NETSOL TECHNOLOGIES INC

Pakistan

The political and economic environment in Pakistan may negatively affect our business.

According to Pakistan Network, April 23, 2026, and as identified by the BTI Transformation Index, Pakistan Country Report 2026 the current government has focused on economic stabilization, infrastructure development, and maintaining relationships with key international partners. However, internal pressures within the coalition remain a constant challenge. The Pakistani economy has shown cautious signs of recovery. Key economic indicators include gradual stabilization of the Pakistani Rupee, improved foreign exchange reserves, and a modest uptick in industrial production. However, unemployment remains a pressing concern, particularly among the youth population. The political unsteadiness delays governmental functions. If such unsteadiness continues in the long term, it could result in difficulty in necessary interactions with the government as it relates to government contracts and personnel access to necessary government functions. While there is no guarantee, we anticipate that the new government policies may continue to lead to macroeconomic stability.

While the devaluation of the Pakistan Rupee in comparison to the US Dollar has stabilized, the higher-than-average inflation rate in Pakistan may continue to negatively impact our largest subsidiary and accordingly the Company’s financials as a whole.

General Economic Conditions

General economic conditions in our geographic markets; inflation, geopolitical tensions, including trade wars, tariffs and/or sanctions in geographic areas; and global conflicts or disasters that impact the global economy or one or more sectors of the global economy have negative impacts on our ability to acquire new business to and deliver on new business when contracted.

Inflation and higher interest rates globally have greatly increased the cost of doing business, including salaries and benefits worldwide, affecting our profitability. If inflation does not stabilize, our profitability and ability of our customers to spend on new and/or upgraded projects can be impacted.