Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 245

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 245
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 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 the promised good or service to the customer. The Company identifies and tracks the performance
obligations at contract inception so that the Company can monitor and account for the performance obligations over the life of the contract.

The
Company’s contracts which contain multiple performance obligations generally consist of the initial purchase of subscription or
licenses and a professional services engagement. License purchases generally have multiple performance obligations as customers purchase
post-contract support and services in addition to the licenses. The Company’s single performance obligation arrangements are typically
post-contract support renewals, subscription renewals and services engagements.

For
contracts with multiple performance obligations where the contracted price differs from the standard-alone selling price (“SSP”)
for any distinct good or service, the Company may be required to allocate the contract’s transaction price to each performance
obligation using its best estimate for the SSP.

15

Subscription

Subscription
revenue is recognized ratably over the initial subscription period committed to by the customer commencing when the product is made available
to the customer. The initial subscription period is typically 12 to 60 months. The Company generally invoices its customers in advance
in quarterly or annual installments and typical payment terms provide that customers make payment within 30 days of invoice.

Software
Licenses

Transfer
of control for software is considered to have occurred upon delivery of the product to the customer. The Company’s typical payment
terms tend to vary by region, but its standard payment terms are within 30 days of invoice.

Post
Contract Support

Revenue
from support services and product updates, referred to as subscription and support revenue