What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-09-22 compared with 2022-09-27 · 246 added, 252 removed, 439 unchanged (53% of the section changed)

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few of our highlights for the fiscal year ended June 30, 2023 were:

generated approximately $5,500,000 of revenue by successfully implementing change requests from various customers across multiple

went live with NFS Ascent® and NFS Ascent® Digital in New Zealand for a leading Japanese equipment manufacturer and in addition

signed a statement of work which will generate approximately $1,000,000 of revenue.

went live in Japan, Australia, and South Africa with various NFS Ascent® and NFS implementations with Daimler Truck Financial

Services GmbH (“DTFS”).

These implementations were on time as per requirements of the Clients.

The implementations will

generate over $4,000,000 in revenues including license revenue, services revenue, and support revenue.

renegotiated a support contract with DFS which will generate over $10,000,000 on top of the previously projected revenues from the

same contract, to be recognized over the next four years.

renegotiated the support contract with BMW in China to additionally generate approximately $400,000 above the previously expected

signed a contract with a commercial finance organization in Australia, which is part of a bigger finance network, to implement NFS

This SaaS implementation is expected to generate approximately $500,000 in subscriptions and services over the next

progressed to the UAT stage in the implementation process of our NFS Ascent® Suite for DFS in India.

entered into a strategic partnership with CGI in a bid to gain further traction in Europe.

This partnership is expected to not only

expand the current business pipeline in Europe but will also help in successfully delivering future SaaS implementations across Europe

and other regions.

successfully delivered our cloud enabled Ascent® front end (POS/CAP) to a leading commercial finance company in Australia at

subscription-based pricing.

This implementation has generated revenues of approximately $200,000.

signed a contract with a notable Swedish bank to implement NFS Ascent® in Sweden, Norway, Denmark and Finland with an estimated

value of $5,000,000 over the five-year contract period.

were awarded a contract by the Government of Khyber Pakhtunkhwa under the World Bank Funded “Khyber Pakhtunkhwa Revenue Mobilization

and Public Resource Management Program” to provide a document management system.

The contract is valued at approximately $2,250,000.

successfully implemented our modern technology platform Ascent® on the Cloud (LeasePak Version) for a leading North American

lease and loan portfolio servicing provider.

The client has deployed Ascent® Retail’s Contract Management System (CMS)

on the Cloud.

The organization plans to generate approximately $2,000,000 from this contract over a 5-year period.

successfully went live with our cloud-based NFS Ascent® Retail Platform for a bank in the United Kingdom.

The Retail Platform

constitutes both NFS Ascent® Omni Point of Sale and NFS Ascent® Contract Management System.

This contract will provide additional

subscription fee of approximately $1,000,000 over the coming 5 years.

successfully upgraded our front-end solution currently deployed at a leading bank of Japan based in Indonesia.

This upgrade helped

the business generate close to $500,000.

onboarded another 20 dealers of a leading German Auto Manufacturer in the U.S, on our digital retailing solution Otoz.

started the implementation process for NFS Ascent Retail in Taiwan related to the DFS contract.

were awarded a Five-Star Premier Business Partnership Level Status with the American Financial Services Association.

partnered with Amazon Web Services to offer cloud computing services, providing an innovative transformation of our cloud-based solutions.

Since this launch, we have successfully signed our first customer, a leading software house based in the U.S.

We achieved the status

of API Gateway Delivery Partner with Amazon Web Services (AWS).

With this extended APN partnership, we will have access to AWS API

Gateway, a fully managed service that makes it easy for developers to create, publish, maintain, monitor, and secure APIs (application

programming interfaces) at any scale.

This partnership is expected to help the business generate new sales for this growth vertical.

signed a contract with a tier 1 automotive company in the U.S.

for our mobility solution which will manage the back-office operations

for vehicle subscriptions.

launched a new product offering – Flex, which is a cloud-based ready-to-use calculation engine that guarantees precise calculations

at all stages of the contract lifecycle.

We successfully signed our first Flex contract with European Merchant Bank.

launched Hubex, an API library that enables companies to standardize their API integration procedures across multiple API services

through a single integration.

Hubex is our second product offering from the AppexNow marketplace following Flex, an API-based, ready-to-use

calculation engine.

Pre-integrated services in the Hubex library include but are not limited to payment processing, bank account

authentication, finance and insurance products, fraud check, KYC service, driver license verification, address validation, vehicle

valuation and notification service.

went live with its 55th dealer and is, now with dealers in 36 states.

The onboarding of these new dealers will help the business

generate approximately $1.1 million in annual recurring revenues.

effectively generated approximately $7.0 million by successfully implementing change requests from various customers across multiple

successfully re-negotiated the extension of the contract with one of our existing bank customers in the UK.

This extension is expected

to generate nearly $2 million in revenues over the next few quarters.

successfully renegotiated an existing maintenance contract with a leading finance company of a U.S.

based auto manufacturer in China

increasing the annual maintenance fees to $500K from $280K.

achieved the first Go-Live milestone for the finance company of a leading Swedish bank by effectively implementing its invoice factoring

signed a new agreement with Kubota Australia Pty Ltd (“Kubota”) to implement our NFS Ascent ® product.

The contract relates to its operations in Australia and is expected to generate revenues of $5 million over 5 years.

established a new subsidiary in Dubai.

This new company is strategically important for the business to penetrate into MENA (Middle

East and North Africa) region.

We expect the Dubai entity to serve as a regional sales and delivery office in medium to long run.

opened up a development and support center in Austin, Texas to support growth in North America partnering with consultants and system

integrators like Amazon AWS to efficiently scale U.S.

continued our successful implementations with DFS by going live in Japan with our NFS Ascent ® CMS system.

and Business Development Activities

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strong C-level executive professional teams in each key location to execute our long-term strategy.

groom and retain the next tier level management for leadership to navigate long term growth.

and retain the next tier level management for leadership to navigate long term growth.

our offices in China to support the growing and existing client relationships and new client acquisitions in the region.

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a cloud enabled NFS Ascent ® at subscription-based pricing models to generate additional interest from prospects.

investing in Otoz TM and our innovation lab to generate new verticals for the business.

investing in our innovation lab to generate new verticals for the business.

Prospects for NFS Ascent ®

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multinational auto manufacturers, as well as, local Chinese captive finance and leasing companies.

The Chinese auto leasing market is

young and low on consumer penetration in comparison with the giant U.S.

TRENDS AFFECTING NETSOL

has identified the following material trends affecting NetSol.

countries no longer require COVID-19 testing and other travel restrictions have been lifted which

increases opportunities to meet face to face with current and potential customers.

Ascent ® SaaS offering is gaining traction in mid-size auto captives in North

American and European markets.

auto and banking sectors continue momentum towards increased mobility and digital solutions.

developing markets, we continue to see interest from existing clients for upgrades and mobility

dynamics of shared car ownership through ride hailing and car sharing create opportunities

for our innovation and development tools.

TM platform is showing a steady growth of interest from existing and new auto

leasing and Tier 1 companies in all of our markets.

in Pakistan and venture capital investments are at a record high which is boosting the country’s

technology image while acknowledging the skillset of Pakistan’s technology workers.

China Pakistan Economic Corridor (CPEC) investment, initiated by China, has exceeded $62

billion investment from the originally planned $46 billion on Pakistan energy and infrastructure

auto sector remains strong with customers requesting additional services reflecting the resilience

to S&P Global Mobility, new vehicles sales globally are expected to reach 84 million units in 2023 for a 5.6% increase.

sales volumes are expected to reach approximately 15 million units, an estimated increase of 8% from the projected 2022 levels.

inflation rate over the last few months to approximately 5% annually.

market remains strong and resilient for NetSol to continue investing in building local teams for its core offerings.

Ascent ® SaaS offerings and major on-premise license offerings are gaining traction in both mid and large size auto

captives in the North American and European markets.

auto and banking sectors continue momentum towards increased mobility and digital solutions according to Forbes and Insider Intelligence

China Pakistan Economic Corridor (CPEC) investment, initiated by China, has exceeded $65 billion investment, from the originally

planned $46 billion, in Pakistan energy and infrastructure sectors.

Last June, China authorized a new $2.3 billion loan at a discounted

rate to Pakistan as a short-term loan.

auto sector remains steady with government year-end incentives and customers requesting additional services reflecting the resilience

of our offerings.

has been increased traction in the UK and the Scandinavian region.

is a growing interest from long-time customers in upgrading from our legacy NFS solution

to Ascent ® .

auto sales rose 8.8% over a year earlier over the first half of 2023 as electric vehicle purchases surged.

Total vehicle sales including

trucks and buses rose 9.8% to 13.2 million (ABCnews.com July 2023).

overall size of the mobility market in the Europe and the United States is projected to increase over $425 billion combined, by 2035

or a compound CAGR of 5%from 2022.

* source – Deloitte Global Automotive Mobility Market Simulation Tool.

global automotive finance market accounted for $245 Billion in 2022 and is expected to more than double by 2035 at a CAGR of 7.4%.

www.precedenceresearch.com

economic conditions in our geographic markets;

geopolitical tensions, including trade wars,

tariffs and/or sanctions in our geographic areas;

pandemics, including COVID-19;

and, global conflicts or disasters that impact the global

economy or one or more sectors of the global economy.

fear of global recession impacts the future expansions and budgets in every country and every

and hostility between Russia and Ukraine.

travel and 14 days quarantine rules have yet to soften and is adversely affecting business

travels and face to face meetings with decision makers.

inflation globally has impacted compensation and benefits for employees resulting in increased

turnover in Pakistan.

markets including the NASDAQ index and the Russell 2000 index have been down by over

from the office might never return to 100% affecting productivity and collaboration.

Pakistan political environment will likely remain unsteady until the new elections are called

in Fall 2022.

inflation, geopolitical tensions, including trade wars, tariffs and/or sanctions in

geographic areas;

Global pandemics, including COVID-19;

and, global conflicts or disasters that impact the global economy or one

or more sectors of the global economy.

global recession fear impacts the future expansions and budgets in every country and every sector.

interest rate increases by the U.S.

Federal Reserve Board in 2023 restricting buying power for consumers.

negative currency impact on our financial statements due to the devaluation of the Pakistan Rupee in comparison to the US Dollar.

monetary and economic challenges and higher inflation rate than other regional countries impacting Pakistan exports.

and higher interest rates globally have greatly increased the cost of doing business, including salaries and benefits worldwide,

affecting profitability.

and hostility between Russia and Ukraine continue to foster global uncertainty.

decline by over 20% in 2022 of the U.S.

markets including the NASDAQ index and the Russell 2000 index limiting access to capital

from the office might not return to pre-pandemic levels which may affect employee collaboration potentially lessening efficiency.

Pakistan political and economic environment will likely remain unsteady until new elections are called.

tensions between the U.S.

and China are causing some American companies to pull out of China and move their supply chain elsewhere.

(Business Insider, Aug.

ACCOUNTING POLICIES

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

● Recognition

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

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

contract assets (revenues in excess of billings), or contract liabilities (deferred revenue) on the Company’s Consolidated Balance

contract assets (revenues in excess of billings), or contract liabilities (unearned revenue) on the Company’s Consolidated Balance

The Company records revenues in excess of billings when the Company has transferred goods or services but does not yet have the

right to consideration.

The Company records deferred revenue when the Company has received or has the right to receive consideration

The Company records unearned revenue when the Company has received or has the right to receive consideration

but has not yet transferred goods or services to the customer.

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For the Years

Ended June 30,

Net Revenues:

Subscription and support

Services - related party

Total net revenues

Cost of revenues

Salaries and consultants

Depreciation and amortization

Total cost of revenues

Operating expenses:

Selling and marketing

Depreciation and amortization

General and administrative

Research and development cost

Total operating expenses

Income (loss) from operations

Selling, general and administrative

Research and development

operating expenses

Loss from operations

Other income and (expenses)

Gain (loss) on sale of assets

Interest expense

Interest income

Gain (loss) on foreign currency exchange transactions

Share of net loss from equity investment

Other income (expense)

Total other income (expenses)

Net income before income taxes

Income tax provision

Non-controlling interest

Net income (loss) attributable to NetSol

Gain (loss) on foreign

currency exchange transactions

Share of net loss from

equity investment

income (expense)

other income (expenses)

Net income (loss) before

tax provision

Net income (loss)

Non-controlling

income (loss) attributable to NetSol

$ (5,243,748 )

Net income (loss) per share:

Net income (loss) per common share

Net income (loss) per common

Weighted average number of shares outstanding

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For the Years

Change due to

(Unfavorable)

Ended June 30,

Net Revenues:

$ (2,589,689 )

$ (2,265,075 )

$ (4,854,764 )

Cost of revenues:

(11,939,512 )

(14,529,201 )

Operating expenses:

3 unchanged sentences

$ (20,132,777 )

$ (7,701,635 )

revenues for the years ended June 30, 2023 and 2022 by segment are as follows:

3 unchanged sentences

In the fiscal year ended June 30, 2023, we recognized approximately $1,918,000

related to a new agreement with DTFS for the sale of both our legacy and Ascent product ® for their new business segment

in the Japanese, Australian and South African markets and $465,000 from the DFS contract.

We also recognized approximately $720,000 related

to a new agreement with the Government of Khyber Pakhtunkhwa for the sale of our Ascent product ® .

In the fiscal year ended

June 30, 2021, we recognized $2,400,000 of license revenue for the GAC NFS Ascent ® contract, $2,100,000 for the TIL NFS

Ascent ® contract, and $1,400,000 for the BMW NFS Ascent ® contract.

related to a new NFS Ascent ® agreement with Kubota in Australia and approximately $188,000 related to a new agreement

with the Government of Khyber Pakhtunkhwa for the sale of our Ascent ® product.

In the fiscal year ended June 30, 2022,

we recognized approximately $3,000,000 related to a new agreement with DTFS for the sale of both our legacy and Ascent product ®

for their new business segment in the Japanese, Australian and South African markets and $465,000 from the DFS contract.

recognized approximately $720,000 related to a new agreement with the Government of Khyber Pakhtunkhwa for the sale of our Ascent product ® .

and support fees for the year ended June 30, 2023, were $25,980,661 compared to $28,284,759 for the year ended June 30, 2022 reflecting

an increase of $6,111,014 with a change in constant currency of $7,861,490.

The major increase is related to the revised ceiling amount

for post contract support due to the software customizations related to the DFS contract.

The Company recorded a one-time post contract

support revenue of approximately $3,480,000 using the catch-up approach during the year ended June 30, 2022.

In addition, the Company

will recognize approximately $7,900,000 of additional subscription and support revenue over the remaining four years of the contract.

Subscription and support fees begin once a customer has “gone live” with our product.

Subscription and support fees are recurring

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

a decrease of $2,304,098 with a decrease in constant currency of $1,613,325.

The decrease was due to the recognition of a one-time post

contract support revenue of approximately $3,480,000 using the catch-up approach during the year ended June 30, 2022.

Subscription and

support fees are recurring in nature, and we anticipate these fees to gradually increase as we implement both our NFS legacy products

and NFS Ascent ® .

income for the year ended June 30, 2023, was $24,142,990 compared to $24,423,960 for the year ended June 30, 2022, reflecting a decrease

of $280,970 with an increase in constant currency of $1,167,842.

The increase in services revenue on a constant currency basis is due

to the increase in change requests, enhancements and reimbursable costs.

Services revenue is derived from

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

gross profit was $16,915,563 for the year ended June 30, 2023 compared with $23,737,174 for the year ended June 30, 2022.

This is a decrease

of $6,821,611 with a decrease in constant currency of $14,529,201.

The decrease in services revenue is due to the decrease in implementation

revenue associated with major contracts which we have fully implemented or are in the latter stages of implementation offset by services

revenue for new contracts.

Services revenue is derived from services provided to both current customers as well as services provided

to new customers as part of the implementation process.

– Related Party

income from related party for the year ended June 30, 2022 was $nil compared to $48,775 for the year ended June 30, 2021 reflecting a

decrease of $48,775 with a decrease in constant currency of $48,775.

The decrease in related party service revenue is due to a decrease

in revenue due to less services performed for WRLD3D.

gross profit was $23,737,174 for the year ended June 30, 2022 as compared with $26,353,028 for the year ended June 30, 2021.

a decrease of $2,615,854 with a decrease in constant currency of $2,660,083.

The gross profit percentage for the year ended June 30,

2022 decreased to 41.5% from 48.0% for the year ended June 30, 2021.

The cost of sales was $33,510,805 for the year ended June 30, 2022

compared to $28,567,587 for the year ended June 30, 2021 for an increase of $4,943,218 and on a constant currency basis an increase of

As a percentage of sales, cost of sales increased from 52.0% for the year ended June 30, 2021 to 58.5% for the year ended

June 30, 2022.

The gross profit percentage for the year ended June 30, 2023 decreased

to 32.3% from 41.5% for the year ended June 30, 2022.

The cost of sales was $35,477,652 for the year ended June 30, 2023 compared to

$33,510,805 for the year ended June 30, 2022 for an increase of $1,966,847 and on a constant currency basis an increase of $11,939,512.

As a percentage of sales, cost of sales increased from 58.5% for the year ended June 30, 2022 to 67.7% for the year ended June 30, 2023.

and consultant fees increased by $1,501,361 from $24,528,155 for the year ended June 30, 2022 to $26,029,516 for the year ended June

30, 2023 and on a constant currency basis increased by $8,625,137.

The increase is due to increases in salaries that had been decreased

as part of our cost savings measure due to the COVID-19 pandemic last year, annual salary raises, and new hirings.

We had 1,009, 1,036,

and 1,356 technical employees as of June 30, 2020, 2021 and 2022, respectively.

The increase is due to increases in salaries and personnel.

fiscal years 2023 and 2022, we had an average of 1,505 and 1,225 technical employees, respectively.

As of June 30, 2023, our total

number of technical employees decreased to 1,415 from a maximum of 1,579.

As a percentage of sales, salaries and consultant expense

4 unchanged sentences

restrictions.

As a percentage of sales, travel expense increased from 1.2% for year ended June 30, 2021 to 1.8% for the year ended June

and amortization expense slightly decreased to $2,949,093 compared to $2,990,689 for the year ended June 30, 2021 or a decrease of $41,596

and on a constant currency basis a decrease of $280,234.

cost increased to $4,996,934 for the year ended June 30, 2022 compared to $3,944,197 for the year ended June 30, 2021 or an increase

of $1,052,737 and on a constant currency basis an increase of $1,407,270.

The increase is mainly due to a one-time hosting charge of

approximately $300,000, an increase in repair and maintenance cost of approximately $460,000, and an increase in computer hardware

and software costs of approximately $500,000, offset by reductions in other areas.

As a percentage of sales, travel expense

increased from 1.8% for year ended June 30, 2022 to 4.6% for the year ended June 30, 2023.

and amortization expense decreased to $2,504,046 compared to $2,949,093 for the year ended June 30, 2022 or a decrease of $445,057 and

on a constant currency basis an increase of $517,294.

cost decreased to $4,534,049 for the year ended June 30, 2023 compared to $4,996,934 for the year ended June 30, 2022 or a decrease of

$462,885 and on a constant currency basis an increase of $744,971.

The increase in constant currency is mainly due to increase in computer

cost of approximately $503,000, connectivity charges of approximately $186,000, utilities and communication costs of approximately $293,000

off set by the reversal of royalty fee of approximately $162,000, and a decrease in repair and maintenance cost of approximately $140,000.

expenses were $25,695,521 for the year ended June 30, 2023 compared to $24,815,497, for the year ended June 30, 2022 for an increase

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and research and development costs.

and marketing expenses increased by $665,018 or 10.2% and on a constant currency basis an increase of $1,127,924 or 17.2%.

is mainly due to increase in travel of approximately $400,000 and sales promotion activities of approximately $170,000.

and administrative expenses were $15,390,141 for the year ended June 30, 2022, compared to $15,437,382 at June 30, 2021 or a decrease

and marketing expenses decreased by $111,542 or 1.6% and on a constant currency basis increased by $1,333,881 or 18.5%.

in constant currency is mainly due to increases in salaries of approximately $928,000, travel of approximately $271,000 and other selling

expenses of approximately $133,000.

and administrative expenses were $16,244,936 for the year ended June 30, 2023, compared to $15,390,141 at June 30, 2022 or an increase

of $854,795 or 5.6%, and on a constant currency basis an increase of $3,359,080 or 21.8%.

During the year ended June 30, 2022, salaries decreased

by approximately $244,000 or increased by approximately $191,000 on a constant currency basis, and professional services increased approximately

$205,000 or $226,000 on a constant currency basis and other general and administrative expenses decreased approximately $8,000 or increased

by approximately $407,000 on a constant currency basis.

and development costs were $1,342,154 for the year ended June 30, 2022 compared to $674,168 at June 30, 2021 or an increase of $667,986

or 99.1% and on constant currency basis an increase of $864,608 or 128.3%.

During the year ended June 30, 2023, salaries

decreased by approximately $237,675 or increased by approximately $1,310,485 on a constant currency basis, due to increases in salaries,

medical costs and subsidiary options granted to staff in NetSol PK.

The provision for doubtful accounts increased by approximately $1,700,000

and on constant currency basis increased by approximately $1,800,000 primarily due to non-payment from one of our Chinese customers.

and development costs were $1,601,613 for the year ended June 30, 2023 compared to $1,342,154 for the year ended June 30, 2022 or an

increase of $259,459 or 19.3% and on constant currency basis an increase of $854,083 or 63.6%.

from Operations

from operations was $1,078,323 for the year ended June 30, 2022 compared to income from operations of $2,720,849 for the year ended June

This represents a decrease of $3,799,172 with a decrease of $5,431,499 on a constant currency basis for the year ended June

from operations was $8,779,958 for the year ended June 30, 2023 compared to a loss of $1,078,323 for the year ended June 30, 2022.

represents an increase in loss of $7,701,635 with an increase of $20,132,777 on a constant currency basis for the year ended June 30,

2023 compared with the year ended June 30, 2022.

As a percentage of sales, loss from operations was 16.8% for the year ended June 30,

30, 2022 compared to income from operation 5.0% for the year ended June 30, 2021.

2023 compared to 1.9% for the year ended June 30, 2022.

Income and Expense

2 unchanged sentences

of $2,393,981 with an increase of $5,469,614 on a constant currency basis.

The increase is primarily due to the interest income and foreign

currency exchange transactions off set by recording an impairment in the WRLD3D and DriveMate investments and recording goodwill impairment.

The increase is primarily due to the foreign currency exchange

transactions off set by recording other comprehensive loss and an impairment in our Drivemate investment and an increase in interest

income was $1,217,850 for the year ended June 30, 2023 compared to $1,655,883 for the period ended June 30, 2022.

This represents an

increase of $638,451 or a change of $831,405 on a constant currency basis.

Interest income is earned on cash maintained in interest bearing

the year ended June 30, 2022, we recognized a gain of $4,327,590 in foreign currency exchange transactions compared to a loss of $597,433

for the year ended June 30, 2021.

This represents a decrease

of $438,033 or a change of $2,959 on a constant currency basis.

Interest income is earned on cash maintained in interest bearing accounts.

the year ended June 30, 2023, we recognized a gain of $6,748,038 in foreign currency exchange transactions compared to $4,327,590 for

the year ended June 30, 2022.

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

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During the year ended June 30, 2022, the value of the U.S.

dollar and the Euro decreased 5.9% and 0.5%, respectively, compared

share of net loss from equity investment was $2,021,480 for the year ended June 30, 2022 compared to $253,819 for the period ended June

This represents an increase of $1,767,661 or a change of $1,948,838 on constant currency basis.

The increase is primarily due

to the impairment of our investment in WRLD3D and DriveMate of approximately $966,000 and $651,000, respectively.

in other expenses for the year ended June 30, 2022 is $214,000 related to the goodwill impairment related to VLS.

dollar and the Euro increased 29.9% and 14.9%, respectively, compared

share of net loss from equity investment was $1,033,243 for the year ended June 30, 2023 compared to $2,021,480 for the period ended

June 30, 2022.

This represents a decrease of $988,237 or a change of $986,639 on a constant currency basis.

During the year ended June

30, 2023, we recorded an impairment of approximately $1,041,000 on our investment in Drivemate.

During the year ended June 30, 2022,

we recorded an impairment of approximately $1,617,000 related to our investments in WRLD3D and Drivemate.

in other expenses for the year ended June 30, 2023 is $324,000 and $650,000 related to other comprehensive loss on liquidation of NTPK

Thailand and WRLD3D, respectively.

These amounts were reclassified from other comprehensive income to the statement of operations for

the year ended June 30, 2023.

Non-controlling

the year ended June 30, 2023 and 2022, the net income attributable to non-controlling interest was $1,099,275 and $1,951,959, respectively.

The increase in non-controlling interest is primarily due to the increase in net income of NetSol PK.

The decrease in non-controlling interest is primarily due to the decrease in net income of NetSol PK.

Income (Loss) Attributable to NetSol

loss was $851,156 for the year ended June 30, 2022 compared to net income of $1,778,257 for the year ended June 30, 2021.

This is a decrease

of $2,629,413 with a decrease of $4,080,861 on a constant currency basis, compared to the prior year.

For the year ended June 30, 2022,

net loss per share was $0.08 for basic and diluted shares.

For the year ended June 30, 2021, net income per share was $0.15 for basic

and diluted shares.

loss was $5,243,748 for the year ended June 30, 2023 compared to a net loss of $851,156 for the year ended June 30, 2022.

increase in loss of $4,392,592 with an increase of $11,427,411 on a constant currency basis, compared to the prior year.

ended June 30, 2023, net loss per share was $0.46 for basic and diluted shares.

For the year ended June 30, 2022, net loss per share

was $0.08 for basic and diluted shares.

Financial Measures

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adjusted EBITDA is EBITDA plus stock-based compensation expense.

EBITDA per basic and diluted share – Adjusted EBITDA allocated to common stock divided

by the weighted average shares outstanding and diluted shares outstanding.

EBITDA per basic and diluted share – Adjusted EBITDA allocated to common stock divided by the weighted average shares outstanding

and diluted shares outstanding.

use non-GAAP measures internally to evaluate the business and believe that presenting non-GAAP measures provides useful information to

23 unchanged sentences

GAAP measures for the years ended June 30, 2023 and 2022 are as follows:

the Year Ended

Income (loss) attributable to NetSol

Non-controlling

and amortization

For the Years

Net Income (loss) attributable

$ (5,243,748 )

Non-controlling interest

Depreciation and amortization

Interest expense

stock-based compensation

EBITDA, gross

non-controlling interest (a)

Average number of shares outstanding

adjusted EBITDA per common share

reconciliation of adjusted EBITDA of non-controlling interest to

net income attributable to non-controlling interest is as follows

Income (loss) attributable to non-controlling interest

and amortization

Adjusted EBITDA, gross

Less non-controlling

Adjusted EBITDA, net

$ (2,263,594 )

Weighted Average number of shares outstanding

Basic adjusted EBITDA

Diluted adjusted EBITDA

(a)The reconciliation of adjusted EBITDA of

non-controlling interest to net income attributable to non-controlling interest is as follows

Net Income (loss) attributable to non-controlling

Depreciation and amortization

Interest expense

stock-based compensation

EBITDA of non-controlling interest

Adjusted EBITDA of non-controlling

AND CAPITAL RESOURCES

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We had revenues in excess of billings of $12,377,677 at June 30,

2022 compared to $15,637,734 at June 30, 2021 of which $853,601 and $957,603 are shown as long term as of June 30, 2022 and 2021, respectively.

The long-term portion was discounted by $28,339 and $66,779 at June 30, 2022 and 2021, respectively, using the discounted cash flow method

2023 compared to $15,425,377 at June 30, 2022 of which $nil and $853,601 are shown as long term as of June 30, 2023 and 2022, respectively.

The long-term portion was discounted by $nil and $28,339 at June 30, 2023 and 2022, respectively, using the discounted cash flow method

with an interest rate of 4.35%, for the years ended June 30, 2023 and 2022.

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The combined totals

for accounts receivable and revenues in excess of billings increased by $4,272,749 from $19,821,830 at June 30, 2021 to $24,094,579 at

June 30, 2022.

for accounts receivable and revenues in excess of billings slightly decreased by $2,480 from $24,094,579 at June 30, 2022 to $24,092,099

at June 30, 2023.

Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $6,552,181 and

$5,779,510, respectively, at June 30, 2023.

The average days sales outstanding for the years ended June 30, 2022 and 2021 were 140 and

165 days respectively.

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

accounts receivable and revenue in excess of billings.

Accounts payable and accrued expenses, and current portions of loans and lease obligations

amounted to $6,813,541 and $8,567,145, respectively, at June 30, 2022.

The average days sales outstanding for the years ended June 30,

2023 and 2022 were 168 and 140 days respectively.

The days sales outstanding have been calculated by taking into consideration the average

combined balances of accounts receivable and revenue in excess of billings.

cash used by investing activities amounted to $1,399,231 for the year ended June 30, 2023, compared to $2,260,147 for the year ended

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We had net purchases of property and equipment of $1,399,231 compared to $2,260,147 for the comparable period last fiscal

For the year ended June 30, 2022 and 2021, we invested $nil and $155,500, respectively, in DriveMate.

cash used in financing activities was $718,992 compared to $1,378,721, for the years ended June 30, 2023, and 2022, respectively.

the year ended June 30, 2022, we purchased 22,510 shares of our common stock from the open market for $100,106 compared to 669,018 shares

of common stock from the open market for $2,364,781 for the year ended June 30, 2021.

During the year ended June 30, 2022, NetSol PK

purchased 2,000,000 shares of its common stock from the open market for $950,352.

The year ended June 30, 2022, included cash inflow

of $941,841 from bank proceeds compared to $1,898,013 for the same period last year.

During the year ended June 30, 2022, we had net

payments for bank loans and capital leases of $1,270,104 compared to $698,797 for the year ended June 30, 2021.

We are operating in various

geographical regions of the world through our various subsidiaries.

Those subsidiaries have financial arrangements from various financial

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

These loans will become due at different maturity dates as

described in Note 15 of the financial statements.

We are in compliance with the covenants of the financial arrangements and there is

no default which may lead to early payment of these obligations.

We anticipate paying back all these obligations on their respective

the years ended June 30, 2023 and 2022, our subsidiaries used cash of $61,124 and $950,352, respectively, for the purchase of treasury

During the year ended June 30, 2022, we purchased 22,510 shares of our common stock from the open market for $100,106.

ended June 30, 2023, included cash inflow of $270,292 from bank proceeds compared to $941,841 for the same period last year.

year ended June 30, 2023, we had net payments for bank loans and capital leases of $928,160 compared to $1,270,104 for the year ended

June 30, 2022.

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

Those subsidiaries have

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

These loans will

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

We are in compliance with the covenants of

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

We anticipate paying back all

these obligations on their respective due dates.

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

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As of June 30, 2022,

we had approximately $33.7 million of cash, cash equivalents and marketable securities of which approximately $31.7 million is held by

our foreign subsidiaries.

we had approximately $24.0 million of cash, cash equivalents and marketable securities of which approximately $22.8 million was held

by our foreign subsidiaries.

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

The focus will remain on continuously improving cash

reserves internally and reduced reliance on external capital raise.

reserves internally.

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

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and European new business development activities and infrastructure enhancements.

there is no guarantee that any of these methods will result in raising sufficient funds to meet our capital needs or that even if available

will be on terms acceptable to us, we will be very cautious and prudent about any new capital raise given the global market uncertainties.

However, we are very conscious of the dilutive effect and price pressures in raising equity-based capital.

UK based subsidiary, NTE, has an approved overdraft facility of £300,000 ($379,747) which requires that the aggregate amount of

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million ($186,688).

NetSol PK has an approved facility for export refinance from Habib Metro Bank Limited amounting to Rupees 900 million

($4,382,548).

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

PK also has an approved export refinance facility of Rs.

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

900 million ($3,134,687).

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

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

380 million ($1,323,535) from Samba Bank Limited.

During the tenure of loan,

these two facilities require NetSol PK to maintain at a minimum a current ratio of 1:1, an interest coverage ratio of 4 times, a leverage

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

tenure of loan, these two facilities require NetSol PK to maintain at a minimum a current ratio of 1:1, an interest coverage ratio of

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

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

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due by period

Protection Program Loans

Overdraft Facility

Finance Facility

Payable Bank - Export Refinance

Payable Bank - Running Finance

Payable Bank - Export Refinance II

Payable Bank - Export Refinance III

Finance Facility

and Leaseback Financing

Finance Leases

Lease Obligations

Debt Obligations

D&O Insurance

Loan Payable Bank - Export Refinance

Loan Payable Bank - Export Refinance II

Loan Payable Bank - Export Refinance III

Term Finance Facility

Sale and Leaseback Financing

Subsidiary Finance Leases

Operating Lease Obligations

Sheet Arrangements

2 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis