| DEBTS |
NOTE
15 – DEBTS
Notes
payable and capital leases consisted of the following:
SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES
| |
|
|
|
|
As of June 30, 2023 |
|
| |
|
|
|
|
|
|
|
Current |
|
|
Long-Term |
|
| Name |
|
|
|
|
Total |
|
|
Maturities |
|
|
Maturities |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| D&O Insurance |
|
(1) |
|
|
$ |
89,823 |
|
|
$ |
89,823 |
|
|
$ |
- |
|
| Bank Overdraft Facility |
|
(2) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Term Finance Facility |
|
(3) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance |
|
(4) |
|
|
|
1,741,493 |
|
|
|
1,741,493 |
|
|
|
- |
|
| Loan Payable Bank - Running Finance |
|
(5) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance II |
|
(6) |
|
|
|
1,323,535 |
|
|
|
1,323,535 |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance III |
|
(7) |
|
|
|
2,438,089 |
|
|
|
2,438,089 |
|
|
|
- |
|
| Sale and Leaseback Financing |
|
(8) |
|
|
|
321,113 |
|
|
|
148,264 |
|
|
|
172,849 |
|
| Term Finance Facility |
|
(9) |
|
|
|
13,356 |
|
|
|
13,356 |
|
|
|
- |
|
| Insurance Financing |
|
(10) |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
5,927,409 |
|
|
|
5,754,560 |
|
|
|
172,849 |
|
| Subsidiary Finance Leases |
|
(11) |
|
|
|
28,330 |
|
|
|
24,950 |
|
|
|
3,380 |
|
| |
|
|
|
|
$ |
5,955,739 |
|
|
$ |
5,779,510 |
|
|
$ |
176,229 |
|
| |
|
|
|
|
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 range from 5.0% to 7.9% and 5.0% to 7.0% as of June 30, 2023 and 2022, respectively. |
NETSOL
TECHNOLOGIES, INC.
Notes
to Consolidated Financial Statements
June
30, 2023 and 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
$379,747. The annual interest rate was 9.5% and 5.5% as of June 30, 2023 and 2022, respectively. The total outstanding balance as of
June 30, 2023 and 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 June 30, 2023, 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 is Rs. nil or $nil, at
June 30, 2023. 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 % at June 30, 2023 and 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 six months. The total facility amount is Rs. 500,000,000 or $1,741,493 and Rs. 500,000,000 or $2,434,749 at June
30, 2023 and 2022, respectively. The interest rate for the loan was 17.0% and 3.0% at June 30, 2023 and 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. 53,600,000 or $186,688 and Rs. 53,600,000 or $261,005, at June 30, 2023 and 2022, respectively. The balance outstanding
at June 30, 2023 and 2022 was Rs. Nil. The interest rate for the loan was 24.9% and 14.0% at June 30, 2023 and 2022, 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, 2023, 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 six months. The total facility amount is Rs. 380,000,000 or $1,323,535 and Rs. 380,000,000 or $1,850,409, at
June 30, 2023 and 2022, respectively. The interest rate for the loan was 18.0% and 3.0% at June 30, 2023 and 2022, respectively. |
|
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, 2023, 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 $3,134,687 and Rs. 900,000,000 or $4,382,548,
at June 30, 2023 and 2022, respectively. NetSol PK used Rs. 700,000,000 or $2,438,089 and Rs. 700,000,000 or $3,408,648, at June 30,
2023 and 2022, respectively. The interest rate for the loan was 18.0% and 3.0% at June 30, 2023 and 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 June 30, 2023, NetSol PK used Rs. 92,194,774 or $321,113 of which $172,849 was shown as long term and $148,264 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 ranging from 9.0% to 16.0% at June 30, 2023 and 2022. |
| (9) |
In March 2020,
the Company’s subsidiary, VLS, entered into a loan agreement with Investec Bank PLC. The loan amount was £69,549, or $88,037,
for a period of 5 years with monthly payments of £1,349, or $1,708. As of June 30, 2023, the subsidiary has used this facility
up to $13,356, which was shown as current. The interest rate was 6.14% at June 30, 2023. |
| (10) |
The Company’s
subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and $nil and $96,781 was
recorded in current maturities, at June 30, 2023 and 2022, respectively. The interest rate on this financing ranged from 9.7% to 12.7%
as of June 30, 2023 and 2022. |
NETSOL
TECHNOLOGIES, INC.
Notes
to Consolidated Financial Statements
June
30, 2023 and 2022
| (11) |
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,
2023 and 2022. |
Following
is the aggregate minimum future lease payments under capital leases as of June 30, 2023:
SCHEDULE
OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES
| |
|
Amount |
|
| Minimum Lease Payments |
|
|
|
|
| Within year
1 |
|
$ |
27,363 |
|
| Within
year 2 |
|
|
3,546 |
|
| Total Minimum Lease Payments |
|
|
30,909 |
|
| Interest Expense relating
to future periods |
|
|
(2,579 |
) |
| Present Value of minimum lease payments |
|
|
28,330 |
|
|
Less: Current portion
|
|
|
(24,950 |
) |
| Current portion of loans and obligations under finance leases |
|
|
|
|
| Non-Current portion |
|
$ |
3,380 |
|
| Loans and obligations under finance leases; less current maturities |
|
|
|
|
Following
is the aggregate future long term debt payments, which consists of “Sale and Leasback Financing (8)” and “Term Finance
Facility (9)”, as of June 30, 2023:
SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS
| |
|
Amount |
|
| Loan Payments |
|
|
|
|
| Within year
1 |
|
$ |
161,620 |
|
| Within year 2 |
|
|
158,258 |
|
| Within
year 3 |
|
|
14,591 |
|
| Total Loan Payments |
|
|
334,469 |
|
| Less: Current portion |
|
|
(161,620 |
) |
| Non-Current portion |
|
$ |
172,849 |
|
NETSOL
TECHNOLOGIES, INC.
Notes
to Consolidated Financial Statements
June
30, 2023 and 2022
|