What changed in this filing

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Item 1. Financial Statements

2025-02-13 compared with 2024-11-13 · 825 added, 566 removed, 358 unchanged (80% of the section changed)

Financial Statements (Unaudited)

Financial Statements

TECHNOLOGIES, INC.

1 unchanged sentence

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

December 31, 2024

June 30, 2024

Current assets:

in excess of billings, net - long term

and equipment, net

of use assets - operating leases

AND STOCKHOLDERS’ EQUITY

payable and accrued expenses

portion of loans and obligations under finance leases

portion of operating lease obligations

Cash and cash equivalents

Accounts receivable, net of allowance of $ 17,028 and $ 398,809

Revenues in excess of billings, net of allowance of $ 595,875 and $ 116,148

Other current assets

Total current assets

Revenues in excess of billings, net - long term

Property and equipment, net

Right of use assets - operating leases

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

and obligations under finance leases;

Accounts payable and accrued expenses

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;

less current maturities

lease obligations;

Operating lease obligations;

less current maturities

Stockholders’

Preferred stock,

$ .01 par value;

Total liabilities

Stockholders’ equity:

Preferred stock, $ .01 par value;

500,000 shares authorized;

stock, $ .01 par value;

Common stock, $ .01 par value;

14,500,000 shares authorized;

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 )

Treasury stock (at

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

12,589,046 shares issued and

11,650,015 outstanding as of December 31, 2024 , 12,359,922 shares issued and

11,420,891 outstanding as of June 30, 2024

Additional paid-in-capital

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

( 3,920,856 )

Accumulated deficit

( 45,288,560 )

( 44,212,313 )

comprehensive loss

Other comprehensive loss

( 46,187,766 )

( 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.

Total NetSol stockholders’ equity

Non-controlling interest

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying

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

TECHNOLOGIES, INC.

1 unchanged sentence

Consolidated Statements of Operations

the Three Months

September 30,

general and administrative

and development cost

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

Net Revenues:

Subscription and support

Total net revenues

Cost of revenues

Operating expenses:

(loss) from operations

income and (expenses)

(loss) on foreign currency exchange transactions

other income (expenses)

income before income taxes

tax provision

Non-controlling

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.

Selling, general and administrative

Research and development cost

Total operating expenses

Income (loss) from operations

( 1,247,108 )

Other income and (expenses)

Interest expense

Interest income

Gain (loss) on foreign currency exchange transactions

Total other income (expenses)

Net income before income taxes

Income tax provision

( 1,186,206 )

Non-controlling interest

Net income attributable to NetSol

$ ( 1,147,042 )

$ ( 1,076,247 )

Net income per share:

Net income per common share

Weighted average number of shares outstanding

The accompanying

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

TECHNOLOGIES, INC.

1 unchanged sentence

Consolidated Statements of Comprehensive Income (Loss)

the Three Months

September 30,

comprehensive income (loss):

adjustment attributable to non-controlling interest

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

$ ( 1,147,042 )

$ ( 1,076,247 )

Other comprehensive income (loss):

Translation adjustment

Comprehensive

income (loss) attributable to NetSol

Translation adjustment attributable to non-controlling interest

Net translation adjustment

Comprehensive income (loss) attributable to NetSol

$ ( 1,285,785 )

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

$ ( 1,328,397 )

The accompanying

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

TECHNOLOGIES, INC.

1 unchanged sentence

Consolidated Statement of Stockholders’ Equity

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

Comprehensive

A statement of the changes in

equity for the three months ended December 31, 2024 is provided below:

Stockholders’

Balance at September 30, 2024

$ 128,709,890

$ ( 3,920,856 )

$ ( 44,141,518 )

$ ( 46,049,023 )

Exercise of common stock options

Common stock issued for:

Fair value of subsidiary options issued

Acquisition of non-controlling interest in subsidiary

Dividend to non-controlling interest

Foreign currency translation adjustment

Net income (loss) for the year

( 1,147,042 )

( 1,186,206 )

Balance at December 31, 2024

$ 129,194,697

$ ( 3,920,856 )

$ ( 45,288,560 )

$ ( 46,187,766 )

A statement of the changes in

equity for the three months ended September 30, 2024 is provided below:

Stockholders’

Balance at June 30, 2024

14 unchanged sentences

$ ( 46,049,023 )

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

Comprehensive

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

A statement of the changes in

equity for the three months ended December 31, 2023 is provided below:

Stockholders’

Balance at September 30, 2023

$ 128,536,132

$ ( 3,920,856 )

$ ( 44,865,296 )

$ ( 46,411,702 )

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for the year

Balance at December 31, 2023

$ 128,587,384

$ ( 3,920,856 )

$ ( 44,456,980 )

$ ( 45,870,309 )

A statement of the changes in

equity for the three months ended September 30, 2023 is provided below:

Stockholders’

Balance at June 30, 2023

20 unchanged sentences

$ ( 46,411,702 )

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

The accompanying

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

TECHNOLOGIES, INC.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

Cash flows from operating activities:

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

Net income (loss)

$ ( 968,497 )

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

Depreciation and amortization

Provision (reversal) for bad debts

(Gain) loss on sale of assets

Gain on sale of assets

Stock based compensation

15 unchanged sentences

Cash flows from financing activities:

Proceeds from the exercise of stock options

Proceeds from the exercise of stock options and warrants

Dividend paid by subsidiary to non-controlling interest

Proceeds from bank loans

5 unchanged sentences

Cash and cash equivalents at end of period

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

The accompanying

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

TECHNOLOGIES, INC.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Three Months

Ended September 30,

For the Six Months

Ended December 31,

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

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

The accompanying

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

September 30, 2024

1 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

Company designs, develops, markets, and exports proprietary software products to customers in the automobile financing and leasing, banking,

and financial services industries worldwide.

The Company also provides system integration, consulting, and IT products and services in

exchange for fees from customers.

consolidated condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant to the

rules and regulations of the Securities and Exchange Commission.

Certain information and footnote disclosures normally included in financial

statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules

and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures

required by accounting principles generally accepted in the United States of America.

statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for

fair presentation of the information contained therein.

It is suggested that these condensed consolidated financial statements be read

in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year

ended June 30, 2024.

NOTE 1 - BASIS OF PRESENTATION

AND PRINCIPLES OF CONSOLIDATION

is a business services and asset finance solutions provider that designs, develops, markets, and exports proprietary software products

to customers in the automobile financing and leasing, banking, and financial services industries worldwide.

The Company also provides

system integration, consulting, and IT products and services in exchange for fees from customers.

The consolidated

condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations

of the Securities and Exchange Commission.

Certain information and footnote disclosures normally included in financial statements prepared

in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although

the Company believes that the disclosures are adequate to make the information presented not misleading.

The year-end condensed consolidated

balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles

generally accepted in the United States of America.

These statements

reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation

of the information contained therein.

It is suggested that these condensed consolidated financial statements be read in conjunction with

the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended June 30,

The Company follows the same accounting policies in preparation of interim reports.

Results of operations for the

interim periods are not indicative of annual results.

accompanying consolidated financial statements include the accounts of the Company as follows:

Results of operations for the interim periods

are not indicative of annual results.

The accompanying

consolidated financial statements include the accounts of the Company as follows:

owned Subsidiaries

19 unchanged sentences

to Condensed Consolidated Financial Statements

September 30, 2024

2 – ACCOUNTING POLICIES

preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of

America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during

the reporting period.

The areas requiring significant estimates are provision for doubtful accounts, provision for taxation, useful life

of depreciable assets, useful life of intangible assets, contingencies, assumptions used to determine the net present value of operating

lease liabilities, and estimated contract costs.

NOTE 2 – ACCOUNTING

Use of Estimates

The preparation

of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

The areas requiring significant estimates are provision for doubtful accounts, provision for taxation, useful life of depreciable

assets, useful life of intangible assets, contingencies, assumptions used to determine the net present value of operating lease liabilities,

and estimated contract costs.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Actual results

could differ from those estimates.

Concentration

of Credit Risk

includes cash on hand and demand deposits in accounts maintained within the United States as well as in foreign countries.

Certain financial

instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash.

The Company maintains balances

at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located

in the United States.

Balances at financial institutions within certain foreign countries are not covered by insurance except balances

maintained in China are insured for RMB 500,000 ($ 71,327 ) in each bank and in the UK for GBP 85,000 ($ 113,333 ) in each bank.

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

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.

Actual results could differ

from those estimates.

Concentration of Credit

Cash includes

cash on hand and demand deposits in accounts maintained within the United States as well as in foreign countries.

Certain financial instruments,

which subject the Company to concentration of credit risk, consist of cash and restricted cash.

The Company maintains balances at financial

institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the United

Balances at financial institutions within certain foreign countries are not covered by insurance except balances maintained in

China are insured for RMB 500,000 ($ 68,493 ) in each bank and in the UK for GBP 85,000 ($ 106,250 ) in each bank.

The Company maintains

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

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

deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 20,027,837 and $ 18,182,002 , respectively.

The Company has not experienced any losses in such accounts.

Company’s operations are carried out globally.

Accordingly, the Company’s business, financial condition and results of operations

may be influenced by the political, economic and legal environments of each country and by the general state of the country’s economy.

The Company’s

operations are carried out globally.

Accordingly, the Company’s business, financial condition and results of operations may be

influenced by the political, economic and legal environments of each country and by the general state of the country’s economy.

The Company’s operations in each foreign country are subject to specific considerations and significant risks not typically associated

5 unchanged sentences

taxation, among other things.

Value of Financial Instruments

Company applies the provisions of Accounting Standards Codification (“ASC”) 820-10, “Fair Value Measurements and

Disclosures.” ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value

measurement that enhances disclosure requirements for fair value measures.

For certain financial instruments, including cash and cash

equivalents, accounts receivable, accounts payable and short-term debt, the carrying amounts approximate fair value due to their relatively

short maturities.

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

with similar characteristics.

three levels of valuation hierarchy are defined as follows:

consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority.

rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability.

are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement

and are less observable and thus have the lowest priority.

Fair Value of Financial

applies the provisions of Accounting Standards Codification (“ASC”) 820-10, “Fair Value Measurements and Disclosures.”

ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances

disclosure requirements for fair value measures.

For certain financial instruments, including cash and cash equivalents, accounts receivable,

accounts payable and short-term debt, the carrying amounts approximate fair value due to their relatively short maturities.

amounts of the long-term debt approximate their fair values based on current interest rates for instruments with similar characteristics.

The three levels of valuation

hierarchy are defined as follows:

Valuations consist of unadjusted quoted prices in active

markets for identical assets and liabilities and has the highest priority.

Valuations rely on quoted prices in markets that are not

active or observable inputs over the full term of the asset or liability.

Valuations are based on prices or third party or internal

valuation models that require inputs that are significant to the fair value measurement and are less observable and thus have the

lowest priority.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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:

The Company’s financial

assets that were measured at fair value on a recurring basis as of December 31, 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:

Revenues in excess of billings - long term

The Company’s financial

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

Revenues in excess of billings - long term

The reconciliation from June

30, 2024 to December 31, 2024 is as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS RECONCILIATION

in excess of billings - long term

value discount

at June 30, 2024

Revenues in excess of billings - long term

Fair value discount

Balance at June 30, 2024

$ ( 152,446 )

during the period

to short term

of Translation Adjustment

at September 30, 2024

Amortization during the period

Transfers to short term

Effect of Translation Adjustment

Balance at December 31, 2024

$ ( 115,126 )

8 unchanged sentences

Accounting Standards:

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

Segment Reporting (Topic 280):

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.

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):

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

Improvements to Income Tax Disclosures , to enhance transparency

2 unchanged sentences

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.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

3 – REVENUE RECOGNITION

Company determines revenue recognition through the following steps:

● 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

(net presentation) by evaluating the nature of its promise to the customer.

Revenue is presented net of sales, value-added and other

taxes collected from customers and remitted to government authorities.

Company has two primary revenue streams:

All other newly issued accounting

pronouncements not yet effective have been deemed either immaterial or not applicable.

NOTE 3 – REVENUE

determines revenue recognition through the following steps:

· Identification of the contract,

or contracts, with a customer;

· Identification of the performance

obligations in the contract;

· Determination of the transaction

· Allocation of the transaction

price to the performance obligations in the contract;

· Recognition of revenue when, or

as, the Company satisfies a performance obligation.

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

presentation) by evaluating the nature of its promise to the customer.

Revenue is presented net of sales, value-added and other taxes

collected from customers and remitted to government authorities.

The Company has two primary

revenue streams:

core revenue and non-core revenue.

Company generates its core revenue from the following sources:

(1) software licenses, (2) services, which include implementation and

consulting services, and (3) subscription and support, which includes post contract support, of its enterprise software solutions for

the lease and finance industry.

generates its core revenue from the following sources:

(1) software licenses, (2) services, which include implementation and consulting

services, and (3) subscription and support, which includes post contract support, of its enterprise software solutions for the lease

and finance industry.

The Company offers its software using the same underlying technology via two models:

6 unchanged sentences

to take possession of the software.

Company generates its non-core revenue by providing business process outsourcing (“BPO”), other IT services and internet

performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under

The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance

obligation is satisfied by transferring the promised good or service to the customer.

The Company identifies and tracks the performance

obligations at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract.

Company’s contracts which contain multiple performance obligations generally consist of the initial purchase of subscription or

licenses and a professional services engagement.

License purchases generally have multiple performance obligations as customers purchase

post contract support and services in addition to the licenses.

The Company’s single performance obligation arrangements are typically

post contract support renewals, subscription renewals and services engagements.

contracts with multiple performance obligations where the contracted price differs from the standalone selling price (“SSP”)

for any distinct good or service, the Company may be required to allocate the contract’s transaction price to each performance

obligation using its best estimate for the SSP.

Non-Core Revenue

generates its non-core revenue by providing business process outsourcing (“BPO”), other IT services and internet services.

Performance Obligations

A performance

obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Topic 606.

The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation

is satisfied by transferring the promised good or service to the customer.

The Company identifies and tracks the performance obligations

at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract.

The Company’s

contracts which contain multiple performance obligations generally consist of the initial purchase of subscription or licenses and a

professional services engagement.

License purchases generally have multiple performance obligations as customers purchase post contract

support and services in addition to the licenses.

The Company’s single performance obligation arrangements are typically post contract

support renewals, subscription renewals and services engagements.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

For contracts

with multiple performance obligations where the contracted price differs from the standalone selling price (“SSP”) for any

distinct good or service, the Company may be required to allocate the contract’s transaction price to each performance obligation

using its best estimate for the SSP.

Software Licenses

of control for software is considered to have occurred upon delivery of the product to the customer.

1 unchanged sentence

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

21 unchanged sentences

judgment when estimating project status and the costs necessary to complete the services projects.

A number of internal and external

factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement

Services are generally invoiced upon milestones in the contract or upon consumption of the hourly resources and payments are

typically due 30 days after invoice.

and Internet Services

Several internal and external factors

can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes.

Services are generally invoiced upon milestones in the contract or upon consumption of the hourly resources and payments are typically

due 30 days after invoice.

BPO and Internet Services

from BPO services is recognized based on the stage of completion which is measured by reference to labor hours incurred to date as a

2 unchanged sentences

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

Disaggregated

Company disaggregates revenue from contracts with customers by category — core and non-core, as it believes it best depicts how

the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Disaggregated Revenue

disaggregates revenue from contracts with customers by category -- core and non-core, as it believes it best depicts how the nature,

amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Company’s disaggregated revenue by category is as follows:

The Company’s disaggregated

revenue by category is as follows:

SCHEDULE OF DISAGGREGATED REVENUE BY CATEGORY

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

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

Subscription and support

Total core revenue, net

Total non-core revenue, net

Total net revenue

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

may be dependent on contract-specific terms and may vary in some instances.

8 unchanged sentences

Based on these results, the estimated SSP is set for each distinct product or service delivered to customers.

most significant inputs involved in the Company’s revenue recognition policies are:

significant inputs involved in the Company’s revenue recognition policies are:

The (1) stand-alone selling prices of the Company’s

software license, and the (2) the method of recognizing revenue for installation/customization, and other services.

stand-alone selling price of the licenses was measured primarily through an analysis of pricing that management evaluated when quoting

prices to customers.

Although the Company has no history of selling its software separately from post contract support and other services,

the Company does have historical experience with amending contracts with customers to provide additional modules of its software or providing

The stand-alone

selling price of the licenses was measured primarily through an analysis of pricing that management evaluated when quoting prices to

Although the Company has no history of selling its software separately from post contract support and other services, the

Company does have historical experience with amending contracts with customers to provide additional modules of its software or providing

those modules at an optional price.

2 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 “person-days” that

the work requires.

The Company believes the level of effort to complete the services is best measured by the amount of time (measured

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

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

work requires.

The Company believes the level of effort to complete the services is best measured by the amount of time (measured 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 person-days required to complete implementation and customization services each reporting period.

4 unchanged sentences

Judgment is required in estimating project status and the costs necessary to complete projects.

A number of internal and external factors can affect these estimates, including labor rates, utilization, specification variances and

testing requirement changes.

Several internal and external factors can affect these estimates, including labor rates, utilization, specification variances and testing

requirement changes.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

such agreements are deemed to be combined as one arrangement for revenue recognition purposes.

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

agreements are deemed to be combined as one arrangement for revenue recognition purposes.

The Company exercises significant judgment

2 unchanged sentences

of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

a contract includes variable consideration, the Company exercises judgment in estimating the amount of consideration to which the entity

will be entitled in exchange for transferring the promised goods or services to a customer.

When estimating variable consideration, the

Company will consider all relevant facts and circumstances.

Variable consideration will be estimated and included in the contract price

only when it is probable that a significant reversal in the amount of revenue recognized will not occur.

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

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

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

right to consideration.

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

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

revenues in excess of billings are transferred to receivables when the rights to consideration become unconditional, usually upon completion

of a milestone.

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

If a contract

includes variable consideration, the Company exercises judgment in estimating the amount of consideration to which the entity will be

entitled in exchange for transferring the promised goods or services to a customer.

When estimating variable consideration, the Company

will consider all relevant facts and circumstances.

Variable consideration will be estimated and included in the contract price only

when it is probable that a significant reversal in the amount of revenue recognized will not occur.

Contract Balances

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

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

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

to consideration.

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

not yet transferred goods or services to the customer.

in excess of billings are transferred to receivables when the rights to consideration become unconditional, usually upon completion of

The Company’s

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

SCHEDULE OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

in excess of billings

Company’s unearned revenue reconciliation is as follows:

December 31, 2024

June 30, 2024

Revenues in excess of billings

Unearned revenue

The Company’s

unearned revenue reconciliation is as follows:

SCHEDULE OF UNEARNED REVENUE RECONCILIATION

at June 30, 2024

Unearned Revenue

Balance at June 30, 2024

Revenue Recognized

( 14,644,315 )

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.

Balance at December 31, 2024

the three and six months ended December 31, 2024, the Company recognized revenue of $ 3,514,159 and $ 7,686,403 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 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

at the start of the subscription or support term.

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 $ 20,000,000 as of December 31, 2024, of

which the Company estimates to recognize approximately $ 17,000,000 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.

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

start of the subscription or support term.

Unpaid invoice amounts for non-cancelable license and services starting in future periods

1 unchanged sentence

Expedients and Exemptions

are several practical expedients and exemptions allowed under Topic 606 that impact timing of revenue recognition and the Company’s

several practical expedients and exemptions allowed under Topic 606 that impact timing of revenue recognition and the Company’s

The Company has applied the following practical expedients:

9 unchanged sentences

to Obtain a Contract

Company does not have a material amount of costs to obtain a contract capitalized at any balance sheet date.

In general, the Company

incurs few direct incremental costs of obtaining new customer contracts.

The Company rarely incurs incremental costs to review or otherwise

enter into contractual arrangements with customers.

In addition, the Company’s sales personnel receive fees that are referred to

as commissions, but that are based on more than simply signing up new customers.

The Company’s sales personnel are required to

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

does not have a material amount of costs to obtain a contract capitalized at any balance sheet date.

In general, the Company incurs few

direct incremental costs of obtaining new customer contracts.

The Company rarely incurs incremental costs to review or otherwise enter

into contractual arrangements with customers.

In addition, the Company’s sales personnel receive fees that are referred to as commissions,

but that are based on more than simply signing up new customers.

The Company’s sales personnel are required to perform additional

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

TECHNOLOGIES, INC.

1 unchanged sentence

4 – EARNINGS PER SHARE

earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period.

earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common

shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock options

and stock awards.

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

Basic earnings

per share are computed based on the weighted average number of shares of common stock outstanding during the period.

Diluted earnings

per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares

outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock options and

stock awards.

The components

of basic and diluted earnings per share were as follows:

SCHEDULE OF DILUTIVE POTENTIAL COMMON SHARES

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:

For the three months ended December 31, 2024

For the six months ended December 31, 2024

Basic loss per share:

$ ( 1,147,042 )

$ ( 1,076,247 )

Effect of dilutive securities

Stock options

Diluted loss per share

$ ( 1,147,042 )

$ ( 1,076,247 )

For the three months ended December 31, 2023

For the six months ended December 31, 2023

Basic income per share:

Effect of dilutive securities

Stock options

Diluted income per share

NOTE 5 – OTHER

COMPREHENSIVE INCOME AND FOREIGN CURRENCY

The following

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

SCHEDULE OF FOREIGN CURRENCY TRANSLATION

Company and Subsidiaries

Technologies, Inc.

The Company and Subsidiaries

Functional Currency

NetSol Technologies, Inc.

British Pound

Pakistan Rupee

NetSol Innovation

Pakistan Rupee

Australian Dollar

NetSol Beijing

TECHNOLOGIES, INC.

3 unchanged sentences

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

equity section of the consolidated balance sheet were $ 46,049,023 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

equity section of the consolidated balance sheet were $ 46,187,766 and $ 45,935,616 as of December 31, 2024 and June 30, 2024, respectively.

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

income (loss) included a translation loss attributable to NetSol of $ 138,743 and $ 252,150 , respectively.

6 – MAJOR CUSTOMERS

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.

During the three and six months

ended December 31, 2023, comprehensive income (loss) in the consolidated statements of comprehensive income (loss) included a translation

gain attributable to NetSol of $ 541,393 and $ 104,847 , respectively.

NOTE 6 – MAJOR CUSTOMERS

the three and six months ended December 31, 2024, revenues from Daimler Financial Services (“DFS”) were $ 3,042,849 and $ 6,260,390 ,

respectively representing 19.6 % and 20.8 %, respectively of revenues.

During the three and six months ended December 31, 2024, revenues

from BMW Financial (“BMW”) were $ 3,116,086 and $ 5,588,787 , respectively representing 20.1 % and 18.5 %, respectively of revenues.

During the three and six months ended December 31, 2023, revenues from DFS were $ 3,945,061 and $ 7,632,692 , representing 25.9 % of revenues.

During the three and six months ended December 31, 2023, revenues from BMW were $ 699,966 and $ 1,109,955 , respectively representing 4.6 %

and 6.0 %, 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 ,

The revenues from BMW are shown

in the Asia – Pacific and North America segments.

receivable from DFS and BMW at December 31, 2024, were $ 368,862 and $ 107,716 , respectively.

Accounts receivable from DFS and BMW at June

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

Revenues in excess of billings at December 31, 2024, were $ 761,367 and $ 1,375,671 ,

respectively.

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

7 - OTHER CURRENT ASSETS

current assets consisted of the following:

NOTE 7 - OTHER CURRENT ASSETS

Other current assets consisted

of the following:

SCHEDULE OF OTHER CURRENT ASSETS

December 31, 2024

June 30, 2024

Prepaid Expenses

Advance Income Tax

2 unchanged sentences

Other Receivables

8 – REVENUES IN EXCESS OF BILLINGS – LONG TERM

in excess of billings, net consisted of the following:

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

NOTE 8 – REVENUES IN

EXCESS OF BILLINGS – LONG TERM

Revenues in excess of billings,

net consisted of the following:

SCHEDULE OF REVENUE IN EXCESS OF BILLING

in excess of billings - long term

value discount

December 31, 2024

June 30, 2024

Revenues in excess of billings - long term

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

During the three and six months ended December 31, 2024, the Company accreted $ 18,367 and $ 36,734 , respectively, which

was recorded in interest income for that period.

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.

to Condensed Consolidated Financial Statements

9 - PROPERTY AND EQUIPMENT

and equipment consisted of the following:

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

and $ 18,464 , respectively, which was recorded in interest income for that period.

The Company used the discounted cash flow method with

interest rates ranging from 7.3 % to 17.5 %, for the period ended December 31, 2024 and June 30, 2024.

NOTE 9 - PROPERTY AND EQUIPMENT

Property and equipment consisted

of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

Furniture and Equipment

Under Capital Leases

December 31, 2024

June 30, 2024

Office Furniture and Equipment

Computer Equipment

Assets Under Capital Leases

Accumulated Depreciation

( 13,050,846 )

( 12,462,247 )

and Equipment, Net

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

Property and Equipment, Net

three and six months ended December 31, 2024 and 2023, depreciation expense totaled $ 372,585 and $ 738,582 , respectively.

Of these amounts,

$ 237,882 and $ 466,432 , respectively, are reflected in cost of revenues.

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

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

expense totaled $ 429,163 and $ 833,908 , respectively.

Of these amounts, $ 264,374 and $ 531,316 , respectively, are reflected in cost of

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Following is a summary of fixed

assets held under finance leases as of December 31, 2024 and June 30, 2024:

SCHEDULE OF FIXED ASSETS HELD UNDER CAPITAL LEASES

December 31, 2024

June 30, 2024

Accumulated Depreciation - Net

assets held under capital leases, Total

lease term and discount rate were as follows:

Fixed assets held under

capital leases, Total

Finance lease term and discount

rate were as follows:

SCHEDULE OF FINANCE LEASE TERM

average remaining lease term - Finance leases

average discount rate - Finance leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

as financing and operating.

For certain leases, the Company has options to extend the lease term for additional periods ranging from

one year to 10 years.

Company treats a contract as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange

December 31, 2024

June 30, 2024

Weighted average remaining lease term - Finance leases

Weighted average discount rate - Finance leases

NOTE 10 - LEASES

The Company leases certain office

space, office equipment and autos with remaining lease terms of one year to 10 years under leases classified as financing and operating.

For certain leases, the Company has options to extend the lease term for additional periods ranging from one year to 10 years.

treats a contract as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange

for consideration, or the Company directs the use of the asset and obtains substantially all the economic benefits of the asset.

3 unchanged sentences

represent the Company’s obligation to make payments over the life of the lease.

A ROU asset and a lease liability are recognized

at commencement of the lease based on the present value of the lease payments over the life of the lease.

Initial direct costs are included

as part of the ROU asset upon commencement of the lease.

Since the interest rate implicit in a lease is generally not readily determinable

for the operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments.

A ROU asset and a lease liability are recognized at commencement

of the lease based on the present value of the lease payments over the life of the lease.

Initial direct costs are included as part of

the ROU asset upon commencement of the lease.

Since the interest rate implicit in a lease is generally not readily determinable for the

operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments.

The incremental

1 unchanged sentence

term to obtain an asset of similar value.

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

and lease liability accounts.

expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

payments change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not result

in a re-measurement of lease liabilities.

The Company’s variable lease payments include payments for finance leases that are adjusted

based on a change in the Karachi Inter Bank Offer Rate.

The Company’s lease agreements do not contain any significant residual

value guarantees or restrictive covenants.

balance sheet information related to leases was as follows:

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

lease assets, net

Operating, Current

Lease Liabilities

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

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.

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

liability accounts.

Lease expense

is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred.

Variable payments

change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not result in a re-measurement

of lease liabilities.

The Company’s variable lease payments include payments for finance leases that are adjusted based on a change

in the Karachi Inter Bank Offer Rate.

The Company’s lease agreements do not contain any significant residual value guarantees or restrictive

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

components of lease cost were as follows:

Supplemental balance sheet information

related to leases was as follows:

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

December 31, 2024

June 30, 2024

Operating lease assets, net

Operating, Current

Operating, Noncurrent

Total Lease Liabilities

The components of lease cost

were as follows:

SCHEDULE OF COMPONENTS OF 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:

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

Amortization of finance lease assets

Interest on finance lease obligation

Operating lease cost

Short term lease cost

Sub lease income

Total lease cost

Lease term and discount rate

were as follows:

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

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

the Three Months

September 30,

cash flows related to operating leases

cash flows related to finance leases

cash flows related finance leases

December 31, 2024

June 30, 2024

Weighted average remaining lease term - Operating leases

Weighted average discount rate - Operating leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

Supplemental disclosures of

cash flow information related to leases were as follows:

SCHEDULE OF SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION RELATED TO LEASES

For the Six Months

Ended December 31,

Operating cash flows related to operating leases

Operating cash flows related to finance leases

Financing cash flows related finance leases

Maturities of operating lease

liabilities were as follows as of December 31, 2024:

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

Lease Payments

Within year 1

Within year 2

Within year 3

Within year 4

Within year 5

Total Lease Payments

Imputed interest

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.

agreements provide for a fixed base rent and are currently on a month-by-month basis.

Present Value of lease liabilities

Current portion

Non-Current portion

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

These lease agreements

provide for a fixed base rent and are currently on a month-by-month basis.

All leases are considered operating leases.

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

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

payable and accrued expenses consisted of the following:

There are no rights

to purchase the premises and no residual value guarantees.

For the three and six months ended December 31, 2024, the Company received lease

income of $ 8,514 and $ 16,920 , respectively.

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

of $ 8,199 and $ 16,605 , respectively.

NOTE 11 - ACCOUNTS PAYABLE

AND ACCRUED EXPENSES

Accounts payable and accrued

expenses consisted of the following:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Payroll Taxes

December 31, 2024

June 30, 2024

Accounts Payable

Accrued Liabilities

Accrued Payroll

Accrued Payroll Taxes

Taxes Payable

Other Payable

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

payable and finance leases consisted of the following:

NOTE 12 – DEBTS

Notes payable and finance leases

consisted of the following:

SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

As of September 30, 2024

As of December 31, 2024

D&O Insurance

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

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

Short Term Financing

Subsidiary Finance Leases

As of June 30, 2024

D&O Insurance

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

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

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

The interest rate on these financings were ranging from 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.

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

Short Term Financing

Subsidiary Finance Leases

(1) The Company finances Directors’ and Officers’ (“D&O”)

liability insurance and Errors and Omissions (“E&O”) liability insurance, for which the D&O and E&O balances

are renewed on an annual basis and, as such, are recorded in current maturities.

The interest rate on these financings were ranging from

8.6 % to 10.9 % as of December 31, 2024 and June 30, 2024.

(2) The 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

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.

8.25 % at December 31, 2024 and 8.75 % as of June 30, 2024.

The total outstanding balance as of December 31, 2024 and June 30, 2024 was

$ 405,000 and $ nil , 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 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

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

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

As of September 30, 2024,

NTE was in compliance with this covenant.

(4) The Company’s

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

This is a revolving

loan that matures every nine months.

The total facility amount is Rs.

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

(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 $ 375,000 .

The annual interest rate

was 9.5 % as of December 31, 2024 and June 30, 2024.

The total outstanding balance as of December 31, 2024 and June 30, 2024 was £ Nil .

This overdraft facility requires that the aggregate amount of invoiced

trade debtors (net of provisions for bad and doubtful debts and excluding intra-group debtors) of NTE, not exceeding 90 days old,

will not be less than an amount equal to 200 % of the facility.

As of December 31, 2024, NTE was in compliance with this

(4) The Company’s subsidiary, NetSol PK, has an export refinance

facility with Askari Bank Limited, secured by NetSol PK’s assets.

This is a revolving loan that matures every nine months.

total facility amount is Rs.

500,000,000 or $ 1,793,915 at December 31, 2024 and Rs.

500,000,000 or $ 1,796,558 at June 30, 2024.

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

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

The total facility

amount is Rs.

53,000,000 or $ 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

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

This is a revolving

loan that matures every nine months.

rate for the loan was 10.0 % and 17.5 % at December 31, 2024 and June 30, 2024, respectively.

(5) The Company’s subsidiary, NetSol PK, has a running finance

facility with Askari Bank Limited, secured by NetSol PK’s assets.

The total facility amount is Rs.

3,550,937 or $ 12,740 , at December

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

The interest rate for the loan was 14.1 % at December

31, 2024 and 22.2 % at June 30, 2024.

This facility requires NetSol PK to maintain a long-term debt equity

ratio of 60:40 and a current ratio of 1:1.

As of December 31, 2024, NetSol PK was in compliance with this covenant.

(6) The Company’s subsidiary, NetSol PK, has an export refinance

facility with Samba Bank Limited, secured by NetSol PK’s assets.

This is a revolving loan that matures every nine months.

facility amount is Rs.

380,000,000 or $ 1,363,375 and Rs.

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

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

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

revolving loan that matures every nine months.

380,000,000 or $ 1,365,384 at December 31, 2024 and June 30, 2024, respectively.

The interest rate for the loan was 10.0 % and 17.5 % at December 31, 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 December 31, 2024, NetSol PK was in compliance with these

(7) The Company’s subsidiary, NetSol PK, has an export refinance

facility with Habib Metro Bank Limited, secured by NetSol PK’s assets.

This is a revolving loan that matures every nine months.

The total facility amount is Rs.

1,300,000,000 or $ 4,664,180 and Rs.

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

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

900,000,000 or $ 3,233,804 , at December 31, 2024 and June 30, 2024,

respectively.

NetSol PK used Rs.

1,300,000,000 or $ 4,664,180 and Rs.

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

700,000,000 or $ 2,515,181 , at December 31, 2024 and June 30, 2024,

respectively.

(8) The Company’s

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

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.

The interest rate for the loan was 10.0 % and 17.5 % at December 31, 2024 and June 30, 2024, respectively.

(8) The Company’s subsidiary, NetSol PK, availed sale and

leaseback financing from First Habib Modaraba secured by the transfer of the vehicles’ title.

As of December 31, 2024, NetSol PK

8,804,426 or $ 31,589 which was shown as current.

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

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

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.

15,819,683 or $ 56,842 of which $ 9,684

was shown as long term and $ 47,158 as current.

The interest rate for the loan was from 22.7 % to 24.2 % at December 31, 2024 and June 30,

(9) The 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.

amount is CNY 3,000,000 or $ 410,959 .

NetSol Beijing used CNY 3,000,000 or $ 410,959 at December 31, 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

various fixed assets under finance lease arrangements expiring in various years through 2027.

The assets and liabilities under finance

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

The assets are secured

by the assets themselves.

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

September 30, 2024 and 2023.

or $ 412,655 , at June 30, 2024.

The interest rate of the loan was 3.8 % at December 31, 2024 and June 30, 2024.

(10) The Company leases various fixed assets under finance lease

arrangements expiring in various years through 2027.

The assets and liabilities under finance leases are recorded at the lower of the

present value of the minimum lease payments or the fair value of the asset.

The assets are secured by the assets themselves.

of assets under finance leases is included in depreciation expense for the three months ended December 31, 2024 and 2023.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

Following are the aggregate

minimum future lease payments under finance leases as of December 31, 2024:

SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

Lease Payments

Minimum Lease Payments

Expense relating to future periods

Value of 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

Current portion

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)”.

Non-Current portion

Following are the aggregate

future long term debt payments as of December 31, 2024 which consists of “Sale and Leaseback Financing (8)”.

SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

Loan Payments

Within year 1

Within year 2

Total Loan Payments

Current portion

13 - STOCKHOLDERS’ EQUITY

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:

Non-Current portion

NOTE 13 - STOCKHOLDERS’

the three and six months ended December 31, 2024, the Company issued 15,174 and 29,124 shares of common stock for services rendered by

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

These shares were valued at the fair market value

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

During the three and six months

ended December 31, 2024, the employees of the Company exercised 190,000 and 200,000 options of common stock with an exercise price of

$ 2.15 per share for cash proceeds of $ 430,000 .

The following table summarizes

stock grants awarded as compensation:

SUMMARY OF UNVESTED STOCK GRANTS AWARDED AS COMPENSATION

# Number of shares

Average Grant Date Fair Value ($)

Weighted Average Grant Date Fair Value ($)

Unvested, June 30, 2024

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.

Unvested, December 31, 2024

three and six months ended December 31, 2024, the Company recorded compensation expense of $ 39,750 and $ 79,500 , respectively.

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

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

stock purchase options consisted of the following:

NOTE 14 – INCENTIVE

AND NON-STATUTORY STOCK OPTION PLAN

Common stock purchase options

consisted of the following:

OF COMMON STOCK PURCHASE OPTIONS

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.

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (in years)

Aggregated Intrinsic Value

Outstanding and exercisable, June 30, 2024

Expired / Cancelled

Outstanding and exercisable, December 31, 2024

The aggregate

intrinsic value at December 31, 2024 represents the difference between the Company’s closing stock price of $ 2.62 on December 31,

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

The following table summarizes

information about stock options outstanding and exercisable at December 31, 2024.

SUMMARY OF STOCK OPTIONS OUTSTANDING

15– OPERATING SEGMENTS

Company has identified three segments for its products and services;

Exercise Price

Number Outstanding and Exercisable

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

NOTE 15– OPERATING

has identified three segments for its products and services;

North America, Europe and Asia-Pacific.

Our reportable segments

are business units located in different global regions.

Our reportable segments are business

units located in different global regions.

Each business unit provides similar products and services;

license fees for leasing

and asset-based software, related maintenance fees, and implementation and IT consulting services.

Separate management of each segment

is required because each business unit is subject to different operational issues and strategies due to their particular regional location.

The Company accounts for intra-company sales and expenses as if the sales or expenses were to third parties and eliminates them in the

consolidation.

license fees for leasing and asset-based

software, related maintenance fees, and implementation and IT consulting services.

Separate management of each segment is required because

each business unit is subject to different operational issues and strategies due to their particular regional location.

The Company accounts

for intra-company sales and expenses as if the sales or expenses were to third parties and eliminates them in the consolidation.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

The following table presents

a summary of identifiable assets as of December 31, 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:

December 31, 2024

June 30, 2024

Identifiable assets:

Corporate headquarters

North America

Asia - Pacific

The following table presents

a summary of revenue streams by segment for the three months ended December 31, 2024 and 2023:

SUMMARY OF REVENUE STREAMS

Subscription and support

North America

The following table presents

a summary of revenue streams by segment for the six months ended December 31, 2024 and 2023:

Subscription and support

North America

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

The following table presents

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

SUMMARY OF OPERATING INFORMATION

the Three Months

September 30,

from unaffiliated customers:

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

Revenues from unaffiliated customers:

from affiliated customers

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

North America

Asia - Pacific

Revenues from unaffiliated customers

Revenue from affiliated customers

Asia - Pacific

Revenue from affiliated

Intercompany revenue

Asia - Pacific

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

Corporate headquarters

$ ( 103,088 )

$ ( 922,670 )

$ ( 765,146 )

$ ( 1,226,392 )

North America

Asia - Pacific

$ ( 1,186,206 )

$ ( 968,497 )

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

and amortization:

$ ( 1,186,206 )

$ ( 968,497 )

Depreciation and amortization:

North America

Asia - Pacific

Depreciation and amortization

Interest expense:

Corporate headquarters

Asia - Pacific

Income tax expense:

Asia - Pacific

Income tax expense

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

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

The following table presents

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

SUMMARY OF CAPITAL EXPENDITURES

the Three Months

September 30,

expenditures:

For the Six Months

Ended December 31,

Capital expenditures:

16 – NON-CONTROLLING INTEREST IN SUBSIDIARY

Company had non-controlling interests in several of its subsidiaries.

North America

Asia - Pacific

Capital expenditures

NOTE 16 – NON-CONTROLLING

INTEREST IN SUBSIDIARY

had non-controlling interests in several of its subsidiaries.

The balance of non-controlling interest was as follows:

SCHEDULE OF BALANCE OF NON-CONTROLLING INTEREST

Non-Controlling

Non-Controlling Interest %

Non-Controlling Interest

December 31, 2024

NetSol-Innovation

Non-Controlling

Non-Controlling Interest %

Non-Controlling Interest at

June 30, 2024

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 %.

the six months ended December 31, 2024, the Company acquired the remaining 177,558 minority shares from the non-controlling shareholders

for $ 8,878 .

As a result, the Company’s ownership interest increased, reducing the non-controlling interest from 5.59 % to 0.0 %.

The effective non-controlling interest in Otoz® Thai decreased to 0.01 %.

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.

The 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

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

Net income (loss) attributable to NetSol

$ ( 1,147,042 )

$ ( 1,076,247 )

Transfer to (from) non-controlling interest

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

17– INCOME TAXES

current tax provision is based on taxable income for the year determined in accordance with the prevailing law for taxation of income.

The charge for tax on income is calculated at the current rates of taxation as applicable after considering tax credit and tax rebates

available, if any.

Decrease in paid-in capital for purchase of 177,558 shares of OTOZ Inc common stock

Net transfer to (from) non-controlling interest

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

$ ( 1,178,046 )

$ ( 1,242,370 )

NOTE 17– INCOME TAXES

tax provision is based on taxable income for the year determined in accordance with the prevailing law for taxation of income.

for tax on income is calculated at the current rates of taxation as applicable after considering tax credit and tax rebates available,

We are subject to income taxes in the U.S.

and numerous foreign jurisdictions.

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.

Our effective tax rate will depend on the portion

of our profits earned within and outside the United States.

the three and six months ended December 31, 2024, the Company recorded an income tax provision of $ 331,614 and $ 561,431 , respectively.

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

NOTE 18– SUBSEQUENT EVENTS

NetSol PK announced a share buyback program for the

repurchase of up to 10,000,000 shares representing approximately 11.1% of the estimated 89,837,000 outstanding shares.

The buyback program

was announced on January 3, 2025, and will continue through June 29, 2025.

As of February 10, 2025, NetSol PK had repurchased approximately

2,358,000 shares valued at approximately $ 1,345,000 .

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