Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 1632

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 9
Chunk 1632
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 is due to the timing of invoicing in relation to the timing of revenue
recognition.

Revenue
allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied,
or 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 $21,759,000 as of June 30, 2025, of which the Company estimates
to recognize approximately $15,877,000 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