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Item 1. Financial Statements

2024-02-13 compared with 2023-11-07 · 283 added, 209 removed, 785 unchanged (39% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

September 30, 2023

Consolidated Balance Sheets

December 31, 2023

June 30, 2023

26 unchanged sentences

14,500,000 shares authorized;

12,311,850 shares issued and

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

12,329,919 shares issued and 11,390,888 outstanding as of December 31, 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 September 30, 2023 and June 30,

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

( 3,920,856 )

13 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

Consolidated Statements of Operations

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Net Revenues:

8 unchanged sentences

( 3,046,514 )

( 4,942,705 )

Other income and (expenses)

2 unchanged sentences

Gain (loss) on foreign currency exchange transactions

Share of net loss from equity investment

Other income (expense)

1 unchanged sentence

Net income (loss) before income taxes

( 2,181,907 )

( 2,426,530 )

Income tax provision

Net income (loss)

( 2,401,963 )

( 2,839,934 )

Non-controlling interest

1 unchanged sentence

$ ( 2,092,926 )

$ ( 2,713,655 )

Net income (loss) per share:

4 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Net income (loss)

$ ( 2,092,926 )

$ ( 2,713,655 )

Other comprehensive income (loss):

10 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

Consolidated Statement of Stockholders’ Equity

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

Comprehensive

Stockholders’

Balance at September 30, 2023

$ 128,536,132

$ ( 3,920,856 )

$ ( 44,865,296 )

$ ( 46,411,702 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for the year

Balance at December 31, 2023

$ 128,587,384

$ ( 3,920,856 )

$ ( 44,456,980 )

$ ( 45,870,309 )

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’

Comprehensive

Stockholders’

Balance at June 30, 2023

12 unchanged sentences

$ ( 46,411,702 )

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity

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

Comprehensive

Stockholders’

Balance at September 30, 2022

$ 128,420,519

$ ( 3,920,856 )

$ ( 40,273,167 )

$ ( 42,281,135 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for the year

( 2,092,926 )

( 2,401,963 )

Balance at December 31, 2022

$ 128,484,714

$ ( 3,920,856 )

$ ( 42,366,093 )

$ ( 42,011,340 )

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

Additional Paid-in

Other Compre-hensive

Non Controlling

Total Stockholders’

Comprehensive

Stockholders’

Balance at June 30, 2022

27 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

For the Three Months

Ended September 30,

Consolidated Statements of Cash Flows

For the Six Months

Ended December 31,

Cash flows from operating activities:

1 unchanged sentence

$ ( 2,839,934 )

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

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

Depreciation and amortization

Provision for bad debts

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

Gain on sale of assets

14 unchanged sentences

Net cash used in investing activities

( 1,182,042 )

Cash flows from financing activities:

Proceeds from bank loans

Payments on finance lease obligations and loans - net

9 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Three Months

Ended September 30,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

the Six Months

paid during the period for:

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

65 unchanged sentences

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

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

As of December 31, 2023, and June 30, 2023, the Company had

uninsured deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 14,517,520 and $ 13,524,518 ,

27 unchanged sentences

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:

Company’s financial assets that were measured at fair value on a recurring basis as of December 31, 2023, were as follows:

OF FAIR VALUE OF FINANCIAL ASSETS MEASURED ON RECURRING BASIS

1 unchanged sentence

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:

reconciliation from June 30, 2023 to December 31, 2023 is as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS RECONCILIATION

Revenues in excess of billings -

billings - long term

Balance at June 30, 2023

1 unchanged sentence

Effect of Translation Adjustment

Balance at September 30, 2023

Balance at December 31, 2023

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

116 unchanged sentences

Company’s disaggregated revenue by category is as follows:

OF DISAGGREGATED REVENUE BY CATEGORY

SCHEDULE OF DISAGGREGATED REVENUE BY CATEGORY

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Subscription and support

59 unchanged sentences

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

OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

September 30, 2023

June 30, 2023

SCHEDULE OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

Revenues in excess of billings

1 unchanged sentence

Company’s unearned revenue reconciliation is as follows:

OF UNEARNED REVENUE RECONCILIATION

Unearned Revenue

SCHEDULE OF UNEARNED REVENUE RECONCILIATION

Balance at June 30, 2023

1 unchanged sentence

( 10,944,715 )

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.

Balance at December 31, 2023

the three and six months ended December 31, 2023, the Company recognized revenue of $ 2,248,000 and $ 6,454,000 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.

2 unchanged sentences

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 $ 29,053,000 as of September 30, 2023, of which the Company estimates

Contracted but unsatisfied performance obligations were approximately $ 32,816,000 as of December 31, 2023, of which the Company estimates

to recognize approximately $ 18,471,000 in revenue over the next 12 months and the remainder over an estimated 3 years thereafter.

33 unchanged sentences

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

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 months ended September 30, 2023 and 2022, there

were no outstanding dilutive instruments.

During the three and six months ended December 31, 2023 and 2022,

there were no outstanding dilutive instruments.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

5 – OTHER COMPREHENSIVE INCOME AND FOREIGN CURRENCY

5 unchanged sentences

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.

equity section of the consolidated balance sheet were $ 45,870,309 and $ 45,975,156 as of December 31, 2023 and June 30, 2023, respectively.

During the three and six months ended December 31, 2023, comprehensive income (loss) in the consolidated statements of comprehensive

income (loss) included a translation gain attributable to NetSol of $ 541,393 and $ 104,847 , respectively.

During the three and six months

ended December 31, 2022, comprehensive income (loss) in the consolidated statements of comprehensive income (loss) included a $ 269,795

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

6 – MAJOR CUSTOMERS

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 three and six months ended December 31, 2023, revenues from Daimler Financial Services (“DFS”) were $ 3,945,061

and $ 7,632,692 ,

representing 25.9 %

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

were $ 3,478,077

and $ 7,069,884 ,

representing 28.1 %

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.

receivable from DFS at December 31, 2023 and June 30, 2023, were $ 1,014,503 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.

at December 31, 2023 and June 30, 2023, were $ 2,497,783 and $ 1,961,750 , respectively.

TECHNOLOGIES, INC.

3 unchanged sentences

SCHEDULE OF OTHER CURRENT ASSETS

September 30,

Prepaid Expenses

6 unchanged sentences

SCHEDULE OF REVENUE IN EXCESS OF BILLING

September 30,

Revenues in excess of billings - long term

2 unchanged sentences

after one year.

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

During the three and six months ended December 31, 2023, the Company accreted $ 12,309 and $ 18,464 , 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.

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

and $ 18,657 , respectively.

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

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

9 - PROPERTY AND EQUIPMENT

1 unchanged sentence

SCHEDULE OF PROPERTY AND EQUIPMENT

September 30,

Office Furniture and Equipment

5 unchanged sentences

Property and Equipment, Net

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.

the three and six months ended December 31, 2023, depreciation expense totaled $ 429,163 and $ 833,908 , respectively.

Of these amounts,

$ 264,374 and $ 531,316 , respectively, are reflected in cost of revenues.

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

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

expense totaled $ 568,828 and $ 1,091,011 , respectively.

Of these amounts, $ 370,606 and $ 701,835 , respectively, are reflected in cost of

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

SUMMARY OF FIXED ASSETS HELD UNDER CAPITAL LEASES

September 30,

Accumulated Depreciation - Net

2 unchanged sentences

SCHEDULE OF FINANCE LEASE TERM

September 30,

December 31, 2023

June 30, 2023

Weighted average remaining lease term - Finance leases

Weighted average discount rate - Finance leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

31 unchanged sentences

value guarantees or restrictive covenants.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

balance sheet information related to leases was as follows:

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

September 30,

Operating lease assets, net

2 unchanged sentences

Total Lease Liabilities

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

components of lease cost were as follows:

SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months Ended

September 30,

For the Three Months

For the Six Months

Ended December 31,

Amortization of finance lease assets

6 unchanged sentences

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

September 30,

December 31, 2023

June 30, 2023

Weighted average remaining lease term - Operating leases

Weighted average discount rate - Operating leases

TECHNOLOGIES, INC.

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 Three Months

Ended September 30

For the Six Months

Ended December 31,

Operating cash flows related to operating leases

1 unchanged sentence

Financing cash flows related finance leases

of operating lease liabilities were as follows as of September 30, 2023:

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

13 unchanged sentences

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

For the three 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

For the three and six months ended December 31, 2023, the Company

received lease income of $ 8,199 and $ 16,605 , respectively.

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

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

11 - INTANGIBLE ASSETS

1 unchanged sentence

SCHEDULE OF INTANGIBLE ASSETS

September 30, 2023

June 30, 2023

Product Licenses - Cost

7 unchanged sentences

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.

Amortization expense for the three and six months ended December 31, 2023, was $ nil and $ 126,041 , respectively.

Amortization expense

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

12 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

September 30, 2023

June 30, 2023

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts Payable

8 unchanged sentences

SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

As of September 30, 2023

As of December 31, 2023

D&O Insurance

19 unchanged sentences

Subsidiary Finance Leases

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.

(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 % as of December 31, 2023 and June 30, 2023, respectively.

(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 9.5 % as of December 31, 2023.

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

2023 was £ Nil .

This overdraft facility

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

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

As of December 31, 2023, NTE

was in compliance with this covenant.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

This is a revolving loan that matures every nine months.

(3) The Company’s

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

This is a revolving

loan that matures every nine months.

The total facility amount is Rs.

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

500,000,000 or $ 1,787,821 at December 31, 2023 and Rs.

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

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 $ 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 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.

This is a revolving loan that matures every nine months.

The interest rate for the loan was 19.0 % and 17.0 % at December 31, 2023 and June 30, 2023, respectively.

(4) The Company’s

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

The total facility

amount is Rs.

53,000,000 or $ 191,654 , at December 31, 2023.

The balance outstanding at December 31, 2023 and June 30, 2023 was Rs.

The interest rate for the loan was 23.5 and 24.9 % at December 31, 2023 and June 30, 2023, respectively.

This facility requires

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

As of December 31, 2023, NetSol PK was in compliance

with this covenant.

(5) The Company’s

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

This is a revolving

loan that matures every nine months.

The total facility amount is Rs.

380,000,000 or $ 1,358,744 and Rs.

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.

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

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

As of September 30,

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 assets.

This is a revolving loan that matures every nine months.

380,000,000 or $ 1,323,535 at

December 31, 2023 and June 30, 2023, respectively.

The interest rate for the loan was 19.0 % and 18.0 % at December 31, 2023 and June 30,

2023, respectively.

During the tenure of the

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

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

As of December 31, 2023, NetSol PK was in

compliance with these covenants.

(6) The Company’s

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

revolving loan that matures every nine months.

The total facility amount is Rs.

900,000,000 or $ 3,218,078 and Rs.

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

900,000,000 or $ 3,134,687 ,

at December 31, 2023 and June 30, 2023, respectively.

NetSol PK used Rs.

700,000,000 or $ 2,502,951 and Rs.

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 September 30, 2023, NetSol PK used Rs.

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

$ 149,167 as current.

700,000,000 or $ 2,438,089 ,

at December 31, 2023 and June 30, 2023, respectively.

The interest rate for the loan was 19.0 % and 18.0 % at December 31, 2023 and June

30, 2023, respectively.

(7) The Company’s

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

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

71,853,193 or $ 256,921 of which $ 99,527 was shown as long term and $ 157,394 as current.

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

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 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 $ 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.

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

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

(8) In March 2019,

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

The loan amount was £ 69,549 , or $ 88,037 , for a period of 5

years with monthly payments of £ 1,349 , or $ 1,708 .

As of December 31, 2023, the subsidiary has used this facility up to $ 3,392 ,

which was shown as current.

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

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.

The assets and liabilities

under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset.

assets are secured by the assets themselves.

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

three months ended September 30, 2023 and 2022.

interest rate was 6.14 % at December 31, 2023 and June 30, 2023.

(9) The Company’s

subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $ 39,587 and $ nil

was recorded in current maturities, at December 31, 2023 and June 30, 2023, respectively.

The interest rate on this financing ranged

from 9.7 % to 12.7 % as of December 31, 2023 and June 30, 2023.

(10) The Company leases

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

The assets and liabilities under finance

leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset.

The assets are secured

by the assets themselves.

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

December 31, 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

Within year 1

Within year 2

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

SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

Minimum Lease Payments Within year 1

Total Minimum Lease Payments

6 unchanged sentences

less current maturities

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

are the aggregate future long term debt payments as of December 31, 2023 which consists of “Sale and Leaseback Financing (7)”

and “Term Finance Facility (8)”.

8 unchanged sentences

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 .

the three and six months ended December 31, 2023, the Company issued 18,069 and 40,032 shares of common stock for services rendered by

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

These shares were valued at the fair market value

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

the three and six months ended December 31, 2023, the Company issued nil and 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 $ nil and $ 9,050 .

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table summarizes stock grants awarded as compensation:

OF UNVESTED STOCK GRANTS AWARDED AS COMPENSATION

SUMMARY OF UNVESTED STOCK GRANTS AWARDED AS COMPENSATION

Average Grant

Date Fair Value ($)

Unvested, June 30, 2022

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.

Unvested, June 30, 2023

Unvested, December 31, 2023

the three and six months ended December 31, 2023, the Company recorded compensation expense of $ 39,750 and $ 88,550 , respectively.

the three and six months ended December 31, 2022, the Company recorded compensation expense of $ 39,750 and $ 79,500 , 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– OPERATING SEGMENTS

10 unchanged sentences

consolidation.

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

OF IDENTIFIABLE ASSETS

September 30,

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

SUMMARY OF IDENTIFIABLE ASSETS

December 31, 2023

June 30, 2023

Identifiable assets:

3 unchanged sentences

Identifiable assets

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table presents a summary of revenue streams by segment for the three months ended December 31, 2023 and 2022:

SUMMARY OF REVENUE STREAMS

4 unchanged sentences

North America

following table presents a summary of revenue streams by segment for the six months ended December 31, 2023 and 2022:

Subscription and support

North America

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

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

SUMMARY OF OPERATING INFORMATION

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Revenues from unaffiliated customers:

1 unchanged sentence

Asia - Pacific

Revenue from unaffiliated

Revenues from unaffiliated

Revenue from affiliated customers

6 unchanged sentences

$ ( 922,670 )

$ ( 696,938 )

$ ( 1,226,392 )

North America

2 unchanged sentences

( 3,073,187 )

$ ( 2,401,963 )

$ ( 2,839,934 )

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

$ ( 2,401,963 )

$ ( 2,839,934 )

Depreciation and amortization:

4 unchanged sentences

Corporate headquarters

North America

Asia - Pacific

1 unchanged sentence

Income tax expense:

Corporate headquarters

North America

Asia - Pacific

2 unchanged sentences

to Condensed Consolidated Financial Statements

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

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

SUMMARY OF CAPITAL EXPENDITURES

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Capital expenditures:

6 unchanged sentences

SCHEDULE OF BALANCE OF NON-CONTROLLING INTEREST

Non-Controlling Interest %

Non-Controlling

September 30, 2023

Non-Controlling

December 31, 2023

NetSol-Innovation

Non-Controlling Interest %

Non-Controlling Interest at

Non-Controlling

June 30, 2023

NetSol-Innovation

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.

to Condensed Consolidated Financial Statements

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

Otoz and Otoz Thai.

SCHEDULE OF CHANGE IN OWNERSHIP INTEREST

For the Three Months

Ended September 30,

Net income (loss) attributable to NetSol

$ ( 620,729 )

Transfer (to) from non-controlling interest

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

Net transfer (to) from non-controlling interest

Change from net income (loss) attributable to NetSol and

transfer (to) from non-controlling interest

$ ( 500,164 )

17– INCOME TAXES

12 unchanged sentences

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

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

the three and six months ended December 31, 2023, the Company recorded an income tax provision of $ 150,053 and $ 271,948 , respectively.

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