SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
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December 21, 2005

VIA FACSIMILE & OVERNIGHT COURIER
---------------------------------
(202) 942-9544

Stephen Krikorian
Accounting Branch Chief
Jason Niethamer

U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC  20549-0406

     RE:  NetSol Technologies, Inc.
          Post Effective Amendment No. 6 to Registration Statement on Form SB-2
          Filed October 4, 2005
          File No. 333-116512

          Form 10-KSB/A for the fiscal year ended June 30, 2004 Form
          10-QSB/A for fiscal quarter ended September 30, 2004 Form
          10-QSB/A for the fiscal quarter ended December 31, 2004 Form
          10-QSB for the fiscal quarter ended March 31, 2005 Form 10-KSB
          for the period ended June 30, 2005 Form 10-QSB for the fiscal
          quarter ended September 30, 2005 File No. 0-22773

Dear Mr. Krikorian,

Follows is our response to your comment letter dated December 15, 2005.

Draft Form 10-QSB/A for the quarter ended March 31, 2005

Item 3. Controls and Procedures

Prior Comment No. 6

1.    We note in your response that the officers of the Company continue to
      believe that the majority of the restatement issues were as a result
      of...a misapplication of accounting principles. Note that the term
      disclosure controls and procedures is defined in Rule 13a- 15(e) of the
      Exchange Act as controls and other procedures of an issuer that are
      designed to ensure that information required to be disclosed by the issuer
      in the reports that it files or submits under the Act is recorded,
      processed, summarized and reported, within the time periods specified in
      the Commission's rules and forms. For example, explain why your controls
      are effective when the accounting treatment for contingent consideration
      due to the CQ Systems acquisition was improper and was not properly
      disclosed as required by paragraph 51(f) of SFAS 141. The result of the
      failed controls was that Form 10-Q's as of December 31, 2004 or March 31,
      2005 did not contain the information in accordance with GAAP. Further, the
      restatements were the results of errors in applying GAAP and should not be
      characterized as a "re-interpretation and/or re-application". Since the
      errors were not detected by controls in place at the time the filings were
      filed and controls did not prevent these errors from resulting in improper
      financial information being disclosed in the financial statements, it is
      not clear why you believe these controls were effective.

<PAGE>

We have modified the controls and procedures sections of the Form 10Q as of
March 31, 2005 to add the following:

The management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. With the
participation of the Chief Executive Officer and the Chief Financial Officer,
management conducted an evaluation of the effectiveness of the Company's
internal control over financial reporting as of December 31, 2004 and March 31,
2005, based on the framework and criteria established in Internal Control--
Integrated Framework, issued by the Committee of Sponsoring Organizations (COSO)
of the Treadway Commission.

In performing this assessment, management considered that during 2005 the
Company had discussions with the Staff of the SEC regarding the accounting for
goodwill, the issuance of warrants relating to the PIPE financing, and, the
beneficial conversion feature of the convertible debenture and the exercise of
options by officers. As a result of these discussions, the Company concluded
that the amount of impairment of goodwill was over-recorded and classified as
amortization expense, the expense due to issuance of warrants in connection with
the PIPE financing was recorded as finance charges instead of charging it
against the gross proceeds of the private placement, the beneficial conversion
feature of the convertible debenture was overstated and the amount due by
officers on an exercise of options hadn't been properly reflected on the
financial statements and these exercise of options had been recorded as
receivables as of June 30, 2004. In addition for the period ended March 31,
2005, the amount of deferred liability in connection with the acquisition of CQ
Systems was over-stated. The Company restated its financial statements for the
fiscal year ended June 30, 2004, and the quarterly fiscal periods ended
September 30, 2004 and December 31, 2004 and March 31, 2005.

Management evaluated the impact of this restatement on the Company's assessment
of its system of internal control. Based upon the definition of "material
weakness" in the Public Company Accounting Board's Auditing Standards No. 2, an
Audit of Internal Control Over Financial Reporting in Conjunction With an Audit
of Financial Statements, restatement of financial statements in prior filings
with the SEC is a strong indicator of the existence of a "material weakness" in
design or operation of internal control over financial reporting. Management has
concluded that the controls in place relating to the accounting for goodwill,
the issuance of warrants relating to the PIPE financing, the beneficial
conversion feature of the convertible debenture and the exercise of options by
officers were not effective to provide reasonable assurance that these items
would be properly recorded and disclosed in the financial statements and that
this is a material weakness in the Company's internal control over financial
reporting as of the period ended March 31, 2005, and disclosed this to the Audit
Committee and to the independent registered public accountants.

Solely as a result of this material weakness in the Company's internal control
over financial reporting, management, including the Chief Executive Officer and
Chief Financial Officer, has concluded that the Company's internal control over
financial reporting as of March 31, 2005 was not effective to provide reasonable
assurance regarding the financial reporting and preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles of the United States of America based on criteria set
forth by the COSO of the Treadway Commission in their Internal
Control--Integrated Framework.

<PAGE>

Form 10-KSB for Fiscal Year Ended June 30, 2005

Notes to Consolidated Financial Statements

Note 11 - Convertible Debenture, page F-31

Prior Comment No. 7

2.    We note your response that you will no longer calculate the fair market
      value by using the 20-day average. However, it appears that you are not
      using the appropriate date to calculate the beneficial conversion feature
      of the convertible debt. As indicated previously, once the conversion
      terms were set on May 4, 2004, you should have computed the value of the
      beneficial conversion using the revised conversion terms and the
      commitment date stock price. Refer also to Issue 7 of EITF 00-27. Note
      that "commitment date" should not be later than the date of issuance or
      exchange. See Issue 4 of EITF 00-27 for definition of commitment date.

As previously stated in our response to your comment letter dated June 22, 2005,
comment number 17, the amendment on May 4, 2004 did more than set the conversion
price. It restated the entire debenture document thus creating a new agreement.
All of the significant terms of the debenture were renegotiated. Under the terms
of the original debenture, the conversion price and number of shares would have
been set when the contingent financing, called the "Qualified Financing" was
completed. In April 2004, it became apparent to the Company that it could not
complete the Qualified Financing due to the 19.9% dilution rule of NASDAQ
requiring stockholder approval for issuance of any underlying shares, and
therefore could not meet the terms of the original agreement. At that time, the
Company, renegotiated with the debenture holders due to the fact that the
contingency for the debenture could never legally take place. The debenture
holders accepted the new agreement and terms on May 4, 2004. According to Issue
4 of EITF 00-27 the commitment date is defined as "An agreement with an
unrelated third party, binding on both parties and usually legally enforceable,
with the following characteristics: a) The agreement specifies all significant
terms, including the quantity to be exchanged, the fixed price, and the timing
of the transaction." Using this definition, upon the acceptance of the
renegotiated debenture document by the debenture holders which changed all the
significant terms of the original debenture, the commitment date was set at May
4, 2004, not March 24, 2004. The restatement in effect rescinded the original
agreement and established a new agreement. The new document specifically had the
following clauses:

      1)    All reference to automatic conversion of the debenture and the
            Qualified Financing was deleted.

      2)    The conversion price was set at $1.86 per share.

      3)    The Company, at its option, would be permitted to pay any accrued
            interest in cash rather than stock.

      4)    Warrants equal to 50% of the number of shares of Common Stock to be
            issuable upon conversion of the debenture

      5)    The obligation to file a registration statement for the shares was
            changed to be within 30 days of the New Financing.

      6)    Penalty terms were set for any failure to file a registration
            statement within the set time-frame.

<PAGE>

Issue 7 of EITF 00-27 applies to documents in which there is "a contingent
conversion option [that] does not permit the number of shares that would be
received upon conversion if the contingent event occurs to be calculated at the
commitment date...the issuer should wait until the contingent event occurs and
then compute the resulting number of shares that would be received pursuant to
the new conversion price." As the contingency was removed from the restated
document and no contingent event occurred, Issue 7 would not apply to this
situation. In addition, none of the convertible debenture holders could convert
their notes into stock unless the document was restated, as the contingent event
that set the conversion price did not, nor could it ever take place.

                                     * * * *

Thank you for your attention to this matter. Please contact the undersigned
(818) 222-9195 ext. 110, or Ms. Malea Farsai at (818) 222-9195 ext. 105 if you
require any clarification or have any questions.

Very truly yours,

/s/ Patti L. W. McGlasson

Patti L. W. McGlasson
Corporate Counsel
NetSol Technologies, Inc.

Cc:  Naeem Ghauri, CEO NetSol Technologies, Inc.
Daniel Lee, U.S. SEC

<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                  FORM 10-QSB/A

(Mark One)

(X)   Quarterly report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934

                  For the quarterly period ended March 31, 2005

(_)   For the transition period from __________ to __________

Commission file number: 0-22773

                            NETSOL TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)

           NEVADA                                               95-4627685
(State or other Jurisdiction of                            (I.R.S. Employer NO.)
Incorporation or Organization)

              23901 Calabasas Road, Suite 2072, Calabasas, CA 91302
               (Address of principal executive offices) (Zip Code)

                         (818) 222-9195 / (818) 222-9197
           (Issuer's telephone/facsimile numbers, including area code)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

                                 Yes |X| No |_|

The issuer had 13,467,547 shares of its $.001 par value Common Stock issued and
outstanding as of May 6, 2005.

Transitional Small Business Disclosure Format (check one)

                                 Yes |_| No |X|

                                       1
<PAGE>

                            NETSOL TECHNOLOGIES, INC.

                                      INDEX

PART I. FINANCIAL INFORMATION                                           Page No.

Item 1. Financial Statements

Consolidated Unaudited Balance Sheet as of March 31, 2005 (restated)       3

Comparative Unaudited Consolidated Statements of Operations for the
Three and Nine Months Ended March 31, 2005 (restated) and 2004
(restated)                                                                 4

Comparative Unaudited Consolidated Statements of Cash Flow for the
Three and Nine Months Ended March 31, 2005 (restated) and 2004
(restated)                                                                 5

Notes to the Unaudited Consolidated Financial Statements                   7

Item 2. Management's Discussion and Analysis or Plan of Operation         16

Item 3. Controls and Procedures                                           23

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                 24

Item 2. Changes in Securities                                             24

Item 3. Defaults Upon Senior Securities                                   24

Item 4. Submission of Matters to a Vote of Security Holders               24

Item 5. Other Information                                                 24

Item 6. Exhibits and Reports on Form 8-K                                  24

        (a) Exhibits
        (b) Reports on Form 8-K

Signatures                                                                25

                                 2
<PAGE>

             NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
            CONSOLIDATED BALANCE SHEET -- MARCH 31, 2005
                             (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                        <C>             <C>
                                     ASSETS
Current assets:
  Cash and cash equivalents                                                $  1,596,031
  Certificates of deposit                                                     1,083,450
  Accounts receivable, net of allowance for doubtful accounts of $80,000      3,699,180
  Revenues in excess of billings                                              1,914,242
  Other current assets (restated)                                             1,182,456
                                                                           ------------
     Total current assets                                                                     9,475,359
Property and equipment, net of accumulated depreciation                                       4,809,751
Intangibles:
  Product licenses, renewals, enhancedments, copyrights,
     trademarks, and tradenames, net                                          4,658,299
  Customer lists, net                                                         1,699,752
  Goodwill (restated)                                                         1,166,611
                                                                           ------------
     Total intangibles (restated)                                                             7,524,662
                                                                                           ------------
     Total assets