What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-07 compared with 2023-05-11 · 266 added, 448 removed, 728 unchanged (50% of the section changed)

Financial Statements (Unaudited)

NETSOL TECHNOLOGIES, INC.

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

March 31, 2023

September 30, 2023

June 30, 2023

7 unchanged sentences

Property and equipment, net

Right of use of assets - operating leases

Long term investment

Right of use assets - operating leases

Intangible assets, net

11 unchanged sentences

Total liabilities

Commitments and contingencies

Stockholders’ equity:

4 unchanged sentences

12,311,850 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

11,372,819 outstanding as of September 30, 2023 12,284,887 shares issued and 11,345,856 outstanding as of June 30, 2023

Additional paid-in-capital

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

Treasury stock (at cost, 939,031 shares as of September 30, 2023 and June 30,

( 3,920,856 )

11 unchanged sentences

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

NETSOL TECHNOLOGIES, INC.

TECHNOLOGIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

For the Three Months

For the Nine Months

Ended March 31,

Ended September 30,

Net Revenues:

2 unchanged sentences

Cost of revenues

Salaries and consultants

Depreciation and amortization

Total cost of revenues

Operating expenses:

Selling and marketing

Depreciation and amortization

General and administrative

Selling, general and administrative

Research and development cost

3 unchanged sentences

Other income and (expenses)

Gain (loss) on sale of assets

Interest expense

Interest income

Gain on foreign currency exchange transactions

Share of net loss from equity investment

Gain (loss) on foreign currency exchange transactions

Other income (expense)

Total other income (expenses)

Net income before income taxes

Net income (loss) before income taxes

Income tax provision

1 unchanged sentence

Non-controlling interest

( 1,697,908 )

( 1,571,629 )

( 1,655,287 )

Net income (loss) attributable to NetSol

$ ( 620,729 )

$ ( 169,032 )

Net income (loss) per share:

2 unchanged sentences

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

NETSOL TECHNOLOGIES, INC.

TECHNOLOGIES, INC.

AND SUBSIDIARIES

1 unchanged sentence

For the Three Months

For the Nine Months

Ended March 31,

Ended September 30,

Net income (loss)

$ ( 620,729 )

$ ( 169,032 )

Other comprehensive income (loss):

1 unchanged sentence

( 4,151,519 )

( 2,269,229 )

( 11,428,326 )

( 7,020,620 )

Translation adjustment attributable to non-controlling interest

1 unchanged sentence

( 2,918,050 )

( 1,804,777 )

( 7,829,909 )

( 4,871,925 )

Comprehensive income (loss) attributable to NetSol

1 unchanged sentence

$ ( 3,538,779 )

$ ( 7,998,941 )

$ ( 3,555,641 )

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

2 unchanged sentences

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

statement of the changes in equity for the three months ended September 30, 2023 is provided below:

Additional Paid-in

Other Compre-hensive

Non Controlling

Total Stockholders’

Balance at June 30, 2023

$ 128,476,048

5 unchanged sentences

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:

Stockholders’

Balance at September 30, 2023

3 unchanged sentences

$ ( 46,411,702 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for the year

( 2,092,926 )

( 2,401,963 )

Balance at December 31, 2022

$ 128,484,714

$ ( 3,920,856 )

$ ( 42,366,093 )

$ ( 42,011,340 )

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:

Stockholders’

Additional Paid-in

Other Compre-hensive

Non Controlling

Total Stockholders’

Balance at June 30, 2022

3 unchanged sentences

$ ( 39,363,085 )

Common stock issued for:

Adjustment in APIC for change in subsidiary shares to non-controlling interest

Fair value of subsidiary options issued

Foreign currency translation adjustment

$ 128,218,247

1 unchanged sentence

$ ( 39,652,438 )

Net income (loss) for the year

Balance at September 30, 2022

$ ( 39,363,085 )

$ ( 3,920,856 )

$ ( 40,273,167 )

$ ( 42,281,135 )

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:

Adjustment in APIC for change in subsidiary shares to non-controlling interest

Fair value of subsidiary options issued

2 unchanged sentences

( 1,233,469 )

Net income (loss)

Balance at March 31, 2022

( 4,151,519 )

$ ( 3,920,856 )

$ ( 37,484,998 )

$ ( 36,740,406 )

NETSOL TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

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

Stockholders’

Net income (loss) for the year

Balance at September 30, 2022

3 unchanged sentences

$ ( 42,281,135 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

$ 128,420,519

Net income for the year

Balance at December 31, 2021

$ ( 3,920,856 )

1 unchanged sentence

$ ( 42,281,135 )

$ ( 34,935,629 )

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

Stockholders’

Balance at June 30, 2021

$ 129,018,826

$ ( 3,820,750 )

$ ( 38,801,282 )

$ ( 31,868,481 )

Subsidiary common stock issued for:

Common stock issued for:

Purchase of treasury shares

Foreign currency translation adjustment

( 2,145,405 )

( 1,138,991 )

( 3,284,396 )

Balance at September 30, 2021

$ 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.

NETSOL TECHNOLOGIES, INC.

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the Nine Months

Ended March 31,

For the Three Months

Ended September 30,

Cash flows from operating activities:

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

Net income (loss)

$ ( 437,971 )

Adjustments to reconcile net income (loss) to net cash provided by operating

Depreciation and amortization

Provision for bad debts

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

(Gain) loss on sale of assets

Gain on sale of assets

Stock based compensation

1 unchanged sentence

Accounts receivable

( 1,855,899 )

( 3,404,247 )

Revenues in excess of billing

( 1,478,386 )

Other current assets

1 unchanged sentence

Unearned revenue

( 2,791,269 )

Net cash provided by operating activities

2 unchanged sentences

( 1,347,601 )

( 1,680,856 )

Sales of property and equipment

Net cash used in investing activities

( 1,421,657 )

( 1,359,605 )

Cash flows from financing activities:

Purchase of treasury stock

Proceeds from bank loans

Payments on finance lease obligations and loans - net

( 1,045,464 )

Net cash used in financing activities

1 unchanged sentence

( 2,999,975 )

( 6,465,085 )

Net decrease in cash and cash equivalents

( 8,704,300 )

Net increase (decrease) in cash and cash equivalents

( 3,040,849 )

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Nine Months

Ended March 31,

For the Three Months

Ended September 30,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

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.

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

1 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

25 unchanged sentences

Technologies Europe Limited (“NTE”)

(Thailand) Co.

Limited (“NTPK Thailand”)

Technologies (Beijing) Co.

12 unchanged sentences

TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

to Condensed Consolidated Financial Statements

2 – ACCOUNTING POLICIES

20 unchanged sentences

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

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.

As of September 30, 2023, and June 30, 2023, the Company had

uninsured deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 15,197,882 and $ 13,524,518 ,

respectively.

The Company has not experienced any losses in such accounts.

16 unchanged sentences

short maturities.

The carrying amounts of the convertible note receivable and the long-term debt approximate their fair values based

on current interest rates for instruments with similar characteristics.

The carrying amounts of the long-term debt approximate their fair values based on current interest rates for instruments

with similar characteristics.

three levels of valuation hierarchy are defined as follows:

3 unchanged sentences

and are less observable and thus have the lowest priority.

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:

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Company’s financial assets that were measured at fair value on a recurring basis as of September 30, 2023, were as follows:

OF FAIR VALUE OF FINANCIAL ASSETS MEASURED ON RECURRING BASIS

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

Revenues in excess of billings - long term

Fair value discount

Company did not have any financial assets that were measured at fair value on a recurring basis at June 30, 2023.

reconciliation from June 30, 2023 to September 30, 2023 is as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS RECONCILIATION

Revenues in excess of billings -

Balance at June 30, 2023

Amortization during the period

Transfers to short term

Effect of Translation Adjustment

Balance at March 31, 2023

Balance at September 30, 2023

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

13 unchanged sentences

ASU 2021-08 is effective for annual periods beginning after December 15, 2022, and interim periods within

those years, with early adoption permitted.

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

those years, and was adopted by the Company on July 1, 2023.

The adoption of the new standard did not have a material impact on the Company’s

consolidated financial statements.

August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60):

and Initial Measurement.

ASU 2023-05 provides decision-useful information to a joint venture’s investors and reduces diversity

in practice by requiring that a joint venture apply a new basis of accounting upon formation.

As a result, a newly formed joint venture,

upon formation, would initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are

consistent with the business combinations guidance).

ASU 2023-05 is effective prospectively for all joint ventures with a formation date

on or after January 1, 2025, and early adoption is permitted.

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

consolidated financial statements.

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

TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

to Condensed Consolidated Financial Statements

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.

35 unchanged sentences

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

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

10 unchanged sentences

purchase both product support and license updates when they acquire new software licenses.

In addition, a majority of customers renew

their support services contracts annually and typical payment terms provide that customers make payment within 30 days of invoice.

In addition, most customers renew their support

services contracts annually and typical payment terms provide that customers make payment within 30 days of invoice.

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

16 unchanged sentences

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

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.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Company’s disaggregated revenue by category is as follows:

1 unchanged sentence

For the Three Months

For the Nine Months

Ended March 31,

Ended September 30,

Subscription and support

29 unchanged sentences

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

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

5 unchanged sentences

testing requirement changes.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

20 unchanged sentences

OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

March 31, 2023

September 30, 2023

June 30, 2023

1 unchanged sentence

Unearned revenue

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

Company’s unearned revenue reconciliation is as follows:

OF UNEARNED REVENUE RECONCILIATION

Unearned Revenue

Balance at June 30, 2023

Revenue Recognized

( 5,876,193 )

Balance at September 30, 2023

the three months ended September 30, 2023, the Company recognized revenue of $ 4,207,000 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

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 $ 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.

Contracted but unsatisfied performance obligations were approximately $ 29,053,000 as of September 30, 2023, of which the Company estimates

to recognize approximately $ 15,757,000 in revenue over the next 12 months and the remainder over an estimated 3 years thereafter.

revenue recognition depends in part on the timing of software modules installed at various customer sites.

Accordingly, some factors

that affect the Company’s revenue, such as the availability and demand for modules within customer geographic locations, is not

entirely within the Company’s control.

In instances where the timing of revenue recognition differs from the timing of invoicing,

the Company has determined that its contracts generally do not include a significant financing component.

The primary purpose of invoicing

terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, and not to

facilitate financing arrangements.

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

5 unchanged sentences

The Company has applied the following practical expedients:

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

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

transfer of the promised items to the customer.

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

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

year or less or the commissions are based on cashed received.

These costs are recorded within sales and marketing expense in the Consolidated

Statement of Operations.

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

These costs are recorded within sales and marketing expense in the

Consolidated Statement of Operations.

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

at the amount to which it has the right to invoice for services performed (applies to time-and-material engagements).

9 unchanged sentences

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

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

4 – EARNINGS PER SHARE

2 unchanged sentences

shares outstanding during the period using the treasury stock method.

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

there were no outstanding dilutive instruments.

During the three months ended September 30, 2023 and 2022, there

were no outstanding dilutive instruments.

5 – OTHER COMPREHENSIVE INCOME AND FOREIGN CURRENCY

accounts of NTE, AEL, VLSH and VLS use the British Pound;

VLSIL uses the Euro;

NetSol PK, Connect, and NetSol Innovation use the Pakistan

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

Australia uses the Australian dollar;

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.

following table represents the functional currencies of the Company and its subsidiaries:

Company and Subsidiaries

Technologies, Inc.

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 $ 46,411,702 and $ 45,975,156 as of September 30, 2023 and June 30, 2023, respectively.

During the three months ended September 30, 2023 and 2022, comprehensive income (loss) in the consolidated statements of comprehensive

income (loss) included a translation loss attributable to NetSol of $ 436,546 and $ 2,918,050 , respectively.

6 – MAJOR CUSTOMERS

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 nine months ended March

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

respectively representing 35.9 % and 7.3 %, respectively of revenues.

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

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 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.

the three months ended September 30, 2023, revenues from Daimler Financial Services (“DFS”) were $ 3,687,631 , representing

25.9 % of revenues.

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

$ 3,591,807 , representing 28.3 % of revenues.

The revenues from DFS are shown in the Asia – Pacific segment.

receivable from DFS at September 30, 2023 and June 30, 2023, were $ 999,337 and $ 4,368,881 , respectively.

Revenues in excess of billings

at September 30, 2023 and June 30, 2023, were $ 1,229,485 and $ 1,961,750 , respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

7 - OTHER CURRENT ASSETS

1 unchanged sentence

SCHEDULE OF OTHER CURRENT ASSETS

March 31, 2023

June 30, 2022

September 30,

Prepaid Expenses

3 unchanged sentences

Other Receivables

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

8 – REVENUES IN EXCESS OF BILLINGS – LONG TERM

1 unchanged sentence

SCHEDULE OF REVENUE IN EXCESS OF BILLING

March 31, 2023

June 30, 2022

September 30,

Revenues in excess of billings - long term

Present value discount

to revenue recognition for contract accounting, the Company had recorded revenues in excess of billings long-term for amounts billable

to revenue recognition for contract accounting, the Company has recorded revenues in excess of billings long-term for amounts billable

after one year.

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.

During the three months ended September 30, 2023 and 2022, the Company accreted $ 6,155 and $ 9,369 , respectively, which

was recorded in interest income for that period.

The Company used the discounted cash flow method with an interest rate of 7.34 % for

the period ended September, 30, 2023.

The Company used the discounted cash flow method with interest rates ranging from 4.65 % to 6.25 %

for the period ended September 30, 2022.

9 - PROPERTY AND EQUIPMENT

1 unchanged sentence

SCHEDULE OF PROPERTY AND EQUIPMENT

March 31, 2023

June 30, 2022

September 30,

Office Furniture and Equipment

5 unchanged sentences

Property and Equipment, Net

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

the three months ended September 30, 2023 and 2022, depreciation expense totaled $ 404,745 and $ 522,183 , respectively.

Of these amounts,

$ 266,942 and $ 331,229 , respectively, are reflected in cost of revenues.

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.

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

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

SUMMARY OF FIXED ASSETS HELD UNDER CAPITAL LEASES

March 31, 2023

June 30, 2022

September 30,

Accumulated Depreciation - Net

Fixed assets held under

finance leases, Total

NETSOL TECHNOLOGIES, INC.

Notes to Condensed

Consolidated Financial Statements

March 31, 2023

held under capital leases, Total

lease term and discount rate were as follows:

SCHEDULE OF FINANCE LEASE TERM

March 31, 2023

June 30, 2022

September 30,

Weighted average remaining lease term - Finance leases

34 unchanged sentences

TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

to Condensed Consolidated Financial Statements

balance sheet information related to leases was as follows:

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

March 31, 2023

June 30, 2022

September 30,

Operating lease assets, net

4 unchanged sentences

SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months

For the Nine Months

Ended March 31,

For the Three Months Ended

September 30,

Amortization of finance lease assets

6 unchanged sentences

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

March 31, 2023

June 30, 2022

September 30,

Weighted average remaining lease term - Operating leases

1 unchanged sentence

TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

to Condensed Consolidated Financial Statements

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

SCHEDULE OF SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION RELATED TO LEASES

For the Nine Months

Ended March 31

For the Three Months

Ended September 30

Operating cash flows related to operating leases

1 unchanged sentence

Financing cash flows related finance leases

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

of operating lease liabilities were as follows as of September 30, 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 nine months ended March 31, 2023, the Company

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

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

– Related Party

Company and Drivemate Co., Ltd.

(“Drivemate”) entered into a subscription agreement on April 25, 2019, (“Drivemate

Agreement”) whereby the Company purchased an equity interest of 30 % in Drivemate.

Per the Drivemate Agreement, the Company purchased

5,469 preferred shares for $ 1,800,000 consisting of $ 500,000 cash to be paid over a two-year period and $ 1,300,000 to be provided in

The Company has paid the $ 500,000 in cash and has provided services of $ 1,300,000 .

Pursuant to the agreement, the number of

shares to be issued is adjusted as necessary to result in an equity ownership equal to 30% of the issued and outstanding shares at the

final payment date.

As of March 31, 2023, the Company has been issued 8,178 shares equal to 30% of Drivemate.

Per the Drivemate Agreement,

the Company appointed two directors to the Drivemate board.

The Company determined that it met the significant influence criteria since

two of the four directors are appointed by the Company and the Company owns 30% of Drivemate;

therefore, the Company accounts for the

investment using the equity method of accounting .

the 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

March 31, 2023

June 30, 2022

Gross investment

Cumulative net loss on investment

Net investment

For the three months ended September 30, 2023 and 2022, the

Company received lease income of $ 8,406 and $ 7,812 , respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

11 - INTANGIBLE ASSETS

1 unchanged sentence

SCHEDULE OF INTANGIBLE ASSETS

March 31, 2023

September 30, 2023

June 30, 2023

6 unchanged sentences

( 22,360,107 )

licenses include internally developed original license issues, renewals, enhancements, copyrights, trademarks, and trade names.

licenses are amortized on a straight-line basis over their respective lives, and the unamortized amount of $ 381,878 will be amortized

over one year.

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

licenses include internally developed software cost.

Product licenses are amortized on a straight-line basis over their respective lives.

Amortization expense for the three months ended September 30, 2023 and 2022, was $ 126,041 and $ 322,820 , respectively.

12 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

1 unchanged sentence

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

March 31, 2023

September 30, 2023

June 30, 2023

5 unchanged sentences

Other Payable

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

payable and finance leases consisted of the following:

SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

As of March 31, 2023

As of September 30, 2023

D&O Insurance

Bank Overdraft Facility

Term Finance Facility

Loan Payable Bank - Export Refinance

9 unchanged sentences

Bank Overdraft Facility

Term Finance Facility

Loan Payable Bank - Export Refinance

6 unchanged sentences

Subsidiary Finance Leases

(1) The Company finances

Directors’ and Officers’ (“D&O”) liability insurance and Errors and Omissions (“E&O”) liability

insurance, for which the D&O and E&O balances are renewed on an annual basis and, as such, are recorded in current maturities.

The interest rate on these financings were ranging from 5.0 % to 7.9 % and 5.0 % to 7.0 % as of March 31, 2023 and June 30, 2022, respectively.

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

The interest rate on these financings were ranging from 5.0 % to 7.9 % as of September 30, 2023 and June 30, 2023, respectively.

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 $ 365,854 .

The annual interest rate was 9.5 % as of September 30, 2023.

The total outstanding balance as of September

30, 2023 and June 30, 2023 was £ Nil .

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

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

of September 30, 2023, NTE was in compliance with this covenant.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

(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 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 3.0 % 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.

1 unchanged sentence

The total facility amount is Rs.

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

500,000,000 or $ 1,737,619 at September 30,

500,000,000 or $ 1,741,493 at June 30, 2023.

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

2022, respectively.

The interest rate for the loan was 19.0 % and 17.0 % at September 30, 2023 and

June 30, 2023, 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.

53,000,000 or $ 186,273 , at September 30, 2023.

The balance outstanding at September 30, 2023 and June

30, 2023 was Rs.

The interest rate for the loan was 24.9 % at September 30, 2023 and June 30, 2023.

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 .

As of September 30, 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.

2 unchanged sentences

380,000,000 or $ 1,320,591 and Rs.

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

or $ 1,323,535 at September 30, 2023 and June 30, 2023, respectively.

The interest rate for the loan was 19.0 % and 18.0 % at September

30, 2023 and June 30, 2023, 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

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,

As of September 30,

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

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.

1 unchanged sentence

900,000,000 or $ 3,127,715 and Rs.

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

or $ 3,134,687 , at September 30, 2023 and June 30, 2023, respectively.

NetSol PK used Rs.

700,000,000 or $ 2,432,667 and Rs.

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.

or $ 2,438,089 , at September 30, 2023 and June 30, 2023, respectively.

The interest rate for the loan was 19.0 % and 18.0 % at September

30, 2023 and June 30, 2023, 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.

As of September 30, 2023, NetSol PK used Rs.

82,337,274 or $ 286,142 of which $ 136,975 was shown as long term and

2 unchanged sentences

92,194,774 or $ 321,113 of which $ 172,849 was shown as long term and $ 148,264

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

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

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

The loan amount was £ 69,549 , or $ 84,816 , for a

period of 5 years with monthly payments of £ 1,349 , or $ 1,645 .

As of September 30, 2023, the subsidiary has used this facility up

to $ 8,105 , 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.

As of June 30, 2023, the subsidiary has used this facility up to $ 13,356 , which was shown as current.

The interest rate was 6.14 % at September 30, 2023 and June 30, 2023.

Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $ 74,903

$ 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.

and $ nil was recorded in current maturities, at September 30, 2023 and June 30, 2023, respectively.

The interest rate on this financing

ranged from 9.7 % to 12.7 % as of September 30, 2023 and June 30, 2023.

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

3 unchanged sentences

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

three months ended September 30, 2023 and 2022.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

are the aggregate minimum future lease payments under finance leases as of September 30, 2023:

OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

Minimum Lease Payments

9 unchanged sentences

less current maturities

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

are the aggregate future long term debt payments as of September 30, 2023 which consists of “Sale and Leaseback Financing (7)”

and “Term Finance Facility (8)”.

SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

6 unchanged sentences

Non-Current portion

14 - STOCKHOLDERS’ EQUITY

the three months ended September 30, 2023, the Company issued 21,963 shares of common stock for services rendered by the independent

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

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

the three months ended September 30, 2023, the Company issued 5,000 shares of common stock for services rendered by the employees of

the company as part of their compensation.

These shares were valued at the fair market value of $ 9,050 .

following table summarizes stock grants awarded as compensation:

OF UNVESTED STOCK GRANTS AWARDED AS COMPENSATION

Average Grant

Date Fair Value ($)

Unvested, June 30, 2023

Unvested, September 30, 2023

the three months ended September 30, 2023 and 2022, the Company recorded compensation expense of $ 48,800 and $ 39,750 , respectively.

weighted average grant date fair value is determined by the Company’s closing stock price on the grant date.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

15 - STOCKHOLDERS’ EQUITY

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.

These shares were valued at the fair market value

of $ 39,750 and $ 119,250 , respectively.

16 – CONTINGENCIES

time to time, the Company is subject to legal proceedings, claims, and litigation arising in the ordinary course of business including

tax assessments.

The Company defends itself vigorously against any such claims.

When (i) it is probable that an asset has been impaired

or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, the Company records the estimated loss.

The Company provides disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both conditions

if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements.

judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable.

The Company bases accruals on the best information available at the time, which can be highly subjective.

The final outcome of these

matters could vary significantly from the amounts included in the accompanying consolidated financial statements.

15– OPERATING SEGMENTS

10 unchanged sentences

consolidation.

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

SUMMARY OF IDENTIFIABLE ASSETS

March 31, 2023

June 30, 2022

following table presents a summary of identifiable assets as of September 30, 2023 and June 30, 2023:

OF IDENTIFIABLE ASSETS

September 30,

Identifiable assets:

2 unchanged sentences

Asia - Pacific

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

March 31, 2023

June 30, 2022

Investment in associates under equity method:

Asia - Pacific

Identifiable assets

following table presents a summary of revenue streams by segment for the three months ended September 30, 2023 and 2022:

SUMMARY OF REVENUE STREAMS

Subscription and support

North America

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

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

SUMMARY OF OPERATING INFORMATION

For the Three Months

For the Nine Months

Ended March 31,

Ended September 30,

Revenues from unaffiliated customers:

1 unchanged sentence

Asia - Pacific

Revenue from unaffiliated

Revenue from affiliated customers

Asia - Pacific

Revenue from affiliated

Intercompany revenue

3 unchanged sentences

$ ( 303,722 )

$ ( 127,742 )

North America

Asia - Pacific

( 1,426,469 )

$ ( 437,971 )

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

$ ( 437,971 )

Depreciation and amortization:

1 unchanged sentence

Asia - Pacific

Depreciation and amortization

Interest expense:

Corporate headquarters

North America

Asia - Pacific

Interest expense

Income tax expense:

Corporate headquarters

North America

Asia - Pacific

Income tax expense

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

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

SUMMARY OF CAPITAL EXPENDITURES

For the Nine Months

Ended March 31,

For the Three Months

Ended September 30,

Capital expenditures:

1 unchanged sentence

Asia - Pacific

Capital expenditures

16 – NON-CONTROLLING INTEREST IN SUBSIDIARY

2 unchanged sentences

SCHEDULE OF BALANCE OF NON-CONTROLLING INTEREST

Non-Controlling

Non-Controlling Interest %

Non-Controlling

September 30, 2023

NetSol-Innovation

Non-Controlling

Non-Controlling Interest %

Non-Controlling Interest at

June 30, 2023

NetSol-Innovation

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 %.

September 2022, the 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.

4 unchanged sentences

For the Three Months

For the Nine Months

Ended March 31,

Ended September 30,

Net income (loss) attributable to NetSol

$ ( 620,729 )

$ ( 169,032 )

Transfer (to) from non-controlling interest

1 unchanged sentence

Net transfer (to) from non-controlling interest

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

Change from net income (loss) attributable to NetSol and

transfer (to) from non-controlling interest

$ ( 500,164 )

13 unchanged sentences

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

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 three months ended September 30, 2023 and 2022, the Company recorded an income tax provision of $ 121,895 and $ 193,348 , 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