Financial Analysis

NOTE 18 BUSINESS COMBINATIONS AND COMMON CONTROL TRANSACTIONS In July 2024, NTA, a wholly owned subsidiary of NetSol Technologies, Inc. (NTI), entered into a share purchase agreement with NTI and the remaining minority shareholders to acquire all issued and outstanding shares of OTOZ . In March 2025, NTA filed the merger documents with the respective state agencies with an effective date of April 1, 2025. The transaction occurred between entities under common control. Accordingly, all assets and liabilities of OTOZ were transferred to NTA at their carrying amounts, and no gain or loss was recognized as a result of the transaction. This merger did not result in any change to the consolidated accounting for the assets and liabilities transferred, as both entities were controlled by NTI before and after the transaction. The transaction was accounted for in accordance with ASC 805-50, Business Combinations Related Parties and had no material impact on the consolidated financial statements except for the change in legal entity structure. Details of the purchase price and accounting treatment for the noncontrolling interest are provided in Note 19 Non-Controlling Interest in Subsidiaries. …

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NOTE 12 DEBTS Notes payable and capital leases consisted of the following: SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES As of June 30, 2025 Current Long-Term Name Total Maturities Maturities D&O Insurance (1) $ 119,542 $ 119,542 $ - Line of Credit (2) 405,000 405,000 - Bank Overdraft Facility (3) - - - Loan Payable Bank - Export Refinance (4) 1,759,634 1,759,634 - Loan Payable Bank - Running Finance (5) - - - Loan Payable Bank - Export Refinance II (6) 1,337,322 1,337,322 - Loan Payable Bank - Export Refinance III (7) 4,575,048 4,575,048 - Sale and Leaseback Financing (8) 76,618 29,660 46,958 Short Term Financing (9) - - - 8,273,164 8,226,206 46,958 Subsidiary Finance Leases (10) 101,505 13,855 87,650 $ 8,374,669 $ 8,240,061 $ 134,608 As of June 30, 2024 Current Long-Term Name Total Maturities Maturities D&O Insurance (1) $ 124,314 $ 124,314 $ - Line of Credit (2) - - - Bank Overdraft Facility (3) - - - Loan Payable Bank - Export Refinance (4) 1,796,558 1,796,558 - Loan Payable Bank - Running Finance (5) - - - Loan Payable Bank - Export Refinance II (6) 1,365,384 1,365,384 - Loan Payable Bank - Export Refinance III (7) 2,515,181 2,515,181 - Sale and Leaseback Financing (8) 56,842 47,158 9,684 Short Term Financing (9) 412,655 412,655 - 6,270,934 6,261,250 9,684 Subsidiary Finance Leases (10) 100,962 14,875 86,087 $ 6,371,896 $ 6,276,125 $ 95,771 (1) The Company finances Directors and Officers (D&O) liability insurance and Errors and Omissions (E&O …

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The Companys disaggregated revenue by category is as follows: SCHEDULE OF DISAGGREGATED REVENUE BY CATEGORY 2025 2024 For the Years Ended June 30, 2025 2024 Core: License $ 598,633 $ 5,449,991 Subscription and support 32,934,648 27,952,768 Services 28,921,965 22,526,010 Total core revenue, net 62,455,246 55,928,769 Non-Core: Services 3,632,983 5,464,322 Total non-core revenue, net 3,632,983 5,464,322 Total net revenue $ 66,088,229 $ 61,393,091 …

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NOTE 15 EQUITY INCENTIVE PLAN At the Companys 2025 annual meeting of shareholders, the shareholders approved the 2025 Equity Incentive Plan (the 2025 Plan). The 2025 Plan is the Companys sole active equity compensation plan and provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other stock-based awards to employees, directors, and consultants. The maximum number of shares of common stock authorized for issuance under the 2025 Plan is 1,100,000 . Shares subject to awards that are forfeited, canceled, or expire without being exercised become available for grant under the plan. The 2025 Plan is administered by the Compensation Committee of the Board of Directors, which has discretion to determine the terms of awards, including vesting and performance conditions. The exercise price of stock options may not be less than the fair market value of the Companys common stock on the date of grant, and the maximum term of any option is ten years . As of June 30, 2025, the remaining shares to be granted are 998,109 under the 2025 Plan. NETSOL TECHNOLOGIES, INC. Notes to Consolidated Financial Statements June 30, 2025 and 2024 Stock Grants The 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, 2023 - $ - Granted 75,035 $ 2.24 Vested (75,035 ) $ 2.24 Unvested, …

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NOTE 13 INCOME TAXES The Company is incorporated in the State of Nevada and registered to do business in the State of California. The following is a breakdown of income before the provision for income taxes: Consolidated pre-tax income (loss) consists of the following: SCHEDULE OF CONSOLIDATED PRE-TAX INCOME (LOSS) 2025 2024 Years Ended June 30, 2025 2024 US operations $ 1,099,957 $ (1,719,058 ) Foreign operations 4,947,300 4,942,505 Net income before income taxes $ 6,047,257 $ 3,223,447 NETSOL TECHNOLOGIES, INC. Notes to Consolidated Financial Statements June 30, 2025 and 2024 The components of the provision for income taxes are as follows: SCHEDULE OF COMPONENTS OF PROVISION FOR INCOME TAXES 2025 2024 Years Ended June 30, 2025 2024 Current: Federal $ - $ - State and Local 1,600 1,600 Foreign 1,411,601 1,143,918 Deferred: Federal - - State and Local - - Foreign 63,137 - Provision for income taxes $ 1,476,338 $ 1,145,518 A reconciliation of taxes computed at the statutory federal income tax rate to income tax expense (benefit) is as follows: SCHEDULE OF RECONCILIATION OF TAXES AT STATUTORY FEDERAL INCOME TAX RATE INCOME TAX EXPENSE BENEFITS Years Ended June 30, 2025 2024 Income tax (benefit) provision at statutory rate $ 1,269,924 21.0 % $ 676,924 21.0 % State income (benefit) taxes, net of federal tax benefit 422,099 7.0 % 224,997 7.0 % Foreign earnings taxed at different rates 90,483 1.5 % (238,995 ) -7.4 % Change in valuation allowance for deferred tax assets (179,699 ) -3 …

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NOTE 9 - LEASES The Company leases certain office space, office equipment and autos with remaining lease terms of 1 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 1 to 10 years. The 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. These leases are recorded as right-of-use (ROU) assets and lease obligation liabilities for leases with terms greater than 12 months. ROU assets represent the Companys right to use an underlying asset for the entirety of the lease term. Lease liabilities represent the Companys obligation to make payments over the life of the lease. An ROU asset and a lease liability are recognized at the 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 borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis ove …

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Recent Accounting Standards Adopted by the Company : In November 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segments profit or loss used by the CODM when deciding how to allocate resources. The Company adopted the standard on a retrospective basis and made the required annual disclosures as of June 30, 2025. Interim disclosures are required for periods within fiscal years beginning in the first quarter of the Companys fiscal year 2026. As the guidance only requires additional disclosure, there were no effects of adoption on our financial position, results of operations, or cash flows. See Note 17 Segment Information and Geographic Areas for the segment disclosure required under this ASU. …

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NOTE 16 RETIREMENT PLANS The Company and its subsidiaries have varying defined contribution plans based on country-specific laws. Employer contributions vary by subsidiary from 0 % up to 8 % taking the form in some jurisdictions of employee matching contributions and in others direct employer contributions mandated by local law. During the years ended June 30, 2025 and 2024, the Company contributed $ 1,363,234 and $ 1,156,977 , respectively, to these plans. NETSOL TECHNOLOGIES, INC. Notes to Consolidated Financial Statements June 30, 2025 and 2024 …

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NOTE 3 REVENUE RECOGNITION The 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; Allocation of the transaction price to the performance obligations in the contract; and Recognition of revenue when, or as, the Company satisfies a performance obligation. The 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. The Company has two primary revenue streams: core revenue and non-core revenue. Core Revenue The 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: a traditional on-premises licensing model and a subscription model. The on-premises model involves the sale or license of software on a perpetual basis to customers who take possession of the software and install and maintain the softwa …

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NOTE 17 SEGMENT INFORMATION AND GEOGRAPHIC AREAS The Company has identified three segments for its products and services: North America, Europe, and Asia-Pacific. The 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, subscription and support 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 its particular regional location. The Companys chief operating decision maker (CODM) evaluates performance and allocates resources based on gross profit and income from operations. The Company has designated its Chief Executive Officer as the CODM. Segment assets include all assets attributable to operations within the respective geographic regions, including cash, accounts receivable, revenue in excess of billings, and property, plant, and equipment. Corporate assets, which primarily consist of cash and cash equivalents, goodwill, and assets associated with the Companys corporate headquarters, are not allocated to the geographic segments and are shown separately. The accounting policies of the reportable segments are the same as those described in Note 1, Summary of Significant Accounting Policies. Intersegment revenues are eliminated in consolidation. Prior year results have been restated to conform to the current …

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company as follows: Wholly owned Subsidiaries NetSol Technologies Americas, Inc. (NTA) NetSol Connect (Private), Ltd. (Connect) NetSol Technologies Australia Pty Ltd. (Australia) NetSol Technologies Europe Limited (NTE) NetSol Technologies (Beijing) Co. Ltd. (NetSol Beijing) Tianjin NuoJinZhiCheng Co., Ltd (Tianjin) Ascent Europe Ltd. (AEL) Virtual Lease Services Holdings Limited (VLSH) Virtual Lease Services Limited (VLS) Virtual Lease Services (Ireland) Limited (VLSIL) Majority-owned Subsidiaries NetSol Technologies, Ltd. (NetSol PK) NetSol Innovation (Private) Limited (NetSol Innovation) NetSol Institute of Artificial Intelligence (Private) Limited (NIAI) NETSOL Ascent Middle East Computer Equipment Trading LLC (Namecet) NetSol Technologies Thailand Limited (NetSol Thai) OTOZ, Inc. (OTOZ ) OTOZ (Thailand) Limited (OTOZ Thai) The Company consolidates any variable interest entities of which it is the primary beneficiary. Equity investments through which the Company exercises significant influence over but does not control the investee and is not the primary beneficiary of the investees activities are accounted for using the equity method. Investments through which the Company is not able to exercise significant influence over the investee, and which do not have readily determinable fair values are accounted for under t …

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NOTE 14 - STOCKHOLDERS EQUITY During the years ended June 30, 2025 and 2024, the Company issued 58,335 and 70,035 shares of common stock, respectively, to the independent Board of Directors as part of their board compensation. The grant date fair value of the shares was $ 159,000 for each period, and was recorded as compensation expense in the accompanying consolidated financial statements. During the year ended June 30, 2025, the Company issued 59,528 shares of common stock to the CEO for his bonus earned in fiscal year 2024. The fair market value of the shares was $ 151,201 . During the year ended June 30, 2025, the Company issued 2,680 shares of common stock to a consultant pursuant to the terms of his consultancy agreement. The grant date fair value of the shares was $ 8,333 and was recorded as compensation expense in the accompanying consolidated financial statements. During the year ended June 30, 2024, the Company issued 5,000 shares of common stock to employees pursuant to the terms of their employment agreements. The grant date fair value of the shares was $ 9,050 and was recorded as compensation expense in the accompanying consolidated financial statements. …

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