NETSOL TECHNOLOGIES INC

General and administrative expenses were $3,860,509 for the three months ended March 31, 2021 compared to $4,151,394 for the three months ended March 31, 2020 or a decrease of $290,885 or 7.0% and on a constant currency basis a decrease of $282,262 or 6.8%. The decrease is primarily due to a reduction of approximately $200,000 related to the decrease in the provision for doubtful accounts and approximately $175,000 related to reduced travel expenses, offset by approximately $68,000 increase in salaries. Research and Development costs decreased $218,372 from $453,050 for the three months ended March 31, 2020 to $234,678 for the three months ended March 31, 2021 and on a constant currency basis decreased $216,814.

^{License fees for the nine months ended March 31, 2021 were $4,710,942 compared to $2,733,998 for the nine months ended March 31, 2020 reflecting an increase of $1,976,944 with a change in constant currency of $1,760,804. During the nine months ended March 31, 2021, we recognized approximately $2,410,000 related to a new agreement with an existing tier one finance company in China to upgrade to our NFS Ascent®} Retail and Wholesale platforms and approximately $2,100,000 related to an agreement with an existing tier one finance company in Thailand. During the nine months ended March 31, 2020, we recognized approximately $2,455,000 related to the DFS contract.

^{Subscription and support fees for the nine months ended March 31, 2021 were $16,571,441 compared to $14,864,804 for the nine months ended March 31, 2020 reflecting an increase of $1,706,637 with a change in constant currency of $1,798,851. The increase in subscription and support fees is due to going live with several markets related to the DFS contract and going live with the BMW contract. Subscription and support fees begin once a customer has “gone live” with our product. Subscription and support fees are recurring in nature, and we anticipate these fees to gradually increase as we implement both our NFS legacy products and NFS Ascent®}.

General and administrative expenses were $11,353,933 for the nine months ended March 31, 2021 compared to $12,638,797 for the nine months ended March 31, 2020 for a decrease of $1,284,864 or 10.1% and on a constant currency basis a decrease of $1,081,337 or 8.6%. The decrease is primarily due to a reduction of approximately $320,000 related to a withholding tax on dividends paid by NetSol PK, approximately $351,000 of reduced travel expenses, approximately $92,000 of reduced professional services, approximately $302,000 related to the decrease in the provision for doubtful accounts and approximately $104,000 reduction in rent expense offset by an increase in salaries of approximately $113,000.

Other expense was $873,275 for the nine months ended March 31, 2021 compared to other income of $920,151 for the nine months ended March 31, 2020. This represents a decrease of $1,793,426 with a decrease of $1,926,494 on a constant currency basis. The decrease is primarily due to the interest income and foreign currency exchange transactions. We did not accrue any interest income on the convertible notes receivable for the nine months ended March 31, 2021compared to $275,704 for the nine months ended March 31, 2020. 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 nine months ended March 31, 2021, we recognized a loss of $1,515,327 in foreign currency exchange transactions compared to a gain of $71,765 for the nine months ended March 31, 2020. During the nine months ended March 31, 2021, the value of the U.S. dollar and the Euro decreased 8.0% and 1.9%, respectively, compared to the PKR. During the nine months ended March 31, 2020, the value of the U.S. dollar increased 2.0% and the value of the Euro decreased 1.3%, respectively, compared to the PKR.