Annual report pursuant to Section 13 and 15(d)

Debts - Schedule of Components of Notes Payable and Capital Leases (Details)

v3.21.2
Debts - Schedule of Components of Notes Payable and Capital Leases (Details) - USD ($)
Jun. 30, 2021
Jun. 30, 2020
Total $ 11,897,905 $ 10,210,130
Current Maturities 11,246,678 8,847,487
Long-Term Maturities 651,227 1,362,643
Subsidiary Finance Leases, Total [1] 168,107 469,406
Subsidiary Finance Leases, Current Maturities [1] 119,493 292,074
Subsidiary Finance Leases, Long-Term Maturities [1] 48,614 177,332
Total 12,066,012 10,679,536
Current Maturities 11,366,171 9,139,561
Long-Term Maturities 699,841 1,539,975
D&O Insurance [Member]    
Total [2] 73,143 81,728
Current Maturities [2] 73,143 81,728
Long-Term Maturities [2]
Paycheck Protection Program Loans [Member]    
Total [3] 469,721
Current Maturities [3] 182,669
Long-Term Maturities [3] 287,052
Bank Overdraft Facility [Member]    
Total [4]
Current Maturities [4]
Long-Term Maturities [4]
Term Finance Facility [Member]    
Total [5] 1,648,818 1,380,878
Current Maturities [5] 1,090,259 354,337
Long-Term Maturities [5] 558,559 1,026,541
Loan Payable Bank - Export Refinance [Member]    
Total [6] 3,162,555 2,975,482
Current Maturities [6] 3,162,555 2,975,482
Long-Term Maturities [6]
Loan Payable Bank - Running Finance [Member]    
Total [7]
Current Maturities [7]
Long-Term Maturities [7]
Loan Payable Bank - Export Refinance II [Member]    
Total [8] 2,403,542 2,261,365
Current Maturities [8] 2,403,542 2,261,365
Long-Term Maturities [8]
Loan Payable Bank - Running Finance II [Member]    
Total [9]
Current Maturities [9]
Long-Term Maturities [9]
Loan Payable Bank - Export Refinance lll [Member]    
Total [10] 4,427,578 2,975,483
Current Maturities [10] 4,427,578 2,975,483
Long-Term Maturities [10]
Sale and Leaseback Financing [Member]    
Total [11] 85,313  
Current Maturities [11] 28,183  
Long-Term Maturities [11] 57,130  
Term Finance Facility [Member]    
Total [12] 55,182 65,473
Current Maturities [12] 19,644 16,423
Long-Term Maturities [12] 35,538 49,050
Insurance Financing [Member]    
Total [13] 41,774
Current Maturities [13] 41,774
Long-Term Maturities [13]
[1] The Company leases various fixed assets under capital lease arrangements expiring in various years through 2024. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the years ended June 30, 2021 and 2020.
[2] The Company finances Directors' and Officers' ("D&O") liability insurance and Errors and Omissions ("E&O") liability insurance, for which the D&O and E&O balances are renewed on an annual basis and, as such, are recorded in current maturities. The interest rate on these financings range from 5.0% to 7.0% as of June 30, 2021 and 2020, respectively.
[3] The Company and its subsidiary, NTA, received Paycheck Protection Program loans of $469,721 introduced by the U.S. Government during the COVID-19 Pandemic. The loans carry an interest rate of 1% and have a maturity date of two years from the date of the disbursement of the loan. This loan is forgivable if the Company meets the criteria set by the U.S. Government. During the year ended June 30, 2021, the Company applied for the loan forgiveness, which was approved by the U.S. Government.
[4] The Company's subsidiary, NTE, has an overdraft facility with HSBC Bank plc whereby the bank would cover any overdrafts up to £300,000, or approximately $416,667. The annual interest rate was 5.1% as of June 30, 2021 and 2020. Total outstanding balance as of June 30, 2021 and 2020 was £nil. This overdraft facility requires that the aggregate amount of invoiced trade debtors (net of provisions for bad and doubtful debts and excluding intra-group debtors) of NTE, not exceeding 90 days old, will not be less than an amount equal to 200% of the facility. As of June 30, 2021, NTE was in compliance with this covenant.
[5] The Company's subsidiary, NetSol PK, has a term finance facility from Askari Bank Limited, approved by the Government of Pakistan to protect the employment situation during the COVID-19 Pandemic. This is a term loan payable in three years. The availed facility amount is Rs. 260,678,180 or $1,648,818, at June 30, 2021, of which $1,090,259 is shown as current and the remaining $558,559 is shown as long term. The availed facility amount is Rs. 232,042,664 or $1,380,878, at June 30, 2020, of which $354,337 is shown as current and the remaining $1,026,541 is shown as long term. The interest rate for the loan was 3% at June 30, 2021 and 2020.
[6] The Company's subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by NetSol PK's assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 500,000,000 or $3,162,555 and Rs. 500,000,000 or $2,975,482 at June 30, 2021 and 2020, respectively. The interest rate for the loan was 3% at June 30, 2021 and 2020.
[7] The Company's subsidiary, NetSol PK, has a running finance facility with Askari Bank Limited, secured by NetSol PK's assets. Total facility amount is Rs. 75,000,000 or $474,383 and Rs. 75,000,000 or $446,322, at June 30, 2021 and 2020, respectively. The balance outstanding at June 30, 2021 and 2020 was Rs. Nil. The interest rate for the loan was 9.5% and 7.2% at June 30, 2021 and 2020, respectively. These facilities require NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1. As of June 30, 2021, NetSol PK was in compliance with this covenant.
[8] The Company's subsidiary, NetSol PK, has an export refinance facility with Samba Bank Limited, secured by NetSol PK's assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 380,000,000 or $2,403,542 and Rs. 380,000,000 or $2,261,365, at June 30, 2021 and 2020, respectively. The interest rate for the loan was 3% at June 30, 2021 and 2020.
[9] The Company's subsidiary, NetSol PK, has a running finance facility with Samba Bank Limited, secured by NetSol PK's assets. Total facility amount is Rs. 120,000,000 or $759,013 and Rs. 120,000,000 or $714,116, at June 30, 2021 and 2020, respectively. The interest rate for the loan was 9.0% and 7.7% at June 30, 2021 and 2020, respectively. Total outstanding balance at June 30, 2021 and 2020 was $nil. During the loan tenure, the facilities from Samba Bank Limited require NetSol PK to maintain at a minimum a current ratio of 1:1, an interest coverage ratio of 4 times, a leverage ratio of 2 times, and a debt service coverage ratio of 4 times. As of June 30, 2021, NetSol PK was in compliance with these covenants.
[10] The Company's subsidiary, NetSol PK, has an export refinance facility with Habib Metro Bank Limited, secured by NetSol PK's assets. This is a revolving loan that matures every nine months. Total facility amount is Rs. 900,000,000 or $5,692,600 and Rs. 900,000,000 or $5,355,868, at June 30, 2021 and 2020, respectively. NetSol PK used Rs. 700,000,000 or $4,427,578 and Rs. 500,000,000 or $2,975,482, at June 30, 2021 and 2020, respectively. The interest rate for the loan was 3% at June 30, 2021 and 2020.
[11] The Company's subsidiary, NetSol PK, availed sale and leaseback financing from First Habib Modaraba secured by the transfer of the vehicles title. As of June 30, 2021, NetSol PK used Rs. 13,487,949 or $85,313 of which $57,130 was shown as long term and $28,183 as current. The interest rate for the loan was 9.0% at June 30, 2021.
[12] In March 2020, the Company's subsidiary, VLS, entered into a loan agreement with Investec Bank PLC. The loan amount was £69,549, or $96,596, for a period of 5 years with monthly payments of £1,349, or $1,874. As of June 30, 2021, the subsidiary has used this facility up to $55,182, of which $35,538 was shown as long-term and $19,644 as current. The interest rate was 6.14% at June 30, 2021.
[13] The Company's subsidiary, VLS, finances Directors' and Officers' ("D&O") liability insurance, and the $41,774 is recorded in current maturities. The interest rate on this financing was 4.5% as of June 30, 2021.