Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 455

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1B
Chunk 455
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Significant
Judgments

More
judgments and estimates are required under Topic 606 than were required under Topic 605. Due to the complexity of
certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements may be
dependent on contract-specific terms and may vary in some instances.

Judgment
is required to determine the SSP for each distinct performance obligation. The Company rarely licenses or sells products on a stand-alone
basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where SSP is not directly
observable because the Company does not sell the license, product or service separately, the Company determines the SSP using
information that may include market conditions and other observable inputs. In making these judgments, the Company analyzes
various factors, including its pricing methodology and consistency, size of the arrangement, length of term, customer demographics and
overall market and economic conditions. Based on these results, the estimated SSP is set for each distinct product or service delivered
to customers.

The
most significant inputs involved in the Company’s revenue recognition policies are: The (1) stand-alone selling prices of the Company’s
software license, and the (2) the method of recognizing revenue for installation/customization, and other services.

The
stand-alone selling price of the licenses was measured primarily through an analysis of pricing that management evaluated when quoting
prices to customers. Although the Company has no history of selling its software separately from post-contract support and other services,
the Company does have historical experience with amending contracts with customers to provide additional modules of its software or providing
those modules at an optional price. This information guides the Company in assessing the stand-alone selling price of the Company’s
software, since the Company can observe instances where a customer had a particular component of the Company’s software that was
essentially priced separate from other goods and services that the Company delivered to that customer.

The
Company recognizes revenue from implementation and customization services using the percentage of estimated “man-days” that
the work requires. The Company believes the level of effort to complete the services is best measured by the amount of time (measured
as an employee working for one day on implementation/customization work) that is required to complete the implementation or customization
work. The Company reviews its estimate of man-days required to complete implementation and customization services each reporting period.

    F-19

NETSOL
TE