What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-09-29 compared with 2024-09-30 · 236 added, 327 removed, 364 unchanged (61% of the section changed)

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Report on Form 10-K.

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

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

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

retail platform across the automaker’s US dealerships.

The implementation aims to enhance

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

This partnership

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

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

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

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

$110 million.

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

the customer, which was initially signed in 2015.

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

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

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

focused on delivering various digital and business services.

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

requests from multiple customers across various regions.

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

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

marketplace”.

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

product, reinforcing confidence in its SaaS offerings.

FLEX™ serves as an instant,

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

services, and ecosystems.

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

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

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

the potential for enhanced operational efficiency for clients.

By leveraging DOCK™,

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

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

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

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

leasing company based in the Netherlands.

This contract is expected to generate approximately

$1 Million in revenues over forthcoming quarters.

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

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

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

for another three years.

The extension generated approximately $1.1 million in revenues.

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

organization.

below are a few of NetSol’s highlights for the Year ended June 30, 2025:

signed a multi-year agreement with the captive finance arm of a leading Japanese automotive manufacturer to implement its flagship Transcend™

Finance platform across both retail and wholesale operations in Australia and New Zealand.

The agreement, structured with a five-year

total cost of ownership of approximately $21 million, reflects the client’s strategic commitment to deploying a unified, next-generation

The platform implementation is aimed at driving enterprise-wide operational efficiencies, supporting digital transformation

objectives, and enhancing long-term scalability and regulatory readiness across the Australia/New Zealand finance ecosystem.

successfully executed a binding, multi-year maintenance and technical upgrade agreement with the captive finance arm of a leading Japanese

automotive manufacturer.

The agreement, with a total cost of ownership exceeding $4 million, governs the upgrade and extended support

of the client’s retail finance platform through 2027.

The scope includes comprehensive system upgrades, implementation of enhanced

security protocols, performance optimization, and full-cycle testing.

broadened our revenue base and expanded our managed service portfolio by securing three new client engagements covering audit, business

process outsourcing (BPO), and standby services.

One of these clients is already live on our redesigned standby platform.

Collectively,

these contracts are expected to contribute nearly $400,000 in incremental revenues over their respective terms, pursuant to the terms

and service levels defined in each executed agreement.

formalized an agreement with the captive finance division of a prominent North American automotive retailer to conduct a structured discovery

and assessment phase.

This engagement, projected to generate approximately $800,000 in revenue, is aimed at evaluating current platform

capabilities, identifying custom development opportunities, and defining the scope for a future technology solution.

The outcome of this

phase will inform a potential omnichannel transformation strategy focused on enhancing customer experience and operational efficiency.

have generated approximately $6.1 million in revenue through the successful implementation of client-approved platform modifications

and enhancement requests.

These initiatives were executed across multiple regional markets in accordance with the terms of individual

service orders, ensuring continuity, improved performance, and alignment with evolving business needs.

entered into an agreement with a Chinese leasing company to deploy our Transcend™ Finance Suite, including Omni POS, Contract Management

System, and a customized funding platform compliant with local regulations.

The contract is expected to generate approximately $2.7 million

in revenue during the contract term.

partnered with Sindbad Management SPC to implement Transcend™ Finance Platform (Point-of-Sale, Credit Underwriting, Contract Management)

under a scalable pricing model, supporting high-value asset financing and regional growth.

The contract is expected to generate $1.7

million in revenue during the contract term.

secured $1 million in additional revenue for the ongoing Transcend™ Retail Platform implementation for a U.S.

auto manufacturer,

driven by customizations to meet their evolving business needs.

amended an agreement with an existing UK/EU client that will provide additional revenue of €3 million, further strengthening the

long-term partnership.

hired a Vice President of Artificial Intelligence, who has 15+ years in fintech, insurance, and entertainment, to lead Transcend™

AI Labs, accelerating our AI-first strategy in asset finance.

announced the go-live of our Transcend™ Finance platform for the Australian operations of a leading Japanese equipment finance

company, building on our existing partnership in New Zealand and enhancing their regional operations with additional digital self-service

and Business Development Activities

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

growth across our business lines.

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

base, and maintaining a careful focus on profitability.

Investment in Marketing:

Given the current favorable market environment, we have increased

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

While expanding

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

expenditures yield strong returns.

on New Product and Service Offerings:

We are growing our focus on our new product and service

lines that present significant growth opportunities for the business.

New Market Segments:

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

more effectively.

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

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

Repositioning

Our Brand and Messaging:

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

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

Focus on Digital Marketing:

We have made significant investments in digital marketing channels

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

These efforts are aimed

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

and AI Integration:

We continue to prioritize innovation, particularly in the development

of new product features powered by AI.

This includes expanding our in-house AI talent to

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

to manage costs and support business growth.

Through Strategic Partnerships:

To further fuel our growth prospects, we are actively building

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

collaborations broaden our reach and reinforce our market position.

Strengthening

Leadership and Talent Acquisition:

We remain committed to appointing and retaining top talent

across both technical and non-technical roles.

Consulting and Professional Service Expertise:

We continue to expand our consulting and professional

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

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

across all the industries we support.

continue to pursue a series of strategic marketing and business development initiatives to capitalize on favorable market conditions

and drive growth across our business lines.

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

customer base and maintaining a careful focus on profitability.

These efforts include:

repositioning our brand and messaging;

brand strengthening

and awareness;

raising industry expertise through speaking engagements and participation in awards and recognitions;

accelerating digital

campaigns focused on content marketing;

leveraging analytics and marketing automation tools to improve campaign effectiveness and optimize

marketing return on investment;

creating comprehensive go-to-market plans for new launches and feature upgrades;

customer centric sales

targeting new global and product markets;

using AI to enhance productivity;

expanding market reach through participation

in industry associations;

and, adopting practices that strengthen leadership and talent retention.

TRENDS AFFECTING NETSOL

has identified the following material trends affecting NETSOL.

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

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

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

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

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

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

(S&P Global Mobility)

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

(YCharts August 30, 2024)

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

teams for its core offerings.

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

(Clean Technica-September 1, 2024)

to S&P Global Mobility, the forecast for new vehicle sales worldwide in 2025 is 89.6

million units, which is a modest 1.7% year-over-year growth in light vehicle sales.

US automotive sales of new vehicles in 2025 are expected to be around 16.2 million units,

which is a 1.2% to 1.4% increase from 2024.

This would be the highest annual sales figure

annual inflation rate remained steady for the U.S.

at 2.7% for the 12 months ending July

(USinflationcalculator.com)

to recent forecasts, China’s auto sales in 2025 are expected to reach approximately

32.9 million units representing a 4.7% year-over-year increase.

Sales of New Energy Vehicles

account of 48.7% of all new car sales in China.

(China Automobile Manufacturers Association)

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

billion from the originally planned $46 billion, in Pakistan energy and infrastructure sectors.

Last June, China authorized a new $2.3 billion loan at a discounted rate to Pakistan as a

short-term loan.

billion from the originally planned $46 billion, in Pakistan’s energy and infrastructure

In June 2024, China authorized a new $2.3 billion loan at a discounted rate to Pakistan

as a short-term loan.

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

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Automotive Mobility Market Simulation Tool)

global automotive finance market accounted for $245 billion in 2022 and is expected to more

than double by 2035 at a CAGR of 7.4% according to Precedence Research.

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

This report reflects

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

(Associated Press August 29, 2024)

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

global automotive finance market accounted for $378,957 billion in 2024 and is expected to

increase to $798,657 billion by 2035 at a CAGR of 7.7% according to Global Growth Insights.

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

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

has expanded to neighboring nations such as Syria, Lebanon, and Iran.

The unrest and turmoil

in the region are viewed unfavorably by the regional business community.

economic conditions in our geographic markets;

inflation, pending U.S.

elections, geopolitical

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

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

interest rates set by the U.S.

Federal Reserve Board is restricting buying power for some

monetary, and economic challenges and a higher inflation rate than other regional countries

impacting Pakistan exports.

and higher interest rates globally have greatly increased the cost of doing business, including

salaries and benefits worldwide, affecting profitability.

and hostility between Russia and Ukraine continue to foster global economic uncertainty.

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

Pakistan’s political uncertainty has caused higher inflation with constant

pressure on its currency being devalued against the US Dollar.

According to a report issued

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

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

There is no guarantee that such reforms will be implemented.

See Press Release,

dated April 2, 2024, World Bank.

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

the two countries continue.

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

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

imported from China.

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

inflation, economic uncertainty, and increased

operational costs are pressuring margins and leading companies to prioritize critical investment

and control spending.

cybersecurity faces unprecedented challenges as companies increasingly migrate critical functions

to cloud platforms.

Proliferation of AI tools within these platforms has created additional

attack vectors that require specialized security approaches beyond legacy protections.

imposition of tariffs on China and on other US trading partners may affect the price of consumer

goods including vehicles amongst others, negatively affecting the profitability of many of

our customers.

ACCOUNTING POLICIES

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the lease and finance industry.

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

a traditional on-premises licensing

The Company offers its software using the same underlying technology via a traditional on-premises licensing

model and a subscription model.

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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”)

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

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

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The Company has applied the following practical expedients:

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

transfer of the promised items to the customer.

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

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

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

of the promised items to the customer.

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

or less or the commissions are based on cash received.

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

Statement of Operations.

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

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

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

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

to Obtain a Contract

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dates, including fulfillment duties and collections efforts.

assets consist of product licenses, renewals, enhancements, copyrights, trademarks, trade names, and customer lists.

Intangible assets

with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis and whenever

events or changes in circumstances indicate that the carrying value may not be recoverable.

We assess recoverability by determining whether

the carrying value of such assets will be recovered through the undiscounted expected future cash flows.

If the future undiscounted cash

flows are less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over

the fair value of the assets.

DEVELOPMENT COSTS

incurred to internally develop computer software products or to enhance an existing product are recorded as research and development

costs and expensed when incurred until technological feasibility for the respective product is established.

Thereafter, all software

development costs are capitalized and reported at the lower of unamortized cost or net realizable value.

Capitalization ceases when the

product or enhancement is available for general release to customers.

Company makes on-going evaluations of the recoverability of its capitalized software projects by comparing the amount capitalized for

each product to the estimated net realizable value of the product.

If such evaluations indicate that the unamortized software development

costs exceed the net realizable value, the Company writes off the amount which the unamortized software development costs exceed net

realizable value.

Capitalized and purchased computer software development costs are being amortized ratably based on the projected revenue

associated with the related software or on a straight-line basis.

stock-based compensation expense is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton

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compensation expense may differ materially in the future from that recorded in the current period.

In addition, we are required to estimate

the expected forfeiture rate and only recognize expense for those shares expected to vest.

We estimate the forfeiture rate based on historical

experience and our expectations regarding future pre-vesting termination behavior of employees.

To the extent our actual forfeiture rate

is different from our estimate;

stock-based compensation expense is adjusted accordingly.

The Company recognizes compensation expense net of actual forfeitures as they occur.

Accordingly, no estimate is

made for the future forfeitures at the time of grant.

represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase business combination.

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amount of goodwill may be impaired.

In conducting its annual impairment test, the Company first

reviews qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its

carrying amount.

If factors indicate that the fair value of the reporting unit is less than its carrying amount, the Company performs

a quantitative assessment and the fair value of the reporting unit is determined by analyzing the expected present value of future cash

If the carrying value of the reporting unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill

is calculated and an impairment loss equal to the excess is recorded.

In conducting its annual impairment test, the Company first reviews qualitative factors to determine

whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

If factors indicate that

the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment, and the fair value

of the reporting unit is determined by analyzing the expected present value of future cash flows.

If the carrying value of the reporting

unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal

to the excess is recorded.

Accounting Pronouncement

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For the Years

Ended June 30,

Net Revenues:

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Selling, general and administrative

and development cost

Research and development cost

Total operating expenses

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Interest income

Gain (loss) on foreign

currency exchange transactions

Share of net loss from

equity investment

income (expense)

Gain (loss) on foreign currency exchange transactions

Total other income (expenses)

Net income (loss) before income

tax provision

Net income (loss)

Non-controlling

income (loss) attributable to NetSol

$ (5,243,748 )

Net income (loss) per share:

Net income (loss) per common

Net income before income taxes

Income tax provision

Non-controlling interest

Net income attributable to NetSol

Net income per share:

Net income per common share

Weighted average number of shares outstanding

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(Unfavorable)

Ended June 30,

Net Revenues:

2 unchanged sentences

Income (loss) from operations

$ (8,779,958 )

revenues for the years ended June 30, 2025 and 2024 by segment are as follows:

North America

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

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

fees for the year ended June 30, 2025 were $598,633 compared to $5,449,991 for the year ended June 30, 2024 reflecting a decrease of

$4,851,358 with a change in constant currency of $4,855,917.

In the fiscal year ended June 30, 2025, we recognized approximately $487,000

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

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

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

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

In the fiscal year ended June 30,

2023, we recognized approximately $1,918,000 related to a new NFS Ascent ® agreement with Kubota in Australia and approximately

$188,000 related to a new agreement with the Government of Khyber Pakhtunkhwa for the sale of our Ascent ® product.

from a new customer in Indonesia.

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

of our NFS Ascent ® CMS software to a renowned US auto manufacturer based in China, and we recognized approximately $1,142,000

related to the license renewal with an existing customer, and we recognized approximately $465,000 related to the additional sale of

our NFS Ascent® CMS software to a renowned German auto manufacturer based in China, and we recognized approximately $610,000 related

to selling licenses of our digital applications to a current Indonesian customer.

and support fees for the year ended June 30, 2025, were $32,934,648 compared to $27,952,768 for the year ended June 30, 2024 reflecting

an increase of $4,981,880 with an increase in constant currency of $4,788,597.

Subscription and support fees are recurring in nature,

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

The increase includes a one-time catch up of approximately

$1,693,000 from five of our customers.

Subscription and support fees are recurring in nature, and we anticipate these fees to gradually

increase as we increase our SaaS customer base and implement NFS Ascent ® .

income for the year ended June 30, 2025, was $32,554,948 compared to $27,990,332 for the year ended June 30, 2024, reflecting an increase

of $4,564,616 with an increase in constant currency of $4,160,167.

The increase in services revenue on a constant currency basis is due

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

Services revenue is derived from services provided to both current customers as well as services provided to new customers as

part of the implementation process.

The increase is mainly due to implementation services in APAC, the

gross profit was $32,574,532 for the year ended June 30, 2025, compared with $29,284,870 for the year ended June 30, 2024.

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increased to 49.3% from 47.7% for the year ended June 30, 2024.

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

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

The cost of sales was $33,513,697 for the year ended June 30, 2025, compared

to $32,108,221 for the year ended June 30, 2024, for an increase of $1,405,476 and on a constant currency basis an increase of $1,007,408.

As a percentage of sales, cost of sales decreased from 52.3% for the year ended June 30, 2024, to 50.7% for the year ended June 30, 2025.

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

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

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

employees, respectively.

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

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

June 30, 2024.

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

currency basis increased by $807,100.

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

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

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

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

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

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

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

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

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

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

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

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

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

and consultant fees increased by $2,174,558 from $23,622,907 for the year ended June 30, 2024, to $25,797,465 for the year ended June

30, 2025, and on a constant currency basis increased by $1,869,462.

The increase is due to annual increases in salary.

As a percentage

of sales, salaries and consultant expense increased from 38.5% for the year ended June 30, 2024, to 39.0% for the year ended June 30,

decreased by $879,931 from $2,943,442 for the year ended June 30, 2024, to $2,063,511 for the year ended June 30, 2025, and on a constant

currency basis decreased by $901,699.

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

As a percentage of sales, travel expense decreased from 4.8% for year ended June 30, 2024, to 3.1% for the year ended June 30, 2025.

and amortization expense decreased to $952,331 compared to $1,144,809 for the year ended June 30, 2024, or a decrease of $192,478 and

on a constant currency basis a decrease of $202,630.

costs increased to $4,700,390 for the year ended June 30, 2025, compared to $4,397,063 for the year ended June 30, 2024, or an increase

of $303,327 and on a constant currency basis an increase of $242,275.

The increase is mainly due to increase in third party hardware

costs of approximately $267,000.

expenses were $29,072,814 for the year ended June 30, 2025, compared to $25,791,315, for the year ended June 30, 2024, for an increase

of $3,281,499 and on a constant currency basis an increase of $3,452,110.

As a percentage of sales, it increased from 42.0% to 44.0%.

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

and development costs.

and marketing expenses increased by $2,742,951 and on a constant currency basis increased by $2,603,499.

The increase in constant currency

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

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

The increase is mainly due to

increases in salaries of approximately $2,200,000, travel of approximately $257,000 and other selling expenses of approximately $288,000.

and administrative expenses were $17,501,610 for the year ended June 30, 2025, compared to $16,836,339 at June 30, 2024, or an increase

of $665,271, and on a constant currency basis an increase of $992,703.

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costs and subsidiary options granted to staff in NetSol PK.

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

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

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

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

The provision for doubtful accounts increased by approximately $496,000 and

on a constant currency basis increased by approximately $477,000.

Other general and administrative costs decreased by approximately $518,000

and on a constant currency basis a decrease of approximately $58,000.

and development costs decreased by approximately $127,000 and on a constant currency basis a decrease of approximately $144,000.

from Operations

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

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

2024 compared with the year ended June 30, 2023.

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

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

Income and Expense

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

from operations was $3,501,718 for the year ended June 30, 2025, compared to $3,493,555 for the year ended June 30, 2024.

This represents

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

The decrease is primarily due to the foreign currency

exchange transactions off set by recording other comprehensive loss and an impairment in our Drivemate investment and an increase in

interest expense.

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

This represents an

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

Interest income is earned on cash maintained in interest bearing

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

a slight increase of $8,163 with a decrease of $274,727 on a constant currency basis for the year ended June 30, 2025, compared with

the year ended June 30, 2024.

As a percentage of sales, income from operations was 5.3% for the year ended June 30, 2025, compared to

5.7% for the year ended June 30, 2024.

Income and Expense

income was $2,545,539 for the year ended June 30, 2025, compared to other expense of $270,108 for the year ended June 30, 2024.

represents an increase of $2,815,647 with an increase of $2,796,342 on a constant currency basis.

The increase is primarily due to the

foreign currency exchange transactions.

the year ended June 30, 2025, we recognized a gain of $1,301,613 in foreign currency exchange transactions compared to a loss of $1,187,320

for the year ended June 30, 2024.

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

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During the year ended June 30, 2025, the value of the U.S.

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

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

dollar and the Euro increased 2.1% and 11.9%, respectively, compared

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

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

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

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

in other expenses for the year ended June 30, 2023, is $324,000 and $650,000 related to other comprehensive loss on liquidation of NTPK

Thailand and WRLD3D, respectively.

These amounts were reclassified from other comprehensive income to the statement of operations for

the year ended June 30, 2023.

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

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

Non-controlling

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Income (Loss) Attributable to NetSol

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

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

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

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

was $0.46 for basic and diluted shares.

income was $2,923,233 for the year ended June 30, 2025, compared to $683,873 for the year ended June 30, 2024.

This is an increase in

income of $2,239,360 with an increase of $1,678,200 on a constant currency basis, compared to the prior year.

For the year ended June

30, 2025, net income per share was $0.25 for basic and diluted shares.

For the year ended June 30, 2024, net income per share was $0.06

for basic and diluted shares.

Financial Measures

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adjusted EBITDA is EBITDA plus stock-based compensation expense.

EBITDA per basic and diluted share – Adjusted EBITDA allocated to common stock divided by the weighted average shares outstanding

and diluted shares outstanding.

EBITDA per basic and diluted share – Adjusted EBITDA allocated to common stock divided

by the weighted average shares outstanding and diluted shares outstanding.

use non-GAAP measures internally to evaluate the business and believe that presenting non-GAAP measures provides useful information to

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Net Income (loss) attributable to NetSol

$ (5,243,748 )

Non-controlling interest

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Adjusted EBITDA, net

$ (2,263,594 )

Weighted Average number of shares outstanding

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Diluted adjusted EBITDA

(a)The reconciliation of adjusted EBITDA of non-controlling interest to net income attributable to

non-controlling interest is as follows:

(a)The reconciliation of adjusted EBITDA of non-controlling interest to net income attributable to non-controlling interest is as follows

Net Income (loss) attributable to non-controlling interest

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at June 30, 2025, compared to $13,049,614 at June 30, 2024.

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

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

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

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

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

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

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

at June 30, 2024.

Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $8,232,342 and

$6,276,125, respectively, at June 30, 2024.

Accounts payable and accrued expenses, and current portions of loans and lease obligations

amounted to $6,552,181 and $5,779,510, respectively, at June 30, 2023.

The average days sales outstanding for the years ended June 30,

2024 and 2023 were 151 and 168 days respectively.

The days sales outstanding have been calculated by taking into consideration the average

combined balances of accounts receivable and revenue in excess of billings.

We had revenues in excess of billings of $19,134,385 at June 30, 2025, compared

to $13,638,547 at June 30, 2024, of which $903,766 and $954,029 are shown as long term as of June 30, 2025, and 2024, respectively.

long-term portion was discounted by $208,037 and $152,446 at June 30, 2025, and 2024, respectively, using the discounted cash flow method

with interest rates ranging from 4.2% to 17.5%, for the year ended June 30, 2025, and 2024 respectively.

During the year ended June 30,

2025, our revenues in excess of billings were reclassified to accounts receivable pursuant to billing requirements detailed in each contract.

The combined totals for accounts receivable and revenues in excess of billings decreased by $26,204 from $26,688,161 at June 30, 2024,

to $26,661,957 at June 30, 2025.

Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted

to $8,010,844 and $8,240,061, respectively, at June 30, 2025.

Accounts payable and accrued expenses, and current portions of loans and

lease obligations amounted to $8,232,342 and $6,276,125, respectively, at June 30, 2024.

The average days sales outstanding for the years

ended June 30, 2025, and 2024 were 147 and 151 days respectively.

The days sales outstanding have been calculated by taking into consideration

the average combined balances of accounts receivable and revenue in excess of billings.

cash used by investing activities amounted to $1,274,865 for the year ended June 30, 2025, compared to $291,538 for the year ended June

We had net purchases of property and equipment of $1,265,987 compared to $291,538 for the comparable period last fiscal year.

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

June 30, 2024, and 2023, respectively.

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

treasury shares.

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

period last year.

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

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

We are operating in various geographical regions of the world through our various subsidiaries.

Those subsidiaries have financial arrangements from various financial institutions to meet both their short and long-term funding requirements.

cash provided by financing activities was $822,881 compared to $239,551, for the years ended June 30, 2025, and 2024, respectively.

the year ended June 30, 2025, we received bank proceeds of $2,920,149 compared to $756,936 during the year ended June 30, 2024.

the year ended June 30, 2025, we had net payments for bank loans and capital leases of $773,535 compared to $517,385 for the year ended

June 30, 2024.

During the year ended June 30, 2025, Company employees exercised 220,00 options of common stock for $473,000, NetSol PK,

a subsidiary of the Company, paid a dividend of $306,799 to the non-controlling shareholders, and NetSol PK purchased 2,690,251 shares

of its common stock from the open market for $1,503,662.

We are operating in various geographical regions of the world through our various

subsidiaries.

Those subsidiaries have financial arrangements from various financial institutions to meet both their short and long-term

funding requirements.

These loans will become due at different maturity dates as described in Note 12 of the financial statements.

We are in compliance with

the covenants of the financial arrangements and there is no default which may lead to early payment of these obligations.

We anticipate

paying back all these obligations on their respective due dates.

are in compliance with the covenants of the financial arrangements and there is no default which may lead to early payment of these obligations.

We anticipate paying back all these obligations on their respective due dates.

typically fund the cash requirements for our operations in the U.S.

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Although our requirements

for capital expenses vary from time to time, for the next 12 months, we anticipate needing working capital of $2 to $3 million for APAC,

for capital expenses vary from time to time, for the next 12 months, we anticipate needing working capital of $1.5 to $2 million for

and European new business development activities and infrastructure enhancements.

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The Pakistani subsidiary, NetSol PK has an approved facility for

export refinance from Askari Bank Limited amounting to Rupees 500 million ($1,796,558) and a running finance facility of Rupees 53.6

million ($192,591).

NetSol PK has an approved facility for export refinance from another Habib Metro Bank Limited amounting to Rupees

900 million ($3,233,804).

These facilities require NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio

NetSol PK also has an approved export refinance facility of Rs.

export refinance from Askari Bank Limited amounting to Rupees 600 million ($2,111,561) and a running finance facility of Rupees 4.1 million

NetSol PK has an approved facility for export refinance from another Habib Metro Bank Limited amounting to Rupees 1.3 billion

($4,575,048).

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

PK also has an approved export refinance facility of Rs.

380 million ($1,337,322) from Samba Bank Limited.

tenure of loan, these two facilities 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.

During the loan tenure, these

two facilities 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.

of the date of this report, we are in compliance with the financial covenants associated with our borrowings.

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Contractual Obligation

More than 5 years

Debt Obligations

D&O Insurance

Bank Overdraft Facility

Bank Overdraft Facility II

Term Finance Facility

Loan Payable Bank - Export Refinance

Loan Payable Bank - Running Finance

Loan Payable Bank - Export Refinance II

Loan Payable Bank - Export Refinance III

Term Finance Facility

Sale and Leaseback Financing

Insurance financing

Short Term Loan

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis