Company: NTWK
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021835
Chunk: 24

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 24
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 represent the Company’s right to use an underlying asset for the entirety of the lease term. Lease liabilities
represent the Company’s obligation to make payments over the life of the lease. A ROU asset and a lease liability are recognized
at the commencement of the lease based on the present value of the lease payments over the life of the lease. Initial direct costs are
included as part of the ROU asset upon commencement of the lease. Since the interest rate implicit in a lease is generally not readily
determinable for the operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments.
The incremental borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over
a similar lease term to obtain an asset of similar value.

The
Company reviews the impairment of ROU assets consistent with the approach applied to the Company’s other long-lived assets. The
Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying
value of the asset may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the
carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.

The
Company elected the practical expedient to exclude short-term leases (leases with original terms of 12 months or less) from ROU asset
and lease liability accounts.

Lease
expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Variable
payments change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not result
in a re-measurement of lease liabilities. The Company’s variable lease payments include payments for finance leases that are adjusted
based on a change in the Karachi Inter Bank Offer Rate. The Company’s lease agreements do not contain any significant residual
value guarantees or restrictive covenants.

Supplemental
balance sheet information related to leases was as follows:

 SCHEDULE OF BALANCE SHEET INFORMATION RELATED TO LEASE

    As
                                            of
                                                                               September
                                            30, 2025  
    As
                                            of
                                                                               June
                                            30, 2025 
  
    Assets 

    Operating
    lease assets, net 
    $653,418  
    $809,513 

    Liabilities 

    Current 

    Operating 
    $401,655