NETSOL TECHNOLOGIES INC Stock Compensation Disclosure

NOTE 15 – EQUITY INCENTIVE PLAN

 

At the Company’s 2025 annual meeting of shareholders, the shareholders approved the 2025 Equity Incentive Plan (the “2025 Plan”). The 2025 Plan is the Company’s sole active equity compensation plan and provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other stock-based awards to employees, directors, and consultants. The maximum number of shares of common stock authorized for issuance under the 2025 Plan is 1,100,000. Shares subject to awards that are forfeited, canceled, or expire without being exercised become available for grant under the plan. The 2025 Plan is administered by the Compensation Committee of the Board of Directors, which has discretion to determine the terms of awards, including vesting and performance conditions. The exercise price of stock options may not be less than the fair market value of the Company’s common stock on the date of grant, and the maximum term of any option is ten years. As of June 30, 2025, the remaining shares to be granted are 998,109 under the 2025 Plan.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2025 and 2024

 

Stock Grants

 

The following table summarizes stock grants awarded as compensation:

 SUMMARY OF UNVESTED STOCK GRANTS AWARDED AS COMPENSATION

		# Number of shares				Weighted Average Grant Date Fair Value ($)
Unvested, June 30, 2023			-			$	-
Granted			75,035			$	2.24
Vested			(75,035	)		$	2.24
Unvested, June 30, 2024			-			$	-
Granted			120,543			$	2.64
Vested			(120,543	)		$	2.64
Unvested, June 30, 2025			-			$	-

 

For the years ended June 30, 2025 and 2024, the Company recorded compensation expense of $167,333 and $168,050, respectively. In addition, 59,528 shares were issued to the CEO for his bonus, which was earned during fiscal year 2024. The weighted average grant date fair value is determined by the Company’s closing stock price on the grant date.

 

Common stock purchase options consisted of the following:

 

OPTIONS:

 SCHEDULE OF COMMON STOCK PURCHASE OPTIONS

		# of shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (in years)				Aggregated Intrinsic Value
Outstanding and exercisable, June 30, 2023			-			$	-							$	-
Granted			250,000				2.15				0.5
Exercised			-				-				-
Expired / Cancelled			-				-				-
Outstanding and exercisable, June 30, 2024			250,000			$	2.15				0.50			$	-
Granted			50,000				2.94				1.89
Exercised			(220,000	)			2.15				-
Expired / Cancelled			(30,000	)			2.15				-
Outstanding and exercisable, June 30, 2025			50,000			$	2.94				1.89			$	8,500

 

The aggregate intrinsic value at June 30, 2025 represents the difference between the Company’s closing stock price of $3.11 on June 30, 2025 and the exercise price of the in-the-money stock options.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2025 and 2024

 

The following table summarizes information about stock options outstanding and exercisable at June 30, 2025.

 SUMMARY OF STOCK OPTIONS OUTSTANDING

Exercise Price		Number Outstanding and Exercisable				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price
OPTIONS:
$2.94			50,000				1.89			$	2.94
Totals			50,000				1.89			$	2.94

 

OPTIONS

 

During the year ended June 30, 2025, the Company granted 50,000 options to a consultant with an exercise price of $2.94 per share, a 2 two-year expiration date, and immediate vesting. Using the Black-Scholes method to value the options, the Company recorded $25,149 in compensation expense for these options in the accompanying consolidated financial statements.

 

During the year ended June 30, 2024, the Company granted 250,000 options to officers and employees with an exercise price of $2.15 per share, a 1 one-year expiration date, and immediate vesting. Using the Black-Scholes method to value the options, the Company recorded $101,424 in compensation expense for these options in the accompanying consolidated financial statements. The fair market value was calculated using the Black-Scholes option pricing model.

 

The following table includes the assumptions used in the calculations:

 

 SCHEDULE OF SHARE OPTION ASSUMPTIONS

		June 30, 2025				June 30, 2024
Risk-free interest rate			3.99	%			5.24	%
Expected life			1 year				6 months
Expected volatility			38.8	%			63.60	%
Expected dividend			0	%			0	%

 

In determining the fair value of share options, the Company utilized the simplified method to estimate the expected term for certain share option grants. The simplified method was applied due to the Company’s lack of sufficient historical data on employee exercise behavior, which would otherwise be necessary to develop a more precise estimate of the expected term. The simplified method estimates the expected term as the midpoint between the vesting period and the contractual term of the options.

 

In determining the fair value of share options, the Company utilized historical volatility as the basis for its expected volatility assumption. Historical volatility was calculated using the daily closing prices of the Company’s common stock over a period commensurate with the expected term of the share options. The Company determined that historical volatility was an appropriate measure of future expectations, as it reflects the stock’s past performance and market conditions. No significant adjustments were made to historical volatility, as the Company believes it provides a reasonable estimate of expected volatility for the purposes of option valuation.