targeted at the 50th percentile for the

As indicated above, market data, including compensation percentiles, were among several factors the committee reviewed in

determining compensation.

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

Each executive’s

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

taking into account their position and compensation at similarly situated companies.

Each executive’s stock award was based

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

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

into account their position and compensation at similarly situated companies.

Each executive’s stock award was based on a desired

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

fiscal year 2020, Ms.

McGlasson and Mr.

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

quarterly over a two-year period.

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

operations as discussed below.

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

to the mean market average.

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

following table demonstrates the graduated percentage of bonus that Mr.

Ghauri will be eligible to earn based on the percentage

of the goal achieved.

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

Total net revenues

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

to changes in revenue recognition policy.

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

over a two-year period.

Najeeb Ghauri is eligible to receive grants of shares based on the

performance criteria connected to gross revenues and net income from operations as discussed below.

The total compensation including

equity grants is designed to bring the Chief Executive Officer to the mean market average.

Najeeb Ghauri’s bonus for fiscal year 2021 is based on the total

revenues and income from operations on a graduated basis.

The following table demonstrates the graduated percentage of bonus that Mr.

Ghauri will be eligible to earn based on the percentage of the goal achieved.

Bonuses will be paid 60% in cash and 40% in shares of common

stock valued on June 30, 2021.

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

30, 2021 excluding any adjustments relating to changes in revenue recognition policy.

from Operations

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and Other Personal Benefits

provide named executive officers with perquisites and other personal benefits that we believe are reasonable and consistent with

our overall compensation program to better enable the Company to attract and retain superior employees for key positions.

Compensation Committee periodically reviews the level of perquisites and other personal benefits provided to NetSol’s executive

provide named executive officers with perquisites and other personal benefits that we believe are reasonable and consistent with our

overall compensation program to better enable the Company to attract and retain superior employees for key positions.

The Compensation

Committee periodically reviews the level of perquisites and other personal benefits provided to NETSOL’s executive officers.

maintain benefits and perquisites that are offered to all employees, including health and dental insurance.

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Based Compensation

termination of employment, all executive officers with a written employment agreement are entitled to receive severance payments

under their employment agreements.

In determining whether to approve, and as part of the process of setting the terms of, such

severance arrangements, the Compensation Committee recognizes that executives and officers often face challenges securing new

employment following termination.

Further, the Committee recognizes that many of the named executives and officers have participated

in the Company since its founding and that this participation has not resulted in a return on their investments.

Termination and

Change in Control Payments considered both the risk and the dedication of these executives’

termination of employment, all executive officers with a written employment agreement are entitled to receive severance payments under

their employment agreements.

In determining whether to approve, and as part of the process of setting the terms of, such severance arrangements,

the Compensation Committee recognizes that executives and officers often face challenges securing new employment following termination.

Further, the Committee recognizes that many of the named executives and officers have participated in the Company since its founding

and that this participation has not resulted in a return on their investments.

Termination and Change in Control Payments considered

both the risk and the dedication of these executives’

service to the Company.

Chief Executive Officer has an employment agreement that provides, if his employment is terminated without cause or if the executive

terminates the agreement with Good Reason, he is entitled to (a) all remaining salary to the end of the date of termination, plus

salary from the end of the employment term through the end of the fourth anniversary of the date of termination, and (b) the continuation

by the Company of medical and dental insurance coverage for him and his family until the end of the employment term and through

the end of the fourth anniversary of the date of termination.

Provided, however, if such benefits cannot be continued for this

extended period, the Executive shall receive cash (including a tax-equivalency payment for Federal, state and local income and

payroll taxes assuming Executive is in the maximum tax bracket for all such purposes) where such benefits may not be continued.

These agreements further provide for vesting of all options and restrictive stock grants, if any.

terminates the agreement with Good Reason, he is entitled to (a) all remaining salary to the end of the date of termination, plus salary

from the end of the employment term through the end of the fourth anniversary of the date of termination, and (b) the continuation by

the Company of medical and dental insurance coverage for him and his family until the end of the employment term and through the end

of the fourth anniversary of the date of termination.

Provided, however, if such benefits cannot be continued for this extended period,

the Executive shall receive cash (including a tax-equivalency payment for Federal, state and local income and payroll taxes assuming

Executive is in the maximum tax bracket for all such purposes) where such benefits may not be continued.

These agreements further provide

for vesting of all options and restrictive stock grants, if any.

Chief Financial Officer has an employment agreement that provides, if his employment is terminated without cause or if the executive

terminates the agreement with Good Reason, he is entitled to (a) all remaining salary to the end of the date of termination, plus

salary from the end of the employment term through the end of the first anniversary of the date of termination, and (b) the continuation

by the Company of medical and dental insurance coverage for him and his family until the end of the employment term and through

the end of the first anniversary from the date of termination.

Provided, however, if such benefits cannot be continued for this

extended period, the Executive shall receive cash (including a tax-equivalency payment for Federal, state and local income and

payroll taxes assuming Executive is in the maximum tax bracket for all such purposes) where such benefits may not be continued.

These agreements further provide for vesting of all options and restrictive stock grants, if any.

terminates the agreement with Good Reason, he is entitled to (a) all remaining salary to the end of the date of termination, plus salary

from the end of the employment term through the end of the first anniversary of the date of termination, and (b) the continuation by

the Company of medical and dental insurance coverage for him and his family until the end of the employment term and through the end

of the first anniversary from the date of termination.

Provided, however, if such benefits cannot be continued for this extended period,

the Executive shall receive cash (including a tax-equivalency payment for Federal, state and local income and payroll taxes assuming

Executive is in the maximum tax bracket for all such purposes) where such benefits may not be continued.

These agreements further provide

for vesting of all options and restrictive stock grants, if any.

Secretary of the Company has an employment agreement that provides, if she is terminated without cause or if the executive terminates

the agreement with Good Reason, she is entitled to (a) all remaining salary to the end of the date of termination, plus salary

from the end of the employment term through the end of the second anniversary of the date of termination, and (b) the continuation

by the Company of medical and dental insurance coverage for her and her family until the end of the employment term and through

the end of the second anniversary of the date of termination.

Provided, however, if such benefits cannot be continued for this

extended period, the Executive shall receive cash (including a tax-equivalency payment for Federal, state and local income and

payroll taxes assuming Executive is in the maximum tax bracket for all such purposes) where such benefits may not be continued.

These agreements further provide for vesting of all options and restrictive stock grants, if any.

agreements were designed to assist in the retention of the services of our named executives and to determine in advance the rights

and remedies of the parties in connection with any termination.

The types and amounts of compensation and the triggering events

set forth in these agreements were based on a review of the terms and conditions of normal and customary agreements in our competitive

the agreement with Good Reason, she is entitled to (a) all remaining salary to the end of the date of termination, plus salary from the

end of the employment term through the end of the second anniversary of the date of termination, and (b) the continuation by the Company

of medical and dental insurance coverage for her and her family until the end of the employment term and through the end of the second

anniversary of the date of termination.

Provided, however, if such benefits cannot be continued for this extended period, the Executive

shall receive cash (including a tax-equivalency payment for Federal, state and local income and payroll taxes assuming Executive is in

the maximum tax bracket for all such purposes) where such benefits may not be continued.

These agreements further provide for vesting

of all options and restrictive stock grants, if any.

agreements were designed to assist in the retention of the services of our named executives and to determine in advance the rights and

remedies of the parties in connection with any termination.

The types and amounts of compensation and the triggering events set forth

in these agreements were based on a review of the terms and conditions of normal and customary agreements in our competitive marketplace.

and Accounting Implications

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of Executive Compensation

part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m)

of the Internal Revenue Code, which provides that we may not deduct compensation of more than $1,000,000 that is paid to certain

The Compensation Committee is aware of the limitations imposed by Section 162(m) and considers the issue of deductibility

when and if circumstances warrant.

The committee reviews proposed compensation plans in light of applicable tax deductions, and

generally seeks to maximize the deductibility for tax purposes of all elements of compensation.

However, the committee may approve

compensation that does not qualify for deductibility, including stock option and time-based restricted stock awards, if and when

the committee deems it to be in the best interests of the Company and our shareholders.

part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of

the Internal Revenue Code, which provides that we may not deduct compensation of more than $1,000,000 that is paid to certain individuals.

The Compensation Committee is aware of the limitations imposed by Section 162(m) and considers the issue of deductibility when and if

circumstances warrant.

The committee reviews proposed compensation plans in light of applicable tax deductions, and generally seeks to

maximize the deductibility for tax purposes of all elements of compensation.

However, the committee may approve compensation that does

not qualify for deductibility, including stock option and time-based restricted stock awards, if and when the committee deems it to be

in the best interests of the Company and our shareholders.

for Stock-Based Compensation

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Stock Compensation .

following table shows the compensation for the fiscal year ended June 30, 2019, 2018, and 2017, earned by our Chairman and Chief

Executive Officer, our Chief Financial Officer who is our Principal Financial and Accounting Officer, and others considered to

be executive officers of the Company.

and Principle Position

Awards ($) (1)

Other Compensation ($)

following table shows the compensation for the fiscal year ended June 30, 2021, 2020, and 2019, earned by our Chairman and Chief Executive

Officer, our Chief Financial Officer who is our Principal Financial and Accounting Officer, and others considered to be executive officers

of the Company.

Name and Principle Position

Fiscal Year Ended

Stock Awards ($) (1)

Option Awards ($)

All Other Compensation ($)

Najeeb Ghauri

$ 180,383 (4)

CEO & Chairman

$ 156,586 (4)

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$ 200,000 (4)

Financial Officer

General Counsel

$ 767,768 (5)

Roger K Almond

Chief Financial Officer

Secretary, General Counsel

The stock was awarded as compensation to the officers.

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actually received by the named executive officer.

These amounts represent the aggregate grant date fair value of the stock awards

granted during the relevant time period, computed in accordance with FASB ASC 718, excluding the effect of any estimated forfeitures

based on vesting conditions.

A summary of the assumptions we applied in calculating these estimates is set forth in the Notes

to Consolidated Financial Statements included in Note 18.

The awards for which the aggregate grant date fair value is shown in

this column include awards described under the Grants of Plan-Based Awards Table and in the Outstanding Equity Awards at Fiscal

Year-End Table.

Bonus was awarded by the Compensation Committee in late September 2018 for the results of his cost saving initiatives in fiscal

The expense was accounted for in fiscal year 2019.

These amounts represent the aggregate grant date fair value of the stock awards granted

during the relevant time period, computed in accordance with FASB ASC 718, excluding the effect of any estimated forfeitures based on

vesting conditions.

The awards for which the aggregate grant date fair value is shown in this column include awards

described under the Grants of Plan-Based Awards Table and in the Outstanding Equity Awards at Fiscal Year-End Table.

Bonus was awarded based on Mr.

Ghauri’s bonus structure as detailed on page 41.

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

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

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

2018, respectively.

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

program for the fiscal year ended June 30, 2020, 2019 and 2018, respectively.

Consists of $10,019, $9,935 and $9,795 paid for medical and dental insurance premiums for participation in the health insurance

program for the fiscal year ended June 30, 2020, 2019 and 2018, respectively.

Najeeb Ghauri’s compensation agreement, he received $180,383, $156,586 and $200,000 in allowances, perquisites and benefits

such as car allowance, insurance premiums, and home office allowance for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

Consists of $400,000 base salary and $367,768 commission for the fiscal year ended June 30, 2021.

Naeem Ghauri’s compensation agreement, he received $77,045 in allowances, perquisites and benefits for the fiscal year

ended June 30, 2021.

Consists of $8,872, $10,639 and $10,191 paid for medical and dental insurance premiums for participation in the health insurance program

for the fiscal year ended June 30, 2021, 2020 and 2019, respectively, and $24,000 paid as car allowance for the year ended June 30, 2021.

Consists of $9,784, $10,019 and $9,935 paid for medical and dental insurance premiums for participation in the health insurance program

for the fiscal year ended June 30, 2021, 2020 and 2019, respectively.

of Plan-Based Awards

September 2016, Mr.

Najeeb Ghauri was granted 82,644 shares of the Company’s common stock which 50% vested immediately and

the remaining 50% will vest annually from June 2017 to June 2021.

The shares were approved by the Compensation Committee as an

incentive for the named officer.

Najeeb Ghauri was granted 82,644 shares of the Company’s common stock which 50% vested immediately and the

remaining 50% vested annually from June 2017 to June 2021.

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

the named officer.

July 2018, Mr.

Roger Almond was granted 10,000 shares of the Company’s common stock, which vest quarterly over the period

of three years.

Roger Almond was granted 10,000 shares of the Company’s common stock, which vest quarterly over the period of three

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

August 2019, Mr.

Roger Almond was granted 10,000 shares of the Company’s common stock, which vest quarterly over the period

of two years.

Roger Almond was granted 10,000 shares of the Company’s common stock, which vest quarterly over the period of

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

July 2018, Ms.

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

the period of two years.

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

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

August 2019, Ms.

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

the period of two years.

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

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

1 unchanged sentence

terms of our executive officers’

compensation are derived from our employment agreements with them and the annual performance

review by our Compensation Committee.

compensation are derived from our employment agreements with them and the annual performance review

by our Compensation Committee.

The terms of Mr.

Najeeb Ghauri’s employment agreement with the Company were the result

of negotiations between the Company and the executive and were approved by our Compensation Committee and Board of Directors.

Najeeb Ghauri’s employment agreement with the Company were the result of negotiations

between the Company and the executive and were approved by our Compensation Committee and Board of Directors.

The terms of Ms.

McGlasson’s and Mr.

Almond’s employment agreement with the Company were the result of negotiations

between our Chief Executive Officer and the employees and were approved by our Compensation Committee.

McGlasson’s

Almond’s employment agreement with the Company were the result of negotiations between our Chief Executive Officer and

the employees and were approved by our Compensation Committee.

Agreement with Najeeb Ghauri

January 1, 2007, the Company entered into an Employment Agreement with our Chief Executive Officer, Najeeb Ghauri (the “CEO

Agreement”).

January 1, 2007, the Company entered into an Employment Agreement with our Chief Executive Officer, Najeeb Ghauri (the “CEO Agreement”).

The CEO Agreement was amended effective January 1, 2008, January 1, 2010, July 25, 2013 and again on June 30, 2014.

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

Pursuant to the CEO Agreement, as amended, between

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

Ghauri as its Chief Executive Officer

for a five-year term.

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

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

Changes made in the

June 30, 2014 amendment are effective July 1, 2014.

Pursuant to the CEO Agreement, as amended, between Mr.

Ghauri and the Company (the

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

Ghauri as its Chief Executive Officer for a five-year term.

employment automatically renews for 12 additional months unless notice of intent to terminate is received by either party at least 6

months prior to the end of the term.

For the fiscal year 2021, Mr.

Ghauri is entitled to

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

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

beginning on page 38.

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

Ghauri is entitled to an annualized compensation of $900,000 consisting

of salary, allowances, perquisites and benefits, and is eligible for annual bonuses based on the bonus structure adopted by the Compensation

Committee as described in Item 11 under Executive Compensation beginning on page 39.

As previously discussed, the $900,000 was temporarily

reduced to $851,000 in response to the COVID-19 pandemic.

Effective July 1, 2021, Mr.

Ghauri’s salary, including allowances, was

increased to $900,000.

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

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

Pursuant to the CEO Agreement, if he terminates his employment for Good Reason (as described below), or, is terminated prior to

the end of the employment term by the Company other than for Cause (as described below) or death, he shall be entitled to all

remaining salary from the termination date until 48 months thereafter, at the rate of salary in effect on the date of termination,

immediate vesting of all options and continuation of all health related plan benefits for a period of 48 months.

He shall have

no obligation to seek other employment and any income so earned shall not reduce the foregoing amounts.

If he is terminated by

the Company for Cause (as described below), or at the end of the employment term, he shall not be entitled to further compensation.

Under the CEO Agreement, Good Reason includes the assignment of duties inconsistent with his title, a material reduction in salary

and perquisites, the relocation of the Company’s principal office by 30 miles, if the Company asks him to perform any act

which is illegal, including the commission of a crime or act of moral turpitude, or a material breach of the CEO Agreement by

Under the CEO Agreement, Cause includes conviction of crime involving moral turpitude, failure to perform his duties

to the Company, engaging in activities which are directly competitive to or intentionally injurious to the Company, or any material

breach of the CEO Agreement by Mr.

above summary of the CEO Agreement is qualified in its entirety by reference to the full text of the CEO Agreement, a copy of

which was filed as an exhibit to the Company’s 10-KSB for the fiscal year ended June 30, 2007.

The above summary of the

First Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which was filed as an exhibit

to the Company’s 10-KSB for the fiscal year ended June 30, 2008.

The above summary of the Second Amendment is qualified

in its entirety by reference to the full text of the Amendment, a copy of which was filed as an exhibit to the Company’s

10-Q for the fiscal year ended December 31, 2009.

The above summary of the Third Amendment is qualified in its entirety by reference

to the full text of the Amendment, a copy of which was filed as an exhibit to the Company’s 8-K filed on July 26, 2013.

The above summary of the Fourth Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy

to the CEO Agreement, if he terminates his employment for Good Reason (as described below), or, is terminated prior to the end of the

employment term by the Company other than for Cause (as described below) or death, he shall be entitled to all remaining salary from

the termination date until 48 months thereafter, at the rate of salary in effect on the date of termination, immediate vesting of all

options and continuation of all health related plan benefits for a period of 48 months.

He shall have no obligation to seek other employment

and any income so earned shall not reduce the foregoing amounts.

If he is terminated by the Company for Cause (as described below), or

at the end of the employment term, he shall not be entitled to further compensation.

Under the CEO Agreement, Good Reason includes the

assignment of duties inconsistent with his title, a material reduction in salary and perquisites, the relocation of the Company’s

principal office by 30 miles, if the Company asks him to perform any act which is illegal, including the commission of a crime or act

of moral turpitude, or a material breach of the CEO Agreement by the Company.

Under the CEO Agreement, Cause includes conviction of crime

involving moral turpitude, failure to perform his duties to the Company, engaging in activities which are directly competitive to or

intentionally injurious to the Company, or any material breach of the CEO Agreement by Mr.

above summary of the CEO Agreement is qualified in its entirety by reference to the full text of the CEO Agreement, a copy of which was

filed as an exhibit to the Company’s 10-KSB for the fiscal year ended June 30, 2007.

The above summary of the First Amendment is

qualified in its entirety by reference to the full text of the Amendment, a copy of which was filed as an exhibit to the Company’s

10-KSB for the fiscal year ended June 30, 2008.

The above summary of the Second Amendment is qualified in its entirety by reference to

the full text of the Amendment, a copy of which was filed as an exhibit to the Company’s 10-Q for the fiscal year ended December

The above summary of the Third Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy

of which was filed as an exhibit to the Company’s 8-K filed on July 26, 2013.

The above summary of the Fourth Amendment is qualified

in its entirety by reference to the full text of the Amendment, a copy of which was filed as an exhibit to the Company’s 8-K filed

on July 3, 2014.

Agreement with Roger K.

March 1, 2015, the Company entered into an Employment Agreement with our Chief Financial Officer, Mr.

to the Employment Agreement, between Mr.

Almond and the Company (the “CFO Agreement”), the Company agreed to employ

Almond as its Chief Financial Officer from the date of the CFO Agreement through February 28, 2017.

According to the terms

of the CFO Agreement, the term of the agreement automatically extends for an additional one-year period unless notice of intent

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

Pursuant to the

Employment Agreement, between Mr.

Almond and the Company (the “CFO Agreement”), the Company agreed to employ Mr.

its Chief Financial Officer from the date of the CFO Agreement through February 28, 2017.

According to the terms of the CFO Agreement,

the term of the agreement automatically extends for an additional one-year period unless notice of intent to terminate is received by

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

For the fiscal year 2020, Mr.

is entitled to an annualized base salary of $230,381 per annum, a $2,000 per month car allowance, 10,000 shares of common stock

to be granted equally on a quarterly basis over 2 years issued after each quarter of service through June 30, 2021 and is eligible

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

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

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

Almond is entitled to an annualized base salary

of $230,381 per annum, a $2,000 per month car allowance, 10,000 shares of common stock to be granted equally on a quarterly basis over

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

Executive Officer.

As previously discussed, the $230,381 base salary was temporarily reduced to $186,515 in response to the COVID-19

Effective July 1, 2021, Mr.

Almond’s salary, was increased to $221,041.

In addition, Mr.

Almond is entitled to participate in the Company’s

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

Almond is entitled to participate

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

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

Pursuant to the CFO Agreement, if he terminates his employment for Good Reason (as described below), or, is terminated prior to

the end of the employment term by the Company other than for Cause (as described below) or death, he shall be entitled to all

remaining salary from the termination date until 12 months thereafter, at the rate of salary in effect on the date of termination,

immediate vesting of all options and continuation of all health related plan benefits for a period of 12 months.

He shall have

no obligation to seek other employment and any income so earned shall not reduce the foregoing amounts.

If he is terminated by

the Company for Cause (as described below), or at the end of the employment term, he shall not be entitled to further compensation.

Under the CFO Agreement, Good Reason includes the assignment of duties inconsistent with his title, a material reduction in salary

and perquisites, the relocation of the Company’s principal office by 60 miles, if the Company asks him to perform any act

which is illegal, including the commission of a crime or act of moral turpitude, or a material breach of the CFO Agreement by

Under the CFO Agreement, Cause includes conviction of crime involving moral turpitude, failure to perform his duties

to the Company, engaging in activities which are directly competitive to or intentionally injurious to the Company, or any material

breach of the CFO Agreement by Mr.

above summary of the CFO Agreement is qualified in its entirety by reference to the full text of the CFO Agreement, a copy of

which was filed as an exhibit to the Company’s 8-K filed on March 4, 2015.

to the CFO Agreement, if he terminates his employment for Good Reason (as described below), or, is terminated prior to the end of the

employment term by the Company other than for Cause (as described below) or death, he shall be entitled to all remaining salary from

the termination date until 12 months thereafter, at the rate of salary in effect on the date of termination, immediate vesting of all

options and continuation of all health related plan benefits for a period of 12 months.

He shall have no obligation to seek other employment

and any income so earned shall not reduce the foregoing amounts.

If he is terminated by the Company for Cause (as described below), or

at the end of the employment term, he shall not be entitled to further compensation.

Under the CFO Agreement, Good Reason includes the

assignment of duties inconsistent with his title, a material reduction in salary and perquisites, the relocation of the Company’s

principal office by 60 miles, if the Company asks him to perform any act which is illegal, including the commission of a crime or act

of moral turpitude, or a material breach of the CFO Agreement by the Company.

Under the CFO Agreement, Cause includes conviction of crime

involving moral turpitude, failure to perform his duties to the Company, engaging in activities which are directly competitive to or

intentionally injurious to the Company, or any material breach of the CFO Agreement by Mr.

above summary of the CFO Agreement is qualified in its entirety by reference to the full text of the CFO Agreement, a copy of which was

filed as an exhibit to the Company’s 8-K filed on March 4, 2015.

Agreement with Patti L.

May 1, 2006, the Company entered into an Employment Agreement with our Secretary, General Counsel and Sr.

Vice President, Legal

and Corporate Affairs, Ms.

Vice President, Legal and Corporate

Pursuant to the Employment Agreement and its related amendments, between Ms.

McGlasson and the Company (the “General Counsel Agreement”), the Company agreed to employ Ms.

McGlasson as its Secretary

and General Counsel from the date of the General Counsel Agreement through June 30, 2017.

According to the terms of the General

Counsel Agreement, the term of the agreement automatically extends for an additional one-year period unless notice of intent to

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

The General Counsel Agreement was amended

on July 25, 2013 and again on June 30, 2014 (the General Counsel Agreement and all amendments referred to as the “GC Agreement”).

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

McGlasson and the Company

(the “General Counsel Agreement”), the Company agreed to employ Ms.

McGlasson as its Secretary and General Counsel from the

date of the General Counsel Agreement through June 30, 2017.

According to the terms of the General Counsel Agreement, the term of the

agreement automatically extends for an additional one-year period unless notice of intent to terminate is received by either party at

least 6 months prior to the end of the term.

The General Counsel Agreement was amended on July 25, 2013 and again on June 30, 2014 (the

General Counsel Agreement and all amendments referred to as the “GC Agreement”).

Changes made in the June 30, 2014 amendment

are effective July 1, 2014.

Under the GC Agreement, Ms.

McGlasson is entitled to an

annualized base salary of $232,896 per annum, 7,500 shares of common stock to be granted equally on a quarterly basis over 2 years

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

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

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

per calendar year.

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

Pursuant to the General Counsel Agreement, if she terminates her employment for Good Reason (as described below),

or, is terminated prior to the end of the employment term by the Company other than for Cause (as described below) or death, she

shall be entitled to all remaining salary from the termination date until 24 months thereafter, at the rate of salary in effect

on the date of termination, immediate vesting of all options and continuation of all health related plan benefits for a period

of 24 months.

She shall have no obligation to seek other employment and any income so earned shall not reduce the foregoing amounts.

If she is terminated by the Company for Cause (as described below), or at the end of the employment term, she shall not be entitled

to further compensation.

Under the General Counsel Agreement, Good Reason includes the assignment of duties inconsistent with

her title, a material reduction in salary and perquisites, the relocation of the Company’s principal office by 60 miles,

if the Company asks her to perform any act which is illegal, including the commission of a crime or act of moral turpitude, or

a material breach of the General Counsel Agreement by the Company.

Under the General Counsel Agreement, Cause includes conviction

of crime involving moral turpitude, failure to perform her duties to the Company, engaging in activities which are directly competitive

to or intentionally injurious to the Company, or any material breach of the General Counsel Agreement by Ms.

above summary of the General Counsel Agreement is qualified in its entirety by reference to the full text of the General Counsel

Agreement, a copy of which was filed as an exhibit to the Company’s 10-KSB for the fiscal year ended June 30, 2006 on September

The above summary is also qualified in its entirety by reference to the full text of the Amendment to the General Counsel

Agreement, a copy of which was filed as an exhibit to the Company’s 10-Q for the quarter ended March 31, 2010.

summary is also qualified in its entirety by reference to the full text of the Second Amendment to the General Counsel Agreement,

a copy of which was filed as an exhibit to the Company’s 8-K filed on July 26, 2013.

McGlasson is entitled to an annualized base salary of $232,896 per annum, 7,500

shares of common stock to be granted equally on a quarterly basis over 2 years issued after each quarter of service through June 30,

2021 and is eligible for annual bonuses at the discretion of the Chief Executive Officer.

As previously discussed, the $232,896 was temporarily

reduced to $188,552 in response to the COVID-19 pandemic.

Effective July 1, 2021, Ms.

McGlasson’s salary, was increased to $212,384.

In addition, Ms.

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

paid vacation per calendar year.

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

Pursuant to the General Counsel Agreement, if she terminates her employment for Good Reason (as described below), or, is terminated prior

to the end of the employment term by the Company other than for Cause (as described below) or death, she shall be entitled to all remaining

salary from the termination date until 24 months thereafter, at the rate of salary in effect on the date of termination, immediate vesting

of all options and continuation of all health related plan benefits for a period of 24 months.

She shall have no obligation to seek other

employment and any income so earned shall not reduce the foregoing amounts.

If she is terminated by the Company for Cause (as described

below), or at the end of the employment term, she shall not be entitled to further compensation.

Under the General Counsel Agreement,

Good Reason includes the assignment of duties inconsistent with her title, a material reduction in salary and perquisites, the relocation

of the Company’s principal office by 60 miles, if the Company asks her to perform any act which is illegal, including the commission

of a crime or act of moral turpitude, or a material breach of the General Counsel Agreement by the Company.

Under the General Counsel

Agreement, Cause includes conviction of crime involving moral turpitude, failure to perform her duties to the Company, engaging in activities

which are directly competitive to or intentionally injurious to the Company, or any material breach of the General Counsel Agreement

above summary of the General Counsel Agreement is qualified in its entirety by reference to the full text of the General Counsel Agreement,

a copy of which was filed as an exhibit to the Company’s 10-KSB for the fiscal year ended June 30, 2006 on September 27, 2006.

The above summary is also qualified in its entirety by reference to the full text of the Amendment to the General Counsel Agreement,

a copy of which was filed as an exhibit to the Company’s 10-Q for the quarter ended March 31, 2010.

The above summary is also qualified

in its entirety by reference to the full text of the Third Amendment to the General Counsel Agreement, a copy of which was filed

as an exhibit to the Company’s 8-K filed on July 3, 2014.

in its entirety by reference to the full text of the Second Amendment to the General Counsel Agreement, a copy of which was filed as

an exhibit to the Company’s 8-K filed on July 26, 2013.

The above summary is also qualified in its entirety by reference to the

full text of the Third Amendment to the General Counsel Agreement, a copy of which was filed as an exhibit to the Company’s 8-K

filed on July 3, 2014.

Equity Awards at Fiscal Year-End

following table shows grants of stock options and grants of unvested stock awards outstanding on June 30, 2020, the last day of

our fiscal year, to each of the individuals named in the Summary Compensation Table.

OF SECURITIES UNDERLYING OPTIONS (#) EXERCISABLE

OF SECURITIES UNDERLYING OPTIONS (#) UNEXERCISABLE

EXERCISE PRICE ($)

EXPIRATION DATE

OF SHARES OF COMMON STOCK THAT HAVE NOT VESTED

VALUE OF SHARES THAT HAVE NOT VESTED ($)

INCENTIVE PLAN AWARDS:

NUMBER OF UNEARNED SHARES THAT HAVE NOT VESTED

INCENTIVE PLAN AWARDS:

MARKET OR PAYOUT VALUE OF SHARES THAT HAVE NOT VESTED ($)

of June 30, 2021, there are no outstanding stock options or grants of unvested stock awards.

do not have any qualified or non-qualified defined benefit plans.

Payments upon Termination or Change of Control

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

receive amounts earned during the term of employment.

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

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

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

amounts earned during the term of employment.

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

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

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

3 unchanged sentences

the event that Mr.

Ghauri is terminated as a result of a change in control, he is entitled to all payments due in the event of

a termination for Cause or Good Reason and:

(a) a onetime payment equal to the product of 2.99 and his salary during the preceding

(b) a one-time payment equal to the higher of (i) Executive’s bonus for the previous year and (ii) one percent

of the Company’s consolidated gross revenues for the previous twelve (12) months;

and at the election of the Executive,

Options then currently outstanding and exercisable as if they had been exercised in full (the “Change of Control Termination

Payment”).

In the event Executive elects to receive the cash value of the shares underlying Executive’s options, he

shall so notify the Company of his intent.

Ghauri is terminated as a result of a change in control, he is entitled to all payments due in the event of a termination

for Cause or Good Reason and:

(a) a onetime payment equal to the product of 2.99 and his salary during the preceding 12 months;

one-time payment equal to the higher of (i) Executive’s bonus for the previous year and (ii) one percent of the Company’s

consolidated gross revenues for the previous twelve (12) months;

and at the election of the Executive, (c) a one-time cash payment equal

to the cash value of all shares eligible for exercise upon the exercise of Executive’s Options then currently outstanding and exercisable

as if they had been exercised in full (the “Change of Control Termination Payment”).

In the event Executive elects to receive

the cash value of the shares underlying Executive’s options, he shall so notify the Company of his intent.

following table summarizes the potential payments to Mr.

Ghauri assuming his employment with us was terminated or a change of

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

AFTER CHANGE OF CONTROL

UPON DEATH OR DISABILITY

BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Salary Continuance

Related Benefits

Multiple Pay-out

or Revenue One-time Pay-Out

Cash Value of Options

Ghauri assuming his employment with us was terminated or a change of control

occurred on June 30, 2021, the last day of our most recently completed fiscal year.

BENEFITS AND PAYMENTS

TERMINATION AFTER CHANGE OF CONTROL

TERMINATION UPON DEATH OR DISABILITY

TERMINATION BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Base Salary Continuance

Health Related Benefits

Salary Multiple Pay-out

Bonus or Revenue One-time Pay-Out

Net Cash Value of Options

Almond, Chief Financial Officer

the event that Mr.

Almond is terminated as a result of a change in control, he is entitled to all payments due in the event of

a termination for Cause or Good Reason and:

(a) a onetime payment equal to the product of 2.99 and his salary during the preceding

(b) a one-time payment equal to the higher of (i) Executive’s bonus for the previous year and (ii) one-half of

one percent of the Company’s consolidated gross revenues for the previous twelve (12) months (the “Change of Control

Termination Payment”).

Almond is terminated as a result of a change in control, he is entitled to all payments due in the event of a termination

for Cause or Good Reason and:

(a) a onetime payment equal to the product of 2.99 and his salary during the preceding 12 months;

one-time payment equal to the higher of (i) Executive’s bonus for the previous year and (ii) one-half of one percent of the Company’s

consolidated gross revenues for the previous twelve (12) months (the “Change of Control Termination Payment”).

following table summarizes the potential payments to Mr.

Almond assuming his employment with us was terminated or a change of

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

AFTER CHANGE OF CONTROL

UPON DEATH OR DISABILITY

BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Salary Continuance

related benefits

Multiple Pay-out

or Revenue One-time Pay-Out

Cash Value of Options

Almond assuming his employment with us was terminated or a change of control

occurred on June 30, 2021, the last day of our most recently completed fiscal year.

BENEFITS AND PAYMENTS

TERMINATION AFTER CHANGE OF CONTROL

TERMINATION UPON DEATH OR DISABILITY

TERMINATION BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Base Salary Continuance

Health related benefits

Salary Multiple Pay-out

Bonus or Revenue One-time Pay-Out

Net Cash Value of Options

McGlasson, Senior V.P.

1 unchanged sentence

the event that Ms.

McGlasson is terminated as a result of a change in control, she is entitled to all payments due in the event

of a termination for Cause or Good Reason and:

(a) a onetime payment equal to the product of 2.99 and her salary during the preceding

(b) a one-time payment equal to the higher of (i) Executive’s bonus for the previous year and (ii) one-half of

one percent of the Company’s consolidated gross revenues for the previous twelve (12) months (the “Change of Control

Termination Payment”).

McGlasson is terminated as a result of a change in control, she is entitled to all payments due in the event of a

termination for Cause or Good Reason and:

(a) a onetime payment equal to the product of 2.99 and her salary during the preceding 12 months;

(b) a one-time payment equal to the higher of (i) Executive’s bonus for the previous year and (ii) one-half of one percent of the

Company’s consolidated gross revenues for the previous twelve (12) months (the “Change of Control Termination Payment”).

following table summarizes the potential payments to Ms.

McGlasson assuming her employment with us was terminated or a change

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

AFTER CHANGE OF CONTROL

UPON DEATH OR DISABILITY

BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Salary Continuance

related benefits

Multiple Pay-out

or Revenue One-time Pay-Out

Cash Value of Options

McGlasson assuming her employment with us was terminated or a change of control

occurred on June 30, 2021, the last day of our most recently completed fiscal year.

BENEFITS AND PAYMENTS

TERMINATION AFTER CHANGE OF CONTROL

TERMINATION UPON DEATH OR DISABILITY

TERMINATION BY US WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

Base Salary Continuance

Health related benefits

Salary Multiple Pay-out

Bonus or Revenue One-time Pay-Out

Net Cash Value of Options

Compensation Table

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

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

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

EARNED OR PAID IN CASH ($)

AWARDS ($) (1)

fiscal 2020, the Directors’

fee structure was 60% cash and 40% common stock.

During the fiscal year ended June 30, 2020,

there were 15,171 shares issued to Mr.

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

Mark Caton, 12,317 shares issued to

Henry Tolentino and 11,445 shares issued to Mr.

Kausar Kazmi.

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

the Company’s compensation policies for the fiscal year ended June 30, 2021, other than Najeeb Ghauri and Malea Farsai who were

paid as part of their employment agreements with the Company and not as directors.

FEES EARNED OR PAID IN CASH ($)

SHARE AWARDS ($)

Henry Tolentino

Compensation Policy

2 unchanged sentences

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

in setting the compensation for the non-employee members

of our Board of Directors.

in setting the compensation for the non-employee members of our

Board of Directors.

As with named executives, the aim is to compensate the Board of Directors at the mean of peer companies.

Any additional cash and/or equity compensation for the fiscal year beginning was designed to maintain this mean.

non-employee members of our Board of Directors received as compensation for services as directors as well as reimbursement for

documented reasonable expenses incurred in connection with attendance at meetings of our Board of Directors and the committees

The Company paid the following amounts to members of the Board of Directors for the activities shown during the fiscal

year ended June 30, 2020.

for Audit Committee

for Compensation Committee

for Nominating and Corporate Governance Committee

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

of Directors and on an annual basis in line with recommendations by the Compensation Committee, which grants are non-qualified

stock options under our Employee Stock Option Plans.

Further, from time to time, the non-employee members of the Board of Directors

are eligible to receive stock grants that may be granted if and only if approved by the shareholders of the Company.

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

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

September 30, 2021.

Any additional

cash and/or equity compensation for the fiscal year beginning was designed to maintain this mean.

non-employee members of our Board of Directors received as compensation for services as directors as well as reimbursement for documented

reasonable expenses incurred in connection with attendance at meetings of our Board of Directors and the committees thereof.

paid the following amounts to members of the Board of Directors for the activities shown during the fiscal year ended June 30, 2021.

BOARD ACTIVITY

Board Member Fee

Chairperson for Audit Committee

Chairperson for Compensation Committee

Chairperson for Nominating and Corporate Governance Committee

previous years, the committee chairs have received additional compensation, but was eliminated as part of the Company’s Covid-19

mitigation measures.

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

upon joining the Board of Directors and on an annual basis in line with recommendations by the Compensation Committee, which grants are

non-qualified stock options under our Employee Stock Option Plans.

Further, from time to time, the non-employee members of the Board

of Directors are eligible to receive stock grants that may be granted if and only if approved by the shareholders of the Company.

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

and rest at the completion of each year served commencing with the period ended September 30, 2017 and ending September 30, 2021.

Committee Interlocks and Insider Participation

2 unchanged sentences

Kazmi, and Mr.

All current members of the

Compensation Committee are “independent directors”

All current members of the Compensation

Committee are “independent directors”

as defined under the NASDAQ Listing Rules.

None of these individuals

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

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

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

of Options Authorized

Grants Issued

Grants Cancelled / Expired

but Outstanding

2003 stock option plan

2005 stock option plan

2011 stock option plan

2013 stock option plan

2015 stock option plan

None of these individuals were at any time

during the fiscal year ended June 30, 2021, or at any other relevant time, an officer or employee of the Company.

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

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

Number of Options Authorized

Options Grants Issued

Options Grants Cancelled / Expired

Available for Issue

Options Issued but Outstanding

The 2005 stock option plan

The 2013 stock option plan

The 2015 stock option plan

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

following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock, its only

class of outstanding voting securities as of September 18, 2020, by (i) each person who is known to the Company to own beneficially

more than 5% of the outstanding common Stock with the address of each such person, (ii) each of the Company’s present directors

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

of Beneficial Owner (1)

Capital Partners LLC

officers and directors as a group (nine persons)

following table sets forth certain information regarding the beneficial ownership of the Company’s Common Stock, its only class

of outstanding voting securities as of September 16 2021, by (i) each person who is known to the Company to own beneficially more than

5% of the outstanding common Stock with the address of each such person, (ii) each of the Company’s present directors and officers,

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

Number of Shares

Name of Beneficial Owner (1)

Beneficially Owned (2)

Najeeb Ghauri

Henry Tolentino

Patti McGlasson

Renaissance Technologies Holdings Corp.

All officers and directors as a group (eight persons)

Less than one percent

Except as otherwise indicated, the Company believes that the beneficial owners of the common stock listed below, based on information

furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws

where applicable.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and

generally includes voting or investment power with respect to securities.

Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment

power with respect to securities.

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

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

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

Except as indicated by footnote,

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

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

furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes

voting or investment power with respect to securities.

Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with

respect to securities.

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

within 60 days of September 16, 2021, are deemed outstanding for computing the percentage of the person holding such securities but are

not deemed outstanding for computing the percentage of any other person.

Except as indicated by footnote, and subject to community property

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

beneficially owned by them.

Address c/o NetSol Technologies, Inc.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

May 31, 2017, Faizaan Ghauri, son of CEO Najeeb Ghauri, and an employee of the Company, was appointed CEO of WRLD3D by the Board

of WRLD3D which does not include Najeeb Ghauri.

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

Note”) which was fully executed on May 25, 2017.

The maximum principal amount of the Convertible Note is $750,000, and as

of June 30, 2018, the Company had disbursed $750,000.

The Convertible Note bears interest at 5% per annum and all unpaid interest

and principal is due and payable upon the Company’s request on or after February 1, 2018.

May 31, 2017, Faizaan Ghauri, son of CEO Najeeb Ghauri, and an employee of the Company, was appointed CEO of WRLD3D by the Board of WRLD3D

which does not include Najeeb Ghauri.

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

which was fully executed on May 25, 2017.

The maximum principal amount of the Convertible Note is $750,000, and as of June 30, 2018,

the Company had disbursed $750,000.

The Convertible Note bears interest at 5% per annum and all unpaid interest and principal is due

and payable upon the Company’s request on or after February 1, 2018.

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

Note”) which was fully executed on February 9, 2018.

The maximum principal amount of the Convertible Note is $2,500,000,

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

The Thai Convertible Note bears interest at 10% per annum and all

unpaid interest and principal is due and payable upon NetSol Thai’s request on or after March 31, 2019.

The maximum principal amount of the Convertible Note is $2,500,000, and as

of June 30, 2019, NetSol Thai had disbursed $2,500,000.

The Thai Convertible Note bears interest at 10% per annum and all unpaid interest

and principal is due and payable upon NetSol Thai’s request on or after March 31, 2019.

Company entered into an agreement with WRLD3D, whereby the Company was issued a Convertible Promissory Note (the “April 1, 2019

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

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

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

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

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

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

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

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

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

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

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

Company entered into an agreement with WRLD3D, whereby the Company was issued a Convertible Promissory Note (the “August 2019 Note”)

which was fully executed on August 19, 2019.

The maximum principal amount of $400,000 was paid on September 9, 2019.

The August 2019 Note bears interest at 10% per annum and all unpaid interest and principal is due and payable upon the

Company’s request on or after March 31, 2020.

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

4.9% investment in WRLD3D for $1,111,111.

The August 2019

Note bears interest at 10% per annum and all unpaid interest and principal is due and payable upon the Company’s request on or

after March 31, 2020.

Ghauri, CEO and Chairman of the Board, and Naeem Ghauri, Director, have a financial interest in G-Force, LLC which purchased a 4.9% investment

in WRLD3D for $1,111,111.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

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

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

The aggregate fees billed by principal accountants for the annual

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

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

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

ended June 30, 2019 was $280,000.

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

the fiscal years 2019.

Tax fees for fiscal year 2019 were $15,000 and consisted of the preparation of the Company’s federal

and state tax returns for the fiscal year 2018.

Borgers audited the Company’s financial statements for the fiscal year ended June 30, 2021 and 2020.

The aggregate fees billed

by principal accountants for the annual audit and review of financial statements included in the Company’s Form 10-K, services

related to providing an opinion in connection with our public offering of shares of common stock and/or services that are normally provided

by the accountant in connection with statutory and regulatory filings or engagements was $250,000 for the years ended June 30, 2021 and

fees for fiscal year 2021 were $13,000 and consisted of the preparation of the Company’s federal and state tax returns for the

fiscal years 2020.

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

tax returns for the fiscal year 2019.

other fees were paid to principal accountant during the fiscal year 2021 and 2020.

Audit Committee and the Board of Directors are responsible for the engagement of the independent auditors and for approving, in

advance, all auditing services and permitted non-audit services to be provided by the independent auditors.

The Audit Committee

maintains a policy for the engagement of the independent auditors that is intended to maintain the independent auditor’s

independence from NetSol.

In adopting the policy, the Audit Committee considered the various services that the independent auditors

have historically performed or may be needed to perform in the future.

The policy, which is to be reviewed and re-adopted at least

annually by the Audit Committee:

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

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

Audit Committee and the Board of Directors are responsible for the engagement of the independent auditors and for approving, in advance,

all auditing services and permitted non-audit services to be provided by the independent auditors.

The Audit Committee maintains a policy

for the engagement of the independent auditors that is intended to maintain the independent auditor’s independence from NetSol.

In adopting the policy, the Audit Committee considered the various services that the independent auditors have historically performed

or may be needed to perform in the future.

The policy, which is to be reviewed and re-adopted at least annually by the Audit Committee:

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

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

auditors’

4 unchanged sentences

would be impaired.

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

or by any other Committee member to whom the Committee has delegated that authority.

The Audit Committee does not delegate its

responsibilities to approve services performed by the independent auditors to any member of management.

standard applied by the Audit Committee in determining whether to grant approval of an engagement of the independent auditors

is whether the services to be performed, the compensation to be paid therefore and other related factors are consistent with the

independent auditors’

independence under guidelines of the Securities and Exchange Commission and applicable professional

Relevant considerations include, but are not limited to, whether the work product is likely to be subject to, or implicated

in, audit procedures during the audit of NetSol’s financial statements;

whether the independent auditors would be functioning

in the role of management or in an advocacy role;

whether performance of the service by the independent auditors would enhance

NetSol’s ability to manage or control risk or improve audit quality;

whether performance of the service by the independent

auditors would increase efficiency because of their familiarity with NetSol’s business, personnel, culture, systems, risk

profile and other factors;

and whether the amount of fees involved, or the proportion of the total fees payable to the independent

auditors in the period that is for tax and other non-audit services, would tend to reduce the independent auditors’

to exercise independent judgment in performing the audit.

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

any other Committee member to whom the Committee has delegated that authority.

The Audit Committee does not delegate its responsibilities

to approve services performed by the independent auditors to any member of management.

standard applied by the Audit Committee in determining whether to grant approval of an engagement of the independent auditors is whether

the services to be performed, the compensation to be paid therefore and other related factors are consistent with the independent auditors’

independence under guidelines of the Securities and Exchange Commission and applicable professional standards.

Relevant considerations

include, but are not limited to, whether the work product is likely to be subject to, or implicated in, audit procedures during the audit

of NetSol’s financial statements;

whether the independent auditors would be functioning in the role of management or in an advocacy

whether performance of the service by the independent auditors would enhance NetSol’s ability to manage or control risk or

improve audit quality;

whether performance of the service by the independent auditors would increase efficiency because of their familiarity

with NetSol’s business, personnel, culture, systems, risk profile and other factors;

and whether the amount of fees involved, or

the proportion of the total fees payable to the independent auditors in the period that is for tax and other non-audit services, would

tend to reduce the independent auditors’

ability to exercise independent judgment in performing the audit.

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

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

3.1 to NETSOL’s Registration Statement No.

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

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

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

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

to the Articles of Incorporation of NETSOL International, Inc.

dated March 20, 2002 incorporated by reference as Exhibit 3.3

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

to the Articles of Incorporation of NetSol Technologies, Inc.

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

Proxy Statement filed June 27, 2003.

to the Articles of Incorporation of NetSol Technologies, Inc.

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

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

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

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

to Articles of Incorporation dated May 12, 2008.

to the Articles of Incorporation dated August 6, 2012, filed as Appendix A to NETSOL’s Definitive Proxy Statement filed

June 14, 2012.

and Restated Bylaws of NetSol Technologies, Inc.

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

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

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

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

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

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

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

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

Amendment to Articles of Incorporation dated May 12, 2008.

Amendment to the Articles of Incorporation dated August 6, 2012, filed as Appendix A to NETSOL’s Definitive Proxy Statement filed June 14, 2012.

Amended and Restated Bylaws of NetSol Technologies, Inc.

dated February 9, 2018*.

of Common Stock Certificate.

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

and the shareholders of McCue Systems,

Form of Common Stock Certificate.

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

and the shareholders of McCue Systems, Inc.

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

Agreement by and between NetSol Technologies, Inc.

McGlasson dated May 1, 2006 incorporated by reference as

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

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

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

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

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

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

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

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

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

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

to Employment Agreement by and between Company and Patti L.

Employment Agreement by and between NetSol Technologies, Inc.

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

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

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

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

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

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

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

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

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

McGlasson dated effective April 1, 2010.

Company’s

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

on April 11, 2011.

Company’s

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

to Employment Agreement between NetSol Technologies, Inc.

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

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

Amendment to Employment Agreement between NetSol Technologies, Inc.

and Najeeb Ghauri dated effective July 25, 2013.

to Employment Agreement between NetSol Technologies, Inc.

Amendment to Employment Agreement between NetSol Technologies, Inc.

and Patti L.W.

McGlasson dated effective July 25, 2013.

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

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

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

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

Company’s

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

list of all subsidiaries of the Company (1)

Certification

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

Certification

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

Certification

pursuant to 18 U.S.C.

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

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

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

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

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

A list of all subsidiaries of the Company (1)

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

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

Certification pursuant to 18 U.S.C.

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

Certification

pursuant to 18 U.S.C.

Certification pursuant to 18 U.S.C.

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

Filed Herewith

accordance with Section 13 or 15 (d) of the Exchange Act, the Registrant caused this amended report to be signed on its behalf

by the undersigned, thereunto duly authorized.

accordance with Section 13 or 15 (d) of the Exchange Act, the Registrant caused this amended report to be signed on its behalf by the

undersigned, thereunto duly authorized.

Technologies, Inc.

5 unchanged sentences

Financial Officer

accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in

the capacities and on the dates indicated.

accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities

and on the dates indicated.

September 28, 2021

1 unchanged sentence

September 28, 2021

Financial Officer

Accounting Officer

Chief Financial Officer

Principal Accounting Officer

September 28, 2021

6 unchanged sentences

TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm

Balance Sheets as of June 30, 2020 and 2019

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

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

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

to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Technologies, Inc.

and subsidiaries

on the Financial Statements

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

and subsidiaries (the “Company”)

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

and cash flow for the period then ended.

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

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

and subsidiaries as of June 30, 2019 and the results

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

in the United States of America.

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

Our responsibility is to express an

opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public

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

with the U.S.

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

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

Oversight Board (United States).

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

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

The Company is

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

As part of our

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

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

Accordingly, we express no such

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

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

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

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

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

KSP Group, Inc.

PUBLIC ACCOUNTANTS

have served as the Company’s auditor since 2017.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of June 30, 2021 and 2020

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended June 30, 2021 and 2020

Consolidated Statement of Equity for the Years Ended June 30, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended June 30, 2021 and 2020

Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

on the Financial Statements

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

and subsidiaries (the “Company”)

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

and cash flow for the period then ended.

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

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

and subsidiaries as of June 30, 2020 and the results

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

in the United States of America.

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

and subsidiaries (the “Company”) as

of June 30, 2021 and 2020, and the related consolidated statements of operations, comprehensive income (loss), stockholders’

and cash flows for the period then ended.

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

the consolidated financial positions of NetSol Technologies, Inc.

and subsidiaries as of June 30, 2021 and 2020 and the results of their

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

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

Our responsibility is to express an

opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public

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

with the U.S.

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

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

Oversight Board (United States).

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

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

The Company is

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

As part of our

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

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

Accordingly, we express no such

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

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

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles

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

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

Our responsibility is to express an opinion

on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting

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

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Board (United States).

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

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

The Company is not required to have, nor were

we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an

understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of

the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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

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

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

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

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

recognition —

identification of contractual terms in certain customer arrangements

Audit Matter Description

described in Note 3 to the consolidated financial statements, management assesses relevant contractual terms in its customer arrangements

to determine the transaction price and recognizes revenue upon transfer of control of the promised goods or services in an amount that

reflects the consideration the Company expects to receive in exchange for those products or services.

Management applies judgment in

determining the transaction price which is dependent on the contractual terms.

In order to determine the transaction price, management

may be required to estimate variable consideration when determining the amount and timing of revenue recognition.

the Critical Audit Matter Was Addressed in the Audit

principal considerations for our determination that performing procedures relating to the identification of contractual terms in customer

arrangements to determine the transaction price is a critical audit matter are there was significant judgment by management in identifying

contractual terms due to the volume and customized nature of the Company’s customer arrangements.

This in turn led to significant

effort in performing our audit procedures which were designed to evaluate whether the contractual terms used in the determination of

the transaction price and the timing of revenue recognition were appropriately identified and determined by management and to evaluate

the reasonableness of management’s estimates.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated

financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including

those related to the identification of contractual terms in customer arrangements that impact the determination of the transaction price

and revenue recognition.

These procedures also included, among others, (i) testing the completeness and accuracy of management’s

identification of the contractual terms by examining customer arrangements on a test basis, and (ii) testing management’s process

for determining the appropriate amount and timing of revenue recognition based on the contractual terms identified in the customer arrangements.

and Intangible asset- Refer to Note 12 and Note 13 to the financial statements

Audit Matter Description

Company tests goodwill and intangible assets for impairment annually (in the fourth quarter), or more frequently when events or changes

in circumstances indicate it is more likely than not that the fair value of a reporting unit has declined below its carrying value.

Company utilizes a discounted cash flow methodology to calculate the fair value of its reporting units, which requires management to

make significant estimates and assumptions related to projected revenue growth rates, discount rates, and earnings before interest, taxes,

depreciation and amortization (“EBITDA”).

Changes in these assumptions could have a significant impact on the fair value

of the reporting unit and the amount of any goodwill impairment charge.

As of June 30, 2021, the Company has four reporting units, but

only three of which have goodwill.

the significant judgments made by management to estimate the fair value of the reporting units, performing audit procedures to evaluate

the reasonableness of management’s estimates and assumptions related to projected revenue growth rates, discount rates, EBITDA

and EBITDA margin required a high degree of auditor judgment and an increased extent of effort, including the assistance of our fair

value specialists.

the Critical Audit Matter Was Addressed in the Audit

Our audit procedures

related to management’s estimates and assumptions related to projected revenue growth rates, discount rates, EBITDA and EBITDA

margin for the reporting units included the following, among other procedures:

We tested the effectiveness

of internal controls over the goodwill impairment evaluation, including controls over the selection of the discount rates and over

forecasts of future revenue growth rates, EBITDA, and EBITDA margin.

We performed a retrospective

review comparing actual revenue and EBITDA results of the reporting unit for 2021 to the forecasted results from 2020.

We performed a retrospective

review comparing management’s estimates and assumptions relating to revenue, EBITDA, and EBITDA margin projections for the

reporting unit used for the purpose of current year’s annual impairment test to the projections previously used in connection

with the prior year annual impairment test.

We evaluated the consistency

of estimates and assumptions relating to revenue and EBITDA growth inherent in the discounted cash flow model for the reporting unit

to those used by management in other annual forecasting activities.

With the assistance of

our fair value specialists, we performed a benchmarking exercise comparing management’s estimates and assumptions related to

revenue growth, EBITDA and EBITDA margin for the reporting unit as of the measurement date to the revenue growth, EBITDA and EBITDA

margins of a peer group of public companies for the most recent three years and the projection period.

With the assistance of

our fair value specialists, we evaluated (1) the valuation methodology used and (2) the projections of long-term revenue growth and

the discount rates by testing the underlying source information, and by developing a range of independent estimates and comparing

those to the rates selected by management.

BF Borgers CPA PC.

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Balance Sheets

and cash equivalents

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

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

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

in excess of billings - related party

current assets

June 30, 2021

June 30, 2020

Current assets:

in excess of billings, net - long term

Convertible note receivable - related party

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

Cash and cash equivalents

Accounts receivable, net of allowance of $166,231 and $435,611

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

Revenues in excess of billings, net of allowance of $136,976 and $188,914

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

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

Total current assets

Revenues in excess of billings, net - long term

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

Property and equipment, net

Right of use of assets - operating leases

Long term investment

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

and obligations under finance leases;

Accounts payable and accrued expenses

Current portion of loans and obligations under finance leases

Current portion of operating lease obligations

Unearned revenue

Total current liabilities

Loans and obligations under finance leases;

less current maturities

lease obligations;

Operating lease obligations;

less current maturities

and contingencies

Total liabilities

Commitments and contingencies

Stockholders’

stock, $.01 par value;

Preferred stock, $.01 par value;

500,000 shares authorized;

stock, $.01 par value;

Common stock, $.01 par value;

14,500,000 shares authorized;

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

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

paid-in-capital

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

12,181,585 shares issued and 11,265,064 outstanding as of June 30, 2021 and 12,122,149 shares issued and 11,874,646 outstanding as of June 30, 2020

Additional paid-in-capital

Treasury stock (at cost, 916,521 shares and 247,503 shares as of June 30, 2021 and June 30, 2020, respectively)

Accumulated deficit

(38,801,282 )

(34,269,817 )

comprehensive loss

Other comprehensive loss

(31,868,481 )

(34,085,047 )

NetSol stockholders’

Non-controlling

stockholders’

liabilities and stockholders’

Total NetSol stockholders’

Non-controlling interest

Total stockholders’

Total liabilities and stockholders’

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

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Statements of Operations

- related party

and consultants

and amortization

For the Years

Ended June 30,

Net Revenues:

Subscription and support

Services - related party

Total net revenues

Cost of revenues:

and marketing

and amortization

and administrative

and development cost

Salaries and consultants

Depreciation and amortization

Total cost of revenues

Operating expenses:

(loss) from operations

income and (expenses)

on sale of assets

on foreign currency exchange transactions

of net loss from equity investment

other income (expenses)

income before income taxes

tax provision

Non-controlling

income attributable to NetSol

income per share:

income per common share

Weighted average

number of shares outstanding

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 before income taxes

Income tax provision

Non-controlling interest

Net income attributable to NetSol

Net income per share:

Net income per common share

Weighted average number of shares outstanding

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

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AND SUBSIDIARIES

Statements of Comprehensive Income (Loss)

comprehensive income (loss):

(13,463,469 )

adjustment attributable to non-controlling interest

Consolidated Statements of Comprehensive Income (Loss)

For the Years

Ended June 30,

Other comprehensive income (loss):

Translation adjustment

Comprehensive

income (loss) attributable to NetSol

Translation adjustment attributable to non-controlling interest

Net translation adjustment

Comprehensive income (loss) attributable to NetSol

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

3 unchanged sentences

the Years Ended June 30, 2021 and 2020

Comprehensive

Stockholders’

at June 30, 2018

Balance at June 30, 2019

$ 127,737,999

2 unchanged sentences

$ (33,125,006 )

in retained earnings on adoption of ASC 606

of common stock options

of subsidiary common stock options

stock issued for:

of treasury shares

component shown as current liability at

value of options extended

of non-controlling interest in subsidiary

to non-controlling interest

in subscription receivable

currency translation adjustment

income for the year

at June 30, 2019

Exercise of subsidiary common stock options

Subsidiary common stock issued for:

Common stock issued for:

Acquisition of non-controlling interest in subsidiary

Dividend to non-controlling interest

Foreign currency translation adjustment

Net income for the year

Balance at June 30, 2020

$ 128,677,754

5 unchanged sentences

AND SUBSIDIARIES

Statement of Stockholders’

the Years Ended June 30, 2020 and 2019

Consolidated Statement of Stockholders’

For the Years Ended June 30, 2021 and 2020

Comprehensive

Stockholders’

at June 30, 2019

Balance at June 30, 2020

$ 128,677,754

2 unchanged sentences

$ (34,085,047 )

of subsidiary common stock options

Cumulative effect adjustment (1)

Subsidiary common stock issued for:

Common stock issued for:

stock issued for:

component shown as current liability at

of non-controlling interest in subsidiary

to non-controlling interest

currency translation adjustment

income for the year

at June 30, 2020

Purchase of treasury shares

Foreign currency translation adjustment

Net income for the year

Balance at June 30, 2021

$ 129,018,826

2 unchanged sentences

$ (31,868,481 )

Cumulative 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.

accompanying notes are an integral part of these consolidated financial statements

2 unchanged sentences

Statements of Cash Flows

flows from operating activities:

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

and amortization

for bad debts

of net loss from investment under equity method

on sale of assets

based compensation

market value of stock options

in operating assets and liabilities:

receivable - related party

in excess of billing

(10,764,428 )

in excess of billing - related party

current assets

payable and accrued expenses

cash provided by operating activities

flows from investing activities:

of property and equipment

note receivable - related party

in associates

of subsidiary shares

cash used in investing activities

flows from financing activities:

from the exercise of stock options and warrants

from exercise of subsidiary options

of treasury stock

paid by subsidiary to non-controlling interest

from bank loans

on finance lease obligations and loans - net

cash provided by financing activities

of exchange rate changes

decrease in cash and cash equivalents

and cash equivalents at beginning of the period

and cash equivalents at end of period

For the Years

Ended June 30,

Cash flows from operating activities:

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

Depreciation and amortization

Provision for bad debts

Share of net loss from investment under equity method

(Gain) loss on sale of assets

Gain on forgiveness of loan

Stock based compensation

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 operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sales of property and equipment

Convertible note receivable - related party

Investment in associates

Purchase of subsidiary shares

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from exercise of subsidiary options

Purchase of treasury stock

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 increase in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of period

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

1 unchanged sentence

AND SUBSIDIARIES

Statements of Cash Flows (Continued)

paid during the period for:

INVESTING AND FINANCING ACTIVITIES:

acquired under finance lease

accrued for the purchase of VLS

recognized under operating lease

Consolidated Statements of Cash Flows (Continued)

For the Years

Ended June 30,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Assets acquired under finance lease

Drivemate shares acquired for services rendered

Assets recognized under operating lease

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

7 unchanged sentences

collectively referred to as the “Company”)

Company designs, develops, markets, and exports proprietary software products to customers in the automobile financing and leasing,

banking, and financial services industries worldwide.

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

and services in exchange for fees from customers.

Company designs, develops, markets, and exports proprietary software products to customers in the automobile financing and leasing, banking,

and financial services industries worldwide.

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

exchange for fees from customers.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

25 unchanged sentences

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

Equity investments through which the

Company exercises significant influence over but does not control the investee and is not the primary beneficiary of the investee’s

activities are accounted for using the equity method.

Investments through which the Company is not able to exercise significant

influence over the investee and which do not have readily determinable fair values are accounted for under the cost method.

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

Equity investments through which the Company

exercises significant influence over but does not control the investee and is not the primary beneficiary of the investee’s activities

are accounted for using the equity method.

Investments through which the Company is not able to exercise significant influence over the

investee and which do not have readily determinable fair values are accounted for under the cost method.

All material inter-company accounts

have been eliminated in the consolidation.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

Reclassifications

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

1 unchanged sentence

Below is the table of reclassified amounts:

the Year ended

fees - related party

- related party

Cost of revenues:

and administrative

For the Years ended

June 30, 2020

Originally reported

Subscription and support

Services - related party

Total net revenues

of Presentation

accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the

United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission

(“SEC”).

preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States

of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting period.

The areas requiring significant estimates are provision for doubtful accounts, provision

for taxation, useful life of depreciable assets, useful life of intangible assets, contingencies, and estimated contract costs.

The estimates and underlying assumptions are reviewed on an ongoing basis.

accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United

States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of

America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during

the reporting period.

The areas requiring significant estimates are provision for doubtful accounts, provision for taxation, useful life

of depreciable assets, useful life of intangible assets, contingencies, and estimated contract costs.

The estimates and underlying assumptions

are reviewed on an ongoing basis.

Actual results could differ from those estimates.

and Cash Equivalents

and cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not

securing any corporate obligations.

and cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing

any corporate obligations.

Concentration

1 unchanged sentence

includes cash on hand and demand deposits in accounts maintained within the United States as well as in foreign countries.

financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash.

maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured

limits for the banks located in the United States.

Balances at financial institutions within certain foreign countries are not

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

The Company maintains

two bank accounts in China.

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

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

The Company has not

experienced any losses in such accounts.

Certain financial

instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash.

The Company maintains balances

at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located

in the United States.

Balances at financial institutions within certain foreign countries are not covered by insurance, except balances

maintained in China are insured for RMB500,000 ($77,399) in each bank and in the UK for GBP 85,000 ($118,056) in each bank.

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

As of June 30, 2021 and 2020, the Company had uninsured

deposits related to cash deposits in accounts maintained within foreign entities of approximately $31,662,035 and $18,210,378, respectively.

The Company has not experienced any losses in such accounts.

TECHNOLOGIES, INC.

2 unchanged sentences

Company’s operations are carried out globally.

Accordingly, the Company’s business, financial condition and results

of operations may be influenced by the political, economic and legal environments of each country and by the general state of

the country’s economy.

The Company’s operations in each foreign country are subject to specific considerations and

significant risks not typically associated with companies in economically developed nations.

These include risks associated with,

among others, the political, economic and legal environments and foreign currency exchange.

The Company’s results may be

adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency

conversion and remittance abroad, and rates and methods of taxation, among other things.

Accordingly, the Company’s business, financial condition and results of operations

may be influenced by the political, economic and legal environments of each country and by the general state of the country’s economy.

The Company’s operations in each foreign country are subject to specific considerations and significant risks not typically associated

with companies in economically developed nations.

These include risks associated with, among others, the political, economic and legal

environments and foreign currency exchange.

The Company’s results may be adversely affected by changes in governmental policies

with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of

taxation, among other things.

Receivable and Allowance for Doubtful Accounts

2 unchanged sentences

for estimated losses inherent in its accounts receivable portfolio.

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.

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.

Reserves are recorded primarily on a specific identification basis.

Account balances

are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered

Receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported

at the principal balance outstanding, net of purchase premiums and discounts, deferred loan fees and costs, and an allowance for

Account balances are charged

off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at

the principal balance outstanding, net of purchase premiums and discounts, deferred loan fees and costs, and an allowance for loan losses.

Interest income is accrued on the unpaid principal balance.

Loan origination fees, net of certain direct origination

costs, are deferred and recognized in interest income.

Loan origination fees, net of certain direct origination costs, are deferred

and recognized in interest income.

in Excess of Billings

in excess of billings represent the total of the project to be billed to the customer for revenues recognized per US GAAP.

the customers are billed under the terms of their contract, the corresponding amount is transferred from this account to “Accounts

Receivable.”

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

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

over operating and financial policies.

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

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

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

influence over operating and financial management are accounted for under the equity method.

In accordance with the equity method,

these investments are originally recorded at cost and are adjusted for the Company’s proportionate share of earnings, losses

and distributions.

These investments are classified as long-term.

As the customers

are billed under the terms of their contract, the corresponding amount is transferred from this account to “Accounts Receivable.”

Company uses the equity investment without readily determinable fair value method to account for investments in businesses that are not

publicly traded and for which the Company does not control or have the ability to exercise significant influence over operating and financial

In accordance with this method, these investments are recorded at lower of cost or fair value, as appropriate, and are classified

as long-term.

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

over operating and financial management are accounted for under the equity method.

In accordance with the equity method, these investments

are originally recorded at cost and are adjusted for the Company’s proportionate share of earnings, losses and distributions.

investments are classified as long-term.

Company assesses and records impairment losses when events and circumstances indicate the investments might be impaired.

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

Gains and losses

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

TECHNOLOGIES, INC.

4 unchanged sentences

Expenditures for maintenance and repairs are charged to earnings as incurred;

additions, renewals

and betterments are capitalized.

When property and equipment are retired or otherwise disposed of, the related cost and accumulated

depreciation are removed from the respective accounts, and any gain or loss is included in operations.

Depreciation is computed

using various methods over the estimated useful lives of the assets, ranging from three to twenty years.

Following is the summary

of estimated useful lives of the assets:

equipment & software

furniture and equipment

under capital leases

Company capitalizes costs of materials, consultants, and payroll and payroll-related costs for employees incurred in developing

internal-use computer software.

additions, renewals and

betterments are capitalized.

When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation

are removed from the respective accounts, and any gain or loss is included in operations.

Depreciation is computed using various methods

over the estimated useful lives of the assets, ranging from three to twenty years.

Following is the summary of estimated useful lives

of the assets:

Estimated Useful Life

Computer equipment and software

Office furniture and equipment

5 to 10 Years

Assets under capital leases

3 to 10 Years

5 to 10 Years

Company capitalizes costs of materials, consultants, and payroll and payroll-related costs for employees incurred in developing internal-use

computer software.

These costs are included with “Computer equipment and software.”

of Long-Lived Assets

Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of

an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition

of the assets.

Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying

value exceeds the fair value.

Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the

Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds

the fair value.

assets consist of product licenses, renewals, enhancements, copyrights, trademarks, trade names, and customer lists.

assets with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis

and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The Company assesses

recoverability by determining whether the carrying value of such assets will be recovered through the discounted expected future

If the future discounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment

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

Intangible assets

with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis and whenever

events or changes in circumstances indicate that the carrying value may not be recoverable.

The Company assesses recoverability by determining

whether the carrying value of such assets will be recovered through the discounted expected future cash flows.

If the future discounted

cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying

amount over the fair value of the assets.

Development Costs

3 unchanged sentences

development costs are capitalized and reported at the lower of unamortized cost or net realizable value.

Capitalization ceases

when the product or enhancement is available for general release to customers.

Company makes on-going evaluations of the recoverability of its capitalized software projects by comparing the amount capitalized

for each product to the estimated present value of expected future net income from the product.

If such evaluations indicate that

the unamortized software development costs exceed the present value of expected future net income, the Company writes off the

amount which the unamortized software development costs exceed such present value.

Capitalized and purchased computer software

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

Capitalization ceases when the

product or enhancement is available for general release to customers.

Company makes on-going evaluations of the recoverability of its capitalized software projects by comparing the amount capitalized for

each product to the estimated present value of expected future net income from the product.

If such evaluations indicate that the unamortized

software development costs exceed the present value of expected future net income, the Company writes off the amount which the unamortized

software development costs exceed such present value.

Capitalized and purchased computer software development costs are being amortized

ratably based on the projected revenue associated with the related software or on a straight-line basis.

TECHNOLOGIES, INC.

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and development expenses are comprised of salaries, benefits and overhead expenses of employees involved in software product enhancement

and development, cost of outside contractors engaged to perform quality assurance, software product enhancement and development

and development, cost of outside contractors engaged to perform quality assurance, software product enhancement and development (if any).

Development costs are expensed as incurred.

represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination.

Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that

the carrying amount of goodwill may be impaired.

The goodwill impairment test is a two-step test.

Under the first step, the fair

value of the reporting unit is compared with its carrying value including goodwill.

If the fair value of the reporting unit exceeds

its carrying value, step two does not need to be performed.

If the fair value of the reporting unit is less than its carrying

value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment

Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill

over the implied fair value of that goodwill.

The implied fair value of goodwill is determined by allocating the fair value of

the reporting unit in a manner similar to a purchase price allocation.

The residual fair value after this allocation is the implied

fair value of the reporting unit goodwill.

Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying

amount of goodwill may be impaired.

In conducting its annual impairment test, the Company first

reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its

carrying amount.

If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs

a quantitative assessment and the fair value of the reporting unit is determined by analyzing the expected present value of future cash

If the carrying value of the reporting unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill

is calculated and an impairment loss equal to the excess is recorded.

Value of Financial Instruments

Company applies the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.”

ASC 820-10 defines

fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure

requirements for fair value measures.

For certain financial instruments, including cash and cash equivalents, restricted cash,

accounts receivable, accounts payable and short-term debt, the carrying amounts approximate fair value due to their relatively

short maturities.

The carrying amounts of the convertible notes receivable and long-term debt approximate their fair values based

on current interest rates for instruments with similar characteristics.

ASC 820-10 defines fair value

and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for

fair value measures.

For certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts

payable and short-term debt, the carrying amounts approximate fair value due to their relatively short maturities.

The carrying amounts

of the convertible notes receivable and long-term debt approximate their fair values based on current interest rates for instruments

with similar characteristics.

three levels of valuation hierarchy are defined as follows:

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rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability.

are based on prices or third party or internal valuation models that require inputs that are significant to the fair value

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

are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement

and are less observable and thus have the lowest priority.

TECHNOLOGIES, INC.

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financial assets that are measured at fair value on a recurring basis as of June 30, 2021 are as follows:

in excess of billings - long term

Revenues in excess of billings - long term

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

in excess of billing - long term

Revenues in excess of billings - long term

reconciliation for the years ended June 30, 2021 and 2020 is as follows:

in excess of billings - long term

value discount

at June 30, 2018

of ASC 606 adoption

June 30, 2019

during the period

of Translation Adjustment

at June 30, 2020

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

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

From Equity”

Revenues in excess of billings - long term

Fair value discount

Balance at June 30, 2019

Amortization during the period

Effect of Translation Adjustment

Balance at June 30, 2020

Amortization during the period

Transfers to short term

Effect of Translation Adjustment

Balance at June 30, 2021

Company used the discounted cash flow method with interest rates ranging from 4.65% to 6.25% and 4.35% for the years ended June 30, 2021

and 2020, respectively.

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

Equity”

and ASC 815, “Derivatives and Hedging.”

Derivative liabilities are adjusted to reflect

fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments

to fair value of derivatives.

The effects of interactions between embedded derivatives are calculated and accounted for in arriving

at the overall fair value of the financial instruments.

In addition, the fair values of freestanding derivative instruments such

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

revenue represents billings in excess of revenue earned on contracts and are recognized on a pro-rata basis over the life of the

Unearned revenue was $4,095,472 and $5,977,736 as of June 30, 2020 and 2019, respectively.

of revenues includes salaries and benefits for technical employees, consultant costs, amortization of capitalized computer software

development costs, depreciation of computer and equipment, travel costs, and indirect costs such as rent and insurance.

Derivative liabilities are adjusted to reflect fair value

at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value

of derivatives.

The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall

fair value of the financial instruments.

In addition, the fair values of freestanding derivative instruments such as warrants and option

derivatives are valued using the Black-Scholes model.

revenue represents billings in excess of revenue earned on contracts and are recognized on a pro-rata basis over the life of the contract.

Unearned revenue was $4,556,626 and $4,095,472 at June 30, 2021 and 2020, respectively.

of revenues includes salaries and benefits for technical employees, consultant costs, amortization of capitalized computer software development

costs, depreciation of computer and equipment, travel costs, and indirect costs such as rent and insurance.

TECHNOLOGIES, INC.

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Company expenses the cost of advertising as incurred.

Advertising costs for the years ended June 30, 2020 and 2019 were $285,964

and $282,354, respectively.

Advertising costs for the years ended June 30, 2021 and 2020 were $224,933 and

$285,964, respectively.

Company records stock compensation in accordance with ASC 718, Compensation –

Stock Compensation .

ASC 718 requires

companies to measure compensation cost for stock employee compensation at fair value at the grant date and recognize the expense

over the employee’s requisite service period.

ASC 718 requires companies

to measure compensation cost for stock employee compensation at fair value at the grant date and recognize the expense over the employee’s

requisite service period.

The Company recognizes forfeitures as they occur.

The Company recognizes in

the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees

and non-employees.

The Company recognizes in the statement of operations the

grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future

tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities

and their respective tax bases and operating loss and tax credit carry forwards.

Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to

be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in

the period that includes the enactment date.

A valuation allowance is provided for deferred tax assets if it is more likely than

not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

Deferred tax assets and liabilities are recognized for the future tax consequences

attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective

tax bases and operating loss and tax credit carry forwards.

Deferred tax assets and liabilities are measured using enacted tax rates

expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company

is able to realize their benefits, or that future deductibility is uncertain.

tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities,

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Tax positions taken are not offset or aggregated with other positions.

Tax positions

that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50

percent likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated

with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax

benefits in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities

upon examination.

Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income

taxes in the statements of operations.

Tax positions that

meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely

of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated with tax positions taken

that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the balance sheets along

with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Applicable interest and

penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.

Currency Translation

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The accounts of NetSol UK, NTE, AEL, VLSH and VLS use the British Pound;

VLSIL uses the Euro;

uses the Euro;

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

NTPK Thailand, NetSol Thai and OTOZ Thai

use Thai Baht;

NTPK Thailand, NetSol Thai and OTOZ Thai use Thai

NetSol Australia uses the Australian dollar;

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

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

NetSol Technologies,

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

dollar as the functional currency.

Consequently, revenues

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

Dollars using average exchange rates while assets

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

Dollars using exchange rates at the balance sheet

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

Consequently, revenues and expenses of operations

outside the United States are translated into U.S.

Dollars using average exchange rates while assets and liabilities of operations outside

the United States are translated into U.S.

Dollars using exchange rates at the balance sheet date.

The effects of foreign currency translation

adjustments are recorded to other comprehensive income.

TECHNOLOGIES, INC.

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Company’s cash flows from operations are calculated based upon the local currencies.

As a result, amounts related to assets

and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances

on the consolidated balance sheet.

As a result, amounts related to assets and

liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated

balance sheet.

Company defines operating segments as components about which separate financial information is available that is evaluated regularly

by the chief operating decision maker in deciding how to allocate resources and in assessing performances.

The Company allocates

its resources and assesses the performance of its sales activities based on the geographic locations of its subsidiaries.

Note 21 “Segment Information and Geographic Areas”)

The Company allocates its

resources and assesses the performance of its sales activities based on the geographic locations of its subsidiaries.

(See Note 21 “Segment

Information and Geographic Areas”)

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

classification

Additionally,

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

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

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

The difference between the ROU assets and lease liabilities represented

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

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

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

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 adoption of this standard did not materially impact

the results of operations or cash flows.

Standards Recently Issued but Not Yet Adopted by the Company:

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

Under the new standard, goodwill

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

the carrying value of goodwill.

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

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

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

This update is effective for annual

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

Early adoption is permitted for interim or

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

The Company will apply this guidance to applicable

impairment tests after the adoption date.

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 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 adopted this standard on July 1, 2020

and the adoption did not have a material effect on our 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 forecasts.

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.

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:

Asset Classification

ASC Topic 326

Allowance for credit losses - accounts receivable

Allowance for credit losses - accounts receivable - related party

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

Allowance for credit losses - convertible notes receivable - related party

Allowance for credit losses - other current assets

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

Accounts 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.

TECHNOLOGIES, INC.

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30, 2021 and 2020

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

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

Under the update, credit losses

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

The update also modifies the impairment

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

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

The Company is currently in the process of evaluating

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

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

As customers 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

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

for recovery is considered remote.

Standards Recently Issued but Not Yet Adopted by the Company:

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”

2019-12”).

ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation

and calculating income taxes in interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing

deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

This ASU is effective for fiscal years (and

interim periods within those fiscal years) beginning after December 15, 2020, which for the Company is the first quarter of fiscal 2022.

Early adoption is permitted.

The Company does not expect this update to have a material impact on its Consolidated Financial Statements.

August 2020, the FASB issued ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity”

(“ASU 2020-06”).

ASU 2020-06 reduces the number of accounting models for convertible debt

instruments and convertible preferred stock and results in fewer instruments with embedded conversion features being separately recognized

from the host contract as compared with current standards.

Those instruments that do not have a separately recognized embedded conversion

feature will no longer recognize a debt issuance discount related to such a conversion feature and would recognize less interest expense

on a periodic basis.

Additionally, the ASU amends the calculation of the share dilution impact related to a conversion feature and eliminates

the treasury method as an option.

For instruments that do not have a component mandatorily settled in cash, the change will likely result

in a higher amount of share dilution in the calculation of earnings per share.

This ASU is effective for fiscal years (and interim periods

within those fiscal years) beginning after December 15, 2021, which for the Company is the first quarter of fiscal 2023, with early adoption

permitted beginning in the first quarter of fiscal 2022.

The Company is currently assessing the impact and timing of adoption of this

March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of Effects of Reference Rate Reform on Financial

Reporting , which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions

affected by reference rate reform if certain criteria are met.

The elective amendments provide expedients to contract modification, affected

by reference rate reform if certain criteria are met.

The expedients and exceptions provided by this guidance apply only to contracts,

hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference

rate expected to be discontinued as a result of reference rate reform.

This guidance is not applicable to contract modifications made

and hedging relationships entered into or evaluated after December 31, 2022.

The guidance can be applied immediately through December

The Company will adopt this standard when LIBOR is discontinued and does not expect a material impact to its financial condition,

results of operations or disclosures based on the current debt portfolio and capital structure.

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

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

REVENUE RECOGNITION

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of revenue when, or as, the Company satisfies a performance obligation.

Company records the amount of revenue and related costs by considering whether the entity is a principal (gross presentation)

or an agent (net presentation) by evaluating the nature of its promise to the customer.

Revenue is presented net of sales, value-added

and other taxes collected from customers and remitted to government authorities.

Company records the amount of revenue and related costs by considering whether the entity is a principal (gross presentation) or an agent

(net presentation) by evaluating the nature of its promise to the customer.

Revenue is presented net of sales, value-added and other

taxes collected from customers and remitted to government authorities.

Company has two primary revenue streams:

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Company generates its core revenue from the following sources:

(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.

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

consulting services, and (3) subscription and support, 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.

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

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

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

under Topic 606.

The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or

as, the performance obligation is satisfied by transferring the promised good or service to the customer.

The Company identifies

and tracks the performance obligations at contract inception so that the Company can monitor and account for the performance obligations

over the life of the contract.

Company’s contracts which contain multiple performance obligations generally consist of the initial purchase of subscription

or licenses and a professional services engagement.

License purchases generally have multiple performance obligations as customers

purchase maintenance and services in addition to the licenses.

The Company’s single performance obligation arrangements

are typically maintenance renewals, subscription renewals and services engagements.

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

The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance

obligation is satisfied by transferring the promised good or service to the customer.

The Company identifies and tracks the performance

obligations at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract.

Company’s contracts which contain multiple performance obligations generally consist of the initial purchase of subscription or

licenses and a professional services engagement.

License purchases generally have multiple performance obligations as customers purchase

post contract support and services in addition to the licenses.

The Company’s single performance obligation arrangements are typically

post contract support renewals, subscription renewals and services engagements.

contracts with multiple performance obligations where the contracted price differs from the standalone selling price (“SSP”)

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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.

of control for software is considered to have occurred upon delivery of the product to the customer.

The Company’s typical

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

Consulting services are generally sold on a time-and-materials or fixed fee basis and can include services ranging from

software installation to data conversion and building non-complex interfaces to allow the software to operate in integrated environments.

The Company recognizes revenue for time-and-materials arrangements as the services are performed.

In fixed fee arrangements, revenue

is recognized as services are performed as measured by costs incurred to date, compared to total estimated costs to complete the

services project.

Management applies judgment when estimating project status and the costs necessary to complete the services

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

variances and specification and testing requirement changes.

Services are generally invoiced upon milestones in the contract or

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

The Company’s typical payment

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

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

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.

Contract Support

from support services and product updates, referred to as subscription and 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 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 licenses.

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 services.

Consulting services are generally sold on a time-and-materials or fixed fee basis and can include services ranging from software installation

to data conversion and building non-complex interfaces to allow the software to operate in integrated environments.

The Company recognizes

revenue for time-and-materials arrangements as the services are performed.

In fixed fee arrangements, revenue is recognized as services

are performed as measured by costs incurred to date, compared to total estimated costs to complete the services project.

Management applies

judgment when estimating project status and the costs necessary to complete the services projects.

A number of internal and external

factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement

Services are generally invoiced upon milestones in the contract or upon consumption of the hourly resources and payments are

typically due 30 days after invoice.

and Internet Services

from BPO services is recognized based on the stage of completion which is measured by reference to labor hours incurred to date

as a percentage of total estimated labor hours for each contract.

Internet services are invoiced either monthly, quarterly or

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

from BPO services is recognized based on the stage of completion which is measured by reference to labor hours incurred to date as a

percentage of total estimated labor hours for each contract.

Internet services are invoiced either monthly, quarterly or half yearly

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

Disaggregated

Company disaggregates revenue from contracts with customers by category —

core and non-core, as it believes it best depicts

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

core and non-core, as it believes it best depicts how

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

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

Company’s disaggregated revenue by category is as follows:

For the Years

Ended June 30,

- related party

core revenue, net

non-core revenue, net

Subscription and support

Services - related party

Total core revenue, net

Total non-core revenue, net

Total net revenue

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

3 unchanged sentences

is required to determine the SSP for each distinct performance obligation.

The Company rarely licenses or sells products on a

stand-alone basis, so the Company is required to estimate the range of SSPs for each performance obligation.

In instances where

SSP is not directly observable because the Company does not sell the license, product or service separately, the Company determines

the SSP using information that may include market conditions and other observable inputs.

In making these judgments, the Company

analyzes various factors, including its pricing methodology and consistency, size of the arrangement, length of term, customer

demographics and overall market and economic conditions.

Based on these results, the estimated SSP is set for each distinct product

or service delivered to customers.

The Company rarely licenses or sells products on a stand-alone

basis, so the Company is required to estimate the range of SSPs for each performance obligation.

In instances where SSP is not directly

observable because the Company does not sell the license, product or service separately, the Company determines the SSP using information

that may include market conditions and other observable inputs.

In making these judgments, the Company analyzes various factors, including

its pricing methodology and consistency, size of the arrangement, length of term, customer demographics and overall market and economic

Based on these results, the estimated SSP is set for each distinct product or service delivered to customers.

most significant inputs involved in the Company’s revenue recognition policies are:

The (1) stand-alone selling prices of

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

The (1) stand-alone selling prices of the Company’s

software license, and the (2) the method of recognizing revenue for installation/customization, and other services.

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

prices to customers.

Although the Company has no history of selling its software separately from post contract 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 recognizes revenue from implementation and customization services using the percentage of estimated “man-days”

that the work requires.

The Company believes the level of effort to complete the services is best measured by the amount of time (measured

as an employee working for one day on implementation/customization work) that is required to complete the implementation or customization

The Company reviews its estimate of man-days required to complete implementation and customization services each reporting period.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

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

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.

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

that the work requires.

The Company believes the level of effort to complete the services is best measured by the amount of time

(measured as an employee working for one day on implementation/customization work) that is required to complete the implementation

or customization work.

The Company reviews its estimate of man-days required to complete implementation and customization services

each reporting period.

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

is recognized over time for the Company’s subscription, post contract 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

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

variances and testing requirement changes.

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,

such agreements are deemed to be combined as one arrangement for revenue recognition purposes.

The Company exercises significant

judgment to evaluate the relevant facts and circumstances in determining whether agreements should be accounted for separately

or as a single arrangement.

The Company’s judgments about whether a group of contracts comprise a single arrangement can

affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations

for the periods involved.

a contract includes variable consideration, the Company exercises judgment in estimating the amount of consideration to which

the entity will be entitled in exchange for transferring the promised goods or services to a customer.

When estimating variable

consideration, the Company will consider all relevant facts and circumstances.

Variable consideration will be estimated and included

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

The Company exercises significant judgment

to evaluate the relevant facts and circumstances in determining whether agreements should be accounted for separately or as a single

The Company’s judgments about whether a group of contracts comprise a single arrangement can affect the allocation

of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

a contract includes variable consideration, the Company exercises judgment in estimating the amount of consideration to which the entity

will be entitled in exchange for transferring the promised goods or services to a customer.

When estimating variable consideration, the

Company will consider all relevant facts and circumstances.

Variable consideration will be estimated and included in the contract price

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

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

contract assets (revenues in excess of billings), or contract liabilities (deferred revenue) on the Company’s Consolidated

Balance Sheets.

The Company records revenues in excess of billings when the Company has transferred goods or services but does

not yet have the right to consideration.

The Company records deferred revenue when the Company has received or has the right to

receive consideration but has not yet transferred goods or services to the customer.

revenues in excess of billings are transferred to receivables when the rights to consideration become unconditional, usually upon

completion of a milestone.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

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

contract assets (revenues in excess of billings), or contract liabilities (deferred revenue) on the Company’s Consolidated Balance

The Company records revenues in excess of billings when the Company has transferred goods or services but does not yet have the

right to consideration.

The Company records deferred revenue when the Company has received or has the right to receive consideration

but has not yet transferred goods or services to the customer.

revenues in excess of billings are transferred to receivables when the rights to consideration become unconditional, usually upon completion

of a milestone.

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

June 30, 2021

June 30, 2020

in excess of billings

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

at the beginning of the period.

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

of revenue recognition.

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

are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as

revenue in future periods.

Contracted but unsatisfied performance obligations were approximately $62,919,547 as of June 30, 2020,

of which the Company estimates to recognize approximately $13,818,077 in revenue over the next 12 months and the remainder over

an estimated 6 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

due at the start of the subscription or support term.

Unpaid invoice amounts for non-cancelable license and services starting

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

Expedients and Exemptions

are several practical expedients and exemptions allowed under Topic 606 that impact timing of revenue recognition and the Company’s

Below is a list of practical expedients the Company applied in the adoption and application of Topic 606:

The Company does not evaluate a contract for a significant financing component if payment is expected within one year or less

from the transfer of the promised items to the customer.

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

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

These costs are recorded within sales and marketing expense

in the Consolidated Statement of Operations.

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

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

Retrospective Transition Adjustments

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

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

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

Revenues in excess of billings

Unearned revenue

the year ended June 30, 2021, the Company recognized revenue of $4,087,373, which 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

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied,

or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods.

Contracted but unsatisfied performance obligations were approximately $48,314,683 as of June 30, 2021, of which the Company estimates

to recognize approximately $15,603,135 in revenue over the next 12 months and the remainder over an estimated 6 years thereafter.

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 due

at the start of the subscription or support term.

Unpaid invoice amounts for non-cancelable license and services starting in future periods

are included in accounts receivable and unearned revenue.

Expedients and Exemptions

are several practical expedients and exemptions allowed under Topic 606 that impact timing of revenue recognition and the Company’s

The Company has applied the following practical expedients:

The Company does not evaluate a contract for a significant financing component if payment is expected within one year or less from the

transfer of the promised items to the customer.

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

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

These costs are recorded within sales and marketing expense in the Consolidated

Statement of Operations.

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

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

to Obtain a Contract

2 unchanged sentences

incurs few direct incremental costs of obtaining new customer contracts.

The Company rarely incurs incremental costs to review

or otherwise enter into contractual arrangements with customers.

In addition, the Company’s sales personnel receive fees

that are referred to as commissions, but that are based on more than simply signing up new customers.

The Company’s sales

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

duties and collections efforts.

The Company rarely incurs incremental costs to review or otherwise

enter into contractual arrangements with customers.

In addition, the Company’s sales personnel receive fees that are referred to

as commissions, but that are based on more than simply signing up new customers.

The Company’s sales personnel are required to

perform additional duties beyond new customer contract inception dates, including fulfillment duties and collections efforts.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

EARNINGS PER SHARE

earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period.

Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive

potential common shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include

outstanding stock options and stock awards.

earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common

shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock options

and stock awards.

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

the year ended June 30, 2020

income available to common shareholders

of dilutive securities

income per share

the year ended June 30, 2019

income available to common shareholders

of dilutive securities

income per share

For the year ended June 30, 2021

Basic income per share:

Net income available to common shareholders

Effect of dilutive securities

Diluted income per share

For the year ended June 30, 2020

Basic income per share:

Net income available to common shareholders

Effect of dilutive securities

Diluted income per share

MAJOR CUSTOMERS

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

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

the year ended June 30, 2021, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”) were

$11,522,694 and $7,137,653, respectively representing 21.0% and 13.0%, respectively of revenues.

During the year ended June 30, 2020,

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

revenue from these customers are shown in the Asia –

revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”) were $14,869,030 and $8,904,809, respectively

representing 26.4% and 15.8%, respectively of revenues.

The revenue from these customers are shown in the Asia –

Pacific segment.

receivable from DFS and BMW at June 30, 2021, were $462,861 and $35,063, respectively.

Accounts receivable at June 30, 2019,

Accounts receivable from DFS and BMW at June 30,

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

2 unchanged sentences

Included in this amount was $1,300,289

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

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

shown as long term at June 30, 2020.

CONVERTIBLE NOTE RECEIVABLE –

RELATED PARTY

Note Receivable - May 25, 2017

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

Note”) which was fully executed on May 25, 2017.

The maximum principal amount of the Convertible Note is $750,000, and as

of June 30, 2020, the Company had disbursed $750,000.

The Convertible Note bears interest at 5% per annum and all unpaid interest

and principal is due and payable upon the Company’s request on or after February 1, 2019.

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.

Convertible Note is convertible upon the occurrence of the following events:

a qualified financing which is an equity financing of at least $2,000,000.

upon an equity financing less than $2,000,000.

after the maturity date.

a change of control.

Convertible Note is convertible into Series BB Preferred shares at the lesser of (i) the price paid per share for the equity security

by the investors in the qualified financing and (ii) $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 Convertible Note.

Note Receivable –

February 9, 2018

Company’s subsidiary NetSol Thai entered into an agreement with WRLD3D, whereby NetSol Thai was issued a Convertible Promissory

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

The maximum principal amount

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

The Thai Convertible

Note bears interest at 10% per annum and all unpaid interest and principal is due and payable upon request on or after March 31,

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.

Thai Convertible Note is convertible upon the occurrence of the following events:

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

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

conversion after the maturity date.

the Company converts the Thai Convertible Note upon the occurrence of a financing, then the conversion price will be equal to

the product of:

(A) the price paid per share for the equity securities by the investors multiplied by (B) 70%.

the Company converts the Thai Convertible 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 Thai Convertible Note.

Note Receivable –

April 1, 2019

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

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

The maximum principal amount is $600,000, and as of June 30, 2020,

the Company had disbursed $600,000.

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

is due and payable upon 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.

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.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

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

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

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

conversion after the maturity date.

the Company converts the April 1, 2019 Note upon the occurrence of a financing, then the conversion price will be equal to the

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

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

the Company converts the April 1, 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 April 1, 2019 Note.

Note Receivable –

August 19, 2019

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

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

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

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

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

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

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

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

and the proceeds thereof.

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

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

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

conversion after the maturity date.

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

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

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

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

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

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

following table summarizes the convertible notes receivable from WRLD3D.

March 2, 2018

February 9, 2018

March 31, 2019

April 1, 2019

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

current assets”.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

March 31, 2020

August 19, 2019

March 31, 2020

Less allowance for doubtful account

Company has accrued interest of $701,062 at June 30, 2021 and 2020, which is included in “Other current assets”.

has not been accruing interest since July 1, 2020.

7 - OTHER CURRENT ASSETS

current assets consisted of the following:

June 30, 2021

June 30, 2020

Prepaid Expenses

Advance Income Tax

Employee Advances

Security Deposits

Other Receivables

Due From Related Party

Less allowance for doubtful account

REVENUES IN EXCESS OF BILLINGS –

in excess of billings, net consisted of the following:

in excess of billings - long term

value discount

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

billable after one year.

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

was recorded in interest income for that period.

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

during the years ended June 30, 2020 and 2019.

June 30, 2021

June 30, 2020

Revenues in excess of billings - long term

Present value discount

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

after one year.

During the years ended June 30, 2021 and 2020, the Company accreted $53,119 and $55,344, respectively, which was recorded

in interest income for that period.

The Company used the discounted cash flow method with interest rates ranging from 4.65% to 6.25%

for the year ended June 30, 2021 and 4.35% during the year ended June 30, 2020.

TECHNOLOGIES, INC.

3 unchanged sentences

and equipment consisted of the following:

Furniture and Equipment

Under Capital Leases

Work In Progress

June 30, 2021

June 30, 2020

Office Furniture and Equipment

Computer Equipment

Assets Under Capital Leases

Capital Work In Progress

Accumulated Depreciation

(20,785,781 )

(21,288,868 )

and Equipment, Net

Property and Equipment, Net

the years ended June 30, 2021 and 2020, depreciation expense totaled $2,148,578 and $1,903,640, respectively.

2 unchanged sentences

is a summary of fixed assets held under capital leases as of June 30, 2021 and 2020:

and Other Equipment

June 30, 2021

June 30, 2020

Computers and Other Equipment

Furniture and Fixtures

Accumulated Depreciation - Net

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

classified as financing and operating.

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

ranging from one year to 10 years.

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

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

of the asset.

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

with terms greater than 12 months.

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

of the lease term.

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

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

the life of the lease.

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

Since the interest

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

rate to determine the present value of the lease payments.

The incremental borrowing rate represents the rate of interest the

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

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

For finance leases,

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

lease term and discount rate were as follows:

June 30, 2021

June 30, 2020

Weighted average remaining lease term - Finance leases

Weighted average discount rate - Finance leases

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

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

as financing and operating.

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

one year to 10 years.

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

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

leases are recorded as right-of-use (“ROU”) assets and lease obligation liabilities for leases with terms greater than 12

ROU assets represent the Company’s right to use an underlying asset for the entirety of the lease term.

Lease liabilities

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

A ROU asset and a lease liability are recognized

at commencement of the lease based on the present value of the lease payments over the life of the lease.

Initial direct costs are included

as part of the ROU asset upon commencement of the lease.

Since the interest rate implicit in a lease is generally not readily determinable

for the operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments.

The incremental

borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar lease

term to obtain an asset of similar value.

The Company used the incremental borrowing rate on July 1, 2019 for all leases that commenced

prior to that date.

For finance leases, the Company used the incremental borrowing rate implicit in the lease.

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

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

carrying value of the asset may not be recoverable.

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

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

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

asset and lease liability accounts.

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

value of the asset may not be recoverable.

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

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

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

and lease liability accounts.

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

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

result in a re-measurement of lease liabilities.

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

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

The Company’s lease agreements do not contain

any significant residual value guarantees or restrictive covenants.

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

in a re-measurement of lease liabilities.

The Company’s variable lease payments include payments for finance leases that are adjusted

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

The Company’s lease agreements do not contain any significant residual

value guarantees or restrictive covenants.

balance sheet information related to leases was as follows:

lease assets, net

Lease Liabilities

components of lease cost were as follows:

June 30, 2021

of finance lease assets

on finance lease obligation

term lease cost

June 30, 2020

Operating lease assets, net

Total Lease Liabilities

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

components of lease cost were as follows:

For the Years

Ended June 30,

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:

average remaining lease term - Operating leases

average discount rate - Operating leases

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

June 30, 2021

flows related to lease liabilities

cash flows related to operating leases

June 30, 2020

Weighted average remaining lease term - Operating leases

Weighted average discount rate - Operating leases

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

For the Years

Ended June 30

Cash flows related to lease liabilities

Operating cash flows related to operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

of operating lease liabilities were as follows as of June 30, 2021:

Lease Payments

Imputed interest

Present Value

of lease liabilities

Current portion

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

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

Within year 1

3 unchanged sentences

Within year 5

Total Lease Payments

Imputed interest

Present Value of lease liabilities

Current portion

Non-Current portion

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

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

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

All leases are considered operating leases.

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

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

of lease income.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

There are no rights

to purchase the premises and no residual value guarantees.

For the years ended June 30, 2021 and 2020, the Company received $35,740 and

$33,426, respectively, of lease income.

LONG-TERM INVESTMENT

1 unchanged sentence

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

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

Per the Drivemate Agreement, the Company

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

The Company paid $250,000

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

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

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

Drivemate Agreement signing.

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

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

Per the Drivemate Agreement, the Company appointed two directors

to the Drivemate board.

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

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

therefore, the Company accounts

for the investment using the equity method of accounting.

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

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

Per the Drivemate Agreement, the Company purchased

5,469 preferred shares for $1,800,000 consisting of $500,000 cash to be paid over a two-year period and $1,300,000 to be provided

The Company has paid the $500,000 in cash and has provided services of $1,300,000.

Pursuant to the agreement, the number

of shares to be issued is adjusted as necessary to result in an equity ownership equal to 30% of the issued and outstanding shares at

the final payment date.

As of June 30, 2021, the Company has been issued 8,178 shares equal to 30% 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 owns 30% of Drivemate;

therefore, the Company accounts for

the investment using the equity method of accounting.

the years ended June 30, 2021 and 2020, the Company performed services of $18,006 and $1,054,372, respectively.

the equity method of accounting, the Company recorded its share of net loss of $20,001 and $16,714 for the years ended June 30, 2021

and 2020, respectively.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

WRLD3D-Related

March 2, 2017, the Company purchased a 4.9% interest in WRLD3D, a non-public company, for $1,111,111.

The Company paid $555,556

at the initial closing and $555,555 on September 1, 2017.

NetSol PK, the subsidiary of the Company, purchased a 12.2% investment

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

As of June 30, 2020, the investment

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

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

BB Preferred Stock.

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

the following key terms and features:

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

is issued by WRLD3D in a “Qualified Financing”.

warrants expired on March 2, 2020.

Round Preferred”

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

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

“Qualified

Financing”

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

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

exercise price of the warrants is equal to the greater of

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

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

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

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

and also an employee of the Company;

The Company paid $555,556 at the

initial closing and $555,555 on September 1, 2017.

NetSol PK, the subsidiary of the Company, purchased a 12.2% investment in WRLD3D,

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

As of June 30, 2021, NTI and NTPK own 1,636,876 and

4,092,189, respectively, of Series BB Preferred Stock.

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

on March 2, 2020.

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

an employee of the Company;

therefore, the Company accounts for the investment using equity method of accounting.

the years ended June 30, 2020 and 2019, NetSol PK provided services valued at $300,821 and $636,731, respectively, which is recorded

as services-related party.

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

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

the years ended June 30, 2021 and 2020, NetSol PK provided services valued at $48,775 and $300,821, respectively, 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.

Under the equity method of accounting,

the Company recorded its share of net loss of $233,818 and $589,150 for the years ended June 30, 2021 and 2020, respectively.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

following table reflects the above investments at June 30, 2021.

net loss on investment

other comprehensive income (loss)

Gross investment

Cumulative net loss on investment

Cumulative other comprehensive income (loss)

Net investment

12 - INTANGIBLE ASSETS

assets consisted of the following:

Licenses - Cost

of Translation Adjustment

June 30, 2021

June 30, 2020

Product Licenses - Cost

Effect of Translation Adjustment

(14,440,001 )

(16,045,322 )

Accumulated Amortization

(28,900,340 )

2 unchanged sentences

licenses include internally-developed original license issues, renewals, enhancements, copyrights, trademarks, and trade names.

Product licenses are amortized on a straight-line basis over their respective lives, and the unamortized amount of $5,391,077

will be amortized over the next 3.25 years.

Amortization expense for the years ended June 30, 2020 and 2019 was $1,828,314 and

$2,138,432, respectively.

licenses are amortized on a straight-line basis over their respective lives, and the unamortized amount of $3,904,656 will be amortized

over the next 2.25 years.

Amortization expense for the years ended June 30, 2021 and 2020 was $1,807,736 and $1,828,314, respectively.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

Future Amortization

2 unchanged sentences

June 30, 2023

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

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

combinations.

June 30, 2024

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

Goodwill was comprised of the following amounts:

PK (Asia - Pacific)

(North America)

As of June 30,

NetSol PK (Asia - Pacific)

NTA (North America)

14 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

Payroll & Taxes

June 30, 2021

June 30, 2020

Accounts Payable

Accrued Liabilities

Accrued Payroll & Taxes

Taxes Payable

Other Payable

TECHNOLOGIES, INC.

2 unchanged sentences

payable and capital leases consisted of the following:

of June 30, 2020

Protection Program Loans

Overdraft Facility

Finance Facility

Payable Bank - Export Refinance

Payable Bank - Running Finance

Payable Bank - Export Refinance II

Payable Bank - Running Finance II

Payable Bank - Export Refinance III

Finance Facility

Finance Leases

of June 30, 2019

Protection Program Loans

Overdraft Facility

Finance Facility

Payable Bank - Export Refinance

Payable Bank - Running Finance

Payable Bank - Export Refinance II

Payable Bank - Running Finance II

Payable Bank - Export Refinance III

Finance Facility

Finance Leases

As of June 30, 2021

D&O Insurance

Paycheck Protection Program Loans

Bank Overdraft Facility

Term Finance 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

Sale and Leaseback Financing

Term Finance Facility

Insurance Financing

Subsidiary Finance Leases

As of June 30, 2020

D&O Insurance

Paycheck Protection Program Loans

Bank Overdraft Facility

Term Finance 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

Term Finance Facility

Insurance Financing

Subsidiary Finance Leases

The Company finances Directors’

and Officers’

(“D&O”) liability insurance and Errors and Omissions

(“E&O”) liability insurance, for which the D&O and E&O balances are renewed on an annual basis and, as

such, are recorded in current maturities.

The interest rate on these financings range from 5.0% to 7.0% as of June 30, 2020 and

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

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

during the COVID-19 Pandemic.

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

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

As of June 30,

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

(“D&O”) liability insurance and Errors and Omissions (“E&O”)

liability insurance, for which the D&O and E&O balances are renewed on an annual basis and, as such, are recorded in current

The interest rate on these financings range from 5.0% to 7.0% as of June 30, 2021 and 2020, respectively.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

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 $370,370.

The annual interest rate was 5.1% as of June 30, 2020.

Total outstanding balance

as of June 30, 2020 and 2019 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 June 30, 2020, NTE was in compliance with this covenant.

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

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

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

Government during

the COVID-19 Pandemic.

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

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

During the year ended June 30, 2021,

the Company applied for the loan forgiveness, which was approved by the U.S.

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 $416,667.

The annual interest rate was 5.1% as of June 30, 2021 and 2020.

Total outstanding balance as of June 30, 2021

and 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 June 30,

2021, 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 COVID-19 Pandemic.

This is a term loan payable in three years.

facility amount is Rs.

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

The availed facility amount

260,678,180 or $1,648,818, at June 30, 2021, of which $1,090,259 is shown as current and the remaining $558,559 is shown as long

The availed facility amount is 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 June 30, 2020.

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

The interest rate for the loan was 3% at June 30, 2021 and 2020.

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

This is a revolving loan that matures every six months.

1 unchanged sentence

500,000,000 or $3,162,555 and Rs.

500,000,000 or $3,066,355 at June 30, 2020 and 2019, respectively.

500,000,000 or

$2,975,482 at June 30, 2021 and 2020, respectively.

The interest rate for the loan was 3% at June 30, 2021 and 2020.

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

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

Total facility amount is Rs.

1 unchanged sentence

75,000,000 or $446,322, at June 30, 2021 and 2020, respectively.

NetSol PK used Rs.

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

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

and 2019, respectively.

outstanding at June 30, 2021 and 2020 was Rs.

The interest rate for the loan was 9.5% and 7.2% at June 30, 2021 and 2020, respectively.

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

As of June 30, 2020,

NetSol PK was in compliance with this covenant.

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

As of June 30, 2021, NetSol

PK was in compliance with this covenant.

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

This is a revolving loan that matures every six months.

1 unchanged sentence

380,000,000 or $2,403,542 and Rs.

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

380,000,000 or

$2,261,365, at June 30, 2021 and 2020, respectively.

The interest rate for the loan was 3% at June 30, 2021 and 2020.

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

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

Total facility amount is Rs.

1 unchanged sentence

120,000,000 or $714,116, at June 30, 2021 and 2020, respectively.

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

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

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

As of June 30,

2020, NetSol PK was in compliance with these covenants.

rate for the loan was 9.0% and 7.7% at June 30, 2021 and 2020, respectively.

Total outstanding balance at June 30, 2021 and 2020 was

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

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

As of June 30, 2021, NetSol PK

was in compliance with these covenants.

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

1 unchanged sentence

Total facility amount is Rs.

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

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

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

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

The loan amount was

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

As of June 30, 2020, the

subsidiary has used this facility up to $65,473, of which $49,050 was shown as long-term and $16,311 as current.

rate was 6.14% at June 30, 2020.

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

The assets and

liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value

of the asset.

The assets are secured by the assets themselves.

Depreciation of assets under capital leases is included in depreciation

expense for the years ended June 30, 2020 and 2019.

900,000,000 or $5,692,600 and Rs.

or $5,355,868, at June 30, 2021 and 2020, respectively.

NetSol PK used Rs.

700,000,000 or $4,427,578 and Rs.

500,000,000 or $2,975,482,

at June 30, 2021 and 2020, respectively.

The interest rate for the loan was 3% at June 30, 2021 and 2020.

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

The Company’s subsidiary, NetSol PK, availed sale and leaseback financing from First Habib Modaraba secured by the transfer of

the vehicles’

As of June 30, 2021, NetSol PK used Rs.

13,487,949 or $85,313 of which $57,130 was shown as long term and

$28,183 as current.

The interest rate for the loan was 9.0% at June 30, 2021.

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

The loan amount was £69,549,

or $96,596, for a period of 5 years with monthly payments of £1,349, or $1,874.

As of June 30, 2021, the subsidiary has used this

facility up to $55,182, of which $35,538 was shown as long-term and $19,644 as current.

The interest rate was 6.14% at June 30, 2021.

The Company’s subsidiary, VLS, finances Directors’

and Officers’

(“D&O”) liability insurance, and the

$41,774 is recorded in current maturities.

The interest rate on this financing was 4.5% as of June 30, 2021.

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

The assets and liabilities

under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset.

assets are secured by the assets themselves.

Depreciation of assets under capital leases is included in depreciation expense for the

years ended June 30, 2021 and 2020.

is the aggregate minimum future lease payments under capital leases as of June 30, 2021:

Lease Payments

Minimum Lease Payments

Expense relating to future periods

Value of minimum lease payments

Within year 1

Within year 2

Within year 3

Total Minimum Lease Payments

Interest Expense relating to future periods

Present Value of minimum lease payments

Current portion

Non-Current portion

is the aggregate future long term debt payments as of June 30, 2021:

Loan Payments

Within year 1

Within year 2

Within year 3

Total Loan Payments

Current portion

Non-Current portion

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

Company is incorporated in the State of Nevada and registered to do business in the State of California.

2 unchanged sentences

pre-tax income (loss) consists of the following:

Ended June 30,

$ (1,941,611 )

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

Years Ended June 30,

US operations

Foreign operations

components of the provision for income taxes are as follows:

Ended June 30,

for income taxes

Years Ended June 30,

State and Local

Provision for income taxes

reconciliation of taxes computed at the statutory federal income tax rate to income tax expense (benefit) is as follows:

Reconciliation

of effective income tax rate

Ended June 30,

tax (benefit) provision at statutory rate

income (benefit) taxes, net of federal tax benefit

earnings taxed at different rates

in valuation allowance for deferred tax assets

for income taxes

income tax assets and liabilities as of June 30, 2020 and 2019 consist of tax effects of temporary differences related to the

of deferred tax asset

Ended June 30,

operating loss carry forwards

deferred tax assets

allowance for deferred tax assets

deferred tax assets

Company has established a full valuation allowance as management believes it is more likely than not that these assets will not

be realized in the future.

The valuation allowance decreased by $181,930 for the year ended June 30, 2020.

June 30, 2020, federal and state net operating loss carry forwards in the United States of America were $30,196,241 and $7,347,063,

respectively.

Federal net operating loss carry forwards begin to expire in 2028, while state net operating loss carry forwards

are expiring each year.

Due to both historical and recent changes in the capitalization structure of the Company, the utilization

of net operating losses may be limited pursuant to section 382 of the Internal Revenue Code.

Net operating losses related to foreign

entities were $1,330,673 at June 30, 2020.

Years Ended June 30,

Income tax (benefit) provision at statutory rate

State income (benefit) taxes, net of federal tax benefit

Foreign earnings taxed at different rates

Change in valuation allowance for deferred tax assets

Provision for income taxes

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

income tax assets and liabilities as of June 30, 2021 and 2020 consist of tax effects of temporary differences related to the following:

of deferred tax asset

Net operating loss carry forwards

Net deferred tax assets

Valuation allowance for deferred tax assets

Net deferred tax assets

Company has established a full valuation allowance as management believes it is more likely than not that these assets will not be realized

in the future.

The valuation allowance increased by $129,758 for the year ended June 30, 2021.

June 30, 2021, federal and state net operating loss carry forwards in the United States of America were $28,678,045 and $7,935,883, respectively.

Federal net operating loss carry forwards begin to expire in 2028, while state net operating loss carry forwards are expiring each year.

Due to both historical and recent changes in the capitalization structure of the Company, the utilization of net operating losses may

be limited pursuant to section 382 of the Internal Revenue Code.

California has suspended the net operating loss carryover deduction

for taxable years 2020, 2021 and 2022.

Net operating losses related to foreign entities were $3,506,583 at June 30, 2021.

of June 30, 2021, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters.

The Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Company is subject to U.S.

federal income tax, as well as various state and foreign jurisdictions.

The Company is currently open

to audit under the statute of limitations by the federal and state jurisdictions for the years ending June 30, 2017 through 2019.

The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months.

cumulative amount of undistributed earnings of foreign subsidiaries that the Company intends to permanently invest and upon which

no deferred US income taxes have been provided is $31,046,118 as of June 30, 2020.

The additional US income tax on unremitted

foreign earnings, if repatriated, would be offset in part by foreign tax credits.

The extent of this offset would depend on many

factors, including the method of distribution, and specific earnings distributed.

The Company determined that it is not practicable

to determine unrecognized deferred tax liability associated with the unremitted earnings attributable to the foreign subsidiaries.

Income from the export of computer software

and its related services developed in Pakistan is exempt from tax through June 30, 2025.

The aggregate effect of the tax holiday

for June 30, 2020 and 2019 is $47,477 and $2,771,078, respectively.

The effect on basic and diluted earnings per share is $0.004,

for June 30, 2020 and $0.19 and $0.18 for June 30, 2019.

The Company is currently open to audit

under the statute of limitations by the federal and state jurisdictions for the years ending June 30, 2018 through 2020.

does not anticipate any material amount of unrecognized tax benefits within the next 12 months.

cumulative amount of undistributed earnings of foreign subsidiaries that the Company intends to permanently invest and upon which no

deferred US income taxes have been provided is $33,349,743 as of June 30, 2021.

The additional US income tax on unremitted foreign

earnings, if repatriated, would be offset in part by foreign tax credits.

The extent of this offset would depend on many factors, including

the method of distribution, and specific earnings distributed.

The Company determined that it is not practicable to determine unrecognized

deferred tax liability associated with the unremitted earnings attributable to the foreign subsidiaries.

from the export of computer software and its related services developed in Pakistan is exempt from tax through June 30, 2025.

The aggregate

effect of the tax holiday for June 30, 2021 and 2020 is $202,918 and $47,477, respectively.

The effect on basic and diluted earnings

per share is $0.018 and $0.004 for June 30, 2021 and 2020, respectively.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

17 - STOCKHOLDERS’

the years ended June 30, 2020 and 2019, the Company issued 55,044 and 41,482 shares of common stock, respectively, for services

rendered by officers of the Company.

the years ended June 30, 2021 and 2020, the Company issued 20,353 and 55,044 shares of common stock, respectively, for services rendered

by officers of the Company.

These shares were valued at the fair market value of $118,316 and $312,090, respectively, and recorded as

compensation expense in the accompanying consolidated financial statements.

the years ended June 30, 2021 and 2020, the Company issued 1,983 and 73,667 shares of common stock respectively, 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 and $261,622, respectively, and recorded as compensation expense in the accompanying consolidated financial statements.

the years ended June 30, 2021 and 2020, the Company issued 37,100 and 81,696 shares of common stock, respectively, to employees pursuant

to the terms of their employment agreements.

These shares were valued at the fair market value of $211,353 and $416,738, respectively,

and recorded as compensation expense in the accompanying consolidated financial statements.

the years ended June 30, 2020 and 2019, the Company issued 73,667 and 35,723 shares of common stock respectively, 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 $261,622 and $201,246, respectively, and recorded as compensation expense in the accompanying consolidated

financial statements.

the years ended June 30, 2020 and 2019, the Company issued 81,696 and 112,992 shares of common stock, respectively, to employees

pursuant to the terms of their employment agreements.

These shares were valued at the fair market value of $416,738 and $686,109,

respectively, and recorded as compensation expense in the accompanying consolidated financial statements.

the years ended June 30, 2019, the Company received $85,000 pursuant to a stock option agreement for the exercise of 13,076 shares

of common stock at $6.50 per share.

the years ended June 30, 2019, the Company purchased 41,650 shares of its common stock from the open market at an average price

of $6.03 per share pursuant to the Company’s stock buy-back plan.

the year ended June 30, 2021, the Company purchased 669,018 shares of its common stock from the open market for cash proceeds of $2,364,781

at an average price of $3.53 per share pursuant to the Company’s stock buy-back plan.

18 - INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN

Company maintains several Incentive and Non-Statutory Stock Option Plans (“Plans”) for its employees and consultants.

Options granted under these Plans to an employee of the Company become exercisable over a period of no longer than ten (10) years

and no less than twenty percent (20%) of the shares are exercisable annually.

Options are not exercisable, in whole or in part,

prior to one (1) year from the date of grant unless the Board of Directors specifically determines otherwise, as provided.

granted under these Plans to an employee of the Company become exercisable over a period of no longer than ten (10) years and no less

than twenty percent (20%) of the shares are exercisable annually.

Options are not exercisable, in whole or in part, prior to one (1)

year from the date of grant unless the Board of Directors specifically determines otherwise, as provided.

types of options may be granted under these Plans:

(1) Incentive Stock Options (also known as Qualified Stock Options) which may

only be issued to employees of the Company and whereby the exercise price of the option is not less than the fair market value

of the common stock on the date it was reserved for issuance under the Plan;

and (2) Non-statutory Stock Options which may be

issued to either employees or consultants of the Company and whereby the exercise price of the option is less than the fair market

value of the common stock on the date it was reserved for issuance under the plan.

Grants of options may be made to employees

and consultants without regard to any performance measures.

All options issued pursuant to the Plan are nontransferable and subject

to forfeiture.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

(1) Incentive Stock Options (also known as Qualified Stock Options) which may only

be issued to employees of the Company and whereby the exercise price of the option is not less than the fair market value of the common

stock on the date it was reserved for issuance under the Plan;

and (2) Non-statutory Stock Options which may be issued to either employees

or consultants of the Company and whereby the exercise price of the option may be less than the fair market value of the common stock

on the date it was reserved for issuance under the plan.

Grants of options may be made to employees and consultants without regard to

any performance measures.

All options issued pursuant to the Plan are nontransferable and subject to forfeiture.

Plans provide for the grant of equity-based awards, including options, stock appreciation rights, restricted stock awards or performance

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of common stock upon exercise of options or other awards granted to eligible persons under the Plans.

Shares issued under the

Plans may be both authorized and unissued shares or previously issued shares acquired by the Company.

Upon termination or expiration

of an unexercised option, stock appreciation right or other stock-based award under the Plans, in whole or in part, the number

of shares of common stock subject to such award again becomes available for grant under the Plans.

Any shares of restricted stock

forfeited as described below will become available for grant.

The maximum number of shares that may be granted to any one participant

in any calendar year may not exceed 50,000 shares.

All options issued pursuant to the Plan are nontransferable and subject to

granted under the Plans are not generally transferable and must be exercised within 10 years, subject to earlier termination upon

termination of the option holder’s employment, but in no event later than the expiration of the option’s term.

exercise price of each option may not be less than the fair market value of a share of the Company’s common stock on the

date of grant (except in connection with the assumption or substitution for another option in a manner qualifying under Section

424(a) of the Internal Revenue Code of 1986, as amended.

stock options granted to any participant who owns 10% or more of the Company’s outstanding common stock (a “Ten Percent

Shareholder”) must have an exercise price equal to or exceeding 110% of the fair market value of a share of our common stock

on the date of the grant and must not be exercisable for longer than five years.

Options become vested and exercisable at such

times or upon such events and subject to such terms, conditions, performance criteria or restrictions as specified by the Board

of Directors.

The maximum term of any option granted under the 2015 Plan is ten years, provided that an incentive stock option

granted to a Ten Percent Shareholder must have a term not exceeding five years.

the Plans, a participant may also be awarded a “performance award,”

which means that the participant may receive cash,

stock or other awards contingent upon achieving performance goals established by the Board of Directors.

The Board of Directors

may also make “deferred share”

awards, which entitle the participant to receive the Company’s stock in the future

for services performed between the date of the award and the date the participant may receive the stock.

The vesting of deferred

share awards may be based on performance criteria and/or continued service with the Company.

A participant who is granted a “stock

appreciation right”

under the Plan has the right to receive all or a percentage of the fair market value of a share of stock

on the date of exercise of the stock appreciation right minus the grant price of the stock appreciation right determined by the

Board of Directors (but in no event less than the fair market value of the stock on the date of grant).

Finally, the Board of

Directors may make “restricted stock”

awards under the Plans, which are subject to such terms and conditions as the

Board of Directors determines and as are set forth in the award agreement related to the restricted stock.

As of June 30, 2020,

the remaining shares to be granted are 40,386 under 2005 Plan, 98,196 under the 2013 Plan and 306,422 under the 2015 Plan.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

summary of option and warrant activity for the years ended June 30, 2020 and 2019 is presented below:

Average Exercise Price

Average Remaining Contractual Life (in years)

Intrinsic Value

and exercisable, June 30, 2018

and exercisable, June 30, 2019

and exercisable, June 30, 2020

the year ended June 30, 2019, the Company extended the life of 40,386 options with an exercise price of $6.50, for a period of

The Company recorded $43,612 in compensation expense for the extension of these options in the accompanying consolidated

financial statements.

The fair market value was calculated using the Black-Scholes option pricing model with the following assumptions:

interest rate

Shares issued under the Plans may

be both authorized and unissued shares or previously issued shares acquired by the Company.

Upon termination or expiration of an unexercised

option, stock appreciation right or other stock-based award under the Plans, in whole or in part, the number of shares of common stock

subject to such award again becomes available for grant under the Plans.

Any shares of restricted stock forfeited as described below

will become available for grant.

The maximum number of shares that may be granted to any one participant in any calendar year may not

exceed 50,000 shares.

All options issued pursuant to the Plan are nontransferable and subject to forfeiture.

granted under the Plans are not generally transferable and must be exercised within 10 years, subject to earlier termination upon termination

of the option holder’s employment, but in no event later than the expiration of the option’s term.

The exercise price of

each option may not be less than the fair market value of a share of the Company’s common stock on the date of grant (except in

connection with the assumption or substitution for another option in a manner qualifying under Section 424(a) of the Internal Revenue

Code of 1986, as amended.

TECHNOLOGIES, INC.

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30, 2021 and 2020

stock options granted to any participant who owns 10% or more of the Company’s outstanding common stock (a “Ten Percent Shareholder”)

must have an exercise price equal to or exceeding 110% of the fair market value of a share of our common stock on the date of the grant

and must not be exercisable for longer than five years.

Options become vested and exercisable at such times or upon such events and subject

to such terms, conditions, performance criteria or restrictions as specified by the Board of Directors.

The maximum term of any option

granted under the 2015 Plan is ten years, provided that an incentive stock option granted to a Ten Percent Shareholder must have a term

not exceeding five years.

the Plans, a participant may also be awarded a “performance award,”

which means that the participant may receive cash, stock

or other awards contingent upon achieving performance goals established by the Board of Directors.

The Board of Directors may also make

“deferred share”

awards, which entitle the participant to receive the Company’s stock in the future for services performed

between the date of the award and the date the participant may receive the stock.

The vesting of deferred share awards may be based on

performance criteria and/or continued service with the Company.

A participant who is granted a “stock appreciation right”

under the Plan has the right to receive all or a percentage of the fair market value of a share of stock on the date of exercise of the

stock appreciation right minus the grant price of the stock appreciation right determined by the Board of Directors (but in no event

less than the fair market value of the stock on the date of grant).

Finally, the Board of Directors may make “restricted stock”

awards under the Plans, which are subject to such terms and conditions as the Board of Directors determines and as are set forth in the

award agreement related to the restricted stock.

As of June 30, 2021, the remaining shares to be granted are 20,386 under the

2005 Plan, 98,196 under the 2013 Plan and 306,422 under the 2015 Plan.

following table summarizes stock grants awarded as compensation:

Average Grant Date Fair Value ($)

June 30, 2018

June 30, 2019

June 30, 2020

Weighted Average Grant Date Fair Value ($)

Unvested, June 30, 2019

Forfeited / Cancelled

Unvested, June 30, 2020

Forfeited / Cancelled

Unvested, June 30, 2021

the years ended June 30, 2021 and 2020, the Company recorded compensation expense of $341,773 and $808,458, respectively.

compensation expense related to the unvested stock grants as of June 30, 2020 was $373,129 which will be recognized during the

fiscal years 2021 through 2022.

The compensation

expense related to the unvested stock grants as of June 30, 2021 was $31,455 which will be recognized during the fiscal year 2022.

COMMITMENTS AND CONTINGENCIES

or about July 13, 2020, the Company was named as a defendant in a civil lawsuit based on an alleged breach of contract claim filed

by Royal News Corp.

d/b/a Royal Media Group (“RMG”).

The lawsuit is captioned Royal News Corp.

d/b/a Royal Media

Netsol Techs., Inc.

District Court Case No.

1:20-cv-05381-PAE (S.D.N.Y.) (the “Lawsuit”).

about August 24, 2020, the Company and RMG reached an agreement to fully resolve the case and are in the process of documenting

the agreement, which includes a release of each other from all obligations, contractual or otherwise, claims, disputes or other

matters, in exchange for (i) a payment by the Company to RMG in the amount of $100,000;

and (ii) RMG dismissing the Lawsuit, with

prejudice, pursuant to Rule 41(a) of the Federal Rules of Civil Procedure.

On September 22, 2020, a notice of dismissal with

prejudice was filed with the United States District Court Southern District of New York.

time to time, the Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business including

tax assessments.

The Company defends itself vigorously against any such claims.

When (i) it is probable that an asset has been impaired

or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, the Company records the estimated loss.

The Company provides disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both conditions

if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements.

judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable.

The Company bases accruals on the best information available at the time, which can be highly subjective.

The final outcome of these

matters could vary significantly from the amounts included in the accompanying consolidated financial statements.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2021 and 2020

RETIREMENT PLANS

Company and its subsidiaries have varying defined contribution plans based on country specific laws.

Employer contributions vary

by subsidiary from 0% up to 8% taking the form in some jurisdictions of employee matching contributions and in others direct employer

contributions mandated by local law.

During the years ended June 30, 2020 and 2019, the Company contributed $1,135,233 and $1,072,106,

respectively, to these plans.

Employer contributions vary by subsidiary

from 0% up to 8% taking the form in some jurisdictions of employee matching contributions and in others direct employer contributions

mandated by local law.

During the years ended June 30, 2021 and 2020, the Company contributed $1,237,677 and $1,135,233, respectively,

to these plans.

SEGMENT INFORMATION AND GEOGRAPHIC AREAS

4 unchanged sentences

Each business unit provides similar products and services;

for leasing and asset-based software, related maintenance fees, and implementation and IT consulting services.

Separate management

of each segment is required because each business unit is subject to different operational issues and strategies due to their

particular regional location.

The Company accounts for intra-company sales and expenses as if the sales or expenses were to third

parties and eliminates them in the consolidation.

TECHNOLOGIES, INC.

to Consolidated Financial Statements

30, 2020 and 2019

license fees for leasing

and asset-based software, related post contract support fees, and implementation and IT consulting services.

Separate management of each

segment is required because each business unit is subject to different operational issues and strategies due to their particular regional

The Company accounts for intra-company sales and expenses as if the sales or expenses were to third parties and eliminates

them in the consolidation.

following table presents a summary of identifiable assets as of June 30, 2021 and 2020:

June 30, 2021

June 30, 2020

Identifiable assets:

Corporate headquarters

North America

Asia - Pacific

following table presents a summary of investments under the equity method as of June 30, 2021 and 2020:

in associates under equity method:

June 30, 2021

June 30, 2020

Investment in associates under equity method:

Corporate headquarters

Asia - Pacific

TECHNOLOGIES, INC.

2 unchanged sentences

following table presents a summary of operating information for the years ended June 30:

from unaffiliated customers:

from affiliated customers

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

$ (2,296,409 )

and amortization:

For the Years

Ended June 30,

Revenues from unaffiliated customers:

North America

Asia - Pacific

Revenue from affiliated customers

Asia - Pacific

Intercompany revenue

Asia - Pacific

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

Corporate headquarters

North America

Asia - Pacific

Depreciation and amortization:

North America

Asia - Pacific

Interest expense:

Corporate headquarters

Asia - Pacific

Income tax expense:

Corporate headquarters

North America

Asia - Pacific

TECHNOLOGIES, INC.

2 unchanged sentences

following table presents a summary of capital expenditures for the years ended June 30:

expenditures:

in the table below is the geographic information of total revenues by country for the years ended June 30, 2020 and 2019.

& New Zealand

For the Years

Ended June 30,

Capital expenditures:

North America

Asia - Pacific

in the table below is geographic information for each country that comprised greater than five percent of total revenues for the years

ended June 30, 2021 and 2020.

June 30, 2021

June 30, 2020

Long-lived Assets

Pakistan & India

Australia & New Zealand

Other Countries

TECHNOLOGIES, INC.

1 unchanged sentence

30, 2021 and 2020

in the table below is the reconciliation of revenue by each entity and country disclosed above for the years ended June 30, 2020

in the table below is the geographic information of total revenues by country for the years ended June 30, 2021 and 2020.

& New Zealand

5 unchanged sentences

The balance of non-controlling interest was as follows:

Non-Controlling

Non-Controlling Interest %

Non-Controlling

June 30, 2021

NetSol-Innovation

Non-Controlling

Non-Controlling Interest %

Non-Controlling Interest at

June 30, 2020

NetSol-Innovation

2 unchanged sentences

30, 2021 and 2020

the years ended June 30, 2020 and 2019, employees of NetSol PK exercised 114,000 and 20,000 options of common stock and NetSol

PK received cash of $11,261 and $2,650, respectively.

Due to the exercise of options, the non-controlling interest increased from

33.80% at June 30, 2019 to 33.88% at June 30, 2020.

the years ended June 30, 2020 and 2019, NetSol PK paid a cash dividend of $1,610,909 and $1,675,936, respectively.

the year ended June 30, 2020, employees of NetSol PK exercised and 114,000 options of common stock and NetSol PK received cash of $11,261,

respectively.

Due to the exercise of options, the non-controlling interest increased from 33.80% at June 30, 2019 to 33.88% at June 30,

the year ended June 30, 2020, NetSol PK paid a cash dividend of $1,610,909.

the year ended June 30, 2020, the Company’s subsidiary NetSol PK purchased NetSol Innovation, from 1insurer for $89,425.

Due to this purchase, the non-controlling interest decreased from 49.90% at June 30, 2019 to 33.88% at June 30, 2020.

this purchase, the non-controlling interest decreased from 49.90% at June 30, 2019 to 33.88% at June 30, 2020.

the year ended June 30, 2020, NetSol Innovation paid a cash dividend of $2,778,453.

SUBSEQUENT EVENTS

July 30, the Company’s, Board of Directors authorized the repurchase of up to two million dollars’

worth of the Company’s

issued and outstanding common shares.

The repurchase plan is authorized commencing July 30, 2020, and ending December 24,

2020, subject to an additional six-month extension at the discretion of management.

Although no shares were repurchased

during fiscal year 2020, the Company purchased 147,052 shares at an average price of $3.16 per share subsequent to the fiscal

year ended June 30, 2020.

to year end, the Company purchased 22,510 shares of the Company’s common stock for $100,106 pursuant to the stock repurchase plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures