What changed in this filing

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Item 1. Financial Statements

2024-11-13 compared with 2024-05-20 · 362 added, 589 removed, 562 unchanged (63% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

Cash and cash

Accounts receivable, net of

allowance of $ 414,745 and $ 420,354

Revenues in excess of billings,

net of allowance of $ 116,023 and $ 1,380,141

Other current assets

Total current assets

Revenues in excess of billings,

net - long term

Property and equipment, net

Right of use assets - operating

Intangible assets, net

Consolidated Balance Sheets

and cash equivalents

receivable, net of allowance of $ 15,533 and $ 398,809

in excess of billings, net of allowance of $ 460,743 and $ 116,148

current assets

in excess of billings, net - long term

and equipment, net

of use assets - operating leases

AND STOCKHOLDERS’ EQUITY

Accounts payable and accrued

Current portion of loans and

obligations under finance leases

Current portion of operating

lease obligations

Unearned revenue

Total current liabilities

Loans and obligations under

finance leases;

payable and accrued expenses

portion of loans and obligations under finance leases

portion of operating lease obligations

current liabilities

and obligations under finance leases;

less current maturities

Operating lease obligations;

lease obligations;

less current maturities

Total liabilities

Stockholders’

Preferred stock, $ .01 par value;

Preferred stock,

$ .01 par value;

500,000 shares authorized;

1 unchanged sentence

14,500,000 shares authorized;

shares issued and 11,405,240 outstanding as of March 31, 2024, 12,284,887 shares issued and 11,345,856 outstanding

as of June 30, 2023

Additional paid-in-capital

stock (at cost, 939,031 shares as of March 31, 2024 and June 30, 2023)

12,383,872 shares issued and 11,444,841 outstanding as of September 30,

2024 , 12,359,922 shares issued and 11,420,891 outstanding as of June 30, 2024

paid-in-capital

stock (at cost, 939,031 shares

as of September

30, 2024 and June 30, 2024)

( 3,920,856 )

Accumulated deficit

Treasury stock (at

cost, 939,031 shares as of September 30, 2024 and June 30, 2024)

( 3,920,856 )

Other comprehensive loss

( 44,141,518 )

( 44,212,313 )

Total NetSol stockholders’

Non-controlling interest

Total stockholders’

Total liabilities

and stockholders’ equity

comprehensive loss

( 46,049,023 )

( 45,935,616 )

NetSol stockholders’ equity

Non-controlling

stockholders’ equity

liabilities and stockholders’ equity

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

1 unchanged sentence

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

For the Three

Net Revenues:

Subscription and support

Total net revenues

Cost of revenues

Selling, general and administrative

Research and development cost

Total operating expenses

Consolidated Statements of Operations

the Three Months

September 30,

general and administrative

and development cost

operating expenses

(loss) from operations

( 5,873,140 )

and (expenses)

Interest expense

Interest income

Gain (loss) on foreign currency

exchange transactions

( 1,112,757 )

Share of net loss from equity

Other income (expense)

Total other income (expenses)

before income taxes

income and (expenses)

(loss) on foreign currency exchange transactions

other income (expenses)

income before income taxes

tax provision

Non-controlling

( 1,697,908 )

( 1,571,629 )

(loss) attributable to NetSol

$ 2,544,623 #

$ ( 169,032 )

Net income (loss) per share:

Net income (loss) per common

Weighted average number of shares outstanding

income attributable to NetSol

income per share:

income per common share

Weighted average

number of shares outstanding

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

1 unchanged sentence

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the Three

income (loss)

$ ( 169,032 )

Other comprehensive

income (loss):

Consolidated Statements of Comprehensive Income (Loss)

the Three Months

September 30,

comprehensive income (loss):

adjustment attributable to non-controlling interest

translation adjustment

( 7,628,982 )

( 11,428,326 )

Translation adjustment attributable

to non-controlling interest

Net translation adjustment

( 5,181,654 )

( 7,829,909 )

Comprehensive

1 unchanged sentence

$ ( 405,656 )

$ ( 7,998,941 )

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

1 unchanged sentence

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

statement of the changes in equity for the three months ended March 31, 2024 is provided below:

Stockholders’

at December 31, 2023

$ 128,587,384

$ ( 3,920,856 )

$ ( 44,456,980 )

$ ( 45,870,309 )

stock issued for:

value of options issued

value of subsidiary options issued

currency translation adjustment

Net income (loss) for the

at March 31, 2024

$ 128,736,328

$ ( 3,920,856 )

$ ( 44,129,431 )

$ ( 45,505,920 )

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

Stockholders’

at September 30, 2023

$ 128,536,132

$ ( 3,920,856 )

$ ( 44,865,296 )

$ ( 46,411,702 )

stock issued for:

value of subsidiary options issued

currency translation adjustment

Net income (loss) for the

at December 31, 2023

$ 128,587,384

$ ( 3,920,856 )

$ ( 44,456,980 )

$ ( 45,870,309 )

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

Consolidated Statement of Stockholders’ Equity

statement of the changes in equity for the three months ended September 30, 2024 is provided below:

Stockholders’

at June 30, 2023

$ 128,476,048

$ ( 3,920,856 )

$ ( 44,896,186 )

$ ( 45,975,156 )

stock issued for:

value of subsidiary options issued

currency translation adjustment

Net income (loss) for the

at September 30, 2023

$ 128,536,132

$ ( 3,920,856 )

$ ( 44,865,296 )

$ ( 46,411,702 )

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

Stockholders’

at December 31, 2022

$ 128,484,714

$ ( 3,920,856 )

$ ( 42,366,093 )

$ ( 42,011,340 )

stock issued for:

value of subsidiary options issued

currency translation adjustment

( 5,181,654 )

( 2,447,328 )

( 7,628,982 )

Net income (loss) for the

at March 31, 2023

$ 128,536,955

$ ( 3,920,856 )

$ ( 39,821,470 )

$ ( 47,192,994 )

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

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

Comprehensive

Stockholders’

at September 30, 2022

$ 128,420,519

$ ( 3,920,856 )

Balance at June 30, 2024

$ 128,783,865

$ ( 3,920,856 )

stock issued for:

value of subsidiary options issued

currency translation adjustment

Net income (loss) for the

$ ( 44,212,313 )

$ ( 45,935,616 )

at December 31, 2022

Exercise of common stock options

Common stock issued for:

Fair value of subsidiary options issued

Acquisition of non-controlling interest in subsidiary

Foreign currency translation adjustment

Net income (loss) for the year

Balance at September 30, 2024

$ 128,709,890

3 unchanged sentences

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

Comprehensive

Stockholders’

at June 30, 2022

$ 128,218,247

$ ( 3,920,856 )

$ ( 39,652,438 )

Balance at June 30, 2023

$ 128,476,048

3 unchanged sentences

$ 128,476,048

stock issued for:

Adjustment in APIC for change

in subsidiary shares to non-controlling

value of subsidiary options issued

currency translation adjustment

$ ( 3,920,856 )

1 unchanged sentence

$ ( 45,975,156 )

Net income (loss) for the

Net income (loss)

at September 30, 2022

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for the year

Balance at September 30, 2023

$ 128,536,132

10 unchanged sentences

Consolidated Statements of Cash Flows

from operating activities:

to reconcile net income to net cash provided by (used in) operating

For the Three Months

Ended September 30,

Cash flows from operating activities:

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

Depreciation and amortization

Provision for bad debts

Share of net (gain) loss from

investment under equity method

Provision (reversal) for bad debts

(Gain) loss on sale of assets

Stock based compensation

in operating assets and liabilities:

Changes in operating assets and liabilities:

Accounts receivable

( 3,922,773 )

( 1,855,899 )

Revenues in excess of billing

1 unchanged sentence

Other current assets

Accounts payable and accrued

Accounts payable and accrued expenses

Unearned revenue

cash provided by (used in) operating activities

( 2,813,220 )

from investing activities:

Purchases of property and

( 2,791,269 )

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sales of property and equipment

cash used in investing activities

( 1,421,657 )

from financing activities:

Purchase of subsidiary shares

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from the exercise of stock options

Proceeds from bank loans

Payments on finance lease

obligations and loans - net

cash provided by (used in) financing activities

of exchange rate changes

( 9,329,913 )

in cash and cash equivalents

( 3,194,612 )

( 8,704,300 )

Cash and cash equivalents

at beginning of the period

cash equivalents at end of period

Payments on finance lease obligations and loans - net

Net cash provided by (used in) financing activities

Effect of exchange rate changes

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of period

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

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Three Months

Ended September 30,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period

NON-CASH INVESTING AND FINANCING

Assets acquired under finance

Cash paid during the period for:

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

1 unchanged sentence

to Condensed Consolidated Financial Statements

September 30, 2024

1 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

40 unchanged sentences

to Condensed Consolidated Financial Statements

September 30, 2024

2 – ACCOUNTING POLICIES

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

As of March 31, 2024, and June 30, 2023, the Company had uninsured

deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 11,779,289 and $ 13,524,518 , respectively.

As of September 30, 2024, and June 30, 2024, the Company had

uninsured deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 22,836,207 and $ 18,182,002 ,

respectively.

The Company has not experienced any losses in such accounts.

25 unchanged sentences

to Condensed Consolidated Financial Statements

Company’s financial assets that were measured at fair value on a recurring basis as of March 31, 2024, were as follows:

OF FAIR VALUE OF FINANCIAL ASSETS MEASURED ON RECURRING BASIS

Revenues in excess

of billings - long term

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 March 31, 2024 is as follows:

September 30, 2024

Company’s financial assets that were measured at fair value on a recurring basis as of September 30, 2024, were as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL ASSETS MEASURED ON RECURRING BASIS

in excess of billings - long term

Company’s financial assets that were measured at fair value on a recurring basis as of June 30, 2024, are as follows:

in excess of billings - long term

reconciliation from June 30, 2024 to September 30, 2024 is as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS RECONCILIATION

billings - long term

in excess of billings - long term

value discount

Balance at June 30, 2023

Amortization during the period

Effect of Translation Adjustment

Balance at March 31, 2024

at June 30, 2024

$ ( 152,446 )

during the period

to short term

of Translation Adjustment

at September 30, 2024

$ ( 133,867 )

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

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Accounting Standards :

October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities

from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized

in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, as if the acquirer

had originated the contracts.

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

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.

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023-07 expands public entities’ segment

disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker

and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items,

and interim disclosures of a reportable segment’s profit or loss and assets.

ASU 2023-07 is effective for the Company’s Annual

Report on Form 10-K for the fiscal year ending June 30, 2025, and subsequent interim periods, with early adoption permitted.

We are evaluating

the impact of adopting this ASU on our consolidated financial statements and related disclosures.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to enhance transparency

and decision usefulness of income tax disclosures, particularly around rate reconciliations and income taxes paid information.

is effective for our Annual Report on Form 10-K for the fiscal year ending June 30, 2026, on a prospective basis, with early adoption

We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

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

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Company determines revenue recognition through the following steps:

Identification of the contract, or contracts, with

Identification of the performance obligations in the

Determination of the transaction price;

Allocation of the transaction price to the performance

obligations in the contract;

Recognition of revenue when, or as, the Company satisfies

a performance obligation.

● Identification

of the contract, or contracts, with a customer;

● Identification

of the performance obligations in the contract;

● Determination

of the transaction price;

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

● Recognition

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

Company records the amount of revenue and related costs by considering whether the entity is a principal (gross presentation) or an agent

75 unchanged sentences

SCHEDULE OF DISAGGREGATED REVENUE BY CATEGORY

For the Three Months

For the Nine Months

Ended March 31,

Subscription and support

Total core revenue, net

Total non-core revenue, net

Total net revenue

the Three Months

September 30,

core revenue, net

non-core revenue, net

to the complexity of certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements

20 unchanged sentences

essentially priced separate from other goods and services that the Company delivered to that customer.

Company recognizes revenue from implementation and customization services using the percentage of estimated “man-days” that

Company recognizes revenue from implementation and customization services using the percentage of estimated “person-days” that

the work requires.

1 unchanged sentence

as an employee working for one day on implementation/customization work) that is required to complete the implementation or customization

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

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

is recognized over time for the Company’s subscription, post contract support and fixed fee professional services that are separate

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SCHEDULE OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

March 31, 2024

June 30, 2023

Revenues in excess of billings

Unearned revenue

in excess of billings

Company’s unearned revenue reconciliation is as follows:

SCHEDULE OF UNEARNED REVENUE RECONCILIATION

Unearned Revenue

Balance at June 30, 2023

Revenue Recognized

at June 30, 2024

( 7,530,607 )

Balance at March 31, 2024

the three and nine months ended March 31, 2024, the Company recognized revenue of $ 620,000 and $ 7,074,000 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.

at September 30, 2024

the three months ended September 30, 2024, the Company recognized revenue of $ 4,172,244 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 $ 36,014,000 as of March 31, 2024, of which the Company estimates

to recognize approximately $ 24,225,000 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.

allocated to the 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 $ 27,000,000

as of September 30, 2024, of which the Company estimates to recognize approximately $ 19,760,000

in revenue over the next 12 months and the remainder over an estimated 3 years thereafter.

Actual revenue recognition depends in

part on the timing of software modules installed at various customer sites.

Accordingly, some factors that affect the

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

within the Company’s control.

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

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

The primary purpose of

invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and

services, and not to facilitate financing arrangements.

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

24 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

4 unchanged sentences

and stock awards.

components of basic and diluted earnings per share were as follows:

SCHEDULE OF DILUTIVE POTENTIAL COMMON SHARES

For the three months

ended March 31, 2024

the nine months

ended March 31, 2024

Basic income (loss) per share:

Net income (loss) available to common shareholders

Effect of dilutive securities

Stock options

Diluted income (loss) per share

For the three months

March 31, 2023

For the nine months

ended March 31, 2023

Basic income (loss) per share:

Net income (loss) available to common shareholders

$ ( 169,032 )

Effect of dilutive securities

Stock options

Diluted income (loss) per share

$ ( 169,032 )

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

the three months ended September 30, 2024

income per share:

income available to common shareholders

of dilutive securities

income per share

the three months ended September 30, 2023

income per share:

income available to common shareholders

of dilutive securities

income per share

5 – OTHER COMPREHENSIVE INCOME AND FOREIGN CURRENCY

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

SCHEDULE OF FOREIGN CURRENCY TRANSLATION

Company and Subsidiaries

Technologies, Inc.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

and liabilities are translated at the exchange rate on the balance sheet date, and operating results are translated at the average exchange

1 unchanged sentence

Accumulated translation losses classified as an item of accumulated other comprehensive loss in the stockholders’

equity section of the consolidated balance sheet were $ 45,505,920 and $ 45,975,156 as of March 31, 2024 and June 30, 2023, respectively.

During the three and nine months ended March 31, 2024, comprehensive income (loss) in the consolidated statements of comprehensive income

(loss) included a translation gain attributable to NetSol of $ 364,389 and $ 469,236 , 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.

equity section of the consolidated balance sheet were $ 46,049,023 and $ 45,935,616 as of September 30, 2024 and June 30, 2024, respectively.

During the three months ended September 30, 2024 and 2023, comprehensive income (loss) in the consolidated statements of comprehensive

income (loss) included a translation loss attributable to NetSol of $ 113,407 and $ 436,546 , respectively.

6 – MAJOR CUSTOMERS

the three and nine months ended March 31, 2024, revenues from Daimler Financial Services (“DFS”) were $ 4,207,409 and $ 11,840,101 ,

representing 27.2 % and 26.3 % of revenues, respectively.

During the three and nine months ended March 31, 2023, revenues from Daimler

Financial Services (“DFS”) were $ 3,754,752 and $ 10,824,636 , representing 27.8 % and 28.0 % of revenues.

The revenues from DFS

are shown in the Asia – Pacific segment.

receivable from DFS at March 31, 2024 and June 30, 2023, were $ 7,379,879 and $ 4,368,881 , respectively.

Revenues in excess of billings

at March 31, 2024 and June 30, 2023, were $ 2,275,426 and $ 1,961,750 , respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

the three months ended September 30, 2024, revenues from Daimler Financial Services (“DFS”) and BMW Financial

(“BMW”) were $ 3,217,541

and $ 2,472,701 ,

respectively representing 22.3 %

respectively of revenues.

During the three months ended September 30, 2023, revenues from DFS and BMW were $ 3,687,631

and $ 1,058,137 ,

respectively representing 25.9 %

respectively of revenues.

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

The revenues from BMW are shown in

the Asia – Pacific and North America segments.

receivable from DFS and BMW at September 30, 2024, were $ 478,783 and $ 161,788 , respectively.

Accounts receivable from DFS and BMW at

June 30, 2024, were $ 538,648 and $ 505,875 , respectively.

Revenues in excess of billings at September 30, 2024, were $ 716,952 and $ 542,374 ,

respectively.

Revenues in excess of billings at June 30, 2024, were $ 892,109 and $ 1,419,997 , respectively.

7 - OTHER CURRENT ASSETS

1 unchanged sentence

SCHEDULE OF OTHER CURRENT ASSETS

March 31, 2024

June 30, 2023

Prepaid Expenses

Advance Income Tax

5 unchanged sentences

SCHEDULE OF REVENUE IN EXCESS OF BILLING

March 31, 2024

June 30, 2023

Revenues in excess of billings - long term

Present value discount

in excess of billings - long term

value discount

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, 2024, the Company accreted $ 12,309 and $ 30,773 , respectively, which

During the three months ended September 30, 2024 and 2023, the Company accreted $ 18,367 and $ 6,155 , respectively, which

was recorded in interest income for that period.

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

$ 28,029 , respectively.

The Company used the discounted cash flow method with an interest rate of 7.34 % for the period ended March 31,

The Company used the discounted cash flow method with interest rates ranging from 4.65 % to 6.25 % for the period ended March 31,

The Company used the discounted cash flow method with interest rates ranging from 7.3 %

to 17.5 %, for the period ended September, 30, 2024 and June 30, 2024.

TECHNOLOGIES, INC.

3 unchanged sentences

SCHEDULE OF PROPERTY AND EQUIPMENT

March 31, 2024

June 30, 2023

Office Furniture and Equipment

Computer Equipment

Assets Under Capital Leases

Accumulated Depreciation

Furniture and Equipment

Under Capital Leases

( 13,139,576 )

( 12,462,247 )

Property and Equipment, Net

the three and nine months ended March 31, 2024, depreciation expense totaled $ 391,290

and $ 1,225,198 , respectively.

and Equipment, Net

the three months ended September 30, 2024 and 2023, depreciation expense totaled $ 365,997 and $ 404,745 , respectively.

Of these amounts,

$ 228,550 and $ 266,942 , respectively, are reflected in cost of revenues.

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

expense totaled $ 507,314 and $ 1,598,325 , respectively.

Of these amounts, $ 327,177 and $ 1,029,012 , respectively, are reflected in cost

is a summary of fixed assets held under finance leases as of March 31, 2024 and June 30, 2023:

is a summary of fixed assets held under finance leases as of September 30, 2024 and June 30, 2024:

SCHEDULE OF FIXED ASSETS HELD UNDER CAPITAL LEASES

March 31, 2024

June 30, 2023

Accumulated Depreciation - Net

Fixed assets held under

capital leases, Total

assets held under capital leases, Total

lease term and discount rate were as follows:

SCHEDULE OF FINANCE LEASE TERM

March 31, 2024

June 30, 2023

Weighted average remaining lease term - Finance leases

Weighted average discount rate - Finance leases

average remaining lease term - Finance leases

average discount rate - Finance leases

TECHNOLOGIES, INC.

19 unchanged sentences

term to obtain an asset of similar value.

Company reviews the impairment of ROU assets consistent with the approach applied for the Company’s other long-lived assets.

Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying

value of the asset may not be recoverable.

The assessment of possible impairment is based on the Company’s ability to recover the

carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.

Company reviews the impairment of ROU assets consistent with the approach applied to the Company’s other long-lived assets.

The Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the

carrying value of the asset may not be recoverable.

The assessment of possible impairment is based on the Company’s ability to

recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related

Company elected the practical expedient to exclude short-term leases (leases with original terms of 12 months or less) from ROU asset

9 unchanged sentences

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

March 31, 2024

June 30, 2023

Operating lease assets, net

lease assets, net

Operating, Current

Operating, Non Current

Total Lease Liabilities

Lease Liabilities

TECHNOLOGIES, INC.

2 unchanged sentences

SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months

For the Nine Months

Ended March 31,

Amortization of finance lease assets

Interest on finance lease obligation

Operating lease cost

Short term lease cost

Sub lease income

Total lease cost

the Three Months

September 30,

of finance lease assets

on finance lease obligation

term lease cost

term and discount rate were as follows:

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

March 31, 2024

June 30, 2023

Weighted average remaining lease term - Operating leases

Weighted average discount rate - Operating leases

average remaining lease term - Operating leases

average discount rate - Operating leases

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,

Operating cash flows related to operating leases

Operating cash flows related to finance leases

Financing cash flows related finance leases

the Three Months

September 30,

cash flows related to operating leases

cash flows related to finance leases

cash flows related finance leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

of operating lease liabilities were as follows as of March 31, 2024:

of operating lease liabilities were as follows as of September 30, 2024:

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

Within year 1

Within year 2

Within year 3

Within year 4

Within year 5

Total Lease Payments

Lease Payments

Imputed interest

Present Value of lease liabilities

Current portion

Non-Current portion

Present Value of

lease liabilities

Company is a lessor for certain office space leased by the Company and sub-leased to others under non-cancelable leases.

2 unchanged sentences

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

For the three and nine months ended March 31, 2024, the Company

received lease income of $ 8,406 and $ 25,011 , respectively.

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

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

11 - INTANGIBLE ASSETS

assets consisted of the following:

SCHEDULE OF INTANGIBLE ASSETS

March 31, 2024

June 30, 2023

Product Licenses - Cost

Effect of Translation Adjustment

( 24,348,267 )

( 24,756,959 )

Accumulated Amortization

( 15,047,266 )

( 22,360,107 )

licenses include internally developed software cost.

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

Amortization expense for the three and nine months ended March 31, 2024, was $ nil and $ 126,041 , respectively.

Amortization expense for

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

For the three months ended September 30, 2024 and 2023, the

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

11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

1 unchanged sentence

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

March 31, 2024

June 30, 2023

Accounts Payable

Accrued Liabilities

Accrued Payroll

Accrued Payroll Taxes

Taxes Payable

Other Payable

Payroll Taxes

TECHNOLOGIES, INC.

2 unchanged sentences

SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

As of March 31, 2024

D&O Insurance

Bank Overdraft Facility

Loan Payable Bank - Export Refinance

Loan Payable Bank - Running Finance

Loan Payable Bank - Export Refinance II

Loan Payable Bank - Export Refinance III

Sale and Leaseback Financing

Term Finance Facility

Subsidiary Finance Leases

As of September 30, 2024

Line of Credit

Overdraft Facility

Payable Bank - Export Refinance

Payable Bank - Running Finance

Payable Bank - Export Refinance II

Payable Bank - Export Refinance III

and Leaseback Financing

Term Financing

Finance Leases

As of June 30, 2024

D&O Insurance

Bank Overdraft Facility

Loan Payable Bank - Export Refinance

Loan Payable Bank - Running Finance

Loan Payable Bank - Export Refinance II

Loan Payable Bank - Export Refinance III

Sale and Leaseback Financing

Term Finance Facility

Subsidiary Finance Leases

Line of Credit

Overdraft Facility

Payable Bank - Export Refinance

Payable Bank - Running Finance

Payable Bank - Export Refinance II

Payable Bank - Export Refinance III

and Leaseback Financing

Term Financing

Finance Leases

(1) The Company finances

1 unchanged sentence

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 8.6 % to 10.9 % as of March 31, 2024 and 5.0 % to 7.9 % as of June 30, 2023, respectively.

The interest rate on these financings were ranging from 8.6 % to 10.9 % as of September 30, 2024 and June 30, 2024.

Company has an uncommitted discretionary demand line of credit up to an aggregate amount of $ 1,000,000

with HSBC, secured by a lien on the Company’s assets.

The annual interest rate was 8.25 %

at September 30, 2024 and 8.75 %

as of June 30, 2024.

The total outstanding balance as of September 30, 2024 and June 30, 2024 was $ 250,000

respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

(3) 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 March 31, 2024.

The total outstanding balance as of March 31, 2024 and June 30, 2023

The annual interest rate was 9.5 % as of September 30, 2024 and June 30, 2024.

The total outstanding balance as of September

30, 2024 and June 30, 2024 was £ Nil .

This overdraft facility

1 unchanged sentence

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, 2024, NTE

was in compliance with this covenant.

TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2024

As of September 30, 2024,

NTE was in compliance with this covenant.

(4) The Company’s

3 unchanged sentences

The total facility amount is Rs.

500,000,000 or $ 1,799,014 at March 31, 2024 and Rs.

500,000,000 or $ 1,800,504 at September 30, 2024 and Rs.

or $ 1,796,558 at June 30, 2024.

The interest rate for the loan was 19.0 % and 17.0 % at March 31, 2024 and June 30, 2023, respectively.

The interest rate for the loan was 14.5 % and 17.5 % at September 30, 2024 and June 30, 2024, respectively.

(5) The Company’s

2 unchanged sentences

amount is Rs.

53,000,000 or $ 192,854 , at March 31, 2024.

The balance outstanding at March 31, 2024 and June 30, 2023 was Rs.

interest rate for the loan was 24.0 % and 24.9 % at March 31, 2024 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 March 31, 2024, NetSol PK was in

compliance with this covenant.

53,000,000 or $ 193,014 , at September 30, 2024.

The balance outstanding at September 30, 2024 and June 30, 2024 was Rs.

The interest rate for the loan was 18.1 % at September 30, 2024 and 22.2 % at June 30, 2024.

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, 2024,NetSol PK was in compliance with this covenant.

(6) The Company’s

5 unchanged sentences

380,000,000 or $ 1,365,384 at

March 31, 2024 and June 30, 2023, respectively.

The interest rate for the loan was 19.0 % and 18.0 % at March 31, 2024 and June 30, 2023,

September 30, 2024 and June 30, 2024, respectively.

The interest rate for the loan was 14.5 % and 17.5 % at September 30, 2024 and June

30, 2024, 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 March 31, 2024, NetSol PK was in

compliance with these covenants.

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 September 30, 2024, NetSol

PK was in compliance with these covenants.

(7) The Company’s

4 unchanged sentences

900,000,000 or $ 3,233,804 ,

at March 31, 2024 and June 30, 2023, respectively.

at September 30, 2024 and June 30, 2024, respectively.

NetSol PK used Rs.

700,000,000 or $ 2,520,706 and Rs.

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

March 31, 2024 and June 30, 2023, respectively.

The interest rate for the loan was 19.0 % and 18.0 % at March 31, 2024 and June 30, 2023,

700,000,000 or $ 2,515,181 ,

at September 30, 2024 and June 30, 2024, respectively.

The interest rate for the loan was 14.5 % and 17.5 % at September 30, 2024 and June

30, 2024, respectively.

1 unchanged sentence

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

As of March 31, 2024, NetSol PK used Rs.

As of September 30, 2024, NetSol PK used Rs.

12,425,952 or $ 44,746 of which $ 4,957 was shown as long term and $ 39,789 as current.

1 unchanged sentence

15,819,683 or $ 56,842 of which $ 9,684 was shown as long term and $ 47,158 as current.

interest rate for the loan was 9.0 % to 16.0 % at March 31, 2024, 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 March 31, 2024, the subsidiary has paid this facility in full.

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

The interest rate was 6.14 % at March 31, 2024

and June 30, 2023.

rate for the loan was from 22.7 % to 24.2 % at September 30, 2024 and June 30, 2024.

Company’s subsidiary, NetSol Beijing, has a one-year, short-term loan facility with Bank of China, secured by a personal

guarantee from NetSol Beijing’s General Manager.

The facility amount is CNY 3,000,000

or $ 427,960 .

NetSol Beijing used CNY 3,000,000

at September 30, 2024.

NetSol Beijing used CNY 3,000,000

or $ 412,655 ,

at June 30, 2024.

The interest rate of the loan was 3.8 %

at September 30, 2024 and June 30, 2024.

(10) The Company leases

5 unchanged sentences

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

March 31, 2024 and 2023.

September 30, 2024 and 2023.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

are the aggregate minimum future lease payments under finance leases as of March 31, 2024:

are the aggregate minimum future lease payments under finance leases as of September 30, 2024:

SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

Lease Payments

Minimum Lease Payments

Within year 1

Within year 2

Within year 3

Total Minimum Lease Payments

Interest Expense relating to future periods

Present Value of minimum lease payments

Expense relating to future periods

Value of minimum lease payments

Current portion

Non-Current portion

are the aggregate future long term debt payments as of March 31, 2024 which consists of “Sale and Leaseback Financing (7)”

are the aggregate future long term debt payments as of September 30, 2024 which consists of “Sale and Leaseback Financing (7)”

and “Term Finance Facility (8)”.

1 unchanged sentence

Loan Payments

Within year 1

Within year 2

Total Loan Payments

Current portion

Non-Current portion

13 - STOCKHOLDERS’ EQUITY

the three and nine months ended March 31, 2024, the Company issued 14,352 and 54,384 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.

the three and nine months ended March 31, 2024, 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

the three months ended September 30, 2024, the Company issued 13,950 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 .

following table summarizes stock grants awarded as compensation:

SUMMARY OF UNVESTED STOCK GRANTS AWARDED AS COMPENSATION

Average Grant

Date Fair Value

Unvested, June 30, 2022

Number of shares

Average Grant Date Fair Value ($)

Unvested, June 30,

Unvested, March 31, 2024

the three and nine months ended March 31, 2024, the Company recorded compensation expense of $ 39,750 and $ 128,300 , respectively.

the three and nine months ended March 31, 2023, the Company recorded compensation expense of $ 39,750 and $ 119,250 , respectively.

September 30, 2024

the three months ended September 30, 2024 and 2023, the Company recorded compensation expense of $ 39,750 and $ 48,800 , 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

14 – INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN

1 unchanged sentence

OF COMMON STOCK PURCHASE OPTIONS

Exercise Price

Contractual Life

Intrinsic Value

Outstanding and exercisable, June 30, 2023

Expired / Cancelled

Outstanding and exercisable, March 31, 2024

aggregate intrinsic value at March 31, 2024 represents the difference between the Company’s closing stock price of $ 2.77 on March

31, 2024 and the exercise price of the in-the-money stock options.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table summarizes information about stock options outstanding and exercisable at March 31, 2024.

OF STOCK OPTIONS OUTSTANDING

Exercise Price

the nine months ended March 31, 2024, the Company granted 250,000 options to officers and employees with an exercise price of $ 2.15 per

share, an expiration date of one year , and immediate vesting.

Using the Black-Scholes method to value the options, the Company recorded

$ 101,424 in compensation expense for these options in the accompanying condensed consolidated financial statements.

The fair market value

was calculated using the Black-Scholes option pricing model with the following assumptions:

interest rate - 5.24 %

life – 6 months

volatility – 63.6 %

dividend - 0 %

and exercisable, June 30, 2024

and exercisable, September 30, 2024

aggregate intrinsic value at September 30, 2024 represents the difference between the Company’s closing stock price of $ 2.85 on

September 30, 2024 and the exercise price of the in-the-money stock options.

following table summarizes information about stock options outstanding and exercisable at September 30, 2024.

SUMMARY OF STOCK OPTIONS OUTSTANDING

15– OPERATING SEGMENTS

10 unchanged sentences

consolidation.

following table presents a summary of identifiable assets as of March 31, 2024 and June 30, 2023:

SUMMARY OF IDENTIFIABLE ASSETS

March 31, 2024

June 30, 2023

Identifiable assets:

Corporate headquarters

North America

Asia - Pacific

Identifiable assets

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table presents a summary of revenue streams by segment for the three months ended March 31, 2024 and 2023:

following table presents a summary of identifiable assets as of September 30, 2024 and June 30, 2024:

SUMMARY OF IDENTIFIABLE ASSETS

following table presents a summary of revenue streams by segment for the three months ended September 30, 2024 and 2023:

SUMMARY OF REVENUE STREAMS

North America

following table presents a summary of revenue streams by segment for the nine months ended March 31, 2024 and 2023:

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,

Revenues from unaffiliated customers:

North America

Asia - Pacific

the Three Months

September 30,

from unaffiliated customers:

Revenues from unaffiliated customers

Revenue from affiliated customers

Asia - Pacific

from affiliated customers

Intercompany revenue

Asia - Pacific

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

Corporate headquarters

from affiliated customers

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

$ ( 662,058 )

$ ( 303,722 )

North America

Asia - Pacific

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

Depreciation and amortization:

North America

Asia - Pacific

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

and amortization:

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,

Capital expenditures:

North America

Asia - Pacific

the Three Months

September 30,

expenditures:

Capital expenditures

5 unchanged sentences

Non-Controlling

March 31, 2024

NetSol-Innovation

1 unchanged sentence

Non-Controlling

June 30, 2023

NetSol-Innovation

September 2024, the Company’s subsidiary, Otoz®, repurchased 157,895 shares from one of its shareholders for $ 7,895 , resulting

in a decrease of non-controlling interest from 5.59 % to 0.65 %.

The effective shareholding of the non-controlling interest for Otoz®

Thai decreased to 0.66 %.

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

the Three Months

September 30,

income (loss) attributable to NetSol

(to) from non-controlling interest

in paid-in capital for purchase of 157,895 shares of OTOZ Inc common stock

transfer (to) from non-controlling interest

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

17– INCOME TAXES

4 unchanged sentences

and numerous foreign jurisdictions.

Our effective tax rate is lower than

statutory rate primarily because of more earnings realized in countries that have lower statutory tax rates.

Our effective tax

rate in the future will depend on the portion of our profits earned within and outside the United States.

Income from the export of computer

software and its related services developed in Pakistan is exempt from tax through June 30, 2025;

however, tax at the applicable rates

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

the three and nine months ended March 31, 2024, the Company recorded an income tax provision of $ 146,569 and $ 418,517 , respectively.

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

The tax is derived from non-core business activities generated from NetSol PK.

Our effective tax rate will depend

on the portion of our profits earned within and outside the United States.

the three months ended September 30, 2024 and 2023, the Company recorded an income tax provision of $ 229,817 and $ 121,895 , respectively.

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