Quarterly report pursuant to Section 13 or 15(d)

DEBTS

v3.21.2
DEBTS
 3 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
DEBTS

NOTE 15 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

        As of September 30, 2021  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 26,452     $ 26,452     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Term Finance Facility   (3)     1,270,755       990,623       280,132  
Loan Payable Bank - Export Refinance   (4)     2,924,661       2,924,661       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     2,222,742       2,222,742       -  
Loan Payable Bank - Running Finance II   (7)     -       -       -  
Loan Payable Bank - Export Refinance III   (8)     4,094,525       4,094,525       -  
Sale and Leaseback Financing   (9)     73,117       26,063       47,054  
Term Finance Facility   (10)     49,021       19,408       29,613  
Insurance Financing   (11)     45,198       45,198       -  
          10,706,471       10,349,672       356,799  
Subsidiary Finance Leases   (12)     113,515       73,543       39,972  
        $ 10,819,986     $ 10,423,215     $ 396,771  

 

        As of June 30, 2021  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                             
D&O Insurance   (1)   $ 73,143     $ 73,143     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Term Finance Facility   (3)     1,648,818       1,090,259       558,559  
Loan Payable Bank - Export Refinance   (4)     3,162,555       3,162,555       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     2,403,542       2,403,542       -  
Loan Payable Bank - Running Finance II   (7)     -       -       -  
Loan Payable Bank - Export Refinance III   (8)     4,427,578       4,427,578       -  
Sale and Leaseback Financing   (9)     85,313       28,183       57,130  
Term Finance Facility   (10)     55,182       19,644       35,538  
Insurance Financing   (11)     41,774       41,774       -  
          11,897,905       11,246,678       651,227  
Subsidiary Finance Leases   (12)     168,107       119,493       48,614  
        $ 12,066,012     $ 11,366,171     $ 699,841  

 

(1) 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 were ranging from 5.0% to 7.0% as of September 30, 2021 and June 30, 2021.

 

(2) 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 $405,405. The annual interest rate was 5.12% as of September 30, 2021. The total outstanding balance as of September 30, 2021 was £Nil.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

 

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 September 30, 2021, NTE was in compliance with this covenant.
   
   
(3) 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 was Rs. 217,248,351 or $1,270,755, at September 30, 2021, of which $990,623 is shown as current and the remaining $280,132 is shown as long term. The availed facility amount was Rs. 260,678,818 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 interest rate for the loan was 3% at September 30, 2021 and June 30, 2021.
   
(4) 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 nine months. The total facility amount is Rs. 500,000,000 or $2,924,661 at September 30, 2021 and Rs. 500,000,000 or $3,162,555 at June 30, 2021. The interest rate for the loan was 3% at September 30, 2021 and June 30, 2021.
   
(5) The Company’s subsidiary, NetSol PK, has a running finance facility with Askari Bank Limited, secured by NetSol PK’s assets. The total facility amount is Rs. 75,000,000 or $438,699, at September 30, 2021. The balance outstanding at September 30, 2021 and June 30, 2021 was Rs. Nil. The interest rate for the loan was 9.8% and 9.5% at September 30, 2021 and June 30, 2021, respectively.
   
This facility requires NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1. As of September 30, 2021, NetSol PK was in compliance with this covenant.
   
   
(6) 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 nine months. The total facility amount is Rs. 380,000,000 or $2,222,742 and Rs. 380,000,000 or $2,403,542 at September 30, 2021 and June 30, 2021, respectively. The interest rate for the loan was 3% at September 30, 2021 and June 30, 2021.
   
(7) The Company’s subsidiary, NetSol PK, has a running finance facility with Samba Bank Limited, secured by NetSol PK’s assets. The total facility amount is Rs. 120,000,000 or $701,919 and Rs. 120,000,000 or $759,013, at September 30, 2021 and June 30, 2021, respectively. The interest rate for the loan was 9.3% and 9.0% at September 30, 2021 and June 30, 2021, respectively. The balance outstanding at September 30, 2021 and June 30, 2021 was Rs. Nil.
   
During the tenure of the loan, 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 September 30, 2021, NetSol PK was in compliance with these covenants.
(7) The Company’s subsidiary, NetSol PK, has a running finance facility with Samba Bank Limited, secured by NetSol PK’s assets. The total facility amount is Rs. 120,000,000 or $701,919 and Rs. 120,000,000 or $759,013, at September 30, 2021 and June 30, 2021, respectively. The interest rate for the loan was 9.3% and 9.0% at September 30, 2021 and June 30, 2021, respectively. The balance outstanding at September 30, 2021 and June 30, 2021 was Rs. Nil. During the tenure of the loan, 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 September 30, 2021, NetSol PK was in compliance with these covenants.
   
(8) 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 $5,264,389 and Rs. 900,000,000 or $5,692,600, at September 30, 2021 and June 30, 2021, respectively. NetSol PK used Rs. 700,000,000 or $4,094,525 and Rs. 700,000,000 or $4,427,578, at September 30, 2021 and June 30, 2021, respectively. The interest rate for the loan was 3% at September 30, 2021 and June 30, 2021.
   
(9) 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. 12,499,891 or $73,117 of which $47,054 was shown as long term and $26,063 as current. 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 September 30, 2021, and June 30, 2021.
   
(10) In March 2020, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $93,985, for a period of 5 years with monthly payments of £1,349, or $1,823. As of September 30, 2021, the subsidiary has used this facility up to $49,021, of which $29,613 was shown as long-term and $19,408 as current. 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 September 30, 2021 and June 30, 2021.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2021

(Unaudited)

 

(11) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $45,198 and $41,774 was recorded in current maturities, at September 30, 2021 and June 30, 2021, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of September 30, 2021 and was 9.7% as of June 30, 2021.
   
(12) The Company leases various fixed assets under finance lease arrangements expiring in various years through 2024. The assets and liabilities under finance 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 finance leases is included in depreciation expense for the three months ended September 30, 2021 and 2020.

 

Following is the aggregate minimum future lease payments under finance leases as of September 30, 2021:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 77,806  
Within year 2     30,102  
Within year 3     11,845  
Total Minimum Lease Payments     119,753  
Interest Expense relating to future periods     (6,238 )
Present Value of minimum lease payments     113,515  
Less:  Current portion     (73,543 )
Non-Current portion   $ 39,972