What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-11 compared with 2023-02-14 · 341 added, 403 removed, 835 unchanged (47% of the section changed)

Financial Statements (Unaudited)

TECHNOLOGIES, INC.

NETSOL TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2022

Condensed Consolidated Balance Sheets

March 31, 2023

June 30, 2022

3 unchanged sentences

Revenues in excess of billings, net of allowance of $ 43,334 and $ 136,976

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

Other current assets

Total current assets

Revenues in excess of billings, net - long term

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

Property and equipment, net

20 unchanged sentences

14,500,000 shares authorized;

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

12,238,042 shares issued and

11,299,011 outstanding as of March 31, 2023 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 sharesand as of December 31, 2022 and June 30, 2022)

Treasury stock (at cost, 939,031 shares as of March 31, 2023 and June 30, 2022)

( 3,920,856 )

11 unchanged sentences

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

TECHNOLOGIES, INC.

NETSOL TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

Condensed Consolidated Statements of Operations

For the Three Months

For the Six Months

Ended December 31,

For the Nine Months

Ended March 31,

Net Revenues:

11 unchanged sentences

Total operating expenses

Loss from operations

( 3,046,514 )

Income (loss) from operations

( 5,873,140 )

7 unchanged sentences

Total other income (expenses)

Net income (loss) before income taxes

( 2,181,907 )

( 2,426,530 )

Net income before income taxes

Income tax provision

Net income (loss)

( 2,401,963 )

( 2,839,934 )

Non-controlling interest

1 unchanged sentence

( 1,571,629 )

( 1,655,287 )

Net income (loss) attributable to NetSol

5 unchanged sentences

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

TECHNOLOGIES, INC.

NETSOL TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three Months

For the Six Months

Ended December 31,

For the Nine Months

Ended March 31,

Net income (loss)

6 unchanged sentences

( 11,428,326 )

( 7,020,620 )

Translation adjustment attributable to non-controlling interest

2 unchanged sentences

( 1,804,777 )

( 7,829,909 )

( 4,871,925 )

Comprehensive income (loss) attributable to NetSol

2 unchanged sentences

$ ( 7,998,941 )

$ ( 3,555,641 )

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

1 unchanged sentence

AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity

Condensed Consolidated Statement of Stockholders’ Equity

statement of the changes in equity for the three months ended March 31, 2023 is provided below:

Stockholders’

Balance at December 31, 2022

$ 128,484,714

$ ( 3,920,856 )

$ ( 42,366,093 )

$ ( 42,011,340 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

( 5,181,654 )

( 2,447,328 )

( 7,628,982 )

Net income (loss) for the year

Balance at March 31, 2023

$ 128,536,955

$ ( 3,920,856 )

$ ( 39,821,470 )

$ ( 47,192,994 )

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

16 unchanged sentences

$ ( 42,011,340 )

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

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

18 unchanged sentences

$ ( 42,281,135 )

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

TECHNOLOGIES, INC.

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

Stockholders’

Balance at December 31, 2021

$ 129,042,021

$ ( 3,920,856 )

$ ( 37,206,528 )

$ ( 34,935,629 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

( 1,804,777 )

( 2,269,229 )

Net income (loss)

Balance at March 31, 2022

$ 129,084,786

$ ( 3,920,856 )

$ ( 37,484,998 )

$ ( 36,740,406 )

NETSOL TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity

Condensed Consolidated Statement of Stockholders’ Equity

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

22 unchanged sentences

$ ( 31,868,481 )

Beginning balance

$ 129,018,826

$ ( 3,820,750 )

$ ( 38,801,282 )

$ ( 31,868,481 )

Subsidiary common stock issued for:

5 unchanged sentences

( 3,284,396 )

Net income (loss) for the year

Balance at September 30, 2021

3 unchanged sentences

$ ( 34,013,886 )

Ending balance

$ 129,030,982

$ ( 3,920,856 )

$ ( 38,613,313 )

$ ( 34,013,886 )

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

TECHNOLOGIES, INC.

NETSOL TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

the Six Months

Condensed Consolidated Statements of Cash Flows

For the Nine Months

Ended March 31,

Cash flows from operating activities:

Net income (loss)

$ ( 2,839,934 )

Adjustments to reconcile net income

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

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

Depreciation and amortization

6 unchanged sentences

( 1,855,899 )

Revenues in excess of billing

( 3,404,247 )

Revenues in excess of billing

Other current assets

1 unchanged sentence

Unearned revenue

Net cash provided by (used in) operating

( 3,036,634 )

Net cash provided by operating activities

Cash flows from investing activities:

1 unchanged sentence

( 1,575,059 )

( 1,680,856 )

Sales of property and equipment

1 unchanged sentence

( 1,421,657 )

( 1,359,605 )

Cash flows from financing activities:

2 unchanged sentences

Payments on finance lease obligations and loans - net

( 1,045,464 )

Net cash used in financing activities

7 unchanged sentences

Cash and cash equivalents at end of period

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

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)

the Six Months

For the Nine Months

Ended March 31,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

INVESTING AND FINANCING ACTIVITIES:

issued to vendor for services received

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Shares issued to vendor for services received

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

1 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

37 unchanged sentences

Innovation (Private) Limited (“NetSol Innovation”)

Ascent Middle East Computer Equipment Trading LLC (“Namecet”)

Technologies Thailand Limited (“NetSol Thai”)

2 unchanged sentences

Notes to Condensed Consolidated Financial Statements

December 31, 2022

March 31, 2023

2 – ACCOUNTING POLICIES

Use of Estimates

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

19 unchanged sentences

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

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 ,

respectively.

As of March 31, 2023, and June 30, 2022, the Company had uninsured

deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 13,089,660 and $ 22,758,963 , respectively.

The Company has not experienced any losses in such accounts.

9 unchanged sentences

taxation, among other things.

of Financial Instruments

Value 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.

The three levels

of valuation hierarchy are defined as follows:

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.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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:

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

Company did not have any financial assets that were measured at fair value on a recurring basis at March 31, 2023.

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

Revenues in excess of billings - long term

reconciliation from June 30, 2022 to March 31, 2023 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

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 March 31, 2023

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

15 unchanged sentences

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

All other newly

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

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

Notes to Condensed Consolidated Financial Statements

March 31, 2023

3 – REVENUE RECOGNITION

7 unchanged sentences

of the transaction price to the performance obligations in the contract;

● Recognition

of revenue when, or as, the Company satisfies a performance obligation.

3 unchanged sentences

taxes collected from customers and remitted to government authorities.

The Company has

two primary revenue streams:

Company has two primary revenue streams:

core revenue and non-core revenue.

11 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

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

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.

BPO and Internet

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

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

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

Disaggregated

1 unchanged sentence

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

The Company’s

disaggregated revenue by category is as follows:

Company’s disaggregated revenue by category is as follows:

OF DISAGGREGATED REVENUE BY CATEGORY

For the Three Months

For the Six Months

Ended December 31,

For the Nine Months

Ended March 31,

Subscription and support

29 unchanged sentences

The Company reviews its estimate of man-days required to complete implementation and customization services each reporting period.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

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,

8 unchanged sentences

OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

December 31, 2022

March 31, 2023

June 30, 2022

1 unchanged sentence

Unearned revenue

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

the three and nine months ended March 31, 2023, the Company recognized revenue of $ 484,239 and $ 3,268,811 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.

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

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 $ 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.

Contracted but unsatisfied performance obligations were approximately $ 33.6 MM as of March 31, 2023, of which the Company estimates to

recognize approximately $ 15.2 MM in revenue over the next 12 months and the remainder over an estimated 3 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

23 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

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

4 – EARNINGS PER SHARE

2 unchanged sentences

shares outstanding during the period using the treasury stock method.

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

During the three and nine months ended March 31, 2023 and 2022,

there were no outstanding dilutive instruments.

5 unchanged sentences

Australia uses the Australian dollar;

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

Namecet uses AED;

Beijing and Tianjin use the Chinese Yuan as the functional currencies.

NetSol Technologies, Inc., and its subsidiaries, NTA and Otoz,

dollar 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 $ 47,192,994

and $ 39,363,085 as of March 31, 2023 and June 30, 2022, respectively.

During the three and nine months ended March 31, 2023, comprehensive

income (loss) in the consolidated statements of comprehensive income (loss) included a translation loss attributable to NetSol of $ ( 5,181,654 )

and $ ( 7,829,909 ) , respectively.

During the three and nine months ended March 31, 2022, comprehensive income (loss) in the consolidated

statements of comprehensive income (loss) included a translation loss attributable to NetSol of $ ( 1,804,777 ) and $ ( 4,871,925 ) , respectively.

6 – MAJOR CUSTOMERS

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

the nine months ended March 31, 2023, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”)

were $ 10,824,636 , and $ 3,208,649 , respectively representing 28.0 % and 8.3 %, respectively of revenues.

During the six months ended December

During the nine months ended March

31, 2022, revenues from Daimler Financial Services (“DFS”) and BMW Financial (“BMW”) were $ 15,692,171 and $ 3,203,536 ,

1 unchanged sentence

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.

receivable from DFS and BMW at March 31, 2023, were $ 2,284,979 and $ 1,104,698 , respectively.

Accounts receivable at June 30, 2022, were

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

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

Revenues in excess of billings at March 31, 2023 were $ 2,016,970 and $ 2,002,579 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.

7 – CONVERTIBLE NOTES RECEIVABLE – RELATED PARTY

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.

to Condensed Consolidated Financial Statements

December 31, 2022

following table summarizes the convertible notes receivable from WRLD3D.

SCHEDULE OF CONVERTIBLE NOTES

March 2, 2018

February 9, 2018

March 31, 2019

April 1, 2019

March 31, 2020

August 19, 2019

March 31, 2020

Less allowance for doubtful account

( 4,250,000 )

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.

NOTE 8 - OTHER

CURRENT ASSETS

Other current

assets consisted of the following:

7 - OTHER CURRENT ASSETS

current assets consisted of the following:

SCHEDULE OF OTHER CURRENT ASSETS

December 31, 2022

March 31, 2023

June 30, 2022

4 unchanged sentences

Other Receivables

Due From Related Party

Less allowance for doubtful account

( 1,243,633 )

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

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

8 – REVENUES IN EXCESS OF BILLINGS – LONG TERM

Revenues in excess

of billings, net consisted of the following:

in excess of billings, net consisted of the following:

SCHEDULE OF REVENUE IN EXCESS OF BILLING

December 31, 2022

March 31, 2023

June 30, 2022

3 unchanged sentences

after one year.

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

During the three and nine months ended March 31, 2023, the Company accreted $ 9,372 and $ 28,029 , respectively.

the three and nine months ended March 31, 2022, the Company accreted $ 9,546 and $ 28,587 , respectively, which was recorded in interest

income for that period.

1 unchanged sentence

9 - PROPERTY AND EQUIPMENT

equipment consisted of the following:

and equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

December 31, 2022

March 31, 2023

June 30, 2022

6 unchanged sentences

Property and Equipment, Net

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

the three and nine months ended March 31, 2023, depreciation expense totaled $ 507,314 and $ 1,598,325 , respectively.

Of these amounts,

$ 327,177 and $ 1,029,012 , respectively, are reflected in cost of revenues.

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

For the three and nine months ended March 31, 2022, depreciation

expense was $ 540,822 and $ 1,608,007 , respectively.

Of these amounts, $ 334,476 and $ 974,526 , 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:

is a summary of fixed assets held under finance leases as of March 31, 2023 and June 30, 2022:

SUMMARY OF FIXED ASSETS HELD UNDER CAPITAL LEASES

December 31, 2022

March 31, 2023

June 30, 2022

2 unchanged sentences

finance leases, Total

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

Finance lease

term and discount rate were as follows:

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

lease term and discount rate were as follows:

SCHEDULE OF FINANCE LEASE TERM

December 31, 2022

March 31, 2023

June 30, 2022

1 unchanged sentence

Weighted average discount rate - Finance leases

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 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

28 unchanged sentences

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

Notes to Condensed Consolidated Financial Statements

March 31, 2023

balance sheet information related to leases was as follows:

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

December 31, 2022

March 31, 2023

June 30, 2022

1 unchanged sentence

Operating, Current

Operating, Non-current

Total Lease Liabilities

The components

of lease cost were as follows:

components of lease cost were as follows:

SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months

For the Six Months

Ended December 31,

For the Nine Months

Ended March 31,

Amortization of finance lease assets

4 unchanged sentences

Total lease cost

Lease term and

discount rate were as follows:

term and discount rate were as follows:

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

December 31, 2022

March 31, 2023

June 30, 2022

2 unchanged sentences

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

Notes to Condensed Consolidated Financial Statements

March 31, 2023

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

SCHEDULE OF SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION RELATED TO LEASES

For the Six Months

Ended December 31

For the Nine Months

Ended March 31

Operating cash flows related to operating leases

1 unchanged sentence

Financing cash flows related finance leases

Maturities of

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

of operating lease liabilities were as follows as of March 31, 2023:

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 and six months ended December 31, 2022, the Company

For the three and nine months ended March 31, 2023, the Company

received lease income of $ 8,099 and $ 23,697 , 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

For the three and nine months ended March 31, 2022, the Company received lease

income of $ 8,907 and $ 27,012 , respectively.

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

11 – LONG TERM INVESTMENT

9 unchanged sentences

final payment date.

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

As of March 31, 2023, 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 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

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.

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.

the equity method of accounting, the Company recorded its share of net income of $ 2,377 and $ 7,510 for the three and nine months ended

March 31, 2023, respectively and the Company recorded its share of net income of $ 4,712 and net loss of $ 54,193 for the three and nine

months ended March 31, 2022, respectively.

following table reflects the above investments at March 31, 2023 and June 30, 2022.

SCHEDULE OF LONG TERM INVESTMENT

Gross investment

Cumulative net loss on investment

( 3,238,647 )

( 3,974,146 )

Cumulative other comprehensive income (loss)

Net investment

The following

table reflects the above investments at June 30, 2022.

March 31, 2023

June 30, 2022

Gross investment

Cumulative net loss on investment

( 3,238,647 )

( 3,979,279 )

Cumulative other comprehensive income (loss)

Net investment

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

12 - INTANGIBLE ASSETS

Intangible assets

consisted of the following:

assets consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

December 31, 2022

March 31, 2023

June 30, 2022

9 unchanged sentences

over one year.

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.

Amortization expense for the three and nine months ended March 31, 2023, was $ 275,652 and $ 921,144 , respectively.

expense for the three and nine months ended March 31, 2022 was $ 407,111 and $ 1,261,664 , respectively.

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

13 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

1 unchanged sentence

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

March 31, 2023

June 30, 2022

Accounts Payable

3 unchanged sentences

Taxes Payable

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

December 31, 2022

Notes payable

and finance leases consisted of the following:

Other Payable

payable and finance leases consisted of the following:

SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

As of December 31, 2022

As of March 31, 2023

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.

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

(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 7.9 % and 5.0 % to 7.0 % as of March 31, 2023 and June 30, 2022, respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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.

(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 March 31, 2023.

The total outstanding balance as of March 31, 2023 and June 30, 2022

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 March 31, 2023, NTE was in compliance with this covenant.

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.

nil or $ nil , at December

The availed facility

amount was Rs.

nil or $ nil , at March 31, 2023.

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 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.

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

shown as current.

The interest rate for the loan was 3.0 % at March 31, 2023 and June 30, 2022.

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 $ 2,208,285 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.

500,000,000 or $ 1,762,363 at March 31, 2023

500,000,000 or $ 2,434,749 at June 30, 2022.

The interest rate for the loan was 17.0 % and 3.0 % at March 31, 2023 and June 30,

2022, respectively.

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 $ 188,925 , at March 31, 2023.

The balance outstanding at March 31, 2023 and June 30,

The interest rate for the loan was 24.0 % and 14.0 % at March 31, 2023 and June 30, 2022, respectively.

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

As of March 31, 2023, NetSol

PK was in compliance with this covenant .

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 $ 1,339,936 and Rs.

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

or $ 1,850,409 at March 31, 2023 and June 30, 2022, respectively.

The interest rate for the loan was 10.0 % and 3.0 % at March 31, 2023

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 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 March 31, 2023,

NetSol PK was in compliance with these covenants .

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

This is a revolving loan that matures every nine months.

The total facility amount is Rs.

900,000,000 or $ 3,172,253 and Rs.

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

31, 2022 and June 30, 2022, respectively.

900,000,000 or $ 4,382,548 , at March 31, 2023 and June 30, 2022, respectively.

NetSol PK used Rs.

700,000,000 or $ 2,467,308 and 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.

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.

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

700,000,000 or $ 3,408,648 , at March 31, 2023 and June 30, 2022, respectively.

The interest rate for the loan was 10.0 % and 3.0 % at

March 31, 2023 and June 30, 2022, respectively.

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

vehicles’ title.

As of March 31, 2023, NetSol PK used Rs.

101,834,660 or $ 358,939 of which $ 209,543 was shown as long term and

$ 149,396 as current.

As of 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

The interest rate for the loan was 9.0 % to 16.0 % at March 31, 2023, and June 30, 2022.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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:

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

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

a period of 5 years with monthly payments of £ 1,349 , or $ 1,665 .

As of March 31, 2023, the subsidiary has used this facility up

to $ 17,773 , which was shown 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 March 31, 2023 and June 30, 2022.

Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the

$ 22,594 and $ 118,026 was recorded in current maturities, at March 31, 2023 and June 30, 2022, respectively.

The interest rate on this

financing ranged from 9.7 % to 12.7 % as of March 31, 2023 and June 30, 2022.

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.

assets are secured by the assets themselves.

Depreciation of assets under finance leases is included in depreciation expense for the

three and nine months ended March 31, 2023 and 2022.

are the aggregate minimum future lease payments under finance leases as of March 31, 2023:

SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

10 unchanged sentences

less current maturities

Following are

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

are the aggregate future long term debt payments as of March 31, 2023

SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

8 unchanged sentences

to Condensed Consolidated Financial Statements

December 31, 2022

15 - STOCKHOLDERS’ EQUITY

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 three and nine months ended March 31, 2023, the Company issued 15,057 and 41,472 shares of common stock for services rendered by

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

25 unchanged sentences

consolidation.

The following

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

following table presents a summary of identifiable assets as of March 31, 2023 and June 30, 2022:

SUMMARY OF IDENTIFIABLE ASSETS

December 31, 2022

March 31, 2023

June 30, 2022

3 unchanged sentences

Asia - Pacific

The following

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

following table presents a summary of investment under equity method as of March 31, 2023 and June 30, 2022:

SUMMARY OF INVESTMENT UNDER EQUITY METHOD

December 31, 2022

March 31, 2023

June 30, 2022

Investment in associates under equity method:

Corporate headquarters

Asia - Pacific

1 unchanged sentence

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:

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

SUMMARY OF OPERATING INFORMATION

For the Three Months

For the Six Months

Ended December 31,

For the Nine Months

Ended March 31,

Revenues from unaffiliated customers:

8 unchanged sentences

$ ( 394,375 )

$ ( 127,742 )

North America

Asia - Pacific

( 1,646,718 )

( 3,073,187 )

$ ( 2,401,963 )

$ ( 2,839,934 )

Depreciation and amortization:

11 unchanged sentences

to Condensed Consolidated Financial Statements

December 31, 2022

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

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

SUMMARY OF CAPITAL EXPENDITURES

For the Six Months

Ended December 31,

For the Nine Months

Ended March 31,

Capital expenditures:

7 unchanged sentences

Non-Controlling

December 31, 2022

NetSol-Innovation

Non-Controlling

Non-Controlling Interest at

June 30, 2022

Non-Controlling

NetSol-Innovation

Company’s subsidiary, Otoz, issued 191,011 shares to one of its employees as part of their employment agreement resulting in an

increase of non-controlling interest from 5.59 % to 10.94 % .

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

Company’s subsidiary, Otoz, issued 191,011 shares to an employee per the employment agreement resulting in an increase of non-controlling

interest from 5.59 % to 10.94 %.

The effective shareholding of the non-controlling interest for Otoz Thai increased to 10.95 %.

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

For the Six Months

Ended December 31,

For the Nine Months

Ended March 31,

Net income (loss) attributable to NetSol

2 unchanged sentences

Transfer (to) from non-controlling interest

Increase in paid-in capital for issuance of 191,011 shares of Otoz, Inc.

Increase in paid-in capital for issuance of 191,011 shares of OTOZ Inc common stock

Net transfer (to) from non-controlling interest

Change from net income (loss) attributable to NetSol

and transfer (to) from non-controlling interest

$ ( 2,092,926 )

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

$ ( 278,470 )

13 unchanged sentences

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

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 three and nine months ended March 31, 2023, the Company recorded an income tax provision of $ 227,718 and $ 641,122 , respectively.

During the three and nine months ended March 31, 2022, the Company recorded an income tax provision of $ 157,604 and $ 526,737 , 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