Company: NTWK
Filing Date: 2025-09-29
Form Type: 10-K
Source: 0001493152-25-015950
Chunk: 249

Company: NETSOL TECHNOLOGIES INC
Filing Date: 2025-09-29
Form: 10-K
Item: Item 1A
Chunk 249
---
 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 of the net assets acquired in a purchase business combination.
Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying
amount of goodwill may be impaired. In conducting its annual impairment test, the Company first reviews qualitative factors to determine
whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If factors indicate that
the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment, and the fair value
of the reporting unit is determined by analyzing the expected present value of future cash flows. If the carrying value of the reporting
unit continues to exceed its fair value, the fair value of the reporting unit’s goodwill is calculated and an impairment loss equal
to the excess is recorded.

Recent
Accounting Pronouncement

See
Note 2 “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Item 8 of Part
II of this Annual Report on Form 10-K, for a full description of recent accounting pronouncements, including the expected dates of