Company: NTWK
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001641172-25-010127
Chunk: 25

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 1
Chunk 25
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 partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in
future periods. Contracted but unsatisfied performance obligations were approximately $16,000,000 as of March 31, 2025, of which the
Company estimates to recognize approximately $15,000,000 in revenue over the next 12 months and the remainder over an estimated 3 years
thereafter. Actual revenue recognition depends in part on the timing of software modules installed at various customer sites. Accordingly,
some factors that affect the Company’s revenue, such as the availability and demand for modules within customer geographic locations,
is not entirely within the Company’s control. In instances where the timing of revenue recognition differs from the timing of invoicing,
the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing
terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, and not to
facilitate financing arrangements.

Unearned
Revenue

The
Company typically invoices its customers for subscription and support fees in advance on a quarterly or annual basis, with payment due
at the start of the subscription or support term. Unpaid invoice amounts for non-cancelable license and services starting in future periods
are included in accounts receivable and unearned revenue.

Practical
Expedients and Exemptions

There
are several practical expedients and exemptions allowed under Topic 606 that impact timing of revenue recognition and the Company’s
disclosures. The Company has applied the following practical expedients:

●The
                                            Company does not evaluate a contract for a significant financing component if payment is
                                            expected within one year or less from the transfer of the promised items to the customer.

●The
                                            Company generally expenses sales commissions and sales agent fees when incurred when the
                                            amortization period would have been one year or less or the commissions are based on cashed
                                            received. These costs are recorded within sales and marketing expense in the Consolidated
                                            Statement of Operations.

●The
                                            Company does not disclose the value of unsatisfied performance obligations for contracts
                                            for which the Company recognizes revenue at the amount to which it has the right to invoice
                                            for services performed (applies to time-and-material engagements).

Costs
to Obtain a Contract

The
Company does not have a material amount of costs to obtain a contract capitalized at any balance sheet date. In general, the Company
incurs few direct incremental costs of obtaining