Company: NTWK
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0001493152-25-006348
Chunk: 16

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-02-13
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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 our Annual Report on Form 10-K for the fiscal year ending June 30, 2026, on a prospective basis, with early adoption
permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.

All other newly issued accounting
pronouncements not yet effective have been deemed either immaterial or not applicable.

NOTE 3 – REVENUE
RECOGNITION

The Company
determines revenue recognition through the following steps:

·Identification of the contract,
or contracts, with a customer;

·Identification of the performance
obligations in the contract;

·Determination of the transaction
price;

·Allocation of the transaction
price to the performance obligations in the contract; and

·Recognition of revenue when, or
as, the Company satisfies a performance obligation.

The Company
records the amount of revenue and related costs by considering whether the entity is a principal (gross presentation) or an agent (net
presentation) by evaluating the nature of its promise to the customer. Revenue is presented net of sales, value-added and other taxes
collected from customers and remitted to government authorities.

The Company has two primary
revenue streams: core revenue and non-core revenue.

Core
Revenue

The Company
generates its core revenue from the following sources: (1) software licenses, (2) services, which include implementation and consulting
services, and (3) subscription and support, which includes post contract support, of its enterprise software solutions for the lease
and finance industry. The Company offers its software using the same underlying technology via two models: a traditional on-premises
licensing model and a subscription model. The on-premises model involves the sale or license of software on a perpetual basis to customers
who take possession of the software and install and maintain the software on their own hardware. Under the subscription delivery model,
the Company provides access to its software on a hosted basis as a service and customers generally do not have the contractual right
to take possession of the software.

Non-Core Revenue

The Company
generates its non-core revenue by providing business process outsourcing (“BPO”), other IT services and internet services.

Performance Obligations

A performance
obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under Topic 606.
The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation
is satisfied by transferring