Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 504

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1C
Chunk 504
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 annual basis, with payment due
at the start of the subscription or support term. Unpaid invoice amounts for non-cancellable license and services starting in future
periods are included in accounts receivable and unearned revenue.

17

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 cash 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, we incur few
direct incremental costs of obtaining new customer contracts. We rarely incur incremental costs to review or otherwise enter into contractual
arrangements with customers. In addition, our sales personnel receive fees that we refer to as commissions, but that are based on more
than simply signing up new customers. Our sales personnel are required to perform additional duties beyond new customer contract inception
dates, including fulfillment duties and collections efforts.

STOCK-BASED
COMPENSATION

Our
stock-based compensation expense is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton
(BSM) option pricing model and is recognized as expense over the requisite service period. The BSM model requires various highly judgmental
assumptions including expected volatility and expected term. If any of the assumptions used in the BSM model changes significantly, stock-based
compensation expense may differ materially in the future from that recorded in the current period. The Company recognizes compensation expense net of actual forfeitures as they occur. Accordingly, no estimate is
made for the future forfeitures at the time of grant.

GOODWILL

Goodwill
represents the excess of the aggregate purchase price over the fair value