NETSOL TECHNOLOGIES INC [NTWK] Filings

10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024

☐ For the transition period from __________ to __________

Commission file number: 0-22773

NETSOL TECHNOLOGIES, INC.

(Exact name of Registrant as specified in its charter)

nevada		95-4627685
(State or other Jurisdiction of		(I.R.S. Employer NO.)
Incorporation or Organization)

16000 Ventura Blvd., Suite 770, Encino, CA 91436
(Address of principal executive offices) (Zip Code)

(818) 222-9195 / (818) 222-9197
(Issuer’s telephone/facsimile numbers, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common Stock, $0.01 par value per share		NTWK		NASDAQ

Indicate by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

	Large Accelerated Filer ☐	Accelerated Filer ☐
	Non-accelerated Filer ☒	Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

The issuer had 12,344,271 shares issued and 11,405,240 outstanding of its $.01 par value Common Stock and no Preferred Stock outstanding as of May 17, 2024.

NETSOL TECHNOLOGIES, INC.

		Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2024 and June 30, 2023		3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2024 and 2023		4
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended March 31, 2024 and 2023		5
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2024 and 2023		6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2024 and 2023		9
Notes to the Condensed Consolidated Financial Statements		11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Item 3. Quantitative and Qualitative Disclosures about Market Risk		53
Item 4. Controls and Procedures		53

PART II. OTHER INFORMATION
Item 1. Legal Proceedings		54
Item 1A Risk Factors		54
Item 2. Unregistered Sales of Equity and Use of Proceeds		54
Item 3. Defaults Upon Senior Securities		54
Item 4. Mine Safety Disclosures		54
Item 5. Other Information		54
Item 6. Exhibits		54

Page 2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

(Unaudited)

	As of			As of
	March 31, 2024			June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	12,338,642		$	15,533,254
Accounts receivable, net of allowance of $414,745 and $420,354		15,826,210			11,714,422
Revenues in excess of billings, net of allowance of $116,023 and $1,380,141		15,659,806			12,377,677
Other current assets		2,398,403			1,978,514
Total current assets		46,223,061			41,603,867
Revenues in excess of billings, net - long term		752,582			-
Property and equipment, net		5,505,609			6,161,186
Right of use assets - operating leases		1,490,669			1,151,575
Other assets		32,341			32,327
Intangible assets, net		-			127,931
Goodwill		9,302,524			9,302,524
Total assets	$	63,306,786		$	58,379,410

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	6,707,937		$	6,552,181
Current portion of loans and obligations under finance leases		6,047,511			5,779,510
Current portion of operating lease obligations		635,168			505,237
Unearned revenue		9,503,548			7,932,306
Total current liabilities		22,894,164			20,769,234
Loans and obligations under finance leases; less current maturities		130,381			176,229
Operating lease obligations; less current maturities		837,756			652,194
Total liabilities		23,862,301			21,597,657

Stockholders’ equity:
Preferred stock, $.01 par value; 500,000 shares authorized;		-			-
Common stock, $.01 par value; 14,500,000 shares authorized; 12,344,271 shares issued and 11,405,240 outstanding as of March 31, 2024, 12,284,887 shares issued and 11,345,856 outstanding as of June 30, 2023		123,445			122,850
Additional paid-in-capital		128,736,328			128,476,048
Treasury stock (at cost, 939,031 shares as of March 31, 2024 and June 30, 2023)		(3,920,856	)		(3,920,856	)
Accumulated deficit		(44,129,431	)		(44,896,186	)
Other comprehensive loss		(45,505,920	)		(45,975,156	)
Total NetSol stockholders’ equity		35,303,566			33,806,700
Non-controlling interest		4,140,919			2,975,053
Total stockholders’ equity		39,444,485			36,781,753
Total liabilities and stockholders’ equity	$	63,306,786		$	58,379,410

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

Page 3

NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations

(Unaudited)

	2024			2023			2024			2023
	For the Three Months						For the Nine Months
	Ended March 31,						Ended March 31,
	2024			2023			2024			2023
Net Revenues:
License fees	$	558,340		$	1,982,985		$	4,829,242		$	2,248,829
Subscription and support		7,140,358			6,656,082			20,480,382			19,175,585
Services		7,765,818			4,867,322			19,635,014			17,178,452
Total net revenues		15,464,516			13,506,389			44,944,638			38,602,866

Cost of revenues		7,989,696			8,801,360			24,132,064			26,503,377
Gross profit		7,474,820			4,705,029			20,812,574			12,099,489

Operating expenses:
Selling, general and administrative		5,811,335			5,333,202			17,051,798			16,727,836
Research and development cost		345,582			302,262			1,065,412			1,244,793
Total operating expenses		6,156,917			5,635,464			18,117,210			17,972,629

Income (loss) from operations		1,317,903			(930,435	)		2,695,364			(5,873,140	)

Other income and (expenses)
Interest expense		(289,677	)		(188,137	)		(856,016	)		(512,110	)
Interest income		376,466			263,794			1,259,464			1,005,557
Gain (loss) on foreign currency exchange transactions		(963,887	)		5,385,591			(1,112,757	)		7,358,519
Share of net loss from equity investment		-			2,377			-			7,510
Other income (expense)		21,634			(62,941	)		22,210			57,383
Total other income (expenses)		(855,464	)		5,400,684			(687,099	)		7,916,859

Net income before income taxes		462,439			4,470,249			2,008,265			2,043,719
Income tax provision		(146,569	)		(227,718	)		(418,517	)		(641,122	)
Net income		315,870			4,242,531			1,589,748			1,402,597
Non-controlling interest		11,679			(1,697,908	)		(822,993	)		(1,571,629	)
Net income (loss) attributable to NetSol	$	327,549		$	2,544,623	#	$	766,755		$	(169,032	)

Net income (loss) per share:
Net income (loss) per common share
Basic	$	0.03		$	0.23		$	0.07		$	(0.01	)
Diluted	$	0.03		$	0.23		$	0.07		$	(0.01	)

Weighted average number of shares outstanding
Basic		11,390,888			11,283,954			11,369,778			11,270,466
Diluted		11,430,493			11,283,954			11,409,383			11,270,466

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

Page 4

NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

	2024			2023			2024			2023
	For the Three Months						For the Nine Months
	Ended March 31,						Ended March 31,
	2024			2023			2024			2023
Net income (loss)	$	327,549		$	2,544,623		$	766,755		$	(169,032	)
Other comprehensive income (loss):
Translation adjustment		441,993			(7,628,982	)		812,109			(11,428,326	)
Translation adjustment attributable to non-controlling interest		(77,604	)		2,447,328			(342,873	)		3,598,417
Net translation adjustment		364,389			(5,181,654	)		469,236			(7,829,909	)
Comprehensive income (loss) attributable to NetSol	$	691,938		$	(2,637,031	)	$	1,235,991		$	(7,998,941	)

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

Page 5

NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)

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

													Other
					Additional								Compre-			Non			Total
	Common Stock				Paid-in		Treasury			Accumulated			hensive			Controlling			Stockholders’
	Shares		Amount		Capital		Shares			Deficit			Loss			Interest			Equity
Balance at December 31, 2023		12,329,919	$	123,301	$	128,587,384	$	(3,920,856	)	$	(44,456,980	)	$	(45,870,309	)	$	4,074,994		$	38,537,534
Common stock issued for: Services		14,352		144		39,606		-			-			-			-			39,750
Fair value of options issued		-		-		101,424		-			-			-			-			101,424
Fair value of subsidiary options issued		-		-		7,914		-			-			-			-			7,914
		-		-		7,914		-			-			-			-			7,914
Foreign currency translation adjustment		-		-		-		-			-			364,389			77,604			441,993
Net income (loss) for the year		-		-		-		-			327,549			-			(11,679	)		315,870
Balance at March 31, 2024		12,344,271	$	123,445	$	128,736,328	$	(3,920,856	)	$	(44,129,431	)	$	(45,505,920	)	$	4,140,919		$	39,444,485

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

													Other
					Additional								Compre-			Non		Total
	Common Stock				Paid-in		Treasury			Accumulated			hensive			Controlling		Stockholders’
	Shares		Amount		Capital		Shares			Deficit			Loss			Interest		Equity
Balance at September 30, 2023		12,311,850	$	123,120	$	128,536,132	$	(3,920,856	)	$	(44,865,296	)	$	(46,411,702	)	$	3,201,723	$	36,663,121
Common stock issued for: Services		18,069		181		39,569		-			-			-			-		39,750
Fair value of subsidiary options issued		-		-		11,683		-			-			-			-		11,683
Foreign currency translation adjustment		-		-		-		-			-			541,393			298,772		840,165
Net income (loss) for the year		-		-		-		-			408,316			-			574,499		982,815
Balance at December 31, 2023		12,329,919	$	123,301	$	128,587,384	$	(3,920,856	)	$	(44,456,980	)	$	(45,870,309	)	$	4,074,994	$	38,537,534

Page 6

NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)

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

													Other
					Additional								Compre-			Non			Total
	Common Stock				Paid-in		Treasury			Accumulated			hensive			Controlling			Stockholders’
	Shares		Amount		Capital		Shares			Deficit			Loss			Interest			Equity
Balance at June 30, 2023		12,284,887	$	122,850	$	128,476,048	$	(3,920,856	)	$	(44,896,186	)	$	(45,975,156	)	$	2,975,053		$	36,781,753
Common stock issued for: Services		26,963		270		48,530		-			-			-			-			48,800
Fair value of subsidiary options issued		-		-		11,554		-			-			-			-			11,554
Foreign currency translation adjustment		-		-		-		-			-			(436,546	)		(33,503	)		(470,049	)
Net income (loss) for the year		-		-		-		-			30,890			-			260,173			291,063
Balance at September 30, 2023		12,311,850	$	123,120	$	128,536,132	$	(3,920,856	)	$	(44,865,296	)	$	(46,411,702	)	$	3,201,723		$	36,663,121

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

													Other
					Additional								Compre-			Non			Total
	Common Stock				Paid-in		Treasury			Accumulated			hensive			Controlling			Stockholders’
	Shares		Amount		Capital		Shares			Deficit			Loss			Interest			Equity
Balance at December 31, 2022		12,222,985	$	122,231	$	128,484,714	$	(3,920,856	)	$	(42,366,093	)	$	(42,011,340	)	$	4,052,456		$	44,361,112
Common stock issued for: Services		15,057		151		39,599		-			-			-			-			39,750
Fair value of subsidiary options issued		-		-		12,642		-			-			-			-			12,642
Foreign currency translation adjustment		-		-		-		-			-			(5,181,654	)		(2,447,328	)		(7,628,982	)
Net income (loss) for the year		-		-		-		-			2,544,623			-			1,697,908			4,242,531
Balance at March 31, 2023		12,238,042	$	122,382	$	128,536,955	$	(3,920,856	)	$	(39,821,470	)	$	(47,192,994	)	$	3,303,036		$	41,027,053

Page 7

NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)

A statement of the changes in equity for the three months ended December 31, 2022 is provided below:

													Other
					Additional								Compre-			Non			Total
	Common Stock				Paid-in		Treasury			Accumulated			hensive			Controlling			Stockholders’
	Shares		Amount		Capital		Shares			Deficit			Loss			Interest			Equity
Balance at September 30, 2022		12,209,230	$	122,093	$	128,420,519	$	(3,920,856	)	$	(40,273,167	)	$	(42,281,135	)	$	4,279,113		$	46,346,567
Common stock issued for: Services		13,755		138		39,612		-			-			-			-			39,750
Fair value of subsidiary options issued		-		-		24,583		-			-			-			-			24,583
Foreign currency translation adjustment		-		-		-		-			-			269,795			82,380			352,175
Net income (loss) for the year		-		-		-		-			(2,092,926	)		-			(309,037	)		(2,401,963	)
Balance at December 31, 2022		12,222,985	$	122,231	$	128,484,714	$	(3,920,856	)	$	(42,366,093	)	$	(42,011,340	)	$	4,052,456		$	44,361,112

A statement of the changes in equity for the three months ended September 30, 2022 is provided below:

													Other
					Additional								Compre-			Non			Total
	Common Stock				Paid-in		Treasury			Accumulated			hensive			Controlling			Stockholders’
	Shares		Amount		Capital		Shares			Deficit			Loss			Interest			Equity
Balance at June 30, 2022		12,196,570	$	121,966	$	128,218,247	$	(3,920,856	)	$	(39,652,438	)	$	(39,363,085	)	$	5,450,389		$	50,854,223
Balance		12,196,570	$	121,966	$	128,218,247	$	(3,920,856	)	$	(39,652,438	)	$	(39,363,085	)	$	5,450,389		$	50,854,223
Common stock issued for: Services		12,660		127		39,623		-			-			-			-			39,750
Adjustment in APIC for change in subsidiary shares to non-controlling interest		-		-		120,565		-			-			-			(120,565	)		-
Fair value of subsidiary options issued		-		-		42,084		-			-			-			-			42,084
Foreign currency translation adjustment		-		-		-		-			-			(2,918,050	)		(1,233,469	)		(4,151,519	)
Net income (loss) for the year		-		-		-		-			(620,729	)		-			182,758			(437,971	)
Net income (loss)		-		-		-		-			(620,729	)		-			182,758			(437,971	)
Balance at September 30, 2022		12,209,230	$	122,093	$	128,420,519	$	(3,920,856	)	$	(40,273,167	)	$	(42,281,135	)	$	4,279,113		$	46,346,567
Balance		12,209,230	$	122,093	$	128,420,519	$	(3,920,856	)	$	(40,273,167	)	$	(42,281,135	)	$	4,279,113		$	46,346,567

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

Page 8

NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(Unaudited)

	2024			2023
	For the Nine Months
	Ended March 31,
	2024			2023
Cash flows from operating activities:
Net income	$	1,589,748		$	1,402,597
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,351,239			2,519,469
Provision for bad debts		9,739			7,648
Share of net (gain) loss from investment under equity method		-			(7,510	)
(Gain) loss on sale of assets		(1,154	)		56,494
Stock based compensation		260,875			198,559
Changes in operating assets and liabilities:
Accounts receivable		(3,922,773	)		(1,855,899	)
Revenues in excess of billing		(3,904,609	)		240,324
Other current assets		(1,525	)		(621,731	)
Accounts payable and accrued expenses		77,541			1,321,289
Unearned revenue		938,242			(696,621	)
Net cash provided by (used in) operating activities		(3,602,677	)		2,564,619

Cash flows from investing activities:
Purchases of property and equipment		(948,337	)		(1,575,059	)
Sales of property and equipment		125,886			153,402
Net cash used in investing activities		(822,451	)		(1,421,657	)

Cash flows from financing activities:
Proceeds from bank loans		340,847			270,292
Payments on finance lease obligations and loans - net		(307,235	)		(787,641	)
Net cash provided by (used in) financing activities		33,612			(517,349	)
Effect of exchange rate changes		1,196,904			(9,329,913	)
Net decrease in cash and cash equivalents		(3,194,612	)		(8,704,300	)
Cash and cash equivalents at beginning of the period		15,533,254			23,963,797
Cash and cash equivalents at end of period	$

NETSOL TECHNOLOGIES INC [NTWK] Filings
10-Q	[2024-05-20]
10-Q	[2024-02-13]
10-Q	[2023-11-07]
10-K	[2023-09-22]
10-Q	[2023-05-11]
10-Q	[2023-02-14]
10-Q	[2022-11-10]
10-K	[2022-09-27]
10-Q	[2022-05-12]
10-Q	[2022-02-14]
10-Q	[2021-11-12]
10-K	[2021-09-28]
10-Q	[2021-05-13]
10-Q	[2021-02-16]
10-Q	[2020-11-16]
10-K	[2020-09-28]
10-Q	[2020-05-13]
10-Q	[2020-02-12]
10-Q	[2019-11-12]
10-K	[2019-09-23]
10-Q	[2019-05-14]
10-Q	[2019-02-13]
10-Q	[2018-11-13]
10-K	[2018-09-26]
10-Q	[2018-05-14]
10-Q	[2018-02-13]
10-Q	[2017-11-09]
10-K	[2017-09-28]
10-Q	[2017-05-22]
10-Q	[2017-02-14]
10-Q	[2016-11-14]
10-K	[2016-09-15]
10-Q	[2016-05-10]
10-Q	[2016-02-11]
10-Q	[2015-11-12]
10-K	[2015-09-15]
10-Q	[2015-05-11]
10-Q	[2015-02-12]
10-Q	[2014-11-06]
10-K	[2014-09-16]
10-Q	[2014-05-14]
10-Q	[2014-02-14]
10-Q	[2013-11-08]
10-K	[2013-09-12]
10-Q	[2013-05-09]
10-Q	[2013-02-12]
10-Q	[2012-11-14]
10-K	[2012-09-05]
10-Q	[2012-05-07]
10-Q	[2012-02-02]