Quarterly report pursuant to Section 13 or 15(d)

DEBTS

v3.23.3
DEBTS
 3 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
DEBTS

NOTE 13 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

        As of September 30, 2023  
Name       Total     Current
Maturities		     Long-Term
Maturities		  
                       
D&O Insurance   (1)   $ 14,495     $ 14,495     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Loan Payable Bank - Export Refinance   (3)     1,737,619       1,737,619       -  
Loan Payable Bank - Running Finance   (4)     -       -       -  
Loan Payable Bank - Export Refinance II   (5)     1,320,591       1,320,591       -  
Loan Payable Bank - Export Refinance III   (6)     2,432,667       2,432,667       -  
Sale and Leaseback Financing   (7)     286,142       149,167       136,975  
Term Finance Facility   (8)     8,105       8,105       -  
Insurance Financing   (9)     74,903       74,903       -  
          5,874,522       5,737,547       136,975  
Subsidiary Finance Leases   (10)     19,878       19,006       872  
        $ 5,894,400     $ 5,756,553     $ 137,847  

 

        As of June 30, 2023  
Name         Total       Current
Maturities 		      Long-Term
Maturities 		 
                             
D&O Insurance   (1)   $ 89,823     $ 89,823     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Loan Payable Bank - Export Refinance   (3)     1,741,493       1,741,493       -  
Loan Payable Bank - Running Finance   (4)     -       -       -  
Loan Payable Bank - Export Refinance II   (5)     1,323,535       1,323,535       -  
Loan Payable Bank - Export Refinance III   (6)     2,438,089       2,438,089       -  
Sale and Leaseback Financing   (7)     321,113       148,264       172,849  
Term Finance Facility   (8)     13,356       13,356       -  
Insurance Financing   (9)     -       -       -  
          5,927,409       5,754,560       172,849  
Subsidiary Finance Leases   (10)     28,330       24,950       3,380  
        $ 5,955,739     $ 5,779,510     $ 176,229  

 

(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 7.9% as of September 30, 2023 and June 30, 2023, respectively.

 

(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 $365,854. The annual interest rate was 9.5% as of September 30, 2023. The total outstanding balance as of September 30, 2023 and June 30, 2023 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, 2023, NTE was in compliance with this covenant.

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2023

(Unaudited)

 

(3) 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 $1,737,619 at September 30, 2023 and Rs. 500,000,000 or $1,741,493 at June 30, 2023. The interest rate for the loan was 19.0% and 17.0% at September 30, 2023 and June 30, 2023, respectively.

 

(4) 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 $186,273, at September 30, 2023. The balance outstanding at September 30, 2023 and June 30, 2023 was Rs. Nil. The interest rate for the loan was 24.9% at September 30, 2023 and June 30, 2023.

 

This facility requires NetSol PK to maintain a long-term debt equity ratio of 60:40 and a current ratio of 1:1. As of September 30, 2023, NetSol PK was in compliance with this covenant.

 

(5) 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 $1,320,591 and Rs. 380,000,000 or $1,323,535 at September 30, 2023 and June 30, 2023, respectively. The interest rate for the loan was 19.0% and 18.0% at September 30, 2023 and June 30, 2023, 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, 2023, NetSol PK was in compliance with these covenants.

 

(6) 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 $3,127,715 and Rs. 900,000,000 or $3,134,687, at September 30, 2023 and June 30, 2023, respectively. NetSol PK used Rs. 700,000,000 or $2,432,667 and Rs. 700,000,000 or $2,438,089, at September 30, 2023 and June 30, 2023, respectively. The interest rate for the loan was 19.0% and 18.0% at September 30, 2023 and June 30, 2023, respectively.

 

(7) 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, 2023, NetSol PK used Rs. 82,337,274 or $286,142 of which $136,975 was shown as long term and $149,167 as current. 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. The interest rate for the loan was 9.0% to 16.0% at September 30, 2023, and June 30, 2023.

 

(8) In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $84,816, for a period of 5 years with monthly payments of £1,349, or $1,645. As of September 30, 2023, the subsidiary has used this facility up to $8,105, which was shown as current. 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 September 30, 2023 and June 30, 2023.

 

(9) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $74,903 and $nil was recorded in current maturities, at September 30, 2023 and June 30, 2023, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of September 30, 2023 and June 30, 2023.

 

(10) 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, 2023 and 2022.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2023

(Unaudited)

 

Following are the aggregate minimum future lease payments under finance leases as of September 30, 2023:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 20,680  
Within year 2     890  
Total Minimum Lease Payments     21,570  
Interest Expense relating to future periods     (1,692 )
Present Value of minimum lease payments     19,878  
Less: Current portion     (19,006 )
Current portion of loans and obligations under finance leases        
Non-Current portion   $ 872  
Loans and obligations under finance leases; less current maturities        

 

Following are the aggregate future long term debt payments as of September 30, 2023 which consists of “Sale and Leaseback Financing (7)” and “Term Finance Facility (8)”.

 

    Amount  
Loan Payments        
Within year 1   $ 157,271  
Within year 2     132,104  
Within year 3     4,872  
Total Loan Payments     294,247  
Less: Current portion     (157,272 )
Non-Current portion   $ 136,975