Company: NTWK
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0001493152-25-006348
Chunk: 70

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-02-13
Form: 10-Q
Item: Part I, Item 1
Chunk 70
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 months ended December 31, 2023.

Page 46

Non-GAAP
Financial Measures

Regulation
S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use
of non-GAAP financial information. Our measures of adjusted EBITDA and adjusted EBITDA per basic and diluted share meet the definition
of a non-GAAP financial measure.

We define the non-GAAP measures
as follows:

·EBITDA
                                            is GAAP net income or loss before net interest expense, income tax expense, depreciation
                                            and amortization.

·Non-GAAP
                                            adjusted EBITDA is EBITDA plus stock-based compensation expense.

·Adjusted
                                            EBITDA per basic and diluted share – Adjusted EBITDA allocated to common stock divided
                                            by the weighted average shares outstanding and diluted shares outstanding.

We use
non-GAAP measures internally to evaluate the business and believe that presenting non-GAAP measures provides useful information to investors
regarding the underlying business trends and performance of our ongoing operations as well as useful metrics for monitoring our performance
and evaluating it against industry peers. The non-GAAP financial measures presented should be used in addition to, and in conjunction
with, results presented in accordance with GAAP, and should not be relied upon to the exclusion of GAAP financial measures. Management
strongly encourages investors to review our consolidated financial statements in their entirety and not to rely on any single financial
measure in evaluating the Company.

The non-GAAP measures reflect
adjustments based on the following items:

EBITDA:
We report EBITDA as a non-GAAP metric by excluding the effect of net interest expense, income tax expense, depreciation and amortization
from net income or loss because doing so makes internal comparisons to our historical operating results more consistent. In addition,
we believe providing an EBITDA calculation is a more useful comparison of our operating results to the operating results of our peers.

Stock-based
compensation expense: We have excluded the effect of stock-based compensation expense from the non-GAAP adjusted EBITDA and non-GAAP
adjusted EBITDA per basic and diluted share calculations. Although stock-based compensation expense is calculated in accordance with
current GAAP and constitutes an ongoing and recurring expense, such expense is excluded from non-GAAP results because it is not an expense
which generally requires cash settlement by NetSol, and therefore is not used by us to assess the profitability of our operations.