Quarterly report pursuant to Section 13 or 15(d)

DEBTS

v3.22.0.1
DEBTS
 6 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
DEBTS

NOTE 15 – DEBTS

 

Notes payable and finance leases consisted of the following:

    As of December 31, 2021  
          Current     Long-Term  
Name   Total     Maturities     Maturities  
                   
D&O Insurance (1) $ 146,959     $ 146,959     $ -  
Bank Overdraft Facility (2)   -       -       -  
Term Finance Facility (3)   979,250       979,250       -  
Loan Payable Bank - Export Refinance (4)   2,817,219       2,817,219       -  
Loan Payable Bank - Running Finance (5)   -       -       -  
Loan Payable Bank - Export Refinance II (6)   2,141,086       2,141,086       -  
Loan Payable Bank - Running Finance II (7)   -       -       -  
Loan Payable Bank - Export Refinance III (8)   3,944,107       3,944,107       -  
Sale and Leaseback Financing (9)   64,193       26,442       37,751  
Term Finance Facility (10)   44,280       19,708       24,572  
Insurance Financing (11)   20,264       20,264       -  
      10,157,358       10,095,035       62,323  
Subsidiary Finance Leases (12)   110,912       52,958       57,954  
    $ 10,268,270     $ 10,147,993     $ 120,277  

 

    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 December 31, 2021 and June 30, 2021.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2021

(Unaudited)

 

(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 December 31, 2021. The total outstanding balance as of December 31, 2021 and June 30, 2021 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 December 31, 2021, NTE was in compliance with this covenant.

(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 December 31, 2021. The total outstanding balance as of December 31, 2021 and June 30, 2021 was £Nil. Thisoverdraft 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 December 31, 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. 173,797,255 or $979,250, at December 31, 2021, which is shown as current. 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 December 31, 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 $2,817,219 at December 31, 2021 and Rs. 500,000,000 or $3,162,555 at June 30, 2021. The interest rate for the loan was 3% at December 31, 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 $422,583, at December 31, 2021. The balance outstanding at December 31, 2021 and June 30, 2021 was Rs. Nil. The interest rate for the loan was 12.5% and 9.5% at December 31, 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 December 31, 2021, NetSol PK was in compliance with this covenant.

 

(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 $422,583, at December 31, 2021. The balance outstanding at December 31, 2021 and June 30, 2021 was Rs. Nil. The interest rate for the loan was 12.5% and 9.5% at December 31, 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 December 31, 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 $2,141,086 and Rs. 380,000,000 or $2,403,542 at December 31, 2021 and June 30, 2021, respectively. The interest rate for the loan was 3% at December 31, 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 $676,133 and Rs. 120,000,000 or $759,013, at December 31, 2021 and June 30, 2021, respectively. The interest rate for the loan was 12.0% and 9.0% at December 31, 2021 and June 30, 2021, respectively. The balance outstanding at December 31, 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 December 31, 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. The total facility amount is Rs. 900,000,000 or $5,070,994 and Rs. 900,000,000 or $5,692,600, at December 31, 2021 and June 30, 2021, respectively. NetSol PK used Rs. 700,000,000 or $3,944,107 and Rs. 700,000,000 or $4,427,578, at December 31, 2021 and June 30, 2021, respectively. The interest rate for the loan was 3% at December 31, 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 December 31 2021, NetSol PK used Rs. 11,392,924 or $64,193 of which $37,751 was shown as long term and $26,442 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 December 31, 2021, and June 30, 2021.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2021

(Unaudited)

 

(10) In March 2019, 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 December 31, 2021, the subsidiary has used this facility up to $44,280, of which $24,572 was shown as long-term and $19,708 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 December 31, 2021 and June 30, 2021.

 

(11) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $20,264 and $41,774 was recorded in current maturities, at December 31, 2021 and June 30, 2021, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of December 31, 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 December 31, 2021 and 2020.

 

Following is the aggregate minimum future lease payments under finance leases as of December 31, 2021:

    Amount  
Minimum Lease Payments        
Within year 1   $ 59,099  
Within year 2     44,749  
Within year 3     16,756  
Total Minimum Lease Payments     120,604  
Interest Expense relating to future periods     (9,692 )
Present Value of minimum lease payments     110,912  
Less: Current portion     (52,958 )
Non-Current portion   $ 57,954  

 

Following is the aggregate future long term debt payments as of December 31, 2021

    Amount
Loan Payments        
Within year 1   $ 1,025,400  
Within year 2     49,859  
Within year 3     12,464  
Total Loan Payments     1,087,723  
Less: Current portion     (1,025,400 )
Non-Current portion   $ 62,323