Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 585

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1C
Chunk 585
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 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 to time-and-material engagements).

    F-21

NETSOL
                                            TECHNOLOGIES, INC.

Notes
to Consolidated Financial Statements

June
30, 2025 and 2024

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, the Company
incurs few direct incremental costs of obtaining new customer contracts. The Company rarely incurs incremental costs to review or otherwise
enter into contractual arrangements with customers. In addition, the Company’s sales personnel receive fees that are referred to
as commissions, but that are based on more than simply signing up new customers. The