What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-09-28 compared with 2025-09-29 · 315 added, 267 removed, 333 unchanged (64% of the section changed)

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below are a few of NetSol’s highlights for the Year ended June 30, 2026:

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

entered into a four-year contract extension valued at approximately $50 million with a long-standing

customer and strategic partner.

The extension reinforces recurring revenue through ongoing

maintenance and licensing fees and expands the customer’s continued use of the Transcend™

Finance platform across multiple countries.

executed an agreement with the captive finance arm of a leading Japanese commercial vehicle

manufacturer in Thailand to migrate its contract management system from the legacy R1 platform

to the next-generation Transcend Finance platform.

The agreement carries a total contract

value exceeding $12 million and underscores the client’s commitment to modernizing

its core finance technology while strengthening our long-standing partnership.

generated approximately $6.6 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 revenue.

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.

launched an AI-powered credit decisioning engine within the Transcend™ Finance platform.

The solution automates manual credit workflows, accelerates decision-making, and enhances

underwriting accuracy through improved data aggregation, document processing, and financial

signed a contract valued at approximately $1.75 million with a provincial government entity

in Pakistan, funded by the World Bank, to support the digitization of government workflows.

The project focuses on process automation and cross-departmental system integration to improve

operational efficiency and public service delivery.

successfully completed several significant customer go-lives across key international markets,

including deployments of our Transcend™ Finance and Transcend™ Wholesale platforms

for captive and multi-asset finance companies in China, Thailand and the United Kingdom.

These implementations support a range of retail and wholesale finance operations, including

credit workflows, loan origination and servicing, inventory management, dealer credit processes

and digital dealer self-service.

leading German automotive manufacturer in North America successfully completed a dealer portal

pilot, enabling enhanced dealer self-service, real-time financing workflows, and improved

digital engagement.

The pilot represents a milestone toward broader rollout.

subsidiary, NetSol Institute of Artificial Intelligence, entered into a strategic partnership

with Pakistan’s national vocational and technical training authority to train approximately

1,600 individuals in artificial intelligence, data science, and cybersecurity.

The initiative

is expected to generate over $1 million in revenue.

entered into a multi-million-dollar extension agreement with an existing customer to provide

continued support for our legacy product platform.

entered into a strategic partnership with a Stockholm-based fintech advisory and IT services

firm to accelerate our expansion across the Nordics.

By combining our Transcend Finance platform

and decades of asset finance expertise with the partner’s deep local market knowledge

and transformation consulting capabilities, the partnership will help banks, finance companies,

and specialist lenders modernize their core technology platforms.

automotive dealerships successfully went live with the Transcend Retail platform, including

a multi-brand dealer group, a digital-first luxury and exotic vehicle dealership, and a recreational

vehicle dealer.

The deployments enable a connected and transparent digital retail experience

spanning the entire customer journey from initial engagement through credit application and

deal completion while further expanding Transcend Retail’s footprint across the U.S.

automotive retail market.

successfully upgraded one of our long-standing captive finance clients in Thailand, serving

the Asia-Pacific automotive sector for more than two decades, to the latest version of its

Wholesale Finance System, a core module of the Transcend Finance platform.

The implementation

transitioned the client to an AI-enabled, API-first architecture featuring a modular and

scalable framework that integrates OEMs, dealers, brokers, credit bureaus, and ERP systems

into a unified data ecosystem.

and Business Development Activities

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.

continue to pursue a series of strategic marketing and business development initiatives to strengthen market presence and support 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;

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;

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

customer centric sales enablement;

targeting new global and product markets;

using AI to enhance productivity;

expanding market reach through participation

in industry associations;

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 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’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

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 $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 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, 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.

trends affecting our business

believes the following trends and uncertainties may have a material, favorable or unfavorable impact on the Company’s business.

rate environment and credit conditions

rate levels and broader monetary policy conditions continue to influence borrowing costs, credit availability and financing activity

across consumer and commercial lending markets, including automotive finance.

Sustained elevated rates may temper near-term financing

volumes among customers, while creating demand for technology investments that support operational efficiency and risk management.

of Governors of the Federal Reserve System, Monetary Policy Report, July 2026.)

Electrification

of the automotive industry

automotive industry continues its transition toward electrified vehicles, supported by regulatory developments and long-term manufacturer

Chinese automotive manufacturers have become significant participants in the electric vehicle segment, with EVs now accounting

for nearly 55% of new vehicle sales in China and Chinese EV exports reaching record levels, intensifying competition across the global

automotive landscape.

The Company’s established presence and customer base in China may support participation in this growth, while

shifts in market share among traditional automotive OEMs could affect technology investment patterns across the Company’s broader

customer base.

( International Energy Agency (IEA), ‘Global EV Outlook 2026’.

and omnichannel automotive retail

and dealers continue to adopt digital tools and omnichannel retail approaches, integrating online and physical channels across vehicle

research, configuration and transaction processes.

Continued investment in digital retail capabilities by automotive OEMs and dealerships

may support demand for the Company’s Transcend Retail platform, although adoption pace and implementation timing vary across customers

( McKinsey & Company, ‘Auto retail productivity in the digital era’, January 2025.)

transformation in financial services

institutions and captive finance companies continue to invest in digital transformation initiatives, including cloud adoption, data infrastructure

modernization and automation of operational processes.

Continued investment in these areas may support demand for the Company’s

Transcend Finance platform.

The pace and scale of customer transformation initiatives vary based on internal priorities, budget cycles

and the complexity of replacing or integrating with existing core systems.

( PwC, ‘What will be left of financial services tomorrow?’,

PwC FS Survey, July 2025.

regulatory and compliance environment

institutions continue to operate within an evolving global regulatory environment, including banking supervision and capital adequacy

frameworks, which may influence compliance requirements and operational processes.

The Company’s platform supports risk management,

audit and compliance reporting workflows that may help customers address evolving requirements.

At the same time, regulatory uncertainty

and compliance-related investment may extend customer decision-making timelines or shift technology priorities toward maintenance and

remediation initiatives.

( Bank for International Settlements, ‘Basel Committee on Banking Supervision, Basel III Monitoring

Report’, March 2026.

and trade policy developments

geopolitical developments, including the conflict in the Middle East and its impact on global energy markets, alongside evolving trade

policy between major economies, may influence cross-border technology deployment, currency dynamics and client investment decisions in

markets where the Company operates, including China.

The Company’s platform architecture, designed to operate across multiple jurisdictions

and regulatory environments, may help mitigate some of this exposure, though continued volatility could affect the pace of customer technology

investment decisions in affected regions.

( International Monetary Fund, ‘World Economic Outlook Update’, July 2026.

ACCOUNTING POLICIES

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of accounting policies.

Critical accounting policies for us include revenue recognition and multiple element arrangements, intangible

assets, software development costs, and goodwill.

Critical accounting policies for us include revenue recognition and multiple element arrangements, stock-based compensation, and goodwill.

Company determines revenue recognition through the following steps:

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

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

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

licenses and a professional services engagement.

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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 standard-alone selling price (“SSP”)

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

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

obligation using its best estimate for the SSP.

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

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

to the customer.

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revenue for time-and-materials arrangements as the services are performed.

In fixed fee arrangements, revenue is recognized as services

are performed as measured by costs incurred to date, compared to total estimated costs to complete the services project.

Management applies

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

A number of internal and external

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

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

typically due 30 days after invoice.

For fixed-fee implementation and customization services that

are satisfied over time, revenue is recognized using an input method based on person-days incurred relative to total estimated person-days

required to complete the services.

Management applies judgment when estimating project status and the costs necessary to complete the

services projects.

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

variances and specification and testing requirement changes.

Services are generally invoiced upon milestones in the contract or upon

consumption of the hourly resources and payments are typically due 30 days after invoice.

and Internet Services

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Internet services are invoiced either monthly, quarterly or half yearly

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

judgments and estimates are required under Topic 606 than were required under Topic 605.

Due to the complexity of certain contracts,

the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements may be dependent on contract-specific

terms and may vary in some instances.

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

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

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

is required to determine the SSP for each distinct performance obligation.

The Company rarely licenses or sells products on a stand-alone

The Company rarely licenses or sells products on a standalone

basis, so the Company is required to estimate the range of SSPs for each performance obligation.

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

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

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

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

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

most significant judgments and estimates involved in the Company’s revenue recognition policies are:

(1) determining standalone

selling prices of the Company’s software licenses, and (2) measuring progress toward satisfaction of performance obligations for

implementation, customization, and other services.

standalone selling price of the licenses is measured primarily through an analysis of pricing that management evaluates when quoting

prices to customers.

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those modules at an optional price.

This information guides the Company in assessing the stand-alone selling price of the Company’s

This information guides the Company in assessing the standalone selling price of the Company’s

software, since the Company can observe instances where a customer had a particular component of the Company’s software that was

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

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

the work requires.

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

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

that the work requires.

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

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

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

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

performance obligations.

For the Company’s professional services, revenue is recognized over time, generally using costs incurred

or hours expended to measure progress.

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

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

testing requirement changes.

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

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

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

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

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to evaluate the relevant facts and circumstances in determining whether agreements should be accounted for separately or as a single

The Company’s judgments about whether a group of contracts comprise a single arrangement can affect the allocation

The Company’s judgments about whether a group of contracts comprises a single arrangement can affect the allocation

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

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

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

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

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

When estimating variable consideration, the

Company will consider all relevant facts and circumstances.

Variable consideration will be estimated and included in the contract price

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

Company considers all relevant facts and circumstances.

Variable consideration is included in the transaction price only to the extent

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

with the variable consideration is subsequently resolved.

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

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

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

right to consideration.

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

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

contract assets, or contract liabilities on the Company’s Consolidated Balance Sheets.

The Company records contract assets when

the Company has transferred goods or services but does not yet have the right to consideration.

The Company records contract liabilities

when the Company has received or has the right to receive consideration but has not yet transferred goods or services to the customer.

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

at the start of the subscription or support term.

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

periods are included in accounts receivable and unearned revenue.

Unpaid invoice amounts for non-cancellable licenses and services starting in future

periods are included in accounts receivable and contract liabilities.

Expedients and Exemptions

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

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.

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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Total operating expenses

Income (loss) from operations

Income from operations

Other income and (expenses)

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For the Years

Change due to

(Unfavorable)

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North America

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

fees for the year ended June 30, 2026 were $4,954,378 compared to $598,633 for the year ended June 30, 2025 reflecting an increase of

$4,355,745 with a change in constant currency of $4,345,711.

In the fiscal year ended June 30, 2026, we recognized approximately $4,656,000

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.

of software license revenue associated with the renewal and amendment of an existing customer agreement for our Transcend TM

software platform.

The license revenue relates to additional license consideration associated with expanded portfolio usage under the

customer arrangement.

Revenue associated with maintenance and support services under the arrangement will continue to be recognized over

the contractual service period.

In the fiscal year ended June 30, 2025, we recognized approximately $487,000 from a new customer in Indonesia.

and support fees for the year ended June 30, 2026, were $35,799,842 compared to $32,934,648 for the year ended June 30, 2025 reflecting

an increase of $2,865,194 with an increase in constant currency of $2,318,648.

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 ® .

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 Transcend ® .

income for the year ended June 30, 2026, was $33,617,160 compared to $32,554,948 for the year ended June 30, 2025, reflecting an increase

of $1,062,212 with an increase in constant currency of $599,717.

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

The increase is mainly due to implementation services in APAC and Europe.

gross profit was $39,147,343 for the year ended June 30, 2026, compared with $32,574,532 for the year ended June 30, 2025.

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As a percentage of sales, cost of sales decreased from 50.7% for the year ended June 30, 2025, to 47.4% for the year ended June 30, 2026.

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.

and consultant fees decreased by $100,129 from $25,797,465 for the year ended June 30, 2025, to $25,697,336 for the year ended June 30,

2026, and on a constant currency basis decreased by $227,030.

The decrease is due to capitalization of software development costs off

set by annual increases in salary.

As a percentage of sales, salaries and consultant expense decreased from 39.0% for the year ended

June 30, 2025, to 34.6% for the year ended June 30, 2026.

increased by $746,181 from $2,063,511 for the year ended June 30, 2025, to $2,809,692 for the year ended June 30, 2026, and on a constant

currency basis increased by $731,534.

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 3.1% for year ended June 30, 2025, to 3.8% for the year ended June 30, 2026.

and amortization expense decreased to $783,692 compared to $952,331 for the year ended June 30, 2025, or a decrease of $168,639 and on

a constant currency basis a decrease of $165,806.

costs increased to $5,933,317 for the year ended June 30, 2026, compared to $4,700,390 for the year ended June 30, 2025, or an increase

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of $3,127,864 and on a constant currency basis an increase of $2,792,086.

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.

As a percentage of sales, it decreased from 44.0% to 43.3%.

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

a decrease in research and development costs.

and marketing expenses increased by $1,692,136 and on a constant currency basis increased by $1,518,546.

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of $1,929,526, and on a constant currency basis an increase of $1,761,860.

During the year ended June 30, 2025, salaries increased by approximately

$687,000 or increased by approximately $574,000 on a constant currency basis, due to increases in salaries including bonuses, medical

costs and subsidiary options granted to staff in NetSol PK.

The provision for doubtful accounts 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

During the year ended June 30, 2026, salaries increased by

approximately $2,058,745 or increased by approximately $1,955,668 on a constant currency basis, due to increases in salaries including

bonuses, medical costs and subsidiary options granted to staff in NetSol PK.

The provision for doubtful accounts decreased by approximately

$165,930 and on a constant currency basis decreased by approximately $177,581.

Other general and administrative costs increased by approximately

$36,711 and on a constant currency basis a decrease of approximately $16,227.

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This represents

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

an increase of $3,444,947 with an increase of $2,854,410 on a constant currency basis for the year ended June 30, 2026, compared with

the year ended June 30, 2025.

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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.

income was $279,214 for the year ended June 30, 2026, compared to $2,545,539 for the year ended June 30, 2025.

This represents a decrease

of $2,266,325 with a decrease of $2,182,442 on a constant currency basis.

The decrease is primarily due to lower interest income, driven

by a reduction in interest rates from approximately 10.0%-19.5% for the year ended June 30, 2025, to approximately 8.9% to 10.8% for

the year ended June 30, 2026.

The decrease is also due to 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.

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

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

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

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 year ended June 30, 2026, we recognized a loss

of $389,814 in foreign currency exchange transactions compared to a gain of $1,301,613 for the year ended June 30, 2025.

During the year

ended June 30, 2026, the value of the U.S.

dollar and the Euro decreased 2.1% and 4.9%, respectively, compared to the PKR.

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

dollar and the Euro increased 2.1% and 11.9%, respectively, compared to the PKR.

Non-controlling

the year ended June 30, 2026, and 2025, the net income attributable to non-controlling interest was $2,645,150 and $1,647,686, respectively.

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

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

Income (Loss) Attributable to NetSol

income was $2,950,353 for the year ended June 30, 2026, compared to $2,923,233 for the year ended June 30, 2025.

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.

This is an increase

in income of $27,120 with a decrease of $489,366 on a constant currency basis, compared to the prior year.

For the year ended June 30,

2026, 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.

For the year ended June 30, 2025, net income per share was $0.25 for

basic and diluted shares.

Financial Measures

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of non-GAAP financial information.

Our measures of adjusted EBITDA and adjusted EBITDA per basic and diluted share meet the definition

Our measures of adjusted EBITDA meet the definition

of a non-GAAP financial measure.

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is GAAP net income 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.

adjusted EBITDA is EBITDA plus stock-based compensation expense and adjusted for foreign currency gains and losses.

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

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compensation expense :

We have excluded the effect of stock-based compensation expense from the non-GAAP adjusted EBITDA and non-GAAP

adjusted EBITDA per basic and diluted share calculations.

We have excluded the effect of stock-based compensation expense from the non-GAAP adjusted EBITDA.

Although stock-based compensation expense is calculated in accordance with

current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense

which generally requires cash settlement by NetSol, and therefore is not used by us to assess the profitability of our operations.

also believe the exclusion of stock-based compensation expense provides a more useful comparison of our operating results to the operating

results of our peers.

that generally requires cash settlement by NetSol, and therefore is not included in certain measures by management to evaluate operating

We also believe the exclusion of stock-based compensation expense provides a more useful comparison of our operating results

to the operating results of our peers.

currency exchange gains and losses:

We have excluded the effect of foreign currency exchange gains and losses from non-GAAP adjusted

As a multinational company, we are exposed to fluctuations

in foreign currency exchange rates, which may result in significant gains or losses from period to period.

Although foreign currency

exchange gains and losses are reflected in our results in accordance with GAAP and may recur in future periods, we exclude these amounts

from our non-GAAP measures because they are affected by changes in foreign currency exchange rates and are not considered by management

to be indicative of the underlying operating performance of our business.

We believe excluding foreign currency exchange gains and losses

provides investors with additional information regarding our operating performance and facilitates period-to-period comparisons of our

Non-controlling

We add back the non-controlling interest in calculating gross adjusted EBITDA and then subtract out the income taxes, depreciation

and amortization and net interest expense attributable to the non-controlling interest to arrive at a net adjusted EBITDA.

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 years ended June 30, 2025, and 2024 are as follows:

and amortization and net interest expense attributable to the non-controlling interest to arrive at adjusted EBITDA attributable to NetSol.

reconciliation of the non-GAAP financial measures of adjusted EBITDA to the most comparable

GAAP measures for the years ended June 30, 2026, and 2025 is as follows:

For the Years

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Interest (income)

Currency exchange (gain) loss

Non-cash stock-based compensation

Adjusted EBITDA, gross

Adjusted EBITDA

Less non-controlling interest (a)

Adjusted EBITDA, net

Weighted Average number of shares outstanding

Basic adjusted EBITDA

Diluted adjusted EBITDA

Adjusted EBITDA attributable to NetSol

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

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Interest (income)

Currency exchange (gain) loss

Non-cash stock-based compensation

3 unchanged sentences

cash provided by operating activities was $13,884,176 for the year ended June 30, 2026, compared to $447,267 for the year ended June

At June 30, 2025, we had current assets of $46,319,603 and current liabilities of $19,713,997.

The increase in operating cash flows was primarily attributable to changes in working capital and net income.

During fiscal

year 2026, contract liabilities increased by $6.5 million compared to a decrease of $6.3 million in fiscal year 2025, resulting in a

significant year-over-year improvement in operating cash flows.

The increase in contract liabilities during fiscal 2026 primarily reflects

cash collections in advance of the recognition of the related revenue.

Operating cash flows also benefited from a $0.6 million decrease

in contract assets during fiscal year 2026 compared to a $5.2 million increase in fiscal year 2025.

These favorable changes were partially

offset by a $2.8 million increase in accounts receivable during fiscal year 2026 compared to a $5.5 million decrease in fiscal year 2025.

June 30, 2026, we had current assets of $56,861,176 and current liabilities of $27,629,756.

We had accounts receivable of $10,286,342

at June 30, 2026, compared to $7,527,572 at June 30, 2025.

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,

We had contract assets of $18,707,582 at June 30, 2026, compared to $19,134,385

at June 30, 2025, of which $2,467,018 and $903,766 are shown as long-term as of June 30, 2026, and 2025, respectively.

The long-term

portion was discounted by $373,219 and $208,037 at June 30, 2026, and 2025, respectively, using the discounted cash flow method with

interest rates ranging from 4.5% to 6.6%, for the year ended June 30, 2026, and interest rates ranging from 4.2% to 17.5% for the year

ended June 30, 2025, respectively.

the year ended June 30, 2026, our contract assets were reclassified to accounts receivable pursuant to billing requirements detailed

in each contract.

The combined totals for accounts receivable and contract assets increased by $2,331,967 from $26,661,957 at June 30,

2025, to $28,993,924 at June 30, 2026.

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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.

the average combined balances of accounts receivable and contract assets.

cash used by investing activities amounted to $4,581,969 for the year ended June 30, 2026, compared to $1,274,865 for the year ended

June 30, 2025.

We had net purchases of property and equipment of $1,920,120 compared to $1,265,987 for the comparable period last fiscal

We invested $2,686,392 in capitalization of software development cost for the year ended June 30, 2026 compared to $nil in prior

cash provided by financing activities was $269,080 compared to $822,881, for the years ended June 30, 2026, and 2025, respectively.

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June 30, 2025.

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.

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.

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

of our subsidiary, NetSol PK, exercised 1,543,987 options of common stock for $425,661, of which $413,241 was received during the year

ended June 30, 2026 and $12,420 was received during the fiscal year ended June 30, 2025.

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.

will become due at different maturity dates as described in Note 13 of the financial statements.

We are in compliance with the covenants

of the financial arrangements and there is no default that 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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reserves internally.

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

Although our requirements

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.

UK based subsidiary, NTE, has an approved overdraft facility of £300,000 ($410,959) which requires that the aggregate amount of

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

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

The Pakistani subsidiary, NetSol PK has an approved facility for

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.

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.

a growing company, we have ongoing capital expenditure requirements to support our short-term and long-term business plans.

next 12 months, we expect to incur approximately $2.0 to $2.5 million in capital expenditures across our APAC, U.S.

and European operations.

following tables present financial covenants associated with our borrowings.

Financial Covenants / Conditions

trade receivables (≤90 days old, net of provisions, excluding intercompany) must be at least 200% of the facility balance

Bank – Export refinance

600 million ($2,157,963)

debt-to-equity ratio of 60:40;

Current ratio of at least 1:1

Bank – Running finance

4.1 million ($14,570)

Metro – Export refinance

1.3 billion ($4,675,586)

Al-Habib – Export refinance

400 million ($1,438,642)

Bank – Export refinance

380 million ($1,366,710)

Interest coverage ≥ 4x;

Leverage ratio ≤ 2x;

Debt service coverage ≥ 4x

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

Loan Payable Bank - Export Refinance IV

Loan Payable Bank - Export Refinance V

Sale and Leaseback Financing

Insurance financing

Short Term Loan

Subsidiary Finance Leases

4 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis