UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
☒
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
FOR
THE FISCAL YEAR ENDED JUNE 30, 2025
or
☐
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Commission
File Number 0-22773
NETSOL
TECHNOLOGIES, INC.
(Exact
Name of Registrant specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
16000
Ventura Blvd., Suite 770,
Encino,
CA91436
(Address
of principal executive offices) (Zip code)
(818)222-9195
(Issuer’s
telephone number 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 if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes
☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant 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 and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted 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 and post such files). Yes ☒ No ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The
aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $25,936,035 based upon the closing
price of the stock as reported on NASDAQ Capital Market ($2.62 per share) on December 31, 2024, the last business day of the registrant’s
second quarter. As of September 18, 2025, there were 12,724,571 shares issued and 11,785,540 outstanding of its $.01 par value Common
Stock and no Preferred Stock was outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
(None)
ANNUAL
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
ACT OF 1934
TABLE
OF CONTENTS AND CROSS REFERENCE SHEET
PAGE
PART I
Note About Forward-Looking Statements
Item 1 Business 1
Item 1A Risk Factors 9
Item 1B Unresolved Staff Comments 9
Item 1C Cybersecurity 10
Item 2 Properties 11
Item 3 Legal Proceedings 11
Item 4 Mine Safety Disclosures 11
PART II
Item 6 [Reserved] 12
Item 7A Quantitative and Qualitative Disclosures about Market Risk 27
Item 8 Financial Statements and Supplementary Data 27
Item 9A Controls and Procedures 27
Item 9B Other Information 28
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 28
PART III
Item 10 Directors, Executive Officers and Corporate Governance 29
Item 11 Executive Compensation 34
Item 14 Principal Accountant Fees and Services 48
PART IV
Item 15 Exhibits and Financial Statement Schedules 50
i
NOTE
ABOUT FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995 relating to the development of the company’s products and services and future operation results, including statements regarding
the company that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.
The words “believe,” “expect,” “anticipate,” “intend,” variations of such words, and
similar expressions, identify forward-looking statements, but their absence does not mean that the statement is not forward-looking.
These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult
to predict. Factors that could affect the company’s actual results include the progress and costs of the development of products
and services and the timing of the market acceptance. Forward-looking statements may appear throughout this report, including without
limitation, the following sections: Item 1 “Business,” and Item 7 “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” We undertake no obligation to revise or publicly release the results of any revision to these
forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements.
As
used herein, “NETSOL,” “the company”, “we”, “our,” and similar terms include NETSOL Technologies,
Inc. and its subsidiaries, unless the context indicates otherwise.
PART
1
ITEM
1 - BUSINESS
GENERAL
OVERVIEW
NETSOL
Technologies’ solutions and services enable original equipment manufacturers (OEMs), dealerships and financial institutions to
sell, finance and lease assets. The company serves customers across over 30 countries. NETSOL has been at the cutting edge of technology,
pioneering innovations with its asset finance solutions and leveraging advanced AI and cloud services to meet the complex needs of the
global market. Renowned for its deep industry expertise, customer-centric approach and commitment to excellence, NETSOL fosters strong
partnerships with its clients, ensuring their success in an ever-evolving landscape. With a rich history of innovation, ethical business
practices and a focus on sustainability, NETSOL is dedicated to empowering businesses worldwide, securing its position as the trusted
partner for leading firms around the globe.
NETSOL’s
primary sources of revenues have been licensing, subscriptions, modification, enhancement and support of its suite of financial applications
to leading businesses in the global finance and leasing space as well as automotive digital retail.
The
Company’s clients include blue-chip organizations, Dow Jones 30 Industrials, Fortune 500 companies, global vehicle manufacturers
through their captive finance companies (“auto captives”), unrelated automotive finance companies (“non-captives”),
equipment finance and leasing companies, automotive and equipment OEMs, commercial lenders, dealers, brokers, banks and other financial
institutions – all of which are serviced by NETSOL’s strategically located support and delivery centers across the globe.
Founded
in 1996, NETSOL is headquartered in Encino, California. The company follows a global strategy for sales and delivery of its portfolio
of solutions and services through its offices in the following locations:
■ North America Encino, California and Austin, Texas
■ Europe London and Horsham
■ Asia Pacific Sydney, Bangkok, Beijing, Tianjin, Jakarta, Lahore and Karachi
■ Middle East Dubai
OUR
BUSINESS
Company
Business Model
NETSOL
specializes in providing AI-powered, scalable and customizable technology solutions primarily to the global asset finance and
leasing industry. The Company also empowers OEMS, dealer groups and dealerships with a digital retail platform that transforms how
they sell, finance and deliver cars. Our value proposition lies in delivering innovative technologies that enhance operational
efficiency and productivity. Further, NETSOL also provides a range of services that are not limited to the financial services
industry. We reach our customers through a combination of direct sales efforts, strategic partnerships with associations, a robust
online presence, participation in industry events and a variety of targeted marketing channels.
The
Company generates its core revenue from the following primary 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 technology solutions
for the industry. The Company offers its solutions 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 software on their own hardware. Under the subscription delivery model, the Company provides access to its software
on a hosted basis as a service and customers generally do not have the contractual right to take possession of the software or solution(s).
Expertise
Our
expertise in enterprise technology and financial application development has positioned us as a global player in AI-powered asset finance
and digital retail solutions, enabling us to establish a strong footprint across key markets in North America, Europe and Asia-Pacific.
Domain
Experience
NETSOL
is a dynamic leader and has been able to accumulate a wealth of experience in the global asset finance and leasing industry alongside
the automotive digital retail space. We have built a large knowledge base which is regularly refined and updated to ensure the most up-to-date,
best practices and business solutions for the benefit of our clients and partners. We have a strong presence in the captive asset-finance
market. We have had continual operations for over two and a half decades in Asia Pacific and Europe and over four decades in North America.
Proximity
with Global and Regional Customers
We
have offices across the world located strategically to maintain close contact and proximity with our customers in various key markets.
This has not only helped us strengthen our customer relationships but also build a deeper understanding of local market dynamics. Simultaneously,
we are able to extend services and support development through a combination of onsite and offsite resources. This approach has allowed
us to offer blended rates to our customers by employing a unique and cost-effective global development model.
Our
global operations are broken down into the following primary regions: North America, Europe, Asia Pacific and the Middle East. All of
the subsidiaries are seamlessly integrated to function effectively with global delivery capabilities, cross selling to multinational
asset finance companies, automotive and equipment OEMs, auto captives, commercial lenders, dealers, brokers, banks and other financial
institutions, leveraging the centralized marketing and pre-sales organization, and a network of employees connected across the globe
to support local and global customers and partners.
OUR
PRODUCTS AND SERVICES
Built
on cutting-edge, modern technology, NETSOL’s unified TranscendTM Platform is an AI-powered asset finance and digital retail
solution for automotive and equipment OEMs, auto captives, commercial lenders, dealers, brokers and financial institutions.
Our
solutions are designed and developed for highly flexible settings and are capable of dealing with multinational, multi-company, multi-asset,
multi-lingual, multi-distributor and multi-manufacturer environments. They empower our customers to effectively manage their complex
operations, enabling them to thrive in hyper-competitive global markets.
PRODUCTS
AND SERVICES: TRANSCENDTM PLATFORM
The
TranscendTM Platform, powered by NETSOL, is an AI-driven unified ecosystem that revolutionizes how assets are sold, financed and
leased. Designed to automate and optimize every step - from sales, to originations, to servicing, TranscendTM leverages AI and ML
to drive predictive insights and smarter decision-making.
TranscendTM
Retail
We
revolutionize auto and equipment retail with a fully digital, integrated platform that simplifies the entire customer journey. From online
purchasing to finance approval, TranscendTM Retail offers advanced retail and mobility solutions that keep dealerships and OEMs
at the cutting edge of consumer expectations.
TranscendTM
Finance
We
streamline finance and leasing operations with a comprehensive solution for originations, servicing and wholesale finance. TranscendTM
Finance empowers automotive and equipment OEMs, auto captives, commercial lenders, dealers, brokers and financial institutions with end-to-end
visibility and control, ensuring seamless workflows and accelerated business outcomes.
Originations
We
streamline the entire origination process, from submission to approval, with advanced features such as real-time, AI-powered credit decisioning,
automated deal flows and more.
Servicing
We
enable financial institutions to attain real-time insights into portfolio performance, delinquencies and losses, enabling proactive portfolio
management and strategic decision-making.
Wholesale
finance
Our
wholesale finance solution empowers customers to gain a competitive edge by automating their wholesale finance and floor planning operations
effortlessly.
TranscendTM
Marketplace
TranscendTM
Marketplace offers a suite of flexible, component-based solutions that integrate seamlessly with the customer’s existing infrastructure.
TranscendTM Marketplace contains modular, API-first solutions that address every aspect of finance and leasing using tools for calculations,
document generation, loan origination and lending configurations.
FlexTM
Flex
is an application program interface (API)-first, ready-to-use calculation and quotation engine. It is a one-stop solution that guarantees
precise calculations at all stages of the contract lifecycle through various calculation types. All the calculations are parameter-driven,
which helps perform simple, multi-dimensional or complex calculations based on the needs of a business. FlexTM has a lightning-fast
onboarding process, which can take place in mere minutes.
HubexTM
HubexTM
is an API library that enables companies to standardize all their API integration procedures across multiple API services through a single
integration. In addition to traditional lending companies, HubexTM can also streamline the operations of dealerships, vendors and
consultants. With a ready-to-use service, HubexTM makes it easy for businesses to seamlessly connect with multiple APIs and achieve
their desired outcomes. Pre-integrated services in the HubexTM library include, but are not limited to, payment processing, bank
account authentication, finance and insurance products, fraud check, know your customer (KYC) service, driver license verification, address
validation, vehicle valuation and notification service.
IndexTM
IndexTM
is a cloud-based parameter storage that smoothly runs all of a company’s core lending operations. It is an accumulation of all
the master setups, including asset catalog and inventory, programs, rates and profiles for lenders, dealers and multiple partners, in
one centralized location for all business types. IndexTM can enhance delivery efficiency and program management for easy integration
into all systems.
DockTM
DockTM
is an advanced document generation tool that lets a company create accurate and professional-looking documents in just seconds. With
DockTM’s template-based configuration, a company can set up placeholders for data, essentially simplifying the document
creation process and reducing the chance of human error. Its API-first architecture ensures scalability, making it capable of handling
any document generation task, from single documents to millions, with ease.
LaneTM
LaneTM
offers a feature-rich, end-to-end order management system for asset leasing and loans as well as credit companies. Our platform covers
all aspects, from conducting end-to-end sales to performing dealer and partner-related tasks and marketing-related activities. The system
offers a variety of dashboards that provide vital information for dealers and partners while enabling quick order management and providing
a way for users to record and submit a complete credit application for their clients.
LinkTM
Link
is a purpose-built platform designed for brokers, lenders, dealers and borrowers to work seamlessly together. With tailored solutions
that simplify applications and automate key processes, LinkTM is designed to enhance customer relationships whilst making
compliance effortless. This results in faster approvals, enriched customer experiences and stronger loyalty via elevated customer satisfaction.
Intermediary
portals:
Broker
portals
Efficiency
and effectiveness are paramount for any broker. Managing disparate systems and processes can be cumbersome and time-consuming, often
leading to inefficiencies and missed opportunities. NETSOL offers a solution to these challenges by consolidating disparate processes
into a single unified interface, revolutionizing the way a brokerage operates.
Lender
portals
NETSOL’s
lender-specific portals are designed to transform the lending process by enhancing risk management and driving profitability. Our advanced
tools not only streamline loan origination but also facilitate seamless communication and collaboration with the lending ecosystem. We
empower a company’s lending process with intuitive and efficient lender portals designed for a seamless user experience.
Dealer
portals
In
the competitive automotive industry, dealers need efficient and comprehensive solutions to manage their operations effectively. NETSOL’s
intermediary portals serve as digital command centers, providing dealers with a wide array of tools, resources and services to optimize
every aspect of their business, from inventory management to sales and marketing.
TranscendTM
Consultancy
Empowering
businesses with TranscendTM Consulting Services, we offer expert guidance across critical areas like information security, data
engineering and cloud services. Our team partners with businesses to create tailored solutions that drive innovation, efficiency and
growth.
TranscendTM
AI Labs
We
are leading AI-driven innovation with our TranscendTM AI Labs, integrating advanced AI services into our product suite to solve
the unique challenges of BFSI, equipment and auto OEMs and dealerships. Our tailored solutions drive industry-specific advancements,
helping companies stay ahead in a competitive market.
IMPLEMENTATION
PROCESS
The
implementation process of our technology can span up to fifteen months depending upon the methodology, complexity and scope. The implementation
process may also include related software services such as configuration, data migration, training, gaps development and any other additional
third-party interfaces. Even after implementation, customers regularly seek enhancements and additions to improve their business processes
and have changing requirements addressed at mutually agreed rates.
Post
implementation, our consultants may remain at the client site to assist the customer with smooth operations. After this phase, the regular
maintenance and support services phase for the implemented technology begins in exchange for agreed subscriptions or support fees. In
addition to the daily rate paid by the customer for each consultant engaged, the customer also pays for all visa and transportation-related
expenses, boarding of the consultants and a living allowance. Our involvement in all the above steps is suitably priced to bring value
to our customers and increase our profitability.
Cloud-enabled
solutions are offered via seamless and rapid deployments. The swift speed of implementation for our cloud-ready products enables businesses
to be more responsive and attain a competitive advantage. For example, certain API-first, SaaS products of ours via TranscendTM
Marketplace can be integrated into a customer’s ecosystem within mere minutes.
PRICING
AND REVENUE STREAMS
Our
revenue streams are the outcome of the following four main areas:
■ Product licensing
■ Subscription-based pricing
■ Implementation and customization-related services
■ Post implementation, support-related services
License
fees can range up to a multi-million-dollar fee for single or multiple module implementations. License revenue is realized with traditional,
non-SaaS-based agreements, whereas SaaS-based agreements do not contain license fees and are offered via flexible, value-driven, subscription-based
pricing. There are various attributes which determine the level of pricing complexity, a few of which are: number of contracts, size
of the portfolio, IT budgets, business strategy of the customer, internal business processes followed by the customer, number of business
users, amount of customization required, the complexity of data migration and branch network of the customer.
We
recognize revenue from license contracts when the software has been delivered to the customer. Implementation-related services, including
customization, configuration, data migration, training and third-party interfaces are recognized as the services are performed. Post-implementation
support services are then provided on a continued basis. The annual support fee, typically an agreed upon percentage of overall monetary
value of the license, then becomes an ongoing revenue stream realized yearly. Revenue from software services includes fixed price and
time, and materials-based contracts and is recognized as the services are performed.
In
order to avoid lumpiness in our revenues and to ensure a predictable revenue base over coming years, the business has shifted to a pricing
strategy whereby the business offers its cloud-ready products at SaaS/subscription-based pricing models. Rapid deployments coupled with
affordable prices/payment schedules is expected to lead the business towards volume-based selling. Moreover, this value-driven pricing
plan is intended to decrease the initial buy-in cost for new customers by eliminating heavy license fees, reducing the sales cycles and
providing an alternative to current customers seeking lower software usage and maintenance costs.
MARKETING
AND SELLING
Our
global marketing activities aim to establish and maintain a strong preference and loyalty for NETSOL and its offerings. Marketing activities
are conducted both at the global and regional levels. The Global Marketing department oversees all communication, advertising, public
relations and manages all digital platforms, including the Company’s website, social media channels and partnerships within the
industry.
As
part of our lead-generation activities, our regional representatives represent NETSOL as the Company sponsors, exhibits at, and attends
annual industry-leading conferences, conventions, seminars, summits and other events. The company maintains its presence at these events
to demonstrate our product and service offerings and for important networking purposes. NETSOL also takes part in webinars, podcasts
and holds private briefings with associations and individual companies.
GROWTH
PROSPECTS
We
are eyeing key international markets for growth in sales for NETSOL’s TranscendTM Platform. Our sales strategy not only focuses
on expansion into new geographic markets, but within existing markets into new verticals with targeting of Tier 2 and Tier 3 prospects
as well.
Growth
in North America and Europe is expected to come from the potential market for replacement of legacy systems as well as acquisition of
new customers. Our finance and leasing platform TranscendTM Finance is aimed at providing a highly flexible and robust solution
based on the latest technology and advanced architecture for North American and European customers looking to replace their legacy systems.
We believe that the product can provide substantial competitive disruption to the market’s lagging technology provided by incumbent
vendors. The existing customer base may also represent latent demand for increased service and support revenues by offering business
process optimization, customization and upgrade services. With a market-ready product with successful implementations, the prospects
for TranscendTM Finance in the regions are positive.
Further
traction in North America and Europe will come from TranscendTM Finance deployed on the cloud, which will continue to allow catering
to not only larger organizations, but also small and medium sized companies. Currently, in the United Kingdom, a number of banks and
other financial institutions are utilizing our TranscendTM Marketplace solutions offered via subscription-based pricing and swift
deployments.
Our
product strategy has grown significantly in recent years, which includes the recent launch of our broker and lender portals, which marks
a key step forward in delivering more value to our partners.
Growth
in our traditionally strong base in Asia Pacific is expected through diversification across market segments to include new customers
in related banking and commercial lending areas. At the same time, the existing customer base is tapped for increased service and support
revenues by offering enhanced features and new solutions to emerging customer needs. In addition, there is also potential for TranscendTM
Finance in Asia Pacific in the form of existing customers who are looking for replacement of their current system. In China, we are a
leader in the auto finance enterprise solution domain. We will continue strengthening our position within existing multinational auto
manufacturers, as well as local Chinese captive finance and leasing companies. It is pertinent to mention that these Chinese automakers
and finance companies are growing rapidly outside of the country and that our solutions assist them in this growth. Our sales strategy
focuses on supporting Chinese manufacturers in expanding their presence in the EU and other regions of APAC.
We
believe our digital retail platform presents significant growth opportunities in the evolving digital marketplace. TranscendTM Retail
is currently used by major customers in the United States, including some of the largest and most recognized dealership networks. We
foresee further adoption of the platform in the region. Our digital retail solution transforms how OEMs, dealer groups and dealerships
sell, finance and deliver cars, enabling them to provide personalized, fast and transparent car-buying experiences across all digital
and in-store touchpoints.
Beyond
our products, we also anticipate demand for our services that empower our clients to excel in the competitive global economy. Through
TranscendTM Consultancy, we offer expertise across critical areas such as information security, data engineering and cloud services,
helping businesses design tailored solutions for innovation and growth.
THE
MARKETS
We
deliver our comprehensive suite of technology solutions and services across major markets worldwide, positioning ourselves as a leading
provider in the financial services, and particularly, the global asset finance and leasing sector. Leveraging our extensive global footprint,
we offer scalable and innovative solutions tailored to meet the unique needs of clients in diverse geographic regions. Our strategic
presence in key markets enables us to effectively address local regulations and market dynamics, thereby enhancing customer satisfaction
and fostering long-term partnerships.
PEOPLE
AND CULTURE
We
believe that our growth and success are attributable in large part to the high caliber of our global team and our commitment to maintain
the values on which our success has been based. We support gender diversity on a global basis. We are an equal opportunity employer with
a large workforce of approximately 1460 employees, promoting a culture of diversity and inclusion.
NETSOL
stands as a beacon of innovation, excellence and dedication to customer success. We value transparency and integrity, ensuring that honesty
guides our interactions. We are renowned for innovation, expertise and a customer-centric approach.
We
believe we should give back to the community and our employees as much as possible. Certain subsidiaries are located in regions where
basic services are not readily available. Where possible, we act to not only improve the quality of life of our employees, but also the
standard of living in these regions. Examples of such programs are as follows:
Literacy
program: Launched to educate children of our support staff, the main objective of this program is to enable them to acquire basic
reading, writing and arithmetic skills.
Higher
education and science and research institutions: In order to support higher education in Pakistan, we have contributed endowments
to NUST, Forman Christian College and a few other universities who are focused on science and engineering.
Noble
cause fund: A noble cause fund has been established to meet medical and education expenses of the children of our support staff.
Our employees voluntarily contribute a fixed amount every month to the fund and NETSOL matches the employee subscriptions with an equivalent
contribution amount. A portion of this fund is also utilized to support social needs of certain institutions and individuals outside
of NETSOL.
Preventative
health care program: In addition to the comprehensive outpatient and in-patient medical benefits, preventive health care has also
been introduced. This phased program focuses on vaccination of our employees against such diseases as Hepatitis – A/B, Tetanus,
Typhoid, Flu and COVID-19 on a routine basis.
There
is significant competition for employees with the skills required to perform the services we offer. We run an elaborate training program
for different cadres of employees to cover technical skills and business domain knowledge alongside communication, management and leadership
skills. We believe we have been successful in our efforts to attract and retain the highest level of talent available, partly because
of our emphasis on core values, training and professional growth. We intend to continue to recruit, hire and promote employees who share
our vision.
COMPETITION
A
number of companies offer products and services that overlap and are competitive with those offered by us. Some of NETSOL’s main
competitors for its finance and leasing technology include Alfa, Constellation Financial Software, FIS Global, LTI Technology Solutions,
Odessa, Solifi, Soft4 and Sopra Banking Software. The Company’s competitors for digital retail include Tekion and CDK Global. Most
of our major competitors are based in North America and Europe, with a smaller presence in APAC and the Middle East.
CUSTOMERS
NETSOL’s
solutions and services cater to a broad spectrum of finance and leasing businesses, from automotive captive finance companies to equipment
finance and leasing companies to large regional banks, as well as its customers for digital retail, including OEMs, dealer groups and
dealerships.
A
number of NETSOL’s customers include world renowned auto manufacturers through their finance arms. NETSOL is a strategic business
partner for Daimler and BMW (which consists of a group of many companies in different countries), which accounts for approximately 19.1%
and 16.1%, respectively, of our revenue for our fiscal year ended June 30, 2025. Other globally renowned auto captives that are customers
of the company include Toyota, Nissan, Ford and FIAT.
Other
customers include equipment finance and leasing companies, banks and other financial institutions worldwide. Some of these clients include
MINI Financial Services, BMO, Bank of Hawaii, First Hawaiian Leasing, Genpact, SCI Lease Corp, Aldermore, Investec,
Close Brothers, Haydock Finance, Charles and Dean, Maple Commercial Finance, among many others.
Information
regarding financial data by geographic areas is set forth in Item 7 and Item 8 of this Annual Report on form 10-K. See note 17 of Notes
to Consolidated Financial Statements under Item 8.
INTELLECTUAL
PROPERTY
NETSOL
relies upon a combination of non-disclosure and other contractual arrangements, as well as common law trade secret, copyright and trademark
laws to protect its proprietary rights. NETSOL enters into confidentiality agreements with its employees, generally requires its consultants
and clients to enter into these agreements, and limits access to and distribution of its proprietary information. The NETSOL “N”
logo and name has been copyrighted and trademark registered in Pakistan. The NETSOL “N” logo has been registered with the
U.S. Patent and Trademark Office. NFS Ascent® has been registered with the U.S. Patent and Trademark Office. OTOZ® was
registered with the U.S. Patent and Trademark Office. The Company intends to trademark and copyright its intellectual property as necessary
and in the appropriate jurisdictions.
GOVERNMENTAL
APPROVAL AND REGULATION
Current
Company operations do not require specific governmental approvals. Like all companies, including those with multinational subsidiaries,
we are subject to the laws of the countries in which we maintain subsidiaries and conduct operations. Governments in which our subsidiaries
are located, including our largest subsidiary in Pakistan, may require approval for the repatriation of investments.
AVAILABLE
INFORMATION
Our
website is located at https://netsoltech.com/ and our investor relations website is located at https://ir.netsoltech.com.
The following filings are available through our investor relations website after we file with the SEC: Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and our Proxy Statements for our annual meetings of stockholders. These filings are also available for download
free of charge on our investor relations website. We also provide a link to the section of the SEC’s website at www.sec.gov
that has all of our public filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,
all amendments to those reports, our Proxy Statements and other ownership related filings. Further, a copy of this Annual Report on Form
10-K is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C. 20549. Information on the operation of
the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.
We
webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations
website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings,
investor events, press and earnings releases, and blogs as part of our investor relations website. Investors and others can receive notifications
of new information posted on our investor relations website by signing up for e-mail alerts. Further corporate governance information,
including our committee charters and code of conduct, is also available on our investor relations website at https://netsoltech.com/about-us/csr.
The content of our websites is not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report
or document we file with the SEC and any references to our websites are intended to be inactive textual references only.
ITEM
1A - RISK FACTORS
Pakistan
The
political and economic environment in Pakistan may negatively affect our business.
Despite
a recent general election, the government remains unstable. 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
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 can be impacted.
ITEM
1B – UNRESOLVED STAFF COMMENTS
None
ITEM
1C – CYBERSECURITY
Cybersecurity
Risk Management and Strategy
We
face various cyber risks, including, but not limited to, risks related to unauthorized access, misuse, customer data theft, computer
viruses, system disruptions, ransomware, malicious software and other intrusions. We utilize a multilayered, proactive approach to identify,
evaluate, mitigate and prevent potential cyber and information security threats through our cybersecurity risk management program 24/7.
Our cybersecurity risk management program is designed to identify, assess, prioritize and mitigate risks across the organization to enhance
our resilience and support the achievement of our strategic objectives. This integrated approach helps ensure that cyber risks are not
viewed in isolation, but are assessed, prioritized and managed in alignment with the Company’s operational, financial and strategic
risks, assisting the Company in more effectively managing interdependencies among risks and enhancing risk mitigation strategies.
We
devote resources to protecting the security of our computer systems, software, networks and other technology assets. Our efforts are
designed to adapt to the evolution of information security risks and appropriate best practices and include physical, administrative
and technical safeguards. Our cybersecurity risk management program is designed to help coordinate the Company’s identification
of response to and recovery from cybersecurity incidents across all consolidated entities. This includes rapid identification, assessment,
investigation and remediation of incidents, as well as complying with applicable legal obligations, communicated promptly and effectively.
Our
internal audit team assesses regularly the effectiveness of our internal controls relating to cybersecurity and updates as necessary.
Our management team also engages, at times when needed, certain outside advisors and consultants to assist in the identification, oversight,
evaluation and management of cybersecurity risks, as well as to advise on specific topics. As part of our overall risk mitigation strategy,
the Company also maintains cyber insurance coverage; however, such insurance may not be sufficient in type or amount to cover us against
claims related to security breaches, cyberattacks and other related breaches.
We
have various processes and procedures in place to evaluate cybersecurity threats associated with third parties. We have not identified
any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, performance,
results of our operations, or financial condition.
Cybersecurity
Governance and Oversight
The
Company’s cybersecurity risk management program is supervised by our Senior Manager of Information Security (SMIS), who reports
directly to the Company’s Chief Operating Officer (“COO”) in Pakistan. The SMIS and his team are responsible for leading
enterprise-wide cybersecurity strategy, policy, standards, architecture and processes. Our current SMIS received his bachelor’s
in computer sciences and has over 20 years of cybersecurity experience, including relevant prior senior leadership experience at our
Company. Furthermore, he has also achieved globally recognized information security certifications, including CISSP (Certified Information
Systems Security Professional), CISA (Certified Information Systems Auditor), CISM (Certified Information Security Manager), CRISC (Certified
in Risk and Information Systems Control), CompTIA Security+, ISO 27001 Lead Auditor, CEH (Certified Ethical Hacker), CHFI (Computer Hacking
Forensic Investigator), among others.
The
SMIS attends and is invited to all Company Cybersecurity Committee meetings, a cross-functional management committee that drives awareness,
ownership and alignment across broad governance for effective cybersecurity risk management. The Cybersecurity Committee is composed
of senior leaders from our legal, information technology, cybersecurity, and audit sections. Subject matter experts are also invited,
as appropriate. The Cybersecurity Committee meets at least quarterly and has responsibility for oversight and validation of the Company’s
cybersecurity strategic direction, risks and threats, priorities, and resource allocation. The SMIS and his team, as well as the Cybersecurity
Committee, are informed about and monitor the prevention, detection, mitigation and remediation of cybersecurity incidents in accordance
with the Company’s cyber incident response plan.
The
Board of Directors receives regular reports from the SMIS and Cybersecurity Committee on, among other things, the Company’s cyber
risks and threats, the status of projects to strengths of the Company’s information security systems, assessments of the Company’s
security program, insurance, and the emerging threat landscape. In accordance with our cyber incident response plan, the Cybersecurity
committee s promptly informed by SMIS’s team of cybersecurity incidents that could adversely affect the Company or its information
systems and is also regularly updated about incidents with less impact potential. The Board of Directors and Audit committee are informed
of any incidents that could adversely affect the Company by the Cybersecurity committee and SMIS’s team.
In
an effort to detect and defend against cyber threats, the Company annually, and, periodically as needed, provides its employees with various cybersecurity and data
protection training programs. These programs cover timely and relevant topics, including social engineering, phishing, password protection,