What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-02-14 compared with 2022-11-10 · 410 added, 294 removed, 828 unchanged (46% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

September 30, 2022

Consolidated Balance Sheets

December 31, 2022

June 30, 2022

29 unchanged sentences

14,500,000 shares authorized;

12,209,230 shares issued and 11,270,199 outstanding as of September 30, 2022 and 12,196,570 shares issued and 11,257,539 outstanding as of June 30, 2022

12,222,985 shares issued and 11,283,954 outstanding as of December 31, 2022 and 12,196,570 shares issued and 11,257,539

outstanding as of June 30, 2022

Additional paid-in-capital

Treasury stock (at cost, 939,031 shares as of September 30, 2022 and June 30, 2022)

Treasury stock (at cost, 939,031 sharesand as of December 31, 2022 and June 30, 2022)

( 3,920,856 )

13 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

Consolidated Statements of Operations

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Net Revenues:

13 unchanged sentences

( 3,046,514 )

( 4,942,705 )

Other income and (expenses)

7 unchanged sentences

Net income (loss) before income taxes

( 2,181,907 )

( 2,426,530 )

Income tax provision

Net income (loss)

( 2,401,963 )

( 2,839,934 )

Non-controlling interest

( 1,031,763 )

( 1,394,289 )

Net income (loss) attributable to NetSol

$ ( 2,092,926 )

$ ( 2,713,655 )

Net income (loss) per share:

4 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Net income (loss)

$ ( 2,092,926 )

$ ( 2,713,655 )

Other comprehensive income (loss):

2 unchanged sentences

( 3,799,344 )

( 4,751,391 )

Translation adjustment attributable to non-controlling interest

5 unchanged sentences

$ ( 5,361,910 )

$ ( 1,472,394 )

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

1 unchanged sentence

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

Consolidated Statement of Stockholders’ Equity

statement of the changes in equity for the three months ended December 31, 2022 is provided below:

Stockholders’

Balance at September 30, 2022

$ 128,420,519

$ ( 3,920,856 )

$ ( 40,273,167 )

$ ( 42,281,135 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for the year

( 2,092,926 )

( 2,401,963 )

Balance at December 31, 2022

$ 128,484,714

$ ( 3,920,856 )

$ ( 42,366,093 )

$ ( 42,011,340 )

statement of the changes in equity for the three months ended September 30, 2022 is provided below:

Additional Paid-in

Other Compre- hensive

Non Controlling

Total Stockholders’

Stockholders’

Balance at June 30, 2022

16 unchanged sentences

$ ( 42,281,135 )

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

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity

statement of the changes in equity for the three months ended December 31, 2021 is provided below:

Stockholders’

Balance at September 30, 2021

$ 129,030,982

$ ( 3,920,856 )

$ ( 38,613,313 )

$ ( 34,013,886 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

( 1,466,995 )

Net income for the year

Balance at December 31, 2021

$ 129,042,021

$ ( 3,920,856 )

$ ( 37,206,528 )

$ ( 34,935,629 )

statement of the changes in equity for the three months ended September 30, 2021 is provided below:

Additional Paid-in

Other Compre- hensive

Non Controlling

Total Stockholders’

Stockholders’

Balance at June 30, 2021

29 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the Three Months

Ended September 30,

Consolidated Statements of Cash Flows

the Six Months

Cash flows from operating activities:

1 unchanged sentence

$ ( 2,839,934 )

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

operating activities:

Adjustments to reconcile net income

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

Depreciation and amortization

Provision for bad debts

Share of net loss from investment under equity method

Share of net (gain) loss from investment under equity method

(Gain) loss on sale of assets

8 unchanged sentences

Unearned revenue

( 1,086,151 )

Net cash provided by (used in) operating activities

Net cash provided by (used in) operating

( 3,036,634 )

4 unchanged sentences

Net cash used in investing activities

( 1,182,042 )

Cash flows from financing activities:

Purchase of treasury stock

Proceeds from bank loans

Payments on finance lease obligations and loans - net

8 unchanged sentences

Cash and cash equivalents at end of period

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

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

TECHNOLOGIES, INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Three Months

Ended September 30,

SUPPLEMENTAL DISCLOSURES:

the Six Months

Cash paid during the period for:

INVESTING AND FINANCING ACTIVITIES:

issued to vendor for services received

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

1 unchanged sentence

to Condensed Consolidated Financial Statements

December 31, 2022

1 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

39 unchanged sentences

(Thailand) Limited (“Otoz Thai”)

TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2022

2 – ACCOUNTING POLICIES

Use of Estimates

preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of

8 unchanged sentences

could differ from those estimates.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Concentration

9 unchanged sentences

maintains three bank accounts in China and nine bank accounts in the UK.

As of September 30, 2022, and June 30, 2022, the Company had

As of December 31, 2022, and June 30, 2022, the Company had

uninsured deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 18,568,700 and $ 22,758,963 ,

11 unchanged sentences

taxation, among other things.

Value of Financial Instruments

of Financial Instruments

Company applies the provisions of Accounting Standards Codification (“ASC”) 820-10, “Fair Value Measurements and

6 unchanged sentences

on current interest rates for instruments with similar characteristics.

three levels of valuation hierarchy are defined as follows:

The three levels

of valuation hierarchy are defined as follows:

consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority.

2 unchanged sentences

and are less observable and thus have the lowest priority.

Company’s financial assets that were measured at fair value on a recurring basis as of September 30, 2022, were as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL ASSETS MEASURED ON RECURRING BASIS

Revenues in excess of billings - long term

Company’s financial assets that were measured at fair value on a recurring basis as of June 30, 2022, were as follows:

Revenues in excess of billings - long term

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

reconciliation from June 30, 2022 to September 30, 2022 is as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS RECONCILIATION

Revenues in excess of billings - long term

Fair value discount

Balance at June 30, 2022

Amortization during the period

Transfers to short term

Effect of Translation Adjustment

Balance at September 30, 2022

December 31, 2022

Company’s financial assets that were measured at fair value on a recurring basis as of December 31, 2022, were as follows:

OF FAIR VALUE OF FINANCIAL ASSETS MEASURED ON RECURRING BASIS

in excess of billings - long term

The Company’s

financial assets that were measured at fair value on a recurring basis as of June 30, 2022, were as follows:

in excess of billings - long term

The reconciliation

from June 30, 2022 to December 31, 2022 is as follows:

OF FAIR VALUE OF FINANCIAL INSTRUMENTS RECONCILIATION

in excess of billings - long term

at June 30, 2022

during the period

to short term

of Translation Adjustment

at December 31, 2022

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

7 unchanged sentences

Accounting Standards :

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.

2020-06 did not have a material impact on the Company’s financial condition, results of operations or disclosures.

October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

6 unchanged sentences

The Company does not expect the standard to have a material effect on its consolidated financial

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

All other newly

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

3 – REVENUE RECOGNITION

12 unchanged sentences

taxes collected from customers and remitted to government authorities.

Company has two primary revenue streams:

The Company has

two primary revenue streams:

core revenue and non-core revenue.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Company generates its core revenue from the following sources:

10 unchanged sentences

to take possession of the software.

Non-Core Revenue

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

13 unchanged sentences

obligation using its best estimate for the SSP.

Software Licenses

of control for software is considered to have occurred upon delivery of the product to the customer.

1 unchanged sentence

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

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

25 unchanged sentences

typically due 30 days after invoice.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

and Internet Services

BPO and Internet

from BPO services is recognized based on the stage of completion which is measured by reference to labor hours incurred to date as a

2 unchanged sentences

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

Disaggregated

1 unchanged sentence

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

Company’s disaggregated revenue by category is as follows:

SCHEDULE OF DISAGGREGATED REVENUE BY CATEGORY

The Company’s

disaggregated revenue by category is as follows:

OF DISAGGREGATED REVENUE BY CATEGORY

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Subscription and support

31 unchanged sentences

to Condensed Consolidated Financial Statements

December 31, 2022

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

17 unchanged sentences

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

Contract Balances

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

7 unchanged sentences

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

SCHEDULE OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

September 30, 2022

OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

December 31, 2022

June 30, 2022

1 unchanged sentence

Unearned revenue

the three months ended September 30, 2022, the Company recognized revenue of $ 2,108,715 that was included in the unearned revenue balance

at the beginning of the period.

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

revenue recognition.

the three and six months ended December 31, 2022, the Company recognized revenue of $ 675,857 and $ 2,784,572 that was included in the

unearned revenue balance at the beginning of the period.

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

relation to the timing of revenue recognition.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

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 $ 38,252,000 as of September 30, 2022, of which the Company estimates

to recognize approximately $ 15,400,000 in revenue over the next 12 months and the remainder over an estimated 5 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.

Contracted but unsatisfied performance obligations were approximately $ 36,000,000

as of December 31, 2022, of which the Company estimates to recognize

approximately $ 14,500,000

in revenue over the next 12 months and the remainder over an estimated

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

2 unchanged sentences

are included in accounts receivable and unearned revenue.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Expedients and Exemptions

1 unchanged sentence

The Company has applied the following practical expedients:

Company does not evaluate a contract for a significant financing component if payment is expected within one year or less from the

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.

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

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.

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

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).

9 unchanged sentences

perform additional duties beyond new customer contract inception dates, including fulfillment duties and collections efforts.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

4 – EARNINGS PER SHARE

2 unchanged sentences

shares outstanding during the period using the treasury stock method.

During the three months ended September 30, 2022 and 2021, there

were no outstanding dilutive instruments.

During the three and six months ended December 31, 2022 and 2021,

there were no outstanding dilutive instruments.

OTHER COMPREHENSIVE INCOME AND FOREIGN CURRENCY

2 unchanged sentences

NetSol PK, Connect, and NetSol Innovation use the Pakistan

NTPK Thailand and NetSol Thai use the Thai Baht;

NTPK Thailand, NetSol Thai and Otoz Thai use the Thai Baht;

Australia uses the Australian dollar;

and NetSol Beijing and Tianjin use the

Chinese Yuan as the functional currencies.

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

dollar as the functional

Assets and liabilities are translated at the exchange rate on the balance sheet date, and operating results are translated

at the average exchange rate throughout the period.

Accumulated translation losses classified as an item of accumulated other comprehensive

loss in the stockholders’ equity section of the consolidated balance sheet were $ 42,281,135 and $ 39,363,085 as of September 30,

2022 and June 30, 2022, respectively.

During the three months ended September 30, 2022 and 2021, comprehensive income (loss) in the consolidated

statements of comprehensive income (loss) included a translation loss attributable to NetSol of $ 2,918,050 and $ 2,145,405 , respectively.

and NetSol Beijing and Tianjin

use the Chinese Yuan as the functional currencies.

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

as the functional currency.

Assets and liabilities are translated at the exchange rate on the balance sheet date, and operating results

are translated at the average exchange rate throughout the period.

Accumulated translation losses classified as an item of accumulated

other comprehensive loss in the stockholders’ equity section of the consolidated balance sheet were $ 42,011,340 and $ 39,363,085

as of December 31, 2022 and June 30, 2022, respectively.

During the three and six months ended December 31, 2022, comprehensive income

(loss) in the consolidated statements of comprehensive income (loss) included a $ 269,795 translation gain attributable to NetSol and

a $ ( 2,648,255 ) translation loss attributable to NetSol, respectively.

During the three and six months ended December 31, 2021, comprehensive

income (loss) in the consolidated statements of comprehensive income (loss) included a translation loss attributable to NetSol of $ ( 921,743 )

and $ ( 3,067,148 ) , respectively.

MAJOR CUSTOMERS

the three months ended September 30, 2022, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”)

the six months ended December 31, 2022, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”)

were $ 7,069,884 , and $ 2,314,744 , respectively representing 28.2 % and 9.2 %, respectively of revenues.

During the three months ended September

30, 2021, revenues from DFS and BMW were $ 3,542,284 and $ 891,679 , respectively representing 26.4 % and 6.6 % , respectively of revenues.

The revenue from these customers is shown in the Asia – Pacific segment.

receivable from DFS and BMW at September 30, 2022, were $ 600,925 and $ 132,392 , respectively.

During the six months ended December

31, 2021, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”) were $ 11,421,688 and $ 1,531,588 ,

respectively representing 39.5 % and 5.3 %, respectively of revenues.

The revenue from these customers is shown in the Asia – Pacific

receivable from DFS and BMW at December 31, 2022, were $ 357,164 and $ 360,703 , respectively.

Accounts receivable at June 30, 2022, were

$ 2,005,463 and $ 2,498,645 , respectively.

Revenues in excess of billings at September 30, 2022 were $ 1,804,728 and $ 2,533,172 for DFS

and BMW, respectively.

Revenues in excess of billings at December 31, 2022 were $ 3,535,799 and $ 2,252,994 for DFS and

BMW, respectively.

Revenues in excess of billings at June 30, 2022, were $ 365,863 and $ 2,199,381 for DFS and BMW, respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

7 – CONVERTIBLE NOTES RECEIVABLE – RELATED PARTY

6 unchanged sentences

inventory, equipment, general intangibles, financial assets, investment property, securities, deposit accounts and the proceeds thereof.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

following table summarizes the convertible notes receivable from WRLD3D.

9 unchanged sentences

( 4,250,000 )

Company has accrued interest of $ 701,062 at September 30, 2022 and June 30, 2022, which is included in “Other current assets”.

Company has accrued interest of $ 701,062 at December 31, 2022 and June 30, 2022, which is included in “Other current assets”.

As of July 1, 2020, the Company stopped accruing interest.

8 - OTHER CURRENT ASSETS

current assets consisted of the following:

NOTE 8 - OTHER

CURRENT ASSETS

Other current

assets consisted of the following:

SCHEDULE OF OTHER CURRENT ASSETS

September 30, 2022

December 31, 2022

June 30, 2022

8 unchanged sentences

( 1,243,633 )

from related party is the amount receivable from WRLD3D for which the Company has provided an allowance for credit loss for the full amount,

leaving a net balance of $ 0 .

Due from related

party is the amount receivable from WRLD3D for which the Company has provided an allowance for credit loss for the full amount, leaving

a net balance of $ 0 .

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

REVENUES IN EXCESS OF BILLINGS – LONG TERM

in excess of billings, net consisted of the following:

Revenues in excess

of billings, net consisted of the following:

SCHEDULE OF REVENUE IN EXCESS OF BILLING

September 30, 2022

December 31, 2022

June 30, 2022

3 unchanged sentences

after one year.

During the three months ended September 30, 2022 and 2021, the Company accreted $ 9,369 and $ 9,502 , 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 %

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

During the three and six months ended December 31, 2022, the Company accreted $ 9,288 and $ 18,657 , respectively.

the three and six months ended December 31, 2021, the Company accreted $ 9,539 and $ 19,041 , 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 %.

PROPERTY AND EQUIPMENT

and equipment consisted of the following:

equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

September 30, 2022

December 31, 2022

June 30, 2022

6 unchanged sentences

Property and Equipment, Net

the three months ended September 30, 2022 and 2021, depreciation expense totaled $ 522,183 and $ 539,722 , respectively.

the three and six months ended December 31, 2022, depreciation expense totaled $ 568,828 and $ 1,091,011 , respectively.

Of these amounts,

$ 370,606 and $ 701,835 , respectively, are reflected in cost of revenues.

is a summary of fixed assets held under finance leases as of September 30, 2022 and June 30, 2022:

For the three and six months ended December 31, 2021, depreciation

expense was $ 527,463 and $ 1,067,185 , respectively.

Of these amounts, $ 314,599 and $ 640,050 , respectively, are reflected in cost of revenues.

a summary of fixed assets held under finance leases as of December 31, 2022 and June 30, 2022:

SUMMARY OF FIXED ASSETS HELD UNDER CAPITAL LEASES

September 30, 2022

December 31, 2022

June 30, 2022

2 unchanged sentences

finance leases, Total

lease term and discount rate were as follows:

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

Finance lease

term and discount rate were as follows:

SCHEDULE OF FINANCE LEASE TERM

September 30, 2022

December 31, 2022

June 30, 2022

1 unchanged sentence

Weighted average discount rate - Finance leases

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

The 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

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

13 unchanged sentences

term to obtain an asset of similar value.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

12 unchanged sentences

value guarantees or restrictive covenants.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

balance sheet information related to leases was as follows:

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

September 30, 2022

December 31, 2022

June 30, 2022

1 unchanged sentence

Operating, Current

Operating, Non-current

Operating, Current

Total Lease Liabilities

components of lease cost were as follows:

The components

of lease cost were as follows:

SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Amortization of finance lease assets

4 unchanged sentences

Total lease cost

term and discount rate were as follows:

Lease term and

discount rate were as follows:

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

September 30, 2022

December 31, 2022

June 30, 2022

1 unchanged sentence

Weighted average discount rate - Operating leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

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

SCHEDULE OF SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION RELATED TO LEASES

For the Three Months

Ended September 30

For the Six Months

Ended December 31

Operating cash flows related to operating leases

1 unchanged sentence

Financing cash flows related finance leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

of operating lease liabilities were as follows as of September 30, 2022:

Maturities of

operating lease liabilities were as follows as of December 31, 2022:

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

13 unchanged sentences

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

For the three months ended September 30, 2022 and 2021, the

Company received lease income of $ 7,812 and $ 9,155 , respectively.

For the three and six months ended December 31, 2022, the Company

received lease income of $ 7,786 and $ 15,598 , respectively.

For the three and six months ended December 31, 2021, the Company received

lease income of $ 8,950 and $ 18,105 , respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

LONG TERM INVESTMENT

Drivemate – Related Party

– Related Party

Company and Drivemate Co., Ltd.

7 unchanged sentences

final payment date.

As of September 30, 2022, the Company has been issued 8,178 shares equal to 30% of Drivemate.

As of December 31, 2022, the Company has been issued 8,178 shares equal to 30% of Drivemate.

Per the Drivemate Agreement,

4 unchanged sentences

investment using the equity method of accounting .

the equity method of accounting, the Company recorded its share of net loss of $ nil and $ 63,571 for the three months ended September

30, 2022 and 2021, respectively.

the equity method of accounting, the Company recorded its share of net income of $ 5,133 for the three and six months ended December 31,

2022, and the Company recorded its share of net income of $ 4,666 and net loss of $ 58,905 for the three and six months ended December

31, 2021, respectively.

WRLD3D-Related

4 unchanged sentences

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

the equity method of accounting, the Company recorded its share of net loss of $ nil and $ 97,394 for the three months ended September

30, 2022 and 2021, respectively.

following table reflects the above investments at September 30, 2022.

the equity method of accounting, the Company recorded its share of net loss of $ nil for the three and six months ended December 31, 2022,

and the Company recorded its share of net loss of $ 84,484 and $ 181,878 for the three and six months ended December 31, 2021, respectively.

The following

table reflects the above investments at December 31, 2022.

SCHEDULE OF LONG TERM INVESTMENT

5 unchanged sentences

Net investment

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table reflects the above investments at June 30, 2022.

The following

table reflects the above investments at June 30, 2022.

Gross investment

4 unchanged sentences

Net investment

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

INTANGIBLE ASSETS

assets consisted of the following:

Intangible assets

consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

September 30, 2022

December 31, 2022

June 30, 2022

9 unchanged sentences

over one year.

Amortization expense for the three months ended September 30, 2022 and 2021 was $ 322,820 and $ 440,284 , respectively.

Amortization expense for the three and six months ended December 31, 2022, was $ 322,672 and $ 645,492 , respectively.

expense for the three and six months ended December 31, 2021was $ 414,269 and $ 854,553 , respectively.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

September 30, 2022

June 30, 2022

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts Payable

3 unchanged sentences

Taxes Payable

Other Payable

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

payable and finance leases consisted of the following:

December 31, 2022

Notes payable

and finance leases consisted of the following:

SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

As of September 30, 2022

As of December 31, 2022

D&O Insurance

21 unchanged sentences

Subsidiary Finance Leases

(1) 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 were ranging from 5.0 % to 7.0 % as of September 30, 2022 and June 30, 2022.

(2) 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

The annual interest rate was 5.5 % as of September 30, 2022.

The total outstanding balance as of September 30, 2022 and June

30, 2022 was £ Ni l .

This overdraft facility

requires that the aggregate amount of invoiced trade debtors (net of provisions for bad and doubtful debts and excluding intra-group

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

As of September 30, 2022,

NTE was in compliance with this covenant.

(1) 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.

rate on these financings were ranging from 5.0 % to 7.0 % as of December 31, 2022 and June 30, 2022.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

(3) 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.

December 31, 2022

(2) 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

The annual interest rate was 5.5 % as of December 31, 2022.

The total outstanding balance as of December 31, 2022 and June 30,

2022 was £ Nil .

This 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 December 31, 2022, NTE was in

compliance with this covenant.

(3) 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.

The availed facility amount was Rs.

43,422,699 or

$ 190,425 , at September 30, 2022, which is shown as current.

nil or $ nil , at December

The availed facility amount is Rs.

86,887,974 or $ 423,101 , at June 30, 2022,

which is shown as current.

The interest rate for the loan was 3 % at September 30, 2022 and June 30, 2022.

(4) 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 nine months.

86,887,974 or $ 423,101 , at June 30, 2022, which is shown as current.

The interest rate for

the loan was 3 % at December 31, 2022 and June 30, 2022.

(4) 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 nine months.

The total facility amount is Rs.

500,000,000 or $ 2,192,694 at September 30, 2022 and Rs.

or $ 2,434,749 at June 30, 2022.

The interest rate for the loan was 10 % and 3 % at September 30, 2022 and June 30, 2022, respectively.

(5) The Company’s

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

The total facility

amount is Rs.

53,000,000 or $ 235,057 , at September 30, 2022.

The balance outstanding at September 30, 2022 and June 30, 2022 was Rs.

The interest rate for the loan was 17.8 % and 14.0 % at September 30, 2022 and June 30, 2022, respectively.

This facility requires

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

As of September 30, 2022, NetSol PK was

in compliance with this covenant.

(6) 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 nine months.

500,000,000 or $ 2,208,285 at December 31, 2022 and Rs.

500,000,000 or $ 2,434,749

at June 30, 2022.

The interest rate for the loan was 10 % and 3 % at December 31, 2022 and June 30, 2022, respectively.

(5) The Company’s subsidiary,

NetSol PK, has a running finance facility with Askari Bank Limited, secured by NetSol PK’s assets.

The total facility amount is

53,000,000 or $ 236,728 , at December 31, 2022.

The balance outstanding at December 31, 2022 and June 30, 2022 was Rs.

rate for the loan was 19.0 % and 14.0 % at December 31, 2022 and June 30, 2022, respectively.

This facility requires NetSol PK to

maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1.

As of December 31, 2022, NetSol PK was in compliance

with this covenant .

(6) 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 nine months.

The total facility amount is Rs.

380,000,000 or $ 1,678,297 and Rs.

380,000,000 or $ 1,850,409 at

September 30, 2022 and June 30, 2022, respectively.

The interest rate for the loan was 10 % and 3 % at September 30, 2022 and June 30,

2022, respectively.

During the tenure of the

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

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

As of September 30, 2022, NetSol PK was

in compliance with these covenants.

(7) The Company’s

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

revolving loan that matures every nine months.

380,000,000 or $ 1,850,409 at December 31,

2022 and June 30, 2022, respectively.

The interest rate for the loan was 10 % and 3 % at December 31, 2022 and June 30, 2022, respectively.

the tenure of the loan, the facilities from Samba Bank Limited require NetSol PK to maintain

at a minimum a current ratio of 1:1, an interest coverage ratio of 4 times, a leverage ratio

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

As of December 31, 2022, NetSol

PK was in compliance with these covenants.

(7) The Company’s subsidiary,

NetSol PK, has an export refinance facility with Habib Metro Bank Limited, secured by NetSol PK’s assets.

This is a revolving loan

that matures every nine months.

The total facility amount is Rs.

900,000,000 or $ 3,974,914 and Rs.

900,000,000 or $ 4,382,548 ,

at September 30, 2022 and June 30, 2022, respectively.

900,000,000 or $ 4,382,548 , at December

31, 2022 and June 30, 2022, respectively.

NetSol PK used Rs.

700,000,000 or $ 3,091,600 and Rs.

700,000,000 or $ 3,408,648 ,

at September 30, 2022 and June 30, 2022, respectively.

The interest rate for the loan was 10 % and 3 % at September 30, 2022 and June 30,

2022, respectively.

(8) The Company’s

subsidiary, NetSol PK, availed sale and leaseback financing from First Habib Modaraba secured by the transfer of the vehicles’

As of September 30, 2022, NetSol PK used Rs.

700,000,000 or $ 3,408,648 , at December

31, 2022 and June 30, 2022, respectively.

The interest rate for the loan was 10 % and 3 % at December 31, 2022 and June 30, 2022, respectively.

(8) The Company’s subsidiary,

NetSol PK, availed sale and leaseback financing from First Habib Modaraba secured by the transfer of the vehicles’ title.

December 31, 2022, NetSol PK used Rs.

104,834,901 or $ 463,011 of which $ 290,028 was shown as long term and $ 172,983 as current.

As of June 30, 2022, NetSol PK used Rs.

June 30, 2022, NetSol PK used Rs.

127,140,038 or $ 619,108 of which $ 429,882 was shown as long term and $ 189,226 as current.

interest rate for the loan was 9.0 % to 16.0 % at September 30, 2022, and June 30, 2022.

(9) In March 2019,

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

The loan amount was £ 69,549 , or $ 77,277 , for a period of 5

years with monthly payments of £ 1,349 , or $ 1,499 .

As of September 30, 2022, the subsidiary has used this facility up to $ 24,348 ,

of which $ 7,382 was shown as long-term and $ 16,966 as current.

As of June 30, 2022, the subsidiary has used this facility up to $ 31,204 ,

of which $ 12,865 was shown as long-term and $ 18,339 as current.

The interest rate was 6.14 % at September 30, 2022 and June 30, 2022.

(10) The Company’s

subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $ 79,234 and $ 96,781

was recorded in current maturities, at September 30, 2022 and June 30, 2022, respectively.

The interest rate on this financing ranged

from 9.7 % to 12.7 % as of September 30, 2022 and June 30, 2022.

(11) The Company leases

various fixed assets under finance lease arrangements expiring in various years through 2025.

The assets and liabilities under finance

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 finance leases is included in depreciation expense for the three months ended

September 30, 2022 and 2021.

rate for the loan was 9.0 % to 16.0 % at December 31, 2022, and June 30, 2022.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

is the aggregate minimum future lease payments under finance leases as of September 30, 2022:

December 31, 2022

(9) In March 2019, the Company’s

subsidiary, VLS, entered into a loan agreement.

The loan amount was £ 69,549 , or $ 83,794 , for a period of 5 years with monthly payments

of £ 1,349 , or $ 1,625 .

As of December 31, 2022, the subsidiary has used this facility up to $ 21,907 , of which $ 3,226 was shown as

long-term and $ 18,681 as current.

As of June 30, 2022, the subsidiary has used this facility up to $ 31,204 , of which $ 12,865 was shown

as long-term and $ 18,339 as current.

The interest rate was 6.14 % at December 31, 2022 and June 30, 2022.

(10) The Company’s subsidiary,

VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $ 54,405 and $ 96,781 was recorded

in current maturities, at December 31, 2022 and June 30, 2022, respectively.

The interest rate on this financing ranged from 9.7 % to

12.7 % as of December 31, 2022 and June 30, 2022.

(11) The Company leases various fixed

assets under finance lease arrangements expiring in various years through 2025.

The assets and liabilities under finance 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

Depreciation of assets under finance leases is included in depreciation expense for the three and six months ended December

31, 2022 and 2021.

Following are

the aggregate minimum future lease payments under finance leases as of December 31, 2022:

SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

2 unchanged sentences

Within year 2

Within year 3

Total Minimum Lease Payments

6 unchanged sentences

less current maturities

is the aggregate future long term debt payments as of September 30, 2022

Following are

the aggregate future long term debt payments as of December 31, 2022

SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

6 unchanged sentences

Non-Current portion

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

- STOCKHOLDERS’ EQUITY

the three months ended September 30, 2022, the Company issued 12,660 shares of common stock for services rendered by the independent

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

These shares were valued at the fair market value of $ 39,750 .

the three and six months ended December 31, 2022, the Company issued 13,755 and 26,415 shares of common stock for services rendered by

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

These shares were valued at the fair market value

of $ 39,750 and $ 79,500 , respectively.

CONTINGENCIES

22 unchanged sentences

consolidation.

following table presents a summary of identifiable assets as of September 30, 2022 and June 30, 2022:

The following

table presents a summary of identifiable assets as of December 31, 2022 and June 30, 2022:

SUMMARY OF IDENTIFIABLE ASSETS

September 30, 2022

December 31, 2022

June 30, 2022

3 unchanged sentences

Asia - Pacific

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table presents a summary of investment under equity method as of September 30, 2022 and June 30, 2022:

The following

table presents a summary of investment under equity method as of December 31, 2022 and June 30, 2022:

SUMMARY OF INVESTMENT UNDER EQUITY METHOD

September 30, 2022

December 31, 2022

June 30, 2022

2 unchanged sentences

Asia - Pacific

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

The following

table presents a summary of operating information for the three and six months ended December 31:

SUMMARY OF OPERATING INFORMATION

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Revenues from unaffiliated customers:

7 unchanged sentences

Corporate headquarters

$ ( 696,938 )

North America

2 unchanged sentences

( 3,073,187 )

$ ( 2,401,963 )

$ ( 2,839,934 )

Depreciation and amortization:

11 unchanged sentences

to Condensed Consolidated Financial Statements

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

December 31, 2022

following table presents a summary of capital expenditures for the six months ended December 31:

SUMMARY OF CAPITAL EXPENDITURES

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Capital expenditures:

5 unchanged sentences

SCHEDULE OF BALANCE OF NON-CONTROLLING INTEREST

Non-Controlling Interest %

Non-Controlling Interest at

September 30, 2022

Non-Controlling

December 31, 2022

NetSol-Innovation

Non-Controlling Interest %

Non-Controlling

Non-Controlling Interest at

4 unchanged sentences

The effective shareholding of the non-controlling interest for Otoz Thai increased

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

following schedule discloses the effect to the Company’s equity due to the changes in the Company’s ownership interest in

2 unchanged sentences

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Net income (loss) attributable to NetSol

$ ( 2,092,926 )

$ ( 2,713,655 )

Transfer (to) from non-controlling interest

1 unchanged sentence

Net transfer (to) from non-controlling interest

Change from net income (loss) attributable to NetSol and transfer (to) from non-controlling interest

Change from net income (loss) attributable to NetSol

and transfer (to) from non-controlling interest

$ ( 2,092,926 )

$ ( 2,593,090 )

20 – INCOME TAXES

12 unchanged sentences

is charged to the income from revenue generated from other than core business activities.

the three months ended September 30, 2022 and 2021, the Company recorded an income tax provision of $ 193,348 and $ 167,627 , respectively.

the three and six months ended December 31, 2022, the Company recorded an income tax provision of $ 220,056 and $ 413,404 , respectively.

During the three and six months ended December 31, 2021, the Company recorded an income tax provision of $ 201,506 and $ 369,133 , respectively.

The tax is derived from non-core business activities generated from NetSol PK.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements