Quarterly report pursuant to Section 13 or 15(d)

DEBTS

v3.22.2.2
DEBTS
 3 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
DEBTS

NOTE 15 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

        As of September 30, 2022  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 34,344     $ 34,344     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Term Finance Facility   (3)     190,425       190,425       -  
Loan Payable Bank - Export Refinance   (4)     2,192,694       2,192,694       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     1,666,447       1,666,447       -  
Loan Payable Bank - Export Refinance III   (7)     3,069,772       3,069,772       -  
Sale and Leaseback Financing   (8)     407,166       144,372       262,794  
Term Finance Facility   (9)     24,348       16,966       7,382  
Insurance Financing   (10)     79,234       79,234       -  
          7,664,430       7,394,254       270,176  
Subsidiary Finance Leases   (11)     54,998       32,718       22,280  
        $ 7,719,428     $ 7,426,972     $ 292,456  

 

        As of June 30, 2022  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 89,552     $ 89,552     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Term Finance Facility   (3)     423,101       423,101       -  
Loan Payable Bank - Export Refinance   (4)     2,434,749       2,434,749       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     1,850,409       1,850,409       -  
Loan Payable Bank - Export Refinance III   (7)     3,408,648       3,408,648       -  
Sale and Leaseback Financing   (8)     619,108       189,226       429,882  
Term Finance Facility   (9)     31,204       18,339       12,865  
Insurance Financing   (10)     118,026       118,026       -  
          8,974,797       8,532,050       442,747  
Subsidiary Finance Leases   (11)     68,571       35,095       33,476  
        $ 9,043,368     $ 8,567,145     $ 476,223  

 

(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, 2022 and June 30, 2022.

 

(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 $333,333. The annual interest rate was 5.5% as of September 30, 2022. The total outstanding balance as of September 30, 2022 and June 30, 2022 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 September 30, 2022, NTE was in compliance with this covenant.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2022

(Unaudited)

 

(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. 43,422,699 or $190,425, at September 30, 2022, which is shown as current. The availed facility amount is Rs. 86,887,974 or $423,101, at June 30, 2022, which is shown as current. The interest rate for the loan was 3% at September 30, 2022 and June 30, 2022.

 

(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 $2,192,694 at September 30, 2022 and Rs. 500,000,000 or $2,434,749 at June 30, 2022. The interest rate for the loan was 10% and 3% at September 30, 2022 and June 30, 2022, respectively.

 

(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. 53,000,000 or $235,057, at September 30, 2022. The balance outstanding at September 30, 2022 and June 30, 2022 was Rs. Nil. The interest rate for the loan was 17.8% and 14.0% at September 30, 2022 and June 30, 2022, 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, 2022, 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 $1,666,447 and Rs. 380,000,000 or $1,850,409 at September 30, 2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at September 30, 2022 and June 30, 2022, respectively.

 

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, 2022, NetSol PK was in compliance with these covenants.

 

(7) 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 $3,946,849 and Rs. 900,000,000 or $4,382,548, at September 30, 2022 and June 30, 2022, respectively. NetSol PK used Rs. 700,000,000 or $3,069,772 and Rs. 700,000,000 or $3,408,648, at September 30, 2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at September 30, 2022 and June 30, 2022, respectively.

 

(8) 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 September 30, 2022, NetSol PK used Rs. 92,846,015 or $407,166 of which $262,794 was shown as long term and $144,372 as current. As of June 30, 2022, NetSol PK used Rs. 127,140,038 or $619,108 of which $429,882 was shown as long term and $189,226 as current. The interest rate for the loan was 9.0% to 16.0% at September 30, 2022, and June 30, 2022.

 

(9) In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $77,277, for a period of 5 years with monthly payments of £1,349, or $1,499. As of September 30, 2022, the subsidiary has used this facility up to $24,348, of which $7,382 was shown as long-term and $16,966 as current. As of June 30, 2022, the subsidiary has used this facility up to $31,204, of which $12,865 was shown as long-term and $18,339 as current. The interest rate was 6.14% at September 30, 2022 and June 30, 2022.

 

(10) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $79,234 and $96,781 was recorded in current maturities, at September 30, 2022 and June 30, 2022, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of September 30, 2022 and June 30, 2022.

 

(11) The Company leases various fixed assets under finance lease arrangements expiring in various years through 2025. 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, 2022 and 2021.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2022

(Unaudited)

 

Following is the aggregate minimum future lease payments under finance leases as of September 30, 2022:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 37,312  
Within year 2     22,390  
Within year 3     1,058  
Total Minimum Lease Payments     60,760  
Interest Expense relating to future periods     (5,762 )
Present Value of minimum lease payments     54,998  
Less: Current portion     (32,718 )
Current portion of loans and obligations under finance leases        
Non-Current portion   $ 22,280  
Loans and obligations under finance leases; less current maturities        

 

Following is the aggregate future long term debt payments as of September 30, 2022

 

    Amount  
Loan Payments        
Within year 1   $ 351,765  
Within year 2     164,169  
Within year 3     106,005  
Total Loan Payments     621,939  
Less: Current portion     (351,763 )
Non-Current portion   $ 270,176