NETSOL TECHNOLOGIES INC

Previous wording

We continue to pursue a series of strategic marketing and business development initiatives to capitalize on favorable market conditions and drive growth across our business lines. These efforts reflect our commitment to building a stronger market presence, expanding our customer base and maintaining a careful focus on profitability. These efforts include: repositioning our brand and messaging; brand strengthening and awareness; raising industry expertise through speaking engagements and participation in awards and recognitions; accelerating digital campaigns focused on content marketing; leveraging analytics and marketing automation tools to improve campaign effectiveness and optimize marketing return on investment; creating comprehensive go-to-market plans for new launches and feature upgrades; customer centric sales enablement; targeting new global and product markets; using AI to enhance productivity; expanding market reach through participation in industry associations; and, adopting practices that strengthen leadership and talent retention.

Current wording

We continue to pursue a series of strategic marketing and business development initiatives to strengthen market presence and support growth across our business lines. These efforts reflect our commitment to building a stronger market presence, expanding our customer base and maintaining a careful focus on profitability. These efforts include: repositioning our brand and messaging; brand strengthening and awareness; raising industry expertise through speaking engagements and participation in awards and recognitions; accelerating digital campaigns focused on content marketing; leveraging analytics and marketing automation tools to improve campaign effectiveness and optimize marketing return on investment; creating comprehensive go-to-market plans for new launches and feature upgrades; customer centric sales enablement; targeting new global and product markets; using AI to enhance productivity; expanding market reach through participation in industry associations; and, adopting practices that strengthen leadership and talent retention.

Previous wording

Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies for us include revenue recognition and multiple element arrangements, intangible assets, software development costs, and goodwill.

Current wording

Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies for us include revenue recognition and multiple element arrangements, stock-based compensation, and goodwill.

Previous wording

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.

Current wording

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

Previous wording

For contracts with multiple performance obligations where the contracted price differs from the standard-alone selling price (“SSP”) for any distinct good or service, the Company may be required to allocate the contract’s transaction price to each performance obligation using its best estimate for the SSP.

Current wording

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.

Previous wording

Subscription revenue is recognized ratably over the initial subscription period committed to by the customer commencing when the product is made available to the customer. The initial subscription period is typically 12 to 60 months. The Company generally invoices its customers in advance in quarterly or annual installments and typical payment terms provide that customers make payment within 30 days of invoice.

Current wording

Subscription revenue is recognized ratably over the initial subscription period committed by the customer commencing when the product is made available to the customer. The initial subscription period is typically 12 to 60 months. The Company generally invoices its customers in advance in quarterly or annual installments and typical payment terms provide that customers make payment within 30 days of invoice.

Previous wording

Revenue from professional services is typically comprised of implementation, development, data migration, training or other consulting services. Consulting services are generally sold on a time-and-materials or fixed fee basis and can include services ranging from software installation to data conversion and building non-complex interfaces to allow the software to operate in integrated environments. The Company recognizes revenue for time-and-materials arrangements as the services are performed. In fixed fee arrangements, revenue is recognized as services are performed as measured by costs incurred to date, compared to total estimated costs to complete the services project. Management applies judgment when estimating project status and the costs necessary to complete the services projects. A number of internal and external factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. Services are generally invoiced upon milestones in the contract or upon consumption of the hourly resources and payments are typically due 30 days after invoice.

Current wording

Revenue from professional services is typically comprised of implementation, development, data migration, training or other consulting services. Consulting services are generally sold on a time-and-materials or fixed fee basis and can include services ranging from software installation to data conversion and building non-complex interfaces to allow the software to operate in integrated environments. The Company recognizes revenue for time-and-materials arrangements as the services are performed. For fixed-fee implementation and customization services that are satisfied over time, revenue is recognized using an input method based on person-days incurred relative to total estimated person-days required to complete the services. Management applies judgment when estimating project status and the costs necessary to complete the services projects. A number of internal and external factors can affect these estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. Services are generally invoiced upon milestones in the contract or upon consumption of the hourly resources and payments are typically due 30 days after invoice.

Previous wording

Revenue from BPO services is recognized based on the stage of completion which is measured by reference to labor hours incurred to date as a percentage of total estimated labor hours for each contract. Internet services are invoiced either monthly, quarterly or half yearly in advance to the customers and revenue is recognized ratably overtime on a monthly basis.

Current wording

Revenue from BPO services is recognized based on the stage of completion which is measured by reference to labor hours incurred to date as a percentage of total estimated labor hours for each contract. Internet services are invoiced either monthly, quarterly or half yearly in advance to the customers and revenue is recognized ratably over time on a monthly basis.

Previous wording

More judgments and estimates are required under Topic 606 than were required under Topic 605. Due to the complexity of certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances.

Current wording

Due to the complexity of certain contracts, the revenue recognition treatment under Topic 606 for the Company’s arrangements may depend on contract-specific terms and may vary in some instances.

Previous wording

Judgment is required to determine the SSP for each distinct performance obligation. The Company rarely licenses or sells products on a stand-alone basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where SSP is not directly observable because the Company does not sell the license, product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. In making these judgments, the Company analyzes various factors, including its pricing methodology and consistency, size of the arrangement, length of term, customer demographics and overall market and economic conditions. Based on these results, the estimated SSP is set for each distinct product or service delivered to customers.

Current wording

Judgment is required to determine the SSP for each distinct performance obligation. The Company rarely licenses or sells products on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where SSP is not directly observable because the Company does not sell the license, product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. In making these judgments, the Company analyzes various factors, including its pricing methodology and consistency, size of the arrangement, length of term, customer demographics and overall market and economic conditions. Based on these results, the estimated SSP is set for each distinct product or service delivered to customers.

Previous wording

The most significant inputs involved in the Company’s revenue recognition policies are: The (1) stand-alone selling prices of the Company’s software license, and (2) the method of recognizing revenue for installation/customization, and other services.

Current wording

The most significant judgments and estimates involved in the Company’s revenue recognition policies are: (1) determining standalone selling prices of the Company’s software licenses, and (2) measuring progress toward satisfaction of performance obligations for implementation, customization, and other services.

Previous wording

The 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. This information guides the Company in assessing the stand-alone selling price of the Company’s software, since the Company can observe instances where a customer had a particular component of the Company’s software that was essentially priced separate from other goods and services that the Company delivered to that customer.

Current wording

The standalone selling price of the licenses is measured primarily through an analysis of pricing that management evaluates 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. This information guides the Company in assessing the standalone selling price of the Company’s software, since the Company can observe instances where a customer had a particular component of the Company’s software that was essentially priced separately from other goods and services that the Company delivered to that customer.

Previous wording

The Company recognizes revenue from implementation and customization services using the percentage of estimated “man-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 work. The Company reviews its estimate of man-days required to complete implementation and customization services each reporting period.

Current wording

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

Previous wording

If 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 to evaluate the relevant facts and circumstances in determining whether agreements should be accounted for separately or as a single arrangement. The Company’s judgments about whether a group of contracts comprise a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

Current wording

If a group of agreements is entered into at or near the same time and so closely related that they are, in effect, part of a single arrangement, such agreements are deemed to be combined as one arrangement for revenue recognition purposes. The Company exercises significant judgment to evaluate the relevant facts and circumstances in determining whether agreements should be accounted for separately or as a single arrangement. The Company’s judgments about whether a group of contracts comprises a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

Previous wording

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.

Current wording

If a contract includes variable consideration, the Company exercises judgment in estimating the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods or services to a customer. When estimating variable consideration, the Company considers all relevant facts and circumstances. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Previous wording

The 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 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.

Current wording

The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in receivables, contract assets, or contract liabilities on the Company’s Consolidated Balance Sheets. The Company records contract assets when the Company has transferred goods or services but does not yet have the right to consideration. The Company records contract liabilities when the Company has received or has the right to receive consideration but has not yet transferred goods or services to the customer.

Previous wording

The Company typically invoices its customers for subscription and support fees in advance on a quarterly or annual basis, with payment due at the start of the subscription or support term. Unpaid invoice amounts for non-cancellable license and services starting in future periods are included in accounts receivable and unearned revenue.

Current wording

The Company typically invoices its customers for subscription and support fees in advance on a quarterly or annual basis, with payment due at the start of the subscription or support term. Unpaid invoice amounts for non-cancellable licenses and services starting in future periods are included in accounts receivable and contract liabilities.

Previous wording

Subscription and support fees for the year ended June 30, 2025, were $32,934,648 compared to $27,952,768 for the year ended June 30, 2024 reflecting an increase of $4,981,880 with an increase in constant currency of $4,788,597. The increase includes a one-time catch up of approximately $1,693,000 from five of our customers. Subscription and support fees are recurring in nature, and we anticipate these fees to gradually increase as we increase our SaaS customer base and implement NFS Ascent®.

Current wording

Subscription and support fees for the year ended June 30, 2026, were $35,799,842 compared to $32,934,648 for the year ended June 30, 2025 reflecting an increase of $2,865,194 with an increase in constant currency of $2,318,648. Subscription and support fees are recurring in nature, and we anticipate these fees to gradually increase as we increase our SaaS customer base and implement Transcend®.

Previous wording

Services income for the year ended June 30, 2025, was $32,554,948 compared to $27,990,332 for the year ended June 30, 2024, reflecting an increase of $4,564,616 with an increase in constant currency of $4,160,167. The increase is mainly due to implementation services in APAC, the U.S. and Europe.

Current wording

Services income for the year ended June 30, 2026, was $33,617,160 compared to $32,554,948 for the year ended June 30, 2025, reflecting an increase of $1,062,212 with an increase in constant currency of $599,717. The increase is mainly due to implementation services in APAC and Europe.

Previous wording

The gross profit was $32,574,532 for the year ended June 30, 2025, compared with $29,284,870 for the year ended June 30, 2024. This is an increase of $3,289,662 with an increase in constant currency of $3,177,383. The gross profit percentage for the year ended June 30, 2025, increased to 49.3% from 47.7% for the year ended June 30, 2024. The cost of sales was $33,513,697 for the year ended June 30, 2025, compared to $32,108,221 for the year ended June 30, 2024, for an increase of $1,405,476 and on a constant currency basis an increase of $1,007,408. As a percentage of sales, cost of sales decreased from 52.3% for the year ended June 30, 2024, to 50.7% for the year ended June 30, 2025.

Current wording

The gross profit was $39,147,343 for the year ended June 30, 2026, compared with $32,574,532 for the year ended June 30, 2025. This is an increase of $6,572,811 with an increase in constant currency of $5,646,496. The gross profit percentage for the year ended June 30, 2026, increased to 52.6% from 49.3% for the year ended June 30, 2025. The cost of sales was $35,224,037 for the year ended June 30, 2026, compared to $33,513,697 for the year ended June 30, 2025, for an increase of $1,710,340 and on a constant currency basis an increase of $1,617,580. As a percentage of sales, cost of sales decreased from 50.7% for the year ended June 30, 2025, to 47.4% for the year ended June 30, 2026.

Previous wording

Salaries and consultant fees increased by $2,174,558 from $23,622,907 for the year ended June 30, 2024, to $25,797,465 for the year ended June 30, 2025, and on a constant currency basis increased by $1,869,462. The increase is due to annual increases in salary. As a percentage of sales, salaries and consultant expense increased from 38.5% for the year ended June 30, 2024, to 39.0% for the year ended June 30, 2025.

Current wording

Salaries and consultant fees decreased by $100,129 from $25,797,465 for the year ended June 30, 2025, to $25,697,336 for the year ended June 30, 2026, and on a constant currency basis decreased by $227,030. The decrease is due to capitalization of software development costs off set by annual increases in salary. As a percentage of sales, salaries and consultant expense decreased from 39.0% for the year ended June 30, 2025, to 34.6% for the year ended June 30, 2026.

Previous wording

Travel decreased by $879,931 from $2,943,442 for the year ended June 30, 2024, to $2,063,511 for the year ended June 30, 2025, and on a constant currency basis decreased by $901,699. The decrease in travel expense is due to the decrease in travel for the current implementations. As a percentage of sales, travel expense decreased from 4.8% for year ended June 30, 2024, to 3.1% for the year ended June 30, 2025.

Current wording

Travel increased by $746,181 from $2,063,511 for the year ended June 30, 2025, to $2,809,692 for the year ended June 30, 2026, and on a constant currency basis increased by $731,534. The increase in travel expense is due to the increase in travel for the current implementations. As a percentage of sales, travel expense increased from 3.1% for year ended June 30, 2025, to 3.8% for the year ended June 30, 2026.

Previous wording

Depreciation and amortization expense decreased to $952,331 compared to $1,144,809 for the year ended June 30, 2024, or a decrease of $192,478 and on a constant currency basis a decrease of $202,630.

Current wording

Depreciation and amortization expense decreased to $783,692 compared to $952,331 for the year ended June 30, 2025, or a decrease of $168,639 and on a constant currency basis a decrease of $165,806.

Previous wording

Other costs increased to $4,700,390 for the year ended June 30, 2025, compared to $4,397,063 for the year ended June 30, 2024, or an increase of $303,327 and on a constant currency basis an increase of $242,275. The increase is mainly due to increase in third party hardware costs of approximately $267,000.

Current wording

Other costs increased to $5,933,317 for the year ended June 30, 2026, compared to $4,700,390 for the year ended June 30, 2025, or an increase of $1,232,927 and on a constant currency basis an increase of $1,278,882. The increase is mainly due to increase in third party hardware costs of approximately $1,015,865.

Previous wording

Operating expenses were $29,072,814 for the year ended June 30, 2025, compared to $25,791,315, for the year ended June 30, 2024, for an increase of $3,281,499 and on a constant currency basis an increase of $3,452,110. As a percentage of sales, it increased from 42.0% to 44.0%. The increase in operating expenses was primarily due to increases in selling expenses, general and administrative expenses and research and development costs.

Current wording

Operating expenses were $32,200,678 for the year ended June 30, 2026, compared to $29,072,814, for the year ended June 30, 2025, for an increase of $3,127,864 and on a constant currency basis an increase of $2,792,086. As a percentage of sales, it decreased from 44.0% to 43.3%. The increase in operating expenses was primarily due to increases in selling expenses, general and administrative expenses offset by a decrease in research and development costs.

Previous wording

Selling and marketing expenses increased by $2,742,951 and on a constant currency basis increased by $2,603,499. The increase is mainly due to increases in salaries of approximately $2,200,000, travel of approximately $257,000 and other selling expenses of approximately $288,000.

Current wording

Selling and marketing expenses increased by $1,692,136 and on a constant currency basis increased by $1,518,546. The increase is mainly due to increases in salaries of approximately $956,109, travel of approximately $307,028 and other selling expenses of approximately $428,999.

Previous wording

General and administrative expenses were $17,501,610 for the year ended June 30, 2025, compared to $16,836,339 at June 30, 2024, or an increase of $665,271, and on a constant currency basis an increase of $992,703. During the year ended June 30, 2025, salaries increased by approximately $687,000 or increased by approximately $574,000 on a constant currency basis, due to increases in salaries including bonuses, medical costs and subsidiary options granted to staff in NetSol PK. The provision for doubtful accounts increased by approximately $496,000 and on a constant currency basis increased by approximately $477,000. Other general and administrative costs decreased by approximately $518,000 and on a constant currency basis a decrease of approximately $58,000.

Current wording

General and administrative expenses were $19,431,136 for the year ended June 30, 2026, compared to $17,501,610 at June 30, 2025, or an increase of $1,929,526, and on a constant currency basis an increase of $1,761,860. During the year ended June 30, 2026, salaries increased by approximately $2,058,745 or increased by approximately $1,955,668 on a constant currency basis, due to increases in salaries including bonuses, medical costs and subsidiary options granted to staff in NetSol PK. The provision for doubtful accounts decreased by approximately $165,930 and on a constant currency basis decreased by approximately $177,581. Other general and administrative costs increased by approximately $36,711 and on a constant currency basis a decrease of approximately $16,227.

Previous wording

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

Current wording

Research and development costs decreased by approximately $493,798 and on a constant currency basis a decrease of approximately $488,320.

Previous wording

Income from operations was $3,501,718 for the year ended June 30, 2025, compared to $3,493,555 for the year ended June 30, 2024. This represents a slight increase of $8,163 with a decrease of $274,727 on a constant currency basis for the year ended June 30, 2025, compared with the year ended June 30, 2024. As a percentage of sales, income from operations was 5.3% for the year ended June 30, 2025, compared to 5.7% for the year ended June 30, 2024.

Current wording

Income from operations was $6,946,665 for the year ended June 30, 2026, compared to $3,501,718 for the year ended June 30, 2025. This represents an increase of $3,444,947 with an increase of $2,854,410 on a constant currency basis for the year ended June 30, 2026, compared with the year ended June 30, 2025. As a percentage of sales, income from operations was 9.3% for the year ended June 30, 2026, compared to 5.3% for the year ended June 30, 2025.

Previous wording

During the year ended June 30, 2025, we recognized a gain of $1,301,613 in foreign currency exchange transactions compared to a loss of $1,187,320 for the year ended June 30, 2024. The majority of the contracts with NetSol PK are either in U.S. dollars or Euros; therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the value of the PKR compared to the U.S. Dollar and the Euro. During the year ended June 30, 2025, the value of the U.S. dollar and the Euro increased 2.1% and 11.9%, respectively, compared to the PKR. During the year ended June 30, 2024, the value of the U.S. dollar and the Euro decreased 3.1% and 4.6%, respectively, compared to the PKR.

Current wording

Other income was $279,214 for the year ended June 30, 2026, compared to $2,545,539 for the year ended June 30, 2025. This represents a decrease of $2,266,325 with a decrease of $2,182,442 on a constant currency basis. The decrease is primarily due to lower interest income, driven by a reduction in interest rates from approximately 10.0%-19.5% for the year ended June 30, 2025, to approximately 8.9% to 10.8% for the year ended June 30, 2026. The decrease is also due to foreign currency exchange transactions. The majority of the contracts with NetSol PK are either in U.S. dollars or Euros; therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the value of the PKR compared to the U.S. Dollar and the Euro. During the year ended June 30, 2026, we recognized a loss of $389,814 in foreign currency exchange transactions compared to a gain of $1,301,613 for the year ended June 30, 2025. During the year ended June 30, 2026, the value of the U.S. dollar and the Euro decreased 2.1% and 4.9%, respectively, compared to the PKR. During the year ended June 30, 2025, the value of the U.S. dollar and the Euro increased 2.1% and 11.9%, respectively, compared to the PKR.

Previous wording

For the year ended June 30, 2025, and 2024, the net income attributable to non-controlling interest was $1,647,686 and $1,394,056, respectively. The increase in non-controlling interest is primarily due to the increase in net income of NetSol PK.

Current wording

For the year ended June 30, 2026, and 2025, the net income attributable to non-controlling interest was $2,645,150 and $1,647,686, respectively. The increase in non-controlling interest is primarily due to the increase in net income of NetSol PK and NAMECET.

Previous wording

Net income was $2,923,233 for the year ended June 30, 2025, compared to $683,873 for the year ended June 30, 2024. This is an increase in income of $2,239,360 with an increase of $1,678,200 on a constant currency basis, compared to the prior year. For the year ended June 30, 2025, net income per share was $0.25 for basic and diluted shares. For the year ended June 30, 2024, net income per share was $0.06 for basic and diluted shares.

Current wording

Net income was $2,950,353 for the year ended June 30, 2026, compared to $2,923,233 for the year ended June 30, 2025. This is an increase in income of $27,120 with a decrease of $489,366 on a constant currency basis, compared to the prior year. For the year ended June 30, 2026, net income per share was $0.25 for basic and diluted shares. For the year ended June 30, 2025, net income per share was $0.25 for basic and diluted shares.

Previous wording

Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measures of adjusted EBITDA and adjusted EBITDA per basic and diluted share meet the definition of a non-GAAP financial measure.

Current wording

Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measures of adjusted EBITDA meet the definition of a non-GAAP financial measure.

Previous wording

Stock-based compensation expense: We have excluded the effect of stock-based compensation expense from the non-GAAP adjusted EBITDA and non-GAAP adjusted EBITDA per basic and diluted share calculations. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense which generally requires cash settlement by NetSol, and therefore is not used by us to assess the profitability of our operations. We also believe the exclusion of stock-based compensation expense provides a more useful comparison of our operating results to the operating results of our peers.

Current wording

Stock-based compensation expense: We have excluded the effect of stock-based compensation expense from the non-GAAP adjusted EBITDA. Although stock-based compensation expense is calculated in accordance with current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense that generally requires cash settlement by NetSol, and therefore is not included in certain measures by management to evaluate operating performance. We also believe the exclusion of stock-based compensation expense provides a more useful comparison of our operating results to the operating results of our peers.

Previous wording

Non-controlling interest: We add back the non-controlling interest in calculating gross adjusted EBITDA and then subtract out the income taxes, depreciation and amortization and net interest expense attributable to the non-controlling interest to arrive at a net adjusted EBITDA.

Current wording

Non-controlling interest: We add back the non-controlling interest in calculating gross adjusted EBITDA and then subtract out the income taxes, depreciation and amortization and net interest expense attributable to the non-controlling interest to arrive at adjusted EBITDA attributable to NetSol.

Previous wording

Our reconciliation of the non-GAAP financial measures of adjusted EBITDA and non-GAAP earnings per basic and diluted share to the most comparable GAAP measures for the years ended June 30, 2025, and 2024 are as follows:

Current wording

Our reconciliation of the non-GAAP financial measures of adjusted EBITDA to the most comparable GAAP measures for the years ended June 30, 2026, and 2025 is as follows:

Previous wording

Our cash position was $17,357,344 at June 30, 2025, compared to $19,127,165 at June 30, 2024.

Current wording

Our cash position was $27,123,955 at June 30, 2026, compared to $17,357,944 at June 30, 2025.

Previous wording

Net cash provided by operating activities was $447,267 for the year ended June 30, 2025, compared to $2,909,388 for the year ended June 30, 2024. At June 30, 2025, we had current assets of $46,319,603 and current liabilities of $19,713,997. We had accounts receivable of $7,527,572 at June 30, 2025, compared to $13,049,614 at June 30, 2024. We had revenues in excess of billings of $19,134,385 at June 30, 2025, compared to $13,638,547 at June 30, 2024, of which $903,766 and $954,029 are shown as long term as of June 30, 2025, and 2024, respectively. The long-term portion was discounted by $208,037 and $152,446 at June 30, 2025, and 2024, respectively, using the discounted cash flow method with interest rates ranging from 4.2% to 17.5%, for the year ended June 30, 2025, and 2024 respectively. During the year ended June 30, 2025, our revenues in excess of billings were reclassified to accounts receivable pursuant to billing requirements detailed in each contract. The combined totals for accounts receivable and revenues in excess of billings decreased by $26,204 from $26,688,161 at June 30, 2024, to $26,661,957 at June 30, 2025. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $8,010,844 and $8,240,061, respectively, at June 30, 2025. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $8,232,342 and $6,276,125, respectively, at June 30, 2024. The average days sales outstanding for the years ended June 30, 2025, and 2024 were 147 and 151 days respectively. The days sales outstanding have been calculated by taking into consideration the average combined balances of accounts receivable and revenue in excess of billings.

Current wording

During the year ended June 30, 2026, our contract assets were reclassified to accounts receivable pursuant to billing requirements detailed in each contract. The combined totals for accounts receivable and contract assets increased by $2,331,967 from $26,661,957 at June 30, 2025, to $28,993,924 at June 30, 2026. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $8,708,029 and $8,187,170, respectively, at June 30, 2026. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $8,010,844 and $8,240,061, respectively, at June 30, 2025. The average days sales outstanding for the years ended June 30, 2026, and 2025 were 137 and 147 days, respectively. The days sales outstanding have been calculated by taking into consideration the average combined balances of accounts receivable and contract assets.

Previous wording

Net cash used by investing activities amounted to $1,274,865 for the year ended June 30, 2025, compared to $291,538 for the year ended June 30, 2024. We had net purchases of property and equipment of $1,265,987 compared to $291,538 for the comparable period last fiscal year.

Current wording

Net cash used by investing activities amounted to $4,581,969 for the year ended June 30, 2026, compared to $1,274,865 for the year ended June 30, 2025. We had net purchases of property and equipment of $1,920,120 compared to $1,265,987 for the comparable period last fiscal year. We invested $2,686,392 in capitalization of software development cost for the year ended June 30, 2026 compared to $nil in prior period.

Previous wording

Net cash provided by financing activities was $822,881 compared to $239,551, for the years ended June 30, 2025, and 2024, respectively. During the year ended June 30, 2025, we received bank proceeds of $2,920,149 compared to $756,936 during the year ended June 30, 2024. During the year ended June 30, 2025, we had net payments for bank loans and capital leases of $773,535 compared to $517,385 for the year ended June 30, 2024. During the year ended June 30, 2025, Company employees exercised 220,00 options of common stock for $473,000, NetSol PK, a subsidiary of the Company, paid a dividend of $306,799 to the non-controlling shareholders, and NetSol PK purchased 2,690,251 shares of its common stock from the open market for $1,503,662. We are operating in various geographical regions of the world through our various subsidiaries. Those subsidiaries have financial arrangements from various financial institutions to meet both their short and long-term funding requirements. These loans will become due at different maturity dates as described in Note 12 of the financial statements. We are in compliance with the covenants of the financial arrangements and there is no default which may lead to early payment of these obligations. We anticipate paying back all these obligations on their respective due dates.

Current wording

Net cash provided by financing activities was $269,080 compared to $822,881, for the years ended June 30, 2026, and 2025, respectively. During the year ended June 30, 2026, we received bank proceeds of $1,044,523 compared to $2,920,149 during the year ended June 30, 2025. During the year ended June 30, 2026, we had net payments for bank loans and capital leases of $1,188,684 compared to $773,535 for the year ended June 30, 2025. During the year ended June 30, 2025, Company employees exercised 220,000 options of common stock for $473,000. Employees of our subsidiary, NetSol PK, exercised 1,543,987 options of common stock for $425,661, of which $413,241 was received during the year ended June 30, 2026 and $12,420 was received during the fiscal year ended June 30, 2025. NetSol PK, a subsidiary of the Company, paid a dividend of $306,799 to the non-controlling shareholders, and NetSol PK purchased 2,690,251 shares of its common stock from the open market for $1,503,662. We are operating in various geographical regions of the world through our various subsidiaries. Those subsidiaries have financial arrangements from various financial institutions to meet both their short- and long-term funding requirements. These loans will become due at different maturity dates as described in Note 13 of the financial statements. We are in compliance with the covenants of the financial arrangements and there is no default that may lead to early payment of these obligations. We anticipate paying back all these obligations on their respective due dates.

Previous wording

We typically fund the cash requirements for our operations in the U.S. through our license, services, and maintenance agreements, intercompany charges for corporate services, and through the exercise of options. As of June 30, 2025, we had approximately $17.4 million of cash, cash equivalents and marketable securities of which approximately $16.4 million is held by our foreign subsidiaries. As of June 30, 2024, we had approximately $19.1 million of cash, cash equivalents and marketable securities of which approximately $18.2 million was held by our foreign subsidiaries.

Current wording

We typically fund the cash requirements for our operations in the U.S. through our license, services, and maintenance agreements, intercompany charges for corporate services, and through the exercise of options. As of June 30, 2026, we had approximately $27.1 million of cash, cash equivalents and marketable securities of which approximately $26.5 million is held by our foreign subsidiaries. As of June 30, 2025, we had approximately $17.4 million of cash, cash equivalents and marketable securities of which approximately $16.4 million was held by our foreign subsidiaries.