NOTE 14 – CONTINGENCIES

As previously disclosed, on July 25, 2014, a Federal Securities class action lawsuit entitled Rand-Heart of New York, Inc. v. NetSol Technologies, Inc., Najeeb Ghauri, Naeem Ghauri, and Salim Ghauri was filed in Central District of California. The action generally alleges the Company violated certain federal securities laws by allegedly issuing false and misleading statements regarding the Company’s product and business prospect of that product. Specifically, the complaint alleges the next-generation product did not exist as of November 8, 2011 and there was no reasonable basis for stating that there was a growing interest or serious interest in the product; the product had been gaining momentum or that it had been well received. The plaintiff has filed an amended consolidated complaint including the previous allegations. On January 21, 2015, defendants filed a motion to dismiss the lawsuit stating that the plaintiff’s complaint fails to sufficiently plead the allegations and essential elements of the claims. Following responsive pleadings by plaintiff and defendant, the motion is scheduled to be heard on March 16, 2015. The Company believes the lawsuit to be meritless and intends to vigorously defend the action including but not limited to motions to dismiss. The Company has engaged counsel and has liability insurance. Given the early stage of the litigation, however, at this time the Company is unable to form a professional judgment that an unfavorable outcome is either probable or remote, and it is not possible to assess whether or not the outcome of these proceedings will or will not have material adverse effect on the Company. As of the date of this filing, a class had not yet been established.