What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-09-30 compared with 2023-09-22 · 266 added, 260 removed, 425 unchanged (55% of the section changed)

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few of our highlights for the fiscal year ended June 30, 2024 were:

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.

secured a five-year contract valued at $16 million with a tier one US based leading German

This agreement focuses on the implementation of NETSOL’s Otoz™ digital

retail platform across the automaker’s US dealerships.

The implementation aims to enhance

car sales processes and support customer growth within the automotive sector.

This partnership

is anticipated to significantly improve the digital retail experience for both dealerships

and customers, reflecting NETSOL’s commitment to innovation and excellence in the automotive

completed the rollout of our flagship NFS Ascent ® platform across twelve countries

for the leasing and asset finance companies for DFS as part of a contract valued at over

$110 million.

This milestone marks the successful delivery under a 10-year contract with

the customer, which was initially signed in 2015.

generated $600,000 in revenues by selling a license of our digital applications to one of

our existing customers in Indonesia for the additional five-year term.

achieved the Go Live milestone for a leading US based global professional services provider

focused on delivering various digital and business services.

generated nearly $6 million in revenues by successfully implementing modifications and enhancements

requests from multiple customers across various regions.

successfully took AutoNation, one of the largest auto retailers in the US, live on our Otoz™

platform to power the back-end of their newly launched “AutoNation Mobility Micro-lease

marketplace”.

focus on new growth verticals has led to multiple successful onboardings of our FLEX™

product, reinforcing confidence in its SaaS offerings.

FLEX™ serves as an instant,

cloud-based calculation engine designed for seamless integration into clients’ products,

services, and ecosystems.

are focusing on new growth verticals and have successfully onboarded a new client for DOCK™,

a centralized document generation tool designed for rapid and efficient document creation.

This achievement underscores the confidence in our SaaS product offerings and highlights

the potential for enhanced operational efficiency for clients.

By leveraging DOCK™,

we aim to streamline document processes, further solidifying ours position in the market.

successfully renegotiated an existing contract in the UK to accommodate an enhanced scope

implementation which will generate approximately $3.5 Million in additional revenues.

secured a contract to implement our NFS Ascent® wholesale platform at an independent

leasing company based in the Netherlands.

This contract is expected to generate approximately

$1 Million in revenues over forthcoming quarters.

contracted with an auto captive finance company of a renowned US auto manufacturer based

in China which is expected to generate approximately $12 million over the next five years.

renegotiated to extend the NFS Ascent® license term for an existing client in Thailand

for another three years.

The extension generated approximately $1.1 million in revenues.

reduced headcount by approximately 345 employees in our effort to become a leaner and efficient

organization.

and Business Development Activities

has developed a growth strategy aimed at increasing competitiveness, enhancing global delivery capabilities and increasing financial

strength to become a leading global IT institution in the leasing and finance space.

growth strategy contemplates the following enhanced activities and initiatives to accomplish these goals:

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

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.

the NETSOL brand in the Americas and Europe and further penetrate the APAC markets such as China, Thailand, Indonesia, Japan, Australia

and New Zealand.

the quality of our delivery, after delivery support, and client relationships.

penetration of NFS Ascent ® into the leasing and financing sectors in China, APAC, Europe and North America by focusing

on multi-national auto captive Fortune 500 companies.

a well thought out strategy to diversify into complimentary verticals by way of organic expansion, partnerships and synergistic M&A.

to implement new tools, systems and processes, such as JIRA, and the Agile framework to further enhance productivity, efficiencies

and operating margins.

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

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

Prospects for NFS Ascent ®

prospects for NFS Ascent ® are linked to the maturing of the product portfolio and its growing customer base across different

geographic and product markets.

We are eyeing key international markets for growth in sales.

Our sales strategy now carefully balances

expansion into new geographic markets, including the Americas, Europe, and further penetration of our leading position in Asia Pacific.

in North America is expected to come from the potential market for replacement of legacy systems.

NFS Ascent ® is aimed

at providing a highly flexible and robust solution based on the latest technology and advanced architecture for the North American customers

looking to replace their legacy systems.

We believe that NFS Ascent ® can provide substantial competitive disruption to

the market’s lagging technology provided by incumbent vendors.

The existing customer base may also represent latent demand for

increased service and maintenance revenues by offering business process optimization, customization and upgrade services.

in Europe will come from the introduction of NFS Ascent ® , which will allow NTE to support larger organizations than those

typically selecting the existing LeaseSoft product set, and opens the door for European expansion.

This is designed to attract larger

license and professional services revenues across a wider geography.

In addition, leveraging the core strengths of NFS Ascent ®

will increasingly provide opportunities in the automotive sector where NTE is currently underrepresented.

in our traditionally strong base in Asia Pacific is expected through diversification across market segments to include new customers

in related banking and commercial lending areas.

At the same time, the existing customer base is tapped for increased service and maintenance

revenues by offering enhanced features and new solutions to emerging customer needs.

In addition, there is a potential for NFS Ascent ®

in Asia Pacific in the form of existing customers who are looking for replacement of their current system.

China, we are a de facto leader in the leasing and finance enterprise solution domain.

With this position, we continue to enjoy demand

for the current NFS™ solution, as well as NFS Ascent ® .

We will continue strengthening our position within existing

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

have pursued a series of strategic marketing and business development initiatives to capitalize on favorable market conditions and drive

growth across our business lines.

These efforts reflect our commitment to building a stronger market presence, expanding our customer

base, and maintaining a careful focus on profitability.

Investment in Marketing:

Given the current favorable market environment, we have increased

our marketing investments to support the Company’s long-term growth goals.

While expanding

these efforts, we remain vigilant in monitoring profitability and ensuring that our marketing

expenditures yield strong returns.

on New Product and Service Offerings:

We are growing our focus on our new product and service

lines that present significant growth opportunities for the business.

New Market Segments:

Our new product offerings allow us to sell to small and mid-sized organizations

more effectively.

This market segment benefits from shorter sales cycles and faster implementations.

This strategy expands our total addressable market and increasing sales velocity.

Repositioning

Our Brand and Messaging:

As part of our strategic initiatives, we are refining and simplifying

our brand and product messaging to better align with the core needs of our customers.

Focus on Digital Marketing:

We have made significant investments in digital marketing channels

and recently launched a new website to bolster our digital presence.

These efforts are aimed

at boosting our online presence and more effectively engaging with our target audience.

and AI Integration:

We continue to prioritize innovation, particularly in the development

of new product features powered by AI.

This includes expanding our in-house AI talent to

deliver cutting-edge solutions for our customers while leveraging AI across our operations

to manage costs and support business growth.

Through Strategic Partnerships:

To further fuel our growth prospects, we are actively building

partnerships and alliances with industry associations and companies in related fields.

collaborations broaden our reach and reinforce our market position.

Strengthening

Leadership and Talent Acquisition:

We remain committed to appointing and retaining top talent

across both technical and non-technical roles.

Consulting and Professional Service Expertise:

We continue to expand our consulting and professional

service offerings, particularly in cloud platforms such as AWS, Microsoft Azure, and others.

This allows us to provide comprehensive solutions tailored to the diverse needs of our clients

across all the industries we support.

TRENDS AFFECTING NETSOL

has identified the following material trends affecting NETSOL.

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.

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

to PR Newswire, December 14, 2023, and the S&P Global Mobility, new vehicles sales globally

are expected to reach 86 million units in 2023 for an 8.9% increase over 2022 and forecasts

2024 auto sales at 88.3 million units for a 2.8% increase over 2023.

automotive sales volumes are expected to reach approximately 15.5 million units, an estimated

increase of 9% from the projected 2022 levels, and 2024 sales are expected to reach 15.9

million for an estimated increase of 2% compared to 2023.

(S&P Global Mobility)

inflation rate decreased and ended at 2.9% as of August 2024.

(YCharts August 30, 2024)

market remains strong and resilient for NETSOL to continue investing in building local

teams for its core offerings.

China, domestic electric vehicles sales are up 73% compared to August 2023.

(Clean Technica-September 1, 2024)

China Pakistan Economic Corridor (CPEC) investment, initiated by China, has exceeded $65

billion 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.

overall size of the mobility market in Europe and the United States is projected to increase

over $425 billion combined, by 2035 or a compound CAGR of 5% from 2022.

(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% according to Precedence Research.

economy grew at an annual rate of 3% for the second quarter of 2024.

This report reflects

economy to be resilient despite other pressures including inflation and higher interest

(Associated Press August 29, 2024)

Russell index has returned an average of 14.4% during 2024.

conflict in Gaza has disrupted the entire Middle East region since October 7, 2023.

has created uncertainty and has affected the economies of the neighboring nations.

economic conditions in our geographic markets;

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.

inflation, pending U.S.

elections, geopolitical

tensions, including trade wars, tariffs and/or sanctions in geographic areas;

conflicts or disasters that impact the global economy or one or more sectors of the global

interest rates set by the U.S.

Federal Reserve Board is restricting buying power for some

monetary, and economic challenges and a 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 economic uncertainty.

geo-political environment in South Asia will continue to influence Pakistan’s economic

Pakistan’s political uncertainty has caused higher inflation with constant

pressure on its currency being devalued against the US Dollar.

According to a report issued

by the World Bank, while marginal economic growth is expected in Pakistan, implementing an

ambitious and credibly communicated economic reform plan is critical for a robust economic

There is no guarantee that such reforms will be implemented.

See Press Release,

dated April 2, 2024, World Bank.

the US-China bilateral summit in January 2024 exceeded expectations, the tensions between

the two countries continue.

The US and EU have placed tariffs on a range of high-tech products

from China including the US placing 100% tariffs on EV vehicles and 25% tariffs on EV batteries

imported from China.

(Center for Strategic and International Studies June 28, 2024).

ACCOUNTING POLICIES

14 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.

207 unchanged sentences

Selling, general and administrative

Research and development

operating expenses

Loss from operations

and development cost

Total operating expenses

Income (loss) from operations

Other income and (expenses)

6 unchanged sentences

income (expense)

other income (expenses)

Net income (loss) before

Total other income (expenses)

Net income (loss) before income

tax provision

28 unchanged sentences

For the Years

Change due to

(Unfavorable)

Net Revenues:

$ (2,589,689 )

$ (2,265,075 )

$ (4,854,764 )

Cost of revenues:

(11,939,512 )

(14,529,201 )

Operating expenses:

1 unchanged sentence

$ (8,779,958 )

$ (1,078,323 )

$ (20,132,777 )

$ (7,701,635 )

revenues for the years ended June 30, 2024 and 2023 by segment are as follows:

North America

fees for the year ended June 30, 2023 were $2,269,564 compared to $4,539,260 for the year ended June 30, 2022 reflecting a decrease of

$2,269,696 with a change in constant currency of $2,144,206.

fees for the year ended June 30, 2024 were $5,449,991 compared to $2,269,564 for the year ended June 30, 2023 reflecting an increase

of $3,180,427 with a change in constant currency of $3,215,311.

In the fiscal year ended June 30, 2024, we recognized approximately $2,800,000

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.

related to the sale of our NFS Ascent ® CMS software to a renowned US auto manufacturer based in China, and we recognized

approximately $1,142,000 related to the license renewal with an existing customer, and we recognized approximately $465,000 related to

the additional sale of our NFS Ascent® CMS software to a renowned German auto manufacturer based in China, and we recognized approximately

$610,000 related to selling licenses of our digital applications to a current Indonesian customer.

In the fiscal year ended June 30,

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 ® .

2023, we recognized approximately $1,918,000 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.

and support fees for the year ended June 30, 2024, were $27,952,768 compared to $25,980,661 for the year ended June 30, 2023 reflecting

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

an increase of $1,972,107 with an increase in constant currency of $2,048,348.

Subscription and support fees are recurring in nature,

and we anticipate these fees to gradually increase as we increase our SaaS customer base and implement NFS Ascent ® .

income for the year ended June 30, 2024, was $27,990,332 compared to $24,142,990 for the year ended June 30, 2023, reflecting an increase

of $3,847,342 with an increase in constant currency of $3,976,019.

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.

to the increase in implementation revenue associated with the signing of new contracts, change requests, enhancements and reimbursable

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 $29,284,870 for the year ended June 30, 2024 compared with $16,915,563 for the year ended June 30, 2023.

This is a decrease

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

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 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

increased from 42.9% for the year ended June 30, 2022 to 49.7% for the year ended June 30, 2023.

increase of $12,369,307 with an increase in constant currency of $9,561,230.

The gross profit percentage for the year ended June 30,

2024 increased to 47.7% from 32.3% for the year ended June 30, 2023.

The cost of sales was $32,108,221 for the year ended June 30, 2024

compared to $35,477,652 for the year ended June 30, 2023 for a decrease of $3,369,431 and on a constant currency basis a decrease of

As a percentage of sales, cost of sales decreased from 67.7% for the year ended June 30, 2023 to 52.3% for the year ended June

and consultant fees decreased by $2,406,609 from $26,029,516 for the year ended June 30, 2023 to $23,622,907 for the year ended June

30, 2024 and on a constant currency basis decreased by $201,846.

For fiscal years 2024 and 2023, we had an average of 1,569 and 1,505

employees, respectively.

As of June 30, 2024, our total number of technical employees decreased to 1,066 from a maximum of 1,415.

a percentage of sales, salaries and consultant expense decreased from 49.7% for the year ended June 30, 2023 to 38.5% for the year ended

June 30, 2024.

increased by $533,401 from $2,410,041 for the year ended June 30, 2023 to $2,943,442 for the year ended June 30, 2024 and on a constant

currency basis increased by $807,100.

The increase in travel expense is due to the increase in travel as countries begin lifting travel

restrictions.

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.

The increase in travel expense is due to the increase in travel for the current implementations.

As a percentage of sales, travel expense increased from 4.6% for year ended June 30, 2023 to 4.8% for the year ended June 30, 2024.

and amortization expense decreased to $1,144,809 compared to $2,504,046 for the year ended June 30, 2023 or a decrease of $1,359,237

and on a constant currency basis a decrease of $1,158,666.

The decrease is primarily attributed to the full amortization of our capitalized

cost decreased to $4,397,063 for the year ended June 30, 2024 compared to $4,534,049 for the year ended June 30, 2023 or a decrease of

$136,986 and on a constant currency basis an increase of $297,466.

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

of 3.6% or $880,024 and on a constant currency basis an increase of 22.6% or $5,603,576.

As a percentage of sales, it increased from

43.4% to 49.0%.

The increase in operating expenses was primarily due to increases in selling expenses, general and administrative expenses

and research and development costs.

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, 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%.

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

party hardware cost of approximately $558,000, off set by decrease in computer cost of approximately $226,000.

expenses were $25,791,315 for the year ended June 30, 2024 compared to $25,695,521, for the year ended June 30, 2023 for an increase of

$95,794 and on a constant currency basis an increase of $2,120,127.

As a percentage of sales, it decreased from 49.0% to 42.0%.

in operating expenses was primarily due to increases in selling expenses, general and administrative expenses and research and development

and marketing expenses increased by $443,895 and on a constant currency basis increased by $884,209.

The increase in constant currency

is mainly due to increases in salaries of approximately $85,000, travel of approximately $382,000 and other selling expenses of approximately

and administrative expenses were $16,259,348 for the year ended June 30, 2024, compared to $16,244,936 at June 30, 2023 or a slight increase

of $14,412, and on a constant currency basis an increase of $1,358,218.

During the year ended June 30, 2024, salaries increased by approximately

$872,822 or increased by approximately $1,307,610 on a constant currency basis, due to increases in salaries including bonuses, medical

costs and subsidiary options granted to staff in NetSol PK.

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

and on a constant currency basis decreased by approximately $1,700,000.

and development costs were $1,402,601 for the year ended June 30, 2024 compared to $1,601,613 for the year ended June 30, 2023 or a decrease

of $199,012 and on constant currency basis an increase of $910.

from Operations

from operations was $3,493,555 for the year ended June 30, 2024 compared to a loss of $8,779,958 for the year ended June 30, 2023.

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,

represents an increase in income of $12,273,513 with an increase of $7,441,103 on a constant currency basis for the year ended June 30,

2024 compared with the year ended June 30, 2023.

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

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

As a percentage of sales, income from operations was 5.7% for the year ended June 30,

2024 compared to loss of 16.8% for the year ended June 30, 2023.

Income and Expense

income was $5,562,045 for the year ended June 30, 2023 compared to $3,168,064 for the year ended June 30, 2022.

This represents an increase

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

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

expense was $270,108 for the year ended June 30, 2024 compared to income of $5,562,045 for the year ended June 30, 2023.

This represents

a decrease of $5,832,153 with a decrease of $5,864,720 on a constant currency basis.

The decrease 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 expense.

income was $1,911,258 for the year ended June 30, 2024 compared to $1,217,850 for the period ended June 30, 2023.

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.

This represents an

increase of $693,408 or a change of $946,301 on a constant currency basis.

Interest income is earned on cash maintained in interest bearing

the year ended June 30, 2024, we recognized a loss of $1,187,320 in foreign currency exchange transactions compared to a gain of $6,748,038

for the year ended June 30, 2023.

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

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During the year ended June 30, 2024, the value of the U.S.

dollar and the Euro increased 39.8% and 45.6%, respectively, compared

dollar and the Euro decreased 3.1% and 4.6%, respectively, compared

During the year ended June 30, 2023, the value of the U.S.

dollar and the Euro increased 39.8% and 45.6%, 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.

was no share of net income (loss) from equity investment for the year ended June 30, 2024 compared to a net loss from equity investment

of $1,033,243 for the period ended June 30, 2023.

This represents a decrease of $1,033,243 or a change of $1,033,243 on a constant currency

During the year ended June 30, 2023, we recorded an impairment of approximately $1,041,000 on our investment in 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

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the year ended June 30, 2024 and 2023, the net income attributable to non-controlling interest was $1,394,056 and $1,099,275, respectively.

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

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

Income (Loss) Attributable to NetSol

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.

income was $683,873 for the year ended June 30, 2024 compared to a net loss of $5,243,748 for the year ended June 30, 2023.

increase in income of $5,927,621 with an increase of $2,298,324 on a constant currency basis, compared to the prior year.

ended June 30, 2024, net income per share was $0.06 for basic and diluted shares.

For the year ended June 30, 2023, net loss per share

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For the Years

Net Income (loss) attributable

Ended June 30,

Net Income (loss) attributable to NetSol

$ (5,243,748 )

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Interest expense

stock-based compensation

Interest (income)

Non-cash stock-based compensation

Adjusted EBITDA, gross

Less non-controlling

Less non-controlling interest (a)

Adjusted EBITDA, net

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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

(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 interest

Depreciation and amortization

Interest expense

stock-based compensation

Adjusted EBITDA of non-controlling

Interest (income)

Non-cash stock-based compensation

Adjusted EBITDA of non-controlling interest

AND CAPITAL RESOURCES

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We had revenues in excess of billings of $13,638,547 at June 30,

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.

During the year ended June 30, 2023, our revenues in excess

of billings were reclassified to accounts receivable pursuant to billing requirements detailed in each contract.

The combined totals

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

2024 compared to $12,377,677 at June 30, 2023 of which $954,029 and $ nil are shown as long term as of June 30, 2024 and 2023, respectively.

The long-term portion was discounted by $152,446 and $ nil at June 30, 2024 and 2023, respectively, using the discounted cash flow method

with interest rates ranging from 7.3% to 17.5%, for the year ended June 30, 2024.

During the year ended June 30, 2024, our revenues in

excess of billings were reclassified to accounts receivable pursuant to billing requirements detailed in each contract.

totals for accounts receivable and revenues in excess of billings increased by $2,596,062 from $24,092,099 at June 30, 2023 to $26,688,161

at June 30, 2024.

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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

June 30, 2022.

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

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

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.

cash used by investing activities amounted to $291,538 for the year ended June 30, 2024, compared to $1,399,231 for the year ended June

We had net purchases of property and equipment of $291,538 compared to $1,399,231 for the comparable period last fiscal year.

cash provided by financing activities was $239,551 compared to net cash used in financing activities of $718,992, for the years ended

June 30, 2024, and 2023, respectively.

During the year ended June 30, 2023, our subsidiaries used cash of $61,124, for the purchase of

treasury shares.

The year ended June 30, 2024, included cash inflow of $756,936 from bank proceeds compared to $270,292 for the same

period last year.

During the year ended June 30, 2024, we had net payments for bank loans and capital leases of $517,385 compared to

$928,160 for the year ended June 30, 2023.

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.

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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contractual obligations are as follows:

due by period

Payment due by period

Contractual Obligation

More than 5 years

Debt Obligations

3 unchanged sentences

Loan Payable Bank - Export Refinance III

Term Finance Facility

Sale and Leaseback Financing

Short Term Loan

Subsidiary Finance Leases

4 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