Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 871

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 4
Chunk 871
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7% according to Global Growth Insights.

Negative
trends:

●The
                                            conflict in Gaza has disrupted the entire Middle East region since October 7, 2023. The conflict
                                            has expanded to neighboring nations such as Syria, Lebanon, and Iran. The unrest and turmoil
                                            in the region are viewed unfavorably by the regional business community.

●General
                                            economic conditions in our geographic markets; inflation, economic uncertainty, and increased
                                            operational costs are pressuring margins and leading companies to prioritize critical investment
                                            and control spending.

●SaaS
                                            cybersecurity faces unprecedented challenges as companies increasingly migrate critical functions
                                            to cloud platforms. Proliferation of AI tools within these platforms has created additional
                                            attack vectors that require specialized security approaches beyond legacy protections. (JOSYS.COM)

●The
                                            imposition of tariffs on China and on other US trading partners may affect the price of consumer
                                            goods including vehicles amongst others, negatively affecting the profitability of many of
                                            our customers.

14

CRITICAL
ACCOUNTING POLICIES

Our
financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States
(“U.S. GAAP”). Preparing financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application
of accounting policies. Critical accounting policies for us include revenue recognition and multiple element arrangements, intangible
assets, software development costs, and goodwill.

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