What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-05-14 · 234 added, 391 removed, 318 unchanged (66% of the section changed)

1 unchanged sentence

following discussion is intended to assist in an understanding of the Company’s financial position and results of operations for

the three months ended March 31, 2025.

The following discussion should be read in conjunction with the information included within our

Annual Report on Form 10-K for the year ended June 30, 2024, and the Condensed Consolidated Financial Statements and notes thereto included

elsewhere in this Quarterly Report on Form 10-Q.

the three months ended September 30, 2025.

The following discussion should be read in conjunction with the information included within

our Annual Report on Form 10-K for the year ended June 30, 2025, and the Condensed Consolidated Financial Statements and notes thereto

included elsewhere in this Quarterly Report on Form 10-Q.

website is located at https://netsoltech.com/ , and our investor relations website is located at https://ir.netsoltech.com .

The following filings are available through our investor relations website after we file with the SEC:

Annual Reports on Form 10-K,

Quarterly Reports on Form 10-Q, and our Proxy Statements for our annual meetings of stockholders.

These filings are also available

for download free of charge on our investor relations website.

Annual Reports on Form 10-K, Quarterly

Reports on Form 10-Q, and our Proxy Statements for our annual meetings of stockholders.

These filings are also available for download

free of charge on our investor relations website.

We also provide a link to the section of the SEC’s website at www.sec.gov

that has all of our public filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form

8-K, all amendments to those reports, our Proxy Statements and other ownership related filings.

Further, a copy of this Quarterly

Report on Form 10-Q is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C.

Information on

the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

that has all of our public filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,

all amendments to those reports, our Proxy Statements and other ownership related filings.

Further, a copy of this Quarterly Report on

Form 10-Q is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C.

Information on the operation

of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations

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and leveraging advanced AI and cloud services to meet the complex needs of the global market.

for a deep industry expertise, customer-centric approach and commitment to excellence, NetSol seeks to foster strong partnerships with its

for its deep industry expertise, customer-centric approach and commitment to excellence, NetSol fosters strong partnerships with its

clients, ensuring their success in an ever-evolving landscape.

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We understand the unique challenges faced by these

institutions, which is why we offer innovative cloud implementation solutions without any license fees, with rapid deployments and

with the ability to scale.

Further, our out-of-the-box, API-first products are designed to seamlessly integrate into existing

systems, providing flexibility and scalability that smaller institutions often need.

By prioritizing accessibility and ease of use,

we empower smaller financial companies to enhance their service offerings and streamline operations, positioning ourselves as a

trusted partner in their digital transformation journey.

institutions, which is why we offer innovative cloud implementation solutions without any license fees, with rapid deployments and the

with ability to scale.

Further, our out-of-the-box, API-first products are designed to seamlessly integrate into existing systems, providing

flexibility and scalability that smaller institutions often need.

By prioritizing accessibility and ease of use, we empower smaller financial

companies to enhance their service offerings and streamline operations, positioning ourselves as a trusted partner in their digital transformation

in 1997, NetSol is headquartered in Encino, California.

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of solutions and services, it continues to maintain regional offices in the following locations:

North America

Encino, California and Austin, Texas

London Metropolitan area, Horsham and Flintshire

Lahore, Karachi, Bangkok, Beijing, Tianjin, Jakarta and Sydney

California and Austin, Texas

Metropolitan area, Horsham and Flintshire

Karachi, Bangkok, Beijing, Tianjin, Jakarta and Sydney

believe that our strong technology solutions offer our customers a return on their investment and allows us to thrive in a hyper competitive

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for us and a unique value for our customers.

We continue to underpin our proven and effective business model which is a combination of

careful cost arbitrage, subject matter expertise, domain experience, scalability and proximity with our global and regional customers.

We continue to underpin our proven and effective business model, which is a combination

of careful cost arbitrage, subject matter expertise, domain experience, scalability and proximity with our global and regional customers.

expertise in enterprise technology and financial application development has helped us emerge as a global player in the finance and leasing

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the same facilities and competencies to extend our services to related segments, including but not limited to:

● Information

ML and data analytics

Generative AI

technologies|

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helping companies stay ahead in a competitive market.

below are a few of NetSol’s highlights for the quarter ended March 31, 2025:

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 revenues 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 revenues during the contract term.

generated $1.1 million through modifications and system enhancements for multiple clients across diverse regions.

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

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

generated approximately $1.6 million in revenue through major system enhancements and platform

modifications for multiple clients across diverse global regions.

entered into a strategic agreement with an existing client to not only have the annual maintenance

fee revised upwards but also to upgrade our legacy R1 platform, a project expected to generate

approximately $1.5 million in revenues.

launched Check AI, a groundbreaking AI-native credit decisioning engine integrated into our

Transcend platform, marking a major step forward in transforming automated underwriting through

faster decision-making and superior accuracy.

were selected by a Fortune 500 automotive and powersports dealership group in North America

to lead a discovery engagement with them focused on defining the roadmap for their next-gen

omnichannel digital retail platform to be powered by our Transcend Retail system.

finance arm of a leading Chinese construction equipment company in Indonesia successfully

went live with our Transcend Finance solution.

has identified the following material trends affecting NetSol.

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.

to S&P Global Mobility and Edmunds, the US automotive sales of new vehicles in 2025 are expected to be around 16.2 million units,

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, and the

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 since 2019.

annual inflation rate for the U.S.

was 2.4% for the 12 months ending March 2025.

(USinflationcalculator.com)

market remains strong and resilient for NetSol to continue investing in building local teams for its core offerings.

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.

This would be the highest annual sales figure

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

(NEV) account for 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’s energy and infrastructure sectors.

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 over $425 billion combined, by 2035

or a compound CAGR of 5% from 2022.

(Deloitte Global Automotive Mobility Market Simulation Tool)

global automotive finance market accounted for $245 billion in 2022 and is expected to more than double by 2035 at a CAGR of 7.4%

according to Precedence Research.

China’s sales target for NEVs in 2025 is projected to reach 15.5 million units, amounting

to a 20% rise over 2024 figures (Fastmarkets, September 19, 2025).

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

to over $425 billion combined by 2035 or a compound CAGR of 5% from 2022 (Deloitte Global

Automotive Mobility Market Simulation Tool).

global automotive finance market size was valued at approximately $295.13 billion in 2024

and is projected to reach USD 451.71 billion by 2030, representing a compound annual growth

rate (CAGR) of 7.4% from 2025 through 2030 (Grandview Research).

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

The conflict has expanded to neighboring nations

such as Syria, Lebanon and Iran.

The unrest and turmoil in the region is viewed unfavorably by the regional business community.

economic conditions in our geographic markets;

inflation, geopolitical tensions, including trade wars, tariffs and/or sanctions in

geographic areas;

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

imposition of tariffs on China and threatened tariffs 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.

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 prospects.

Pakistan’s political

uncertainty has caused higher inflation with constant pressure on its currency being devalued against the US Dollar.

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 recovery.

There is no guarantee that such reforms will be implemented.

See Press Release, dated April 2, 2024, World Bank.

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).

The US imposed additional

tariffs on China in February 2025 with retaliatory tariffs from China on US goods.

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.

While recent ceasefire

efforts may signal a positive change to the volatility in the region, there is no guarantee

that the ceasefire will hold or that any outcome of the conflict will positively affect the

economic conditions in our geographic markets, 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 (JOSYS.COM).

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.

the phase-out of the U.S.

federal tax credits for EVs, sales have declined and the outlook

for recovery in EV demand is poor in the near future (marklines.com).

IN FINANCIAL CONDITION

Ended March 31, 2025 Compared to the Quarter Ended March 31, 2024

following table sets forth the items in our unaudited condensed consolidated statement of operations for the three months ended March

Ended September 30, 2025 Compared to the Quarter Ended September 30, 2024

following table sets forth the items in our unaudited condensed consolidated statement of operations for the three months ended September

30, 2025 and 2024 as a percentage of revenues.

the Three Months

general and administrative

and development cost

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

average number of shares outstanding

significant portion of our business is conducted in currencies other than the U.S.

We operate in several geographical regions

as described in Note 15 “Operating Segments” within the Notes to the Condensed Consolidated Financial Statements.

of the value of the U.S.

dollar compared to foreign currency exchange rates generally has the effect of increasing our revenues but also

increasing our expenses denominated in currencies other than the U.S.

Similarly, strengthening of the U.S.

dollar compared to

foreign currency exchange rates generally has the effect of reducing our revenues but also reducing our expenses denominated in currencies

other than the U.S.

We plan our business accordingly by deploying additional resources to areas of expansion, while continuing

to monitor our overall expenditures given the economic uncertainties of our target markets.

In order to provide a framework for assessing

how our underlying businesses performed excluding the effect of foreign currency fluctuations, we compare the changes in results from

one period to another period using constant currency.

In order to calculate our constant currency results, we apply the current period

results to the prior period foreign currency exchange rates.

In the table below, we present the change based on actual results in reported

currency and in constant currency.

(Unfavorable)

For the Three Months

Change due to

(Unfavorable)

For the Three Months Ended September 30,

Net Revenues:

Subscription and support

Total net revenues

Cost of revenues

Operating expenses:

Selling, general and administrative

Research and development cost

Total operating expenses

Income (loss) from operations

revenues for the three months ended March 31, 2025 and 2024 are broken out among the segments as follows:

North America

fees for the three months ended March 31, 2025 were $1,198 compared to $558,340 for the three months ended March 31, 2024 reflecting

a decrease of $557,142 with a decrease in constant currency of $557,142.

During the three months ended March 31, 2024, we recognized

approximately $465,000 related to the additional sale of our NFS Ascent® CMS software to a renowned German auto manufacturer based

and support fees for the three months ended March 31, 2025 were $7,888,360 compared to $7,140,358 for the three months ended March 31,

2024 reflecting an increase of $748,002 with an increase in constant currency of $768,805.

Subscription and support fees begin once a

customer has “gone live” with our product.

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

fees to gradually increase as we implement both our NFS legacy products and NFS Ascent ® .

income for the three months ended March 31, 2025 was $9,654,399 compared to $7,765,818 for the three months ended March 31, 2024 reflecting

an increase of $1,888,581, with an increase in constant currency of $1,863,412.

The increase is mainly due to implementation services

gross profit was $8,741,773, for the three months ended March 31, 2025 compared with $7,474,820 for the three months ended March 31,

This is an increase of $1,266,953 with an increase in constant currency of $1,268,499.

The gross profit percentage for the three

months ended March 31, 2025 also increased to 49.8% from 48.3% for the three months ended March 31, 2024.

The cost of sales was $8,802,184

for the three months ended March 31, 2025 compared to $7,989,696 for the three months ended March 31, 2024 for an increase of $812,488

and on a constant currency basis an increase of $829,393.

As a percentage of sales, cost of sales decreased from 51.7% for the three

months ended March 31, 2024 to 50.2% for the three months ended March 31, 2025.

and consultant fees increased by $968,018 from $5,803,910 for the three months ended March 31, 2024 to $6,771,928 for the three months

ended March 31, 2025 and on a constant currency basis increased by $982,985.

The increase is due to annual salary raises.

As a percentage

of sales, salaries and consultant expense increased from 37.5% for the three months ended March 31, 2024 to 38.6% for the three months

ended March 31, 2025.

expenses were $451,895 for the three months ended March 31, 2025 compared to $799,560 for the three months ended March 31, 2024 for a

decrease of $347,665 with a decrease in constant currency of $346,479.

As a percentage of sales, travel expense decreased from 5.2% for

the three months ended March 31, 2024 to 2.6% for the three months ended March 31, 2025.

and amortization expense decreased to $240,444 compared to $250,126 for the three months ended March 31, 2024 or a decrease of $9,682

and on a constant currency basis a decrease of $9,512.

costs increased to $1,337,917 for the three months ended March 31, 2025 compared to $1,136,100 for the three months ended March 31, 2024

or an increase of $201,817 and on a constant currency basis an increase of $202,399.

expenses were $7,188,375 for the three months ended March 31, 2025 compared to $6,156,917, for the three months ended March 31, 2024

for an increase of $1,031,458 and on a constant currency basis an increase of $1,038,277.

As a percentage of sales, it increased from

39.8% to 41.0%.

The increase in operating expenses was primarily due to increases in selling and marketing expenses, salaries and wages

and provision for doubtful accounts off set by decrease in other general and administrative expenses.

expenses were $2,426,083 for the three months ended March 31, 2025 compared to $1,830,025, for the three months ended March 31, 2024

for an increase of $596,058 and on a constant currency basis an increase of $585,484.

The increase is mainly due to increases is salaries

and consultants of approximately $427,000, due to annual raises and the hiring of additional marketing personnel.

Other marketing expenses

increased by approximately $130,000 due to the increase in advertising and marketing events.

and administrative expenses were $4,457,504 for the three months ended March 31, 2025 compared to $3,981,310 for the three months ended

March 31, 2024 or an increase of $476,194 and on a constant currency basis an increase of $493,629.

During the three months ended March

31, 2025, salaries increased by $14,558 and increased $21,091 on a constant currency basis, bad debt expense increased $606,795 and increased

$616,360 on a constant currency basis, and other general and administrative expenses decreased $145,149 and decreased by $143,822 on

a constant currency basis.

and development cost was $304,788 for the three months ended March 31, 2025 compared to $345,582, for the three months ended March 31,

2024 for a decrease of $40,794 and on a constant currency basis a decrease of $40,836.

from Operations

from operations was $1,553,398 for the three months ended March 31, 2025 compared to $1,317,903 for the three months ended March 31,

This represents an increase of $235,495 with an increase of $230,222 on a constant currency basis for the three months ended March

31, 2025 compared with the three months ended March 31, 2024.

As a percentage of sales, income from operations was 8.9% for the three

months ended March 31, 2025 compared to 8.5% for the three months ended March 31, 2024.

Income and Expense

income was $432,366 for the three months ended March 31, 2025 compared to other expense of $855,464 for the three months ended March

This represents an increase in other income of $1,287,830 with an increase of $1,286,923 on a constant currency basis.

increase is primarily due to the foreign currency exchange transactions.

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

dollars or Euros;

therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the value

of the PKR compared to the U.S.

dollar and the Euro.

During the three months ended March 31, 2025, we recognized a gain of $321,622 in

foreign currency exchange transactions compared to a loss of $963,887 for the three months ended March 31, 2024.

During the three months

ended March 31, 2025, the value of the U.S.

dollar increased 0.3% and the Euro increased 4.5%, compared to the PKR.

During the three

months ended March 31, 2024, the value of the U.S.

dollar and the Euro decreased 0.6% and 2.8%, compared to the PKR.

Non-controlling

the three months ended March 31, 2025, the net income attributable to non-controlling interest was $410,462, compared to net income of

$11,679 for the three months ended March 31, 2024.

The increase in non-controlling interest is primarily due to the increase in net income

of NetSol PK.

income (loss) attributable to NetSol

net income was $1,423,968 for the three months ended March 31, 2025 compared to $327,549 for the three months ended March 31, 2024.

is an increase of $1,096,419 with an increase of $1,039,042 on a constant currency basis, compared to the prior year.

For the three months

ended March 31, 2025, net income per share was $0.12 for basic and diluted shares compared to net income per share of $0.03 for basic

and diluted shares for the three months ended March 31, 2024.

Months Ended March 31, 2025 Compared to the Nine Months Ended March 31, 2024

following table sets forth the items in our unaudited condensed consolidated statement of operations for the nine months ended March

31, 2025 and 2024 as a percentage of revenues.

For the Nine Months

Ended March 31,

general and administrative

and development cost

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

average number of shares outstanding

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

Non-controlling interest

Net income attributable to NetSol

$ (2,357,288 )

Net income per share:

Net income per common share

Weighted average number of shares outstanding

significant portion of our business is conducted in currencies other than the U.S.

17 unchanged sentences

currency and in constant currency.

For the Three Months Ended September 30,

(Unfavorable)

For the Nine Months

Change due to

6 unchanged sentences

$ (1,115,354 )

revenues for the nine months ended March 31, 2025 and 2024 are broken out among the segments as follows:

$ (1,078,548 )

revenues for the three months ended September 30, 2025 and 2024 are broken out among the segments as follows:

North America

fees for the nine months ended March 31, 2025 were $75,115 compared to $4,829,242 for the nine months ended March 31, 2024 reflecting

a decrease of $4,754,127 with a decrease in constant currency of $4,756,850.

During the nine months ended March 31, 2024, we recognized

approximately $2,800,000 related to the sale of our NFS Ascent® CMS software to a renowned U.S.

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 support fees for the nine months ended March 31, 2025 were $24,723,460 compared to $20,480,382 for the nine months ended March 31,

2024 reflecting an increase of $4,243,078 with an increase in constant currency of $4,139,874.

The increase includes a one-time catch

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

Subscription and support fees begin once a customer has “gone live”

with our product.

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

both our NFS legacy products and NFS Ascent ® .

income for the nine months ended March 31, 2025 was $22,880,541 compared to $19,635,014 for the nine months ended March 31, 2024 reflecting

fees for the three months ended September 30, 2025 were $72,225 compared to $1,229 for the three months ended September 30, 2024 reflecting

an increase of $70,996 with an increase in constant currency of $68,182.

The increase is mainly due to implementation services

gross profit was $22,226,226, for the nine months ended March 31, 2025 compared with $20,812,574 for the nine months ended March 31,

This is an increase of $1,413,652 with an increase in constant currency of $1,516,550.

The gross profit percentage for the nine

months ended March 31, 2025 slightly increased to 46.6% from 46.3% for the nine months ended March 31, 2024.

and support fees for the three months ended September 30, 2025 were $8,960,555 compared to $8,192,471 for the three months ended September

30, 2024 reflecting an increase of $768,084 with an increase in constant currency of $899,515.

Subscription and support fees begin once

a customer has “gone live” with our product.

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

fees to gradually increase as we implement both our NFS legacy products and NFS Ascent ® .

income for the three months ended September 30, 2025 was $5,979,143 compared to $6,404,798 for the three months ended September 30, 2024

reflecting a decrease of $425,655, with a decrease in constant currency of $479,416.

Services revenue decreased compared to the prior

quarter primarily due to the timing and composition of implementation projects.

gross profit was $5,911,990 for the three months ended September 30, 2025 compared with $6,564,112 for the three months ended September

This is a decrease of $652,122 with a decrease in constant currency of $669,534.

The gross profit percentage for the three

months ended September 30, 2025 also decreased to 39.4% from 45.0% for the three months ended September 30, 2024.

The cost of sales was

for the nine months ended March 31, 2025 compared to $24,132,064 for the nine months ended March 31, 2024 for an increase of $1,320,826

and on a constant currency basis an increase of $938,612.

As a percentage of sales, cost of sales slightly decreased from 53.7% for the

nine months ended March 31, 2024 to 53.4% for the nine months ended March 31, 2025.

and consultant fees increased by $2,024,684 from $17,665,415 for the nine months ended March 31, 2024 to $19,690,099 for the nine months

ended March 31, 2025 and on a constant currency basis increased by $1,732,630.

$9,099,933 for the three months ended September 30, 2025 compared to $8,034,386 for the three months ended September 30, 2024 for an

increase of $1,065,547 and on a constant currency basis an increase of $1,157,815.

As a percentage of sales, cost of sales increased

from 55.0% for the three months ended September 30, 2024 to 60.6% for the three months ended September 30, 2025.

and consultant fees increased by $760,792 from $6,203,734 for the three months ended September 30, 2024 to $6,964,526 for the three months

ended September 30, 2025 and on a constant currency basis increased by $789,164.

The increase is due to annual salary raises.

As a percentage

of sales, salaries and consultant expense increased from 39.3% for the nine months ended March 31, 2024 to 41.3% for the nine months

ended March 31, 2025.

expenses were $1,624,008 for the nine months ended March 31, 2025 compared to $2,207,999 for the nine months ended March 31, 2024 for

a decrease of $583,991 with a decrease in constant currency of $606,561.

of sales, salaries and consultant expense increased from 42.5% for the three months ended September 30, 2024 to 46.4% for the three months

ended September 30, 2025.

expenses were $498,172 for the three months ended September 30, 2025 compared to $570,862 for the three months ended September 30, 2024

for a decrease of $72,690 with a decrease in constant currency of $71,543.

As a percentage of sales, travel expense decreased from 3.9%

for the nine months ended March 31, 2024 to 3.4% for the nine months ended March 31, 2025.

and amortization expense decreased to $706,876 compared to $907,483 for the nine months ended March 31, 2024 or a decrease of $200,607

for the three months ended September 30, 2024 to 3.3% for the three months ended September 30, 2025.

and amortization expense decreased to $208,731 compared to $228,550 for the three months ended September 30, 2024 or a decrease of $19,819

and on a constant currency basis a decrease of $16,277.

costs increased to $3,431,907 for the nine months ended March 31, 2025 compared to $3,351,167 for the nine months ended March 31, 2024

costs were $1,428,504 for the three months ended September 30, 2025 compared to $1,031,240 for the three months ended September 30, 2024

or an increase of $397,264 and on a constant currency basis an increase of $456,471.

expenses were $21,919,936 for the nine months ended March 31, 2025 compared to $18,117,210, for the nine months ended March 31, 2024

The increase is mainly due to an increase in third-party

hardware and software costs of approximately $380,000 and hosting fees of approximately $57,000.

expenses were $7,750,696 for the three months ended September 30, 2025 compared to $7,324,270, for the three months ended September 30,

2024 for an increase of $426,426 and on a constant currency basis an increase of $445,820.

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The increase in operating expenses was primarily due to increases in selling and marketing expenses, salaries and wages,

provision for doubtful accounts, and other general and administrative expenses.

expenses were $7,380,679 for the nine months ended March 31, 2025 compared to $5,323,400, for the nine months ended March 31, 2024 for

an increase of $2,057,279 and on a constant currency basis an increase of $1,952,658.

The increase is mainly due to increases is salaries

and consultants of approximately $1,447,000, due to annual raises and the hiring of additional marketing personnel.

Travel expenses increased

by approximately $274,000.

Other marketing expenses increased by approximately $345,000 due to the increase in marketing events.

and administrative expenses were $13,540,851 for the nine months ended March 31, 2025 compared to $11,728,398 for the nine months ended

March 31, 2024 or an increase of $1,812,453 and on a constant currency basis, an increase of $1,608,601.

During the nine months ended

March 31, 2025, salaries increased by approximately $577,390 and increased $493,440 on a constant currency basis, bad debt expense increased

$1,052,776 and $1,046,603 on a constant currency basis, and other general and administrative expenses increased approximately $182,287

or increased by $68,558 on a constant currency basis.

and development cost was $998,406 for the nine months ended March 31, 2025 compared to $1,065,412, for the nine months ended March 31,

offset by a decrease in other general and administrative expenses and the provision for doubtful accounts.

and marketing expenses were $3,116,953 for the three months ended September 30, 2025 compared to $2,292,199, for the three months ended

September 30, 2024 for an increase of $824,754 and on a constant currency basis an increase of $847,959.

The increase is mainly due to

increases in salaries and consultants of approximately $663,739, due to annual raises and the hiring of additional marketing personnel.

Other marketing expenses increased by approximately $151,836 due to the increase in advertising and marketing events.

and administrative expenses were $4,419,400 for the three months ended September 30, 2025 compared to $4,672,122 for the three months

ended September 30, 2024 or a decrease of $252,722 and on a constant currency basis a decrease of $260,336.

During the three months ended

September 30, 2025, salaries increased by $144,888 and increased $144,575 on a constant currency basis, bad debt expense decreased $338,089

and decreased $338,062 on a constant currency basis, and other general and administrative expenses decreased $59,521 and decreased by

$66,849 on a constant currency basis.

and development cost was $214,343 for the three months ended September 30, 2025 compared to $359,949, for the three months ended September

30, 2024 for a decrease of $145,606 and on a constant currency basis a decrease of $141,803.

from Operations

from operations was $306,290 for the nine months ended March 31, 2025 compared to $2,695,364 for the nine months ended March 31, 2024.

This represents a decrease of $2,389,074 with a decrease of $1,957,068 on a constant currency basis for the nine months ended March 31,

2025 compared with the nine months ended March 31, 2024.

As a percentage of sales, income from operations was 0.6% for the nine months

ended March 31, 2025 compared to 6.0% for the nine months ended March 31, 2024.

from operations was $1,838,706 for the three months ended September 30, 2025 compared to $760,158 for the three months ended September

This represents an increase in loss of $1,078,548 with an increase of $1,115,354 on a constant currency basis for the three

months ended September 30, 2025 compared with the three months ended September 30, 2024.

As a percentage of sales, loss from operations

was 12.3% for the three months ended September 30, 2025 compared to a loss from operations of 5.2% for the three months ended September

Income and Expense

income was $1,272,408 for the nine months ended March 31, 2025 compared to other expense of $687,099 for the nine months ended March

This represents an increase in other income of $1,959,507 with an increase of $1,924,932 on a constant currency basis.

increase is primarily due to the foreign currency exchange transactions and interest income.

The majority of the contracts with

NetSol PK are either in U.S.

expense was $162,884 for the three months ended September 30, 2025 compared to other income of $1,207,684 for the three months ended

September 30, 2024.

This represents a decrease in other income of $1,370,568 with a decrease of $1,371,569 on a constant currency basis.

The decrease is primarily due to the foreign currency exchange transactions.

The majority of the contracts with NetSol PK are either

dollars or Euros;

therefore, the currency fluctuations will lead to foreign currency exchange gains or

losses depending on the value of the PKR compared to the U.S.

therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the

value of the PKR compared to the U.S.

dollar and the Euro.

During the nine months ended March 31, 2025, we

recognized a gain of $165,775 in foreign currency exchange transactions compared to a loss of $1,112,757 for the nine months ended

March 31, 2024.

During the nine months ended March 31, 2025, the value of the U.S.

dollar increased 0.5% and the Euro increased

1.5%, compared to the PKR.

During the nine months ended March 31, 2024, the value of the U.S.

dollar and the Euro decreased 3.2% and

4.0%, respectively, compared to the PKR.

During the nine months ended March 31, 2025, interest income was $1,593,594 compared to

$1,259,464 for the nine months ended March 31, 2024, for an increase of $334,130 and on constant currency basis an increase of

The increase in interest income was driven by a higher balance of interest-bearing funds during the period.

During the three months ended September 30, 2025, we recognized a loss of

$286,917 in foreign currency exchange transactions compared to a gain of $542,545 for the three months ended September 30, 2024.

the three months ended September 30, 2025, the value of the U.S.

dollar decreased 0.6% and the Euro decreased 0.7%, compared to the PKR.

During the three months ended September 30, 2024, the value of the U.S.

dollar decreased 0.2% and the Euro increased 3.9%, compared to

Non-controlling

the nine months ended March 31, 2025, the net income attributable to non-controlling interest was $518,212, compared to $822,993 for

the nine months ended March 31, 2024.

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

the three months ended September 30, 2025, the net income attributable to non-controlling interest was $139,923, compared to $146,914

for the three months ended September 30, 2024.

income (loss) attributable to NetSol

net income was $347,721 for the nine months ended March 31, 2025 compared to $766,755 for the nine months ended March 31, 2024.

is a decrease in net income of $419,034 with a decrease of $277,415 on a constant currency basis, compared to the prior year.

for basic and diluted shares was $0.03 and $0.07 for the nine months ended March 31, 2025 and 2024, respectively.

net loss was $2,357,288 for the three months ended September 30, 2025 compared to net income of $70,795 for the three months ended September

This is a decrease of $2,428,083 with a decrease of $2,509,233 on a constant currency basis, compared to the prior year.

the three months ended September 30, 2025, net loss per share was $0.20 for basic and diluted shares compared to net income per share

of $0.006 for basic and diluted shares for the three months ended September 30, 2024.

Financial Measures

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define the non-GAAP measures as follows:

is GAAP net income or loss before net interest expense, income tax expense, depreciation and amortization.

is GAAP net income or loss before net interest expense, income tax expense, depreciation

and amortization.

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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reconciliation of the non-GAAP financial measures of adjusted EBITDA and non-GAAP earnings per basic and diluted share to the most comparable

GAAP measures for the three and nine months ended March 31, 2025 and 2024 are as follows:

the Three Months

Ended March 31,

the Nine Months

Ended March 31,

Net Income (loss) attributable

GAAP measures for the three months ended September 30, 2025 and 2024 are as follows:

For the Three Months Ended September 30,

Net Income (loss) attributable to NetSol

$ (2,357,288 )

Non-controlling interest

1 unchanged sentence

Interest expense

stock-based compensation

Interest (income)

$ (1,783,347 )

Non-cash stock-based compensation

Adjusted EBITDA, gross

Less non-controlling interest

$ (1,637,947 )

Less non-controlling interest (a)

Adjusted EBITDA, net

$ (1,861,895 )

Weighted Average number of shares outstanding

1 unchanged sentence

Diluted adjusted EBITDA

(a)The reconciliation of adjusted EBITDA of

non-controlling interest to net income attributable to non-controlling interest is as follows

Net Income (loss) attributable to non-controlling

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

non-controlling interest is as follows

Net Income (loss) attributable to non-controlling interest

Depreciation and amortization

Interest expense

stock-based compensation

Adjusted EBITDA of non-controlling

Interest (income)

Non-cash stock-based compensation

Adjusted EBITDA of non-controlling interest

AND CAPITAL RESOURCES

cash position was $18,774,739 at March 31, 2025, compared to $19,127,165 at June 30, 2024.

cash provided by operating activities was $6,315 for the nine months ended March 31, 2025 compared to net cash used in operating activities

of $3,602,677 for the nine months ended March 31, 2024.

At March 31, 2025, we had current assets of $42,411,540 and current liabilities

of $18,738,636.

We had accounts receivable of $5,443,498 at March 31, 2025 compared to $13,049,614 at June 30, 2024.

We had revenues

in excess of billings of $15,424,896 at March 31, 2025 compared to $13,638,547 at June 30, 2024 of which $697,486 and $954,029 is shown

as long-term as of March 31, 2025 and June 30, 2024, respectively.

The long-term portion was discounted by $97,285 and $152,446 at March

cash position was $22,690,618 at September 30, 2025, compared to $17,357,944 at June 30, 2025.

cash provided by operating activities was $5,303,561 for the three months ended September 30, 2025 compared to $5,517,745 for the three

months ended September 30, 2024.

At September 30, 2025, we had current assets of $46,592,989 and current liabilities of $21,659,278.

We had accounts receivable of $6,320,988 at September 30, 2025 compared to $7,527,572 at June 30, 2025.

We had revenues in excess of

billings of $14,875,704 at September 30, 2025 compared to $19,134,385 at June 30, 2025 of which $881,053 and $903,766 is shown as long-term

as of September 30, 2025 and June 30, 2025, respectively.

The long-term portion was discounted by $183,137 and $208,037 at September

30, 2025 and June 30, 2025, respectively, using the discounted cash flow method with interest rates ranging from 4.2% to 17.5%.

the nine months ended March 31, 2025, our revenues in excess of billings were reclassified to accounts receivable pursuant to billing

the three months ended September 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 $5,465,265

from $26,688,161 at June 30, 2024 to $20,868,394 at March 31, 2025.

At March 31, 2025 and June 30, 2024, accounts payable and accrued

expenses were $7,097,343 and $8,232,842, respectively.

At March 31 2025 and June 30, 2024 the current portions of loans and lease obligations

were $8,459,991 and $6,276,125, respectively.

average days sales outstanding for the nine months ended March 31, 2025 and 2024 were 137 and 147 days, respectively.

from $26,661,957 at June 30, 2025 to $21,196,692 at September 30, 2025.

Accounts payable and accrued expenses, and current portions of

loans and lease obligations amounted to $9,191,552 and $8,330,243, respectively, at September 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.

average days sales outstanding for the three months ended September 30, 2025 and 2024 were 147 and 150 days, respectively.

The days sales

outstanding have been calculated by taking into consideration the average combined balances of accounts receivable and revenues in excess

cash used in investing activities was $843,044 for the nine months ended March 31, 2025, compared to $822,451 for the nine months ended

March 31, 2024.

We had purchases of property and equipment of $897,743 compared to $948,337 for the nine months ended March 31, 2024.

cash provided by financing activities was $866,299 for the nine months ended March 31, 2025, compared to $33,612 for the nine months

ended March 31, 2024.

During the nine months ended March 31, 2025, we received bank proceeds of $2,451,256 compared to $340,847 during

the nine months ended March 31, 2024.

During the nine months ended March 31, 2025, we had net payments for bank loans and finance leases

of $247,496 compared to $307,235 for the nine months ended March 31, 2024.

Employees of the Company 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.

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 from its

cash used in investing activities was $443,198 for the three months ended September 30, 2025, compared to $108,632 for the three months

ended September 30, 2024.

We had purchases of property and equipment of $485,281 compared to $100,737 for the three months ended September

cash provided by financing activities was $191,218 for the three months ended September 30, 2025, compared to $153,189 for the three

months ended September 30, 2024.

During the three months ended September 30, 2025, we received bank proceeds of $242,421 compared to

$250,000 during the three months ended September 30, 2024.

During the three months ended September 30, 2025, we had net payments for

bank loans and finance leases of $115,350 compared to $118,311 for the three months ended September 30, 2024.

Employees of our subsidiary,

NetSol PK, exercised 278,455 options of common stock for $76,567, of which $64,147 was received during the quarter ended September 30,

2025 and $12,420 was received during the fiscal year ended June 30, 2025.

We are operating in various geographical regions of the world

through our various subsidiaries.

Those subsidiaries have financial arrangements with 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

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 from its own sources.

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

1 unchanged sentence

intercompany charges for corporate services, and through the exercise of options and warrants.

As of March 31, 2025, we had approximately

As of September 30, 2025, we had approximately

$22.7 million of cash, cash equivalents and marketable securities of which approximately $22 million is held by our foreign subsidiaries.

3 unchanged sentences

The focus will remain on continuously improving cash

reserves internally and reduced reliance on external capital raise.

a growing company, we have on-going capital expenditure needs based on our short term and long-term business plans.

reserves internally and reducing reliance on external capital raises.

a growing company, we have ongoing capital expenditure needs based on our short-term and long-term business plans.

Although our requirements

6 unchanged sentences

export refinance from Askari Bank Limited amounting to Rupees 600 million ($2,124,495) 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

($4,649,333).

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.

NetSol PK has an approved facility for export refinance from Habib Metro Bank Limited amounting to Rupees 1.3 billion ($4,603,073)

and another export refinance facility amounting to Rupees 400 million ($1,416,331) from Bank Al-Habib.

These facilities require NetSol

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

NetSol PK also has an approved export refinance facility

380 million ($1,345,514) from Samba Bank Limited.

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.

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

21 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis