Quarterly report pursuant to Section 13 or 15(d)

DEBTS (Tables)

v3.22.4
DEBTS (Tables)
6 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

Notes payable and finance leases consisted of the following:

 

          As of December 31, 2022  
                Current     Long-Term  
Name         Total     Maturities     Maturities  
                         
D&O Insurance     (1 )   $ 127,599     $ 127,599     $ -  
Bank Overdraft Facility     (2 )     -       -       -  
Term Finance Facility     (3 )     -       -       -  
Loan Payable Bank - Export Refinance     (4 )     2,208,285       2,208,285       -  
Loan Payable Bank - Running Finance     (5 )     -       -       -  
Loan Payable Bank - Export Refinance II     (6 )     1,678,297       1,678,297       -  
Loan Payable Bank - Export Refinance III     (7 )     3,091,600       3,091,600       -  
Sale and Leaseback Financing     (8 )     463,011       172,983       290,028  
Term Finance Facility     (9 )     21,908       18,682       3,226  
Insurance Financing     (10 )     54,405       54,405       -  
              7,645,105       7,351,851       293,254  
Subsidiary Finance Leases     (11 )     48,590       34,899       13,691  
            $ 7,693,695     $ 7,386,750     $ 306,945  

 

          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 December 31, 2022 and June 30, 2022.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2022

(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 $361,446. The annual interest rate was 5.5% as of December 31, 2022. The total outstanding balance as of December 31, 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 December 31, 2022, 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. nil or $nil, at December 31, 2022. 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 December 31, 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 $2,208,285 at December 31, 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 December 31, 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 $236,728, at December 31, 2022. The balance outstanding at December 31, 2022 and June 30, 2022 was Rs. Nil. The interest rate for the loan was 19.0% and 14.0% at December 31, 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 December 31, 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 $1,678,297 and Rs. 380,000,000 or $1,850,409 at December 31, 2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at December 31, 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 December 31, 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 $3,974,914 and Rs. 900,000,000 or $4,382,548, at December 31, 2022 and June 30, 2022, respectively. NetSol PK used Rs. 700,000,000 or $3,091,600 and Rs. 700,000,000 or $3,408,648, at December 31, 2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at December 31, 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 December 31, 2022, NetSol PK used Rs. 104,834,901 or $463,011 of which $290,028 was shown as long term and $172,983 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 December 31, 2022, and June 30, 2022.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2022

(Unaudited)

 

(9) In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $83,794, for a period of 5 years with monthly payments of £1,349, or $1,625. As of December 31, 2022, the subsidiary has used this facility up to $21,907, of which $3,226 was shown as long-term and $18,681 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 December 31, 2022 and June 30, 2022.

 

(10) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $54,405 and $96,781 was recorded in current maturities, at December 31, 2022 and June 30, 2022, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of December 31, 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 and six months ended December 31, 2022 and 2021.
SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

Following are the aggregate minimum future lease payments under finance leases as of December 31, 2022:

 

       
    Amount  
Minimum Lease Payments        
Within year 1   $ 39,033  
Within year 2     14,514  
Total Minimum Lease Payments     53,547  
Interest Expense relating to future periods     (4,957 )
Present Value of minimum lease payments     48,590  
Less: Current portion     (34,899 )
 Current portion of loans and obligations under finance leases        
Non-Current portion   $ 13,691  
 Loans and obligations under finance leases; less current maturities        
SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

Following are the aggregate future long term debt payments as of December 31, 2022

 

    Amount  
Loan Payments        
Within year 1   $ 191,664  
Within year 2     188,283  
Within year 3     104,972  
Total Loan Payments     484,919  
Less: Current portion     (191,665 )
Non-Current portion   $ 293,254