What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2025-02-13 · 616 added, 687 removed, 496 unchanged (72% of the section changed)

Financial Statements

Financial Statements (Unaudited)

TECHNOLOGIES, INC.

1 unchanged sentence

Consolidated Balance Sheets

December 31, 2024

June 30, 2024

Current assets:

Cash and cash equivalents

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

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

Other current assets

Total current assets

Revenues in excess of billings, net - long term

Cash and cash

Accounts receivable, net

of allowance of $ 37,794 and $ 398,809

Revenues in excess of billings,

net of allowance of $ 1,126,734 and $ 116,148

current assets

Revenues in excess of billings, net - long

Property and equipment, net

Right of use assets - operating leases

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

Accounts payable and accrued expenses

Current portion of loans and obligations under finance leases

Current portion of operating lease obligations

Unearned revenue

Total current liabilities

Accounts payable and accrued

Current portion of loans

and obligations under finance leases

Current portion of operating

lease obligations

current liabilities

Loans and obligations under finance leases;

2 unchanged sentences

less current maturities

Total liabilities

Stockholders’ equity:

Preferred stock, $ .01 par value;

Preferred stock, $ .01 par

500,000 shares authorized;

Common stock, $ .01 par value;

Common stock, $ .01 par

14,500,000 shares authorized;

12,589,046 shares issued and

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

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

12,648,574 shares issued and 11,709,543 outstanding as of March 31, 2025, 12,359,922

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

Additional paid-in-capital

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

Treasury stock (at cost,

939,031 shares as of March 31, 2025 and June 30, 2024)

( 3,920,856 )

3 unchanged sentences

( 44,212,313 )

Other comprehensive loss

comprehensive loss

( 46,253,619 )

( 45,935,616 )

Total NetSol stockholders’ equity

Non-controlling interest

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying

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

NetSol stockholders’ equity

Non-controlling

stockholders’ equity

liabilities and stockholders’ equity

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

TECHNOLOGIES, INC.

2 unchanged sentences

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

For the Nine Months

Net Revenues:

1 unchanged sentence

Total net revenues

Cost of revenues

Operating expenses:

Selling, general and administrative

Research and development cost

and development cost

Total operating expenses

Income (loss) from operations

( 1,247,108 )

Other income and (expenses)

1 unchanged sentence

Interest income

Gain (loss) on foreign currency exchange transactions

Total other income (expenses)

Net income before income taxes

Income tax provision

( 1,186,206 )

Non-controlling interest

Net income attributable to NetSol

$ ( 1,147,042 )

Gain (loss) on foreign

currency exchange transactions

( 1,112,757 )

Total other income (expenses)

Net income before income

tax provision

Non-controlling

income attributable to NetSol

Net income per share:

1 unchanged sentence

Weighted average number of shares outstanding

The accompanying

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

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

TECHNOLOGIES, INC.

2 unchanged sentences

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

$ ( 1,147,042 )

$ ( 1,076,247 )

Other comprehensive income (loss):

For the Nine Months

Other comprehensive income

Translation adjustment

Translation adjustment attributable to non-controlling interest

Net translation adjustment

Comprehensive income (loss) attributable to NetSol

$ ( 1,285,785 )

$ ( 1,328,397 )

The accompanying

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

adjustment attributable to non-controlling interest

translation adjustment

Comprehensive

income (loss) attributable to NetSol

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

TECHNOLOGIES, INC.

1 unchanged sentence

Consolidated Statement of Stockholders’ Equity

A statement of the changes in

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

statement of the changes in equity for the three months ended March 31, 2025 is provided below:

Comprehensive

Stockholders’

Balance at December 31, 2024

$ 129,194,697

$ ( 3,920,856 )

$ ( 45,288,560 )

$ ( 46,187,766 )

Exercise of common stock options

Common stock issued for:

Purchase of subsidiary treasury shares

( 1,503,662 )

Adjustment in APIC for change in subsidiary

shares to non-controlling interest

Foreign currency translation adjustment

Net income for the period

Balance at March 31,

$ 129,366,638

$ ( 3,920,856 )

$ ( 43,864,592 )

$ ( 46,253,619 )

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

Comprehensive

Stockholders’

Balance at September 30, 2024

6 unchanged sentences

Fair value of subsidiary options issued

Acquisition of non-controlling interest in subsidiary

Acquisition of non-controlling interest in

Dividend to non-controlling interest

Foreign currency translation adjustment

Net income (loss) for the year

Net income (loss) for

( 1,147,042 )

5 unchanged sentences

$ ( 46,187,766 )

A statement of the changes in

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

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity

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

Comprehensive

Stockholders’

7 unchanged sentences

Fair value of subsidiary options issued

Acquisition of non-controlling interest in subsidiary

Acquisition of non-controlling interest in

Foreign currency translation adjustment

Net income (loss) for the year

Net income (loss) for

Balance at September

3 unchanged sentences

$ ( 46,049,023 )

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

Comprehensive

Stockholders’

Balance at December 31, 2023

$ 128,587,384

$ ( 3,920,856 )

$ ( 44,456,980 )

$ ( 45,870,309 )

Common stock issued for:

of options issued

Fair value of options issued

of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for

Balance at March 31,

$ 128,736,328

$ ( 3,920,856 )

$ ( 44,129,431 )

$ ( 45,505,920 )

TECHNOLOGIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

A statement of the changes in

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

Consolidated Statement of Stockholders’ Equity

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

Comprehensive

Stockholders’

7 unchanged sentences

Foreign currency translation adjustment

Net income (loss) for the year

Net income (loss) for

Balance at December

3 unchanged sentences

$ ( 45,870,309 )

A statement of the changes in

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

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

Comprehensive

Stockholders’

9 unchanged sentences

Common stock issued for:

Fair value of subsidiary options issued

Foreign currency translation adjustment

Net income (loss) for the year

Net income (loss) for

Balance at September

7 unchanged sentences

$ ( 46,411,702 )

The accompanying

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

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

TECHNOLOGIES, INC.

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Six Months

Ended December 31,

Cash flows from operating activities:

Net income (loss)

$ ( 968,497 )

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

For the Nine Months

Cash flows from operating

Adjustments to reconcile

net income to net cash provided by operating activities:

Depreciation and amortization

Provision (reversal) for bad debts

Provision for bad debts

Gain on sale of assets

Stock based compensation

Changes in operating assets and liabilities:

in operating assets and liabilities:

Accounts receivable

Revenues in excess of billing

( 3,922,773 )

Revenues in excess of

( 1,411,983 )

( 3,904,609 )

Other current assets

Accounts payable and accrued expenses

Unearned revenue

Accounts payable and

accrued expenses

( 1,136,533 )

( 6,646,170 )

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Sales of property and equipment

Purchase of subsidiary shares

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from the exercise of stock options and warrants

Dividend paid by subsidiary to non-controlling interest

cash provided by (used in) operating activities

( 3,602,677 )

Cash flows from investing

Purchases of property

and equipment

Sales of property and

of subsidiary shares

cash used in investing activities

Cash flows from financing

Proceeds from the exercise

of stock options and warrants

Dividend paid by subsidiary

to non-controlling interest

Purchase of subsidiary

treasury stock

( 1,503,662 )

Proceeds from bank loans

Payments on finance lease obligations and loans - net

Net cash provided by (used in) financing activities

Effect of exchange rate changes

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of period

The accompanying

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

on finance lease obligations and loans - net

cash provided by financing activities

of exchange rate changes

Net increase (decrease)

in cash and cash equivalents

( 3,194,612 )

Cash and cash equivalents

at beginning of the period

and cash equivalents at end of period

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

TECHNOLOGIES, INC.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Six Months

Ended December 31,

For the Nine Months

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

The accompanying

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

Cash paid during the period

NON-CASH INVESTING AND FINANCING ACTIVITIES:

acquired under finance lease

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

NOTE 1 - BASIS OF PRESENTATION

AND PRINCIPLES OF CONSOLIDATION

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

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

The Company also provides

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

The consolidated

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

of the Securities and Exchange Commission.

Certain information and footnote disclosures normally included in financial statements prepared

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

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

The year-end condensed consolidated

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

generally accepted in the United States of America.

These statements

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

of the information contained therein.

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

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

1 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

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

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

The Company also

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

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

rules and regulations of the Securities and Exchange Commission.

Certain information and footnote disclosures normally included in financial

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

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

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

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

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

fair presentation of the information contained therein.

It is suggested that these condensed consolidated financial statements be read

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

ended June 30, 2024.

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

Results of operations for the interim periods

are not indicative of annual results.

The accompanying

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

Results of operations for the

interim periods are not indicative of annual results.

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

owned Subsidiaries

19 unchanged sentences

to Condensed Consolidated Financial Statements

NOTE 2 – ACCOUNTING

Use of Estimates

The preparation

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

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

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

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

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

and estimated contract costs.

2 – ACCOUNTING POLICIES

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

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

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

the reporting period.

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

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

lease liabilities, and estimated contract costs.

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

Actual results could differ

from those estimates.

Concentration of Credit

Cash includes

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

Certain financial instruments,

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

The Company maintains balances at financial

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

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

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

The Company maintains

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

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

Actual results

could differ from those estimates.

Concentration

of Credit Risk

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

Certain financial

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

The Company maintains balances

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

in the United States.

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

maintained in China are insured for RMB 500,000 ($ 68,871 ) in each bank and in the UK for GBP 85,000 ($ 110,390 ) in each bank.

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

As of March 31, 2025, and June 30, 2024, the Company had uninsured

deposits related to cash deposits in accounts maintained within foreign entities of approximately $ 17,848,732 and $ 18,182,002 , respectively.

The Company has not experienced any losses in such accounts.

The Company’s

operations are carried out globally.

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

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

Company’s operations are carried out globally.

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

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

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

5 unchanged sentences

taxation, among other things.

Fair Value of Financial

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

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

disclosure requirements for fair value measures.

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

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

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

The three levels of valuation

hierarchy are defined as follows:

Valuations consist of unadjusted quoted prices in active

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

Valuations rely on quoted prices in markets that are not

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

Valuations are based on prices or third party or internal

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

lowest priority.

Value of Financial Instruments

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

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

measurement that enhances disclosure requirements for fair value measures.

For certain financial instruments, including cash and cash

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

short maturities.

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

with similar characteristics.

three levels of valuation hierarchy are defined as follows:

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

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

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

and are less observable and thus have the lowest priority.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

The Company’s financial

assets that were measured at fair value on a recurring basis as of December 31, 2024, were as follows:

Company’s financial assets that were measured at fair value on a recurring basis as of March 31, 2025, were as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL ASSETS MEASURED ON RECURRING BASIS

Revenues in excess of billings - long term

The Company’s financial

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

Revenues in excess of billings - long term

The reconciliation from June

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

excess of billings - long term

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

excess of billings - long term

reconciliation from June 30, 2024 to March 31, 2025 is as follows:

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS RECONCILIATION

Revenues in excess of billings - long term

Fair value discount

in excess of billings - long term

value discount

Balance at June 30, 2024

2 unchanged sentences

Transfers to short term

Effect of Translation Adjustment

Balance at December 31, 2024

$ ( 115,126 )

Effect of Translation

Balance at March

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

7 unchanged sentences

Accounting Standards :

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

Reporting (Topic 280):

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

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

ASU 2023-07 expands public entities’ segment disclosures

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

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

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

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

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

ASU 2023-07 expands public entities’ segment

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

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

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

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

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

We are evaluating

2 unchanged sentences

to Condensed Consolidated Financial Statements

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

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

Improvements to Income Tax Disclosures , to enhance transparency

2 unchanged sentences

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

All other newly issued accounting

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

NOTE 3 – REVENUE

determines revenue recognition through the following steps:

· Identification of the contract,

or contracts, with a customer;

· Identification of the performance

obligations in the contract;

· Determination of the transaction

· Allocation of the transaction

price to the performance obligations in the contract;

· Recognition of revenue when, or

as, the Company satisfies a performance obligation.

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

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

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

collected from customers and remitted to government authorities.

The Company has two primary

revenue streams:

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

3 – REVENUE RECOGNITION

Company determines revenue recognition through the following steps:

● Identification

of the contract, or contracts, with a customer;

● Identification

of the performance obligations in the contract;

● Determination

of the transaction price;

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

● Recognition

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

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

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

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

taxes collected from customers and remitted to government authorities.

Company has two primary revenue streams:

core revenue and non-core revenue.

generates its core revenue from the following sources:

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

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

and finance industry.

Company generates its core revenue from the following sources:

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

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

the lease and finance industry.

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

6 unchanged sentences

to take possession of the software.

Non-Core Revenue

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

Performance Obligations

A performance

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

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

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

The Company identifies and tracks the performance obligations

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

The Company’s

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

professional services engagement.

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

support and services in addition to the licenses.

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

support renewals, subscription renewals and services engagements.

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

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

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

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

The Company identifies and tracks the performance

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

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

licenses and a professional services engagement.

License purchases generally have multiple performance obligations as customers purchase

post contract support and services in addition to the licenses.

The Company’s single performance obligation arrangements are typically

post contract support renewals, subscription renewals and services engagements.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

For contracts

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

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

using its best estimate for the SSP.

Software Licenses

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.

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

28 unchanged sentences

due 30 days after invoice.

BPO and Internet Services

and Internet Services

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

2 unchanged sentences

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

Disaggregated Revenue

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

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

Disaggregated

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

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

The Company’s disaggregated

revenue by category is as follows:

Company’s disaggregated revenue by category is as follows:

SCHEDULE OF DISAGGREGATED REVENUE BY CATEGORY

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

For the Nine Months

Subscription and support

2 unchanged sentences

Total net revenue

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

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.

8 unchanged sentences

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

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

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

The stand-alone

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

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

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

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

prices to customers.

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

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

those modules at an optional price.

2 unchanged sentences

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

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

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 person-days required to complete implementation and customization services each reporting period.

8 unchanged sentences

to Condensed Consolidated Financial Statements

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

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

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

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

The Company exercises significant judgment

2 unchanged sentences

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

If a contract

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

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

When estimating variable consideration, the Company

will consider all relevant facts and circumstances.

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

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

Contract Balances

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

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

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

to consideration.

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

not yet transferred goods or services to the customer.

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

The Company’s

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

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

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

When estimating variable consideration, the

Company will consider all relevant facts and circumstances.

Variable consideration will be estimated and included in the contract price

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

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

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

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

right to consideration.

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

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

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

of a milestone.

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

SCHEDULE OF REVENUES IN EXCESS OF BILLINGS AND DEFERRED REVENUE

December 31, 2024

June 30, 2024

Revenues in excess of billings

Unearned revenue

The Company’s

unearned revenue reconciliation is as follows:

in excess of billings

Company’s unearned revenue reconciliation is as follows:

SCHEDULE OF UNEARNED REVENUE RECONCILIATION

Unearned Revenue

Balance at June 30, 2024

Revenue Recognized

at June 30, 2024

( 22,215,692 )

Balance at December 31, 2024

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

in the unearned revenue balance at the beginning of the period.

All other activity in unearned revenue is due to the timing of invoicing

in relation to the timing of revenue recognition.

at March 31, 2025

the three and nine months ended March 31, 2025, the Company recognized revenue of $ 549,933 and $ 8,236,336 , that was included in the unearned

revenue balance at the beginning of the period.

All other activity in unearned revenue is due to the timing of invoicing in relation

to the timing of revenue recognition.

TECHNOLOGIES, INC.

3 unchanged sentences

future periods.

Contracted but unsatisfied performance obligations were approximately $ 20,000,000 as of December 31, 2024, of

which the Company estimates to recognize approximately $ 17,000,000 in revenue over the next 12 months and the remainder

over an estimated 3 years thereafter.

Actual revenue recognition depends in part on the timing of software modules installed at various

customer sites.

Accordingly, some factors that affect the Company’s revenue, such as the availability and demand for modules within

customer geographic locations, is not entirely within the Company’s control.

In instances where the timing of revenue recognition

differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant

financing component.

The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing

the Company’s products and services, and not to facilitate financing arrangements.

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

start of the subscription or support term.

Contracted but unsatisfied performance obligations were approximately $ 16,000,000 as of March 31, 2025, of which the

Company estimates to recognize approximately $ 15,000,000 in revenue over the next 12 months and the remainder over an estimated 3 years

Actual revenue recognition depends in part on the timing of software modules installed at various customer sites.

some factors that affect the Company’s revenue, such as the availability and demand for modules within customer geographic locations,

is not entirely within the Company’s control.

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

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

The primary purpose of invoicing

terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, and not to

facilitate financing arrangements.

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

at the start of the subscription or support term.

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

1 unchanged sentence

Expedients and Exemptions

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

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

The Company has applied the following practical expedients:

9 unchanged sentences

to Obtain a Contract

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

In general, the Company incurs few

direct incremental costs of obtaining new customer contracts.

The Company rarely incurs incremental costs to review or otherwise enter

into contractual arrangements with customers.

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

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

The Company’s sales personnel are required to perform additional

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

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

In general, the Company

incurs few direct incremental costs of obtaining new customer contracts.

The Company rarely incurs incremental costs to review or otherwise

enter into contractual arrangements with customers.

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

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

The Company’s sales personnel are required to

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

TECHNOLOGIES, INC.

1 unchanged sentence

4 – EARNINGS PER SHARE

Basic earnings

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

Diluted earnings

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

outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock options and

stock awards.

The components

of basic and diluted earnings per share were as follows:

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

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

shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding stock options

and stock awards.

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

SCHEDULE OF DILUTIVE POTENTIAL COMMON SHARES

For the three months ended December 31, 2024

For the six months ended December 31, 2024

Basic loss per share:

$ ( 1,147,042 )

$ ( 1,076,247 )

the three months ended

the nine months ended

Basic income per share:

available to common shareholders

Effect of dilutive securities

Stock options

Diluted loss per share

$ ( 1,147,042 )

$ ( 1,076,247 )

For the three months ended December 31, 2023

For the six months ended December 31, 2023

Diluted income per share

the three months ended

the nine months ended

Basic income per share:

available to common shareholders

Effect of dilutive securities

Stock options

Diluted income per share

NOTE 5 – OTHER

COMPREHENSIVE INCOME AND FOREIGN CURRENCY

The following

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

5 – OTHER COMPREHENSIVE INCOME AND FOREIGN CURRENCY

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

SCHEDULE OF FOREIGN CURRENCY TRANSLATION

The Company and Subsidiaries

Functional Currency

Company and Subsidiaries

NetSol Technologies, Inc.

14 unchanged sentences

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

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

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

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

During the three and six months

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

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

NOTE 6 – MAJOR CUSTOMERS

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

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

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

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

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

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

and 6.0 %, respectively of revenues.

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

The revenues from BMW are shown

in the Asia – Pacific and North America segments.

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

Accounts receivable from DFS and BMW at June

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

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

respectively.

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

NOTE 7 - OTHER CURRENT ASSETS

Other current assets consisted

of the following:

equity section of the consolidated balance sheet were $ 46,253,619 and $ 45,935,616 as of March 31, 2025 and June 30, 2024, respectively.

During the three and nine months ended March 31, 2025, comprehensive income (loss) in the consolidated statements of comprehensive income

(loss) included a translation loss attributable to NetSol of $ 65,853 and $ 318,003 , respectively.

During the three and nine months ended

March 31, 2024, comprehensive income (loss) in the consolidated statements of comprehensive income (loss) included a translation gain

attributable to NetSol of $ 364,389 and $ 469,236 , respectively.

6 – MAJOR CUSTOMERS

following table describes the revenues from major customers:

OF REVENUES AND RECEIVABLES FROM MAJOR CUSTOMERS

For the Three Months

For the Nine Months

Net Revenues:

Daimler Financial

BMW Financial

following table describes the receivables from major customers:

Accounts Receivable

Financial Services

BMW Financial

Revenue in Excess of Billing

Daimler Financial Services

BMW Financial

7 - OTHER CURRENT ASSETS

current assets consisted of the following:

SCHEDULE OF OTHER CURRENT ASSETS

December 31, 2024

June 30, 2024

Prepaid Expenses

5 unchanged sentences

to Condensed Consolidated Financial Statements

NOTE 8 – REVENUES IN

EXCESS OF BILLINGS – LONG TERM

Revenues in excess of billings,

net consisted of the following:

SCHEDULE OF REVENUE IN EXCESS OF BILLING

December 31, 2024

June 30, 2024

8 – REVENUES IN EXCESS OF BILLINGS – LONG TERM

in excess of billings, net consisted of the following:

SCHEDULE OF REVENUE IN EXCESS OF BILLING

Revenues in excess of billings

Present value discount

1 unchanged sentence

after one year.

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

During the three and nine months ended March 31, 2025, the Company accreted $ 18,099 and $ 54,833 , respectively, which

was recorded in interest income for that period.

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

During the three and nine months ended March 31, 2024, the Company accreted $ 12,309

and $ 30,773 , respectively, which was recorded in interest income for that period.

The Company used the discounted cash flow method with

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

NOTE 9 - PROPERTY AND EQUIPMENT

Property and equipment consisted

of the following:

interest rates ranging from 7.3 % to 17.5 %, for the period ended March 31, 2025 and June 30, 2024.

9 - PROPERTY AND EQUIPMENT

and equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

December 31, 2024

June 30, 2024

Office Furniture and Equipment

4 unchanged sentences

( 12,462,247 )

Property and Equipment, Net

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

Property and Equipment,

the three and nine months ended March 31, 2025, depreciation expense totaled $ 363,503 and $ 1,102,085 , respectively.

Of these amounts,

$ 240,444 and $ 706,876 , respectively, are reflected in cost of revenues.

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

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

expense totaled $ 391,290 and $ 1,225,198 , respectively.

2 unchanged sentences

to Condensed Consolidated Financial Statements

Following is a summary of fixed

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

is a summary of fixed assets held under finance leases as of March 31, 2025 and June 30, 2024:

SCHEDULE OF FIXED ASSETS HELD UNDER CAPITAL LEASES

December 31, 2024

June 30, 2024

Accumulated Depreciation - Net

Depreciation - Net

Fixed assets held under

capital leases, Total

Finance lease term and discount

rate were as follows:

lease term and discount rate were as follows:

SCHEDULE OF FINANCE LEASE TERM

December 31, 2024

June 30, 2024

Weighted average remaining lease term - Finance leases

Weighted average discount rate - Finance leases

NOTE 10 - LEASES

The Company leases certain office

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

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

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

average remaining lease term - Finance leases

average discount rate - Finance leases

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

as financing and operating.

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

one year to 10 years.

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

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

3 unchanged sentences

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

A ROU asset and a lease liability are recognized at commencement

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

Initial direct costs are included as part of

the ROU asset upon commencement of the lease.

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

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

A ROU asset and a lease liability are recognized

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

Initial direct costs are included

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

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

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

The incremental

1 unchanged sentence

term to obtain an asset of similar value.

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

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

the asset may not be recoverable.

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

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

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

liability accounts.

Lease expense

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

Variable payments

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

of lease liabilities.

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

in the Karachi Inter Bank Offer Rate.

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

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

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

value of the asset may not be recoverable.

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

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

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

and lease liability accounts.

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

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

in a re-measurement of lease liabilities.

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

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

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

value guarantees or restrictive covenants.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Supplemental balance sheet information

related to leases was as follows:

balance sheet information related to leases was as follows:

SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

December 31, 2024

June 30, 2024

Operating lease assets, net

lease assets, net

Operating, Current

1 unchanged sentence

Total Lease Liabilities

The components of lease cost

were as follows:

components of lease cost were as follows:

SCHEDULE OF COMPONENTS OF LEASE COST

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

Amortization of finance lease assets

Interest on finance lease obligation

For the Nine Months

of finance lease assets

Interest on finance lease

Operating lease cost

Short term lease cost

Sub lease income

Total lease cost

Lease term and discount rate

were as follows:

term and discount rate were as follows:

SCHEDULE OF LEASE TERM AND DISCOUNT RATE

December 31, 2024

June 30, 2024

Weighted average remaining lease term - Operating leases

Weighted average discount rate - Operating leases

average remaining lease term - Operating leases

Weighted average

discount rate - Operating leases

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Supplemental disclosures of

cash flow information related to leases were as follows:

disclosures of cash flow information related to leases were as follows:

SCHEDULE OF SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION RELATED TO LEASES

For the Six Months

Ended December 31,

Operating cash flows related to operating leases

Operating cash flows related to finance leases

Financing cash flows related finance leases

Maturities of operating lease

liabilities were as follows as of December 31, 2024:

For the Nine Months

cash flows related to operating leases

Operating cash flows

related to finance leases

Financing cash flows

related finance leases

of operating lease liabilities were as follows as of March 31, 2025:

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

2 unchanged sentences

Within year 4

Within year 5

Total Lease Payments

3 unchanged sentences

Non-Current portion

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

These lease agreements

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

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

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

All leases are considered operating leases.

There are no rights

to purchase the premises and no residual value guarantees.

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

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

For the three and nine months ended March 31, 2025, the Company

received lease income of $ 8,406 and $ 25,326 , respectively.

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

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

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

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

NOTE 11 - ACCOUNTS PAYABLE

AND ACCRUED EXPENSES

Accounts payable and accrued

expenses consisted of the following:

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consisted of the following:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

December 31, 2024

June 30, 2024

Accounts Payable

4 unchanged sentences

Other Payable

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

NOTE 12 – DEBTS

Notes payable and finance leases

consisted of the following:

payable and finance leases consisted of the following:

SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

As of December 31, 2024

of March 31, 2025

D&O Insurance

7 unchanged sentences

Short Term Financing

Subsidiary Finance Leases

As of June 30, 2024

Subsidiary Finance

of June 30, 2024

D&O Insurance

7 unchanged sentences

Short Term Financing

Subsidiary Finance Leases

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

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

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

The interest rate on these financings were ranging from

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

(2) The Company has an uncommitted discretionary demand line of

credit up to an aggregate amount of $ 1,000,000 with HSBC, secured by a lien on the Company’s assets.

The annual interest rate was

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

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

$ 405,000 and $ nil , respectively.

Subsidiary Finance

(1) The Company finances

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

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

The interest rate on these financings were ranging from 8.6 % to 10.9 % as of March 31, 2025 and June 30, 2024.

(2) The Company has

an uncommitted discretionary demand line of credit up to an aggregate amount of $ 1,000,000 with HSBC, secured by a lien on the Company’s

The annual interest rate was 8.25 % at March 31, 2025 and 8.75 % as of June 30, 2024.

The total outstanding balance as of March

31, 2025 and June 30, 2024 was $ 405,000 and $ nil , respectively.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

(3) The Company’s subsidiary, NTE, has an overdraft facility

with HSBC Bank plc whereby the bank would cover any overdrafts up to £ 300,000 , or approximately $ 375,000 .

The annual interest rate

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

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

This overdraft facility requires that the aggregate amount of invoiced

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

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

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

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

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

This is a revolving loan that matures every nine months.

total facility amount is Rs.

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

(3) The Company’s

subsidiary, NTE, has an overdraft facility with HSBC Bank plc whereby the bank would cover any overdrafts up to £ 300,000 , or approximately

The annual interest rate was 9.5 % as of March 31, 2025 and June 30, 2024.

The total outstanding balance as of March 31, 2025

and June 30, 2024 was £ Nil .

This overdraft facility

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

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

As of March 31, 2025, NTE

was in compliance with this covenant.

(4) The Company’s

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

This is a revolving

loan that matures every nine months.

The total facility amount is Rs.

600,000,000 or $ 2,145,846 at March 31, 2025 and Rs.

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

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

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

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

NetSol PK used Rs.

500,000,000 or $ 1,788,205 at March 31, 2025 and Rs.

500,000,000 or $ 1,796,558 at June

The interest rate for the loan was 10.0 % and 17.5 % at March 31, 2025 and June 30, 2024, respectively.

(5) The Company’s

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

The total facility

amount is Rs.

4,050,937 or $ 14,488 , at March 31, 2025.

The balance outstanding at March 31, 2025 and June 30, 2024 was Rs.

rate for the loan was 14.1 % at March 31, 2025 and 22.2% at June 30, 2024.

This facility requires

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

As of March 31, 2025, NetSol PK was in

compliance with this covenant.

(6) The Company’s

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

This is a revolving

loan that matures every nine months.

The total facility amount is Rs.

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

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

The interest rate for the loan was 14.1 % at December

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

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

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

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

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

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

This is a revolving loan that matures every nine months.

facility amount is Rs.

380,000,000 or $ 1,359,036 and Rs.

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

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

During the tenure of the loan, the facilities from Samba Bank Limited

require NetSol PK to maintain at a minimum a current ratio of 1:1, an interest coverage ratio of 4 times, a leverage ratio of 2

times, and a debt service coverage ratio of 4 times.

As of December 31, 2024, NetSol PK was in compliance with these

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

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

This is a revolving loan that matures every nine months.

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

March 31, 2025 and June 30, 2024, respectively.

The interest rate for the loan was 10.0 % and 17.5 % at March 31, 2025 and June 30, 2024,

respectively.

During the tenure of the

loan, the facilities from Samba Bank Limited require NetSol PK to maintain at a minimum a current ratio of 1:1, an interest coverage

ratio of 4 times, a leverage ratio of 2 times, and a debt service coverage ratio of 4 times.

As of March 31, 2025, NetSol PK was in

compliance with these covenants.

(7) The Company’s

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

revolving loan that matures every nine months.

The total facility amount is Rs.

1,300,000,000 or $ 4,649,333 and Rs.

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

respectively.

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

at March 31, 2025 and June 30, 2024, respectively.

NetSol PK used Rs.

1,300,000,000 or $ 4,649,333 and Rs.

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

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

at March 31, 2025 and June 30, 2024, respectively.

The interest rate for the loan was 10.0 % and 17.5 % at March 31, 2025 and June 30,

2024, respectively.

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

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

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

As of December 31, 2024, NetSol PK

(8) The Company’s

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

As of March 31, 2025, NetSol PK used Rs.

5,307,080 or $ 18,980 which was shown as current.

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

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

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

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

(9) The Company’s subsidiary, NetSol Beijing, has a one year,

short-term loan facility with Bank of China, secured by a personal guarantee from NetSol Beijing’s General Manager.

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

NetSol Beijing used CNY 3,000,000 or $ 410,959 at December 31, 2024.

NetSol Beijing used CNY 3,000,000

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

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

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

arrangements expiring in various years through 2027.

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

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

The assets are secured by the assets themselves.

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

As of June 30, 2024, NetSol PK used

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

The interest rate for the loan was from 22.7 %

to 24.2 % at March 31, 2025 and June 30, 2024.

(9) The Company’s

subsidiary, NetSol Beijing, had a one year, short-term loan facility with Bank of China, secured by a personal guarantee from NetSol

Beijing’s General Manager.

The facility amount was CNY 3,000,000 or $ 413,223 .

NetSol Beijing has paid off this facility during

the period ended March 31, 2025.

NetSol Beijing used CNY 3,000,000 or $ 412,655 , at June 30, 2024.

The interest rate of the loan was 3.8 %

at March 31, 2025 and June 30, 2024.

(10) The Company leases

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

The assets and liabilities under finance

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

The assets are secured

by the assets themselves.

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

March 31, 2025 and 2024.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

Following are the aggregate

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

are the aggregate minimum future lease payments under finance leases as of March 31, 2025:

SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

1 unchanged sentence

Within year 2

Within year 3

Total Minimum Lease Payments

Interest Expense relating to future periods

Interest Expense relating

to future periods

Present Value of minimum lease payments

Current portion

Non-Current portion

Following are the aggregate

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

are the aggregate future long term debt payments as of March 31, 2025 which consists of “Sale and Leaseback Financing (8)”.

SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

Loan Payments

Within year 1

Within year 2

Total Loan Payments

1 unchanged sentence

Non-Current portion

NOTE 13 - STOCKHOLDERS’

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

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

13 - STOCKHOLDERS’ EQUITY

the three and nine months ended March 31, 2025, the Company issued nil and 29,124 shares of common stock for services rendered by the

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

These shares were valued at the fair market value

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

During the three and six months

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

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

The following table summarizes

stock grants awarded as compensation:

of $ nil and $ 79,500 , respectively.

The Company grants share-based compensation to its independent Board of Directors as part of their

service compensation.

These awards are typically settled in shares under the Company’s equity incentive plan.

As of March 31, 2025,

the Company did not have a sufficient number of shares available for issuance under the current equity incentive plan to settle the equity

portion of the director’s compensation for the period.

In accordance with ASC 718 – Compensation – Stock Compensation,

the Company has accounted for these awards as a liability and has recorded an accrued liability of $ 39,750 as of March 31, 2025.

Company will reclassify the liability to equity upon the issuance of shares once additional shares are made available under a new equity

incentive plan, or will settle the liability in cash if shares are not issued.

the three and nine months ended March 31, 2025, the employees of the Company exercised 20,000 and 220,000 options of common stock with

an exercise price of $ 2.15 per share for cash proceeds of $ 473,000 .

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

following table summarizes stock grants awarded as compensation:

SUMMARY OF UNVESTED STOCK GRANTS AWARDED AS COMPENSATION

# Number of shares

Weighted Average Grant Date Fair Value ($)

Unvested, June 30, 2024

Unvested, December 31, 2024

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

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

Unvested, March 31,

the three and nine months ended March 31, 2025, the Company recorded compensation expense of $ 39,750 and $ 79,500 , respectively.

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

average grant date fair value is determined by the Company’s closing stock price on the grant date.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

NOTE 14 – INCENTIVE

AND NON-STATUTORY STOCK OPTION PLAN

Common stock purchase options

consisted of the following:

OF COMMON STOCK PURCHASE OPTIONS

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (in years)

Aggregated Intrinsic Value

14 – INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN

stock purchase options consisted of the following:

SCHEDULE OF COMMON STOCK PURCHASE OPTIONS

Outstanding and exercisable, June 30, 2024

Expired / Cancelled

Outstanding and exercisable, December 31, 2024

The aggregate

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

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

The following table summarizes

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

SUMMARY OF STOCK OPTIONS OUTSTANDING

Exercise Price

Number Outstanding and Exercisable

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

NOTE 15– OPERATING

has identified three segments for its products and services;

Outstanding and exercisable, March 31,

15– OPERATING SEGMENTS

Company has identified three segments for its products and services;

North America, Europe and Asia-Pacific.

Our reportable segments are business

units located in different global regions.

Our reportable segments

are business units located in different global regions.

Each business unit provides similar products and services;

license fees for leasing and asset-based

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

Separate management of each segment is required because

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

The Company accounts

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

license fees for leasing

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

Separate management of each segment

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

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

consolidation.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

The following table presents

a summary of identifiable assets as of December 31, 2024 and June 30, 2024:

following table presents a summary of identifiable assets as of March 31, 2025 and June 30, 2024:

SUMMARY OF IDENTIFIABLE ASSETS

December 31, 2024

June 30, 2024

Identifiable assets:

1 unchanged sentence

North America

Asia - Pacific

The following table presents

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

following table presents a summary of revenue streams by segment for the three months ended March 31, 2025 and 2024:

SUMMARY OF REVENUE STREAMS

Subscription and support

North America

The following table presents

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

Subscription and support

following table presents a summary of revenue streams by segment for the nine months ended March 31, 2025 and 2024:

North America

1 unchanged sentence

to Condensed Consolidated Financial Statements

The following table presents

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

following table presents a summary of operating information for the three and nine months ended March 31:

SUMMARY OF OPERATING INFORMATION

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

the Three Months

Ended March 31,

the Nine Months

Ended March 31,

Revenues from unaffiliated customers:

North America

Asia - Pacific

Revenues from unaffiliated customers

Revenue from affiliated customers

Asia - Pacific

Revenue from affiliated

Intercompany revenue

Asia - Pacific

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

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

Corporate headquarters

4 unchanged sentences

North America

Asia - Pacific

$ ( 1,186,206 )

$ ( 968,497 )

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

$ ( 1,186,206 )

$ ( 968,497 )

Depreciation and amortization:

North America

Asia - Pacific

Depreciation and amortization

1 unchanged sentence

Corporate headquarters

Asia - Pacific

Income tax expense:

Asia - Pacific

North America

Income tax expense

1 unchanged sentence

to Condensed Consolidated Financial Statements

The following table presents

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

following table presents a summary of capital expenditures for the nine months ended March 31:

SUMMARY OF CAPITAL EXPENDITURES

For the Six Months

Ended December 31,

For the Nine Months

Capital expenditures:

North America

Asia - Pacific

Capital expenditures

NOTE 16 – NON-CONTROLLING

INTEREST IN SUBSIDIARY

had non-controlling interests in several of its subsidiaries.

16 – NON-CONTROLLING INTEREST IN SUBSIDIARY

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

The balance of non-controlling interest was as follows:

SCHEDULE OF BALANCE OF NON-CONTROLLING INTEREST

Non-Controlling Interest %

Non-Controlling Interest

December 31, 2024

Non-Controlling

NetSol Innovation

Non-Controlling Interest %

Non-Controlling Interest at

June 30, 2024

Non-Controlling

NetSol Innovation

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

the quarter ended March 31, 2025, NetSol PK, a majority owned subsidiary of the Company, repurchased 2,690,251 shares of its outstanding

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

The repurchase did not result in a change of control and was therefore accounted for

as an equity transaction in accordance with ASC 810-10.

Due to this purchase, the non-controlling interest in NetSol PK, NetSol Innovation

and NAMECET, decreased from 32.38 % at June 30, 2024 to 30.24 % at March 31, 2025.

The carrying amount of the non-controlling interest

was reduced by $ 1,532,797 , and the difference of $ 29,135 was recognized as an increase in additional paid-in capital in the Company’s

consolidated equity.

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

the nine months ended March 31, 2025, the Company acquired the remaining 177,558 minority shares from the OTOZ non-controlling shareholders

for $ 8,878 .

1 unchanged sentence

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

TECHNOLOGIES, INC.

to Condensed Consolidated Financial Statements

The following

schedule discloses the effect to the Company’s equity due to the changes in the Company’s ownership interest in Otoz®

and Otoz® Thai.

following schedule discloses the effect on the Company’s equity due to the changes in the Company’s ownership interest in

Otoz® and Otoz® Thai.

SCHEDULE OF CHANGE IN OWNERSHIP INTEREST

For the Three Months

Ended December 31,

For the Six Months

Ended December 31,

Net income (loss) attributable to NetSol

$ ( 1,147,042 )

$ ( 1,076,247 )

Transfer to (from) non-controlling interest

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

Net transfer to (from) non-controlling interest

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

$ ( 1,178,046 )

$ ( 1,242,370 )

NOTE 17– INCOME TAXES

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

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

For the Nine Months

income (loss) attributable to NetSol Transfer to (from) non-controlling interest

Decrease in paid-in capital

for purchase of 177,558 shares of OTOZ Inc common stock

in paid-in capital for purchase of 2,690,251 shares of common stock of NetSol PK from Open Market

Net transfer to (from)

non-controlling interest

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

17– INCOME TAXES

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

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

available, if any.

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

and numerous foreign jurisdictions.

Our effective tax rate will depend on the portion

of our profits earned within and outside the United States.

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

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

NOTE 18– SUBSEQUENT EVENTS

NetSol PK announced a share buyback program for the

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

The buyback program

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

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

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

Our effective tax rate will depend

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

the three and nine months ended March 31, 2025, the Company recorded an income tax provision of $ 151,334 and $ 712,765 , respectively.

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

18– SUBSEQUENT EVENTS

Company’s subsidiary OTOZ Inc.

has been merged with NTA effective April 1, 2025.

The merger has no financial impact on the consolidated

financial statements.

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

What changed 10-Q

Item 1. Financial Statements