Annual report pursuant to Section 13 and 15(d)

DEBTS

v3.24.3
DEBTS
 12 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
DEBTS

NOTE 15 – DEBTS

 

Notes payable and capital leases consisted of the following:

 

        As of June 30, 2024  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 124,314     $ 124,314     $ -  
Line of Credit   (2)     -       -       -  
Bank Overdraft Facility   (3)     -       -       -  
Loan Payable Bank - Export Refinance   (4)     1,796,558       1,796,558       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     1,365,384       1,365,384       -  
Loan Payable Bank - Export Refinance III   (7)     2,515,181       2,515,181       -  
Sale and Leaseback Financing   (8)     56,842       47,158       9,684  
Term Finance Facility   (9)     -       -       -  
Short Term Financing   (10)     412,655       412,655       -  
          6,270,934       6,261,250       9,684  
Subsidiary Finance Leases   (11)     100,962       14,875       86,087  
        $ 6,371,896     $ 6,276,125     $ 95,771  

 

        As of June 30, 2023  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 89,823     $ 89,823     $ -  
Line of Credit   (2)     -       -       -  
Bank Overdraft 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       -  
Short Term 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  

 

(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 8.6% to 10.9% and 5.0% to 7.9% as of June 30, 2024 and 2023, respectively.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2024 and 2023

 

(2) The Company has an uncommitted discretionary demand line of credit up to an aggregate amount of $1,000,000 with HSBC, secured by lien on the Company’s assets. The annual interest rate was 8.75% as of June 30, 2024. The total outstanding balance as of June 30, 2024 was $nil.

 

(3) 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%% as of June 30, 2024 and 2023. The total outstanding balance as of June 30, 2024 and 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 June 30, 2024, NTE was in compliance with this covenant.

 

(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 $1,796,558 and Rs. 500,000,000 or $1,741,493 at June 30, 2024 and 2023, respectively. The interest rate for the loan was 17.5% and 17.0% at June 30, 2024 and 2023, 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 $192,591 and Rs. 53,600,000 or $186,688, at June 30, 2024 and 2023, respectively. The balance outstanding at June 30, 2024 and 2023 was Rs. Nil. The interest rate for the loan was 22.2% and 24.9% at June 30, 2024 and 2023, 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, 2024, 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 $1,365,384 and Rs. 380,000,000 or $1,323,535, at June 30, 2024 and 2023, respectively. The interest rate for the loan was 17.5% and 18.0% at June 30, 2024 and 2023, 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, 2024, 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 $3,233,804 and Rs. 900,000,000 or $3,134,687, at June 30, 2024 and 2023, respectively. NetSol PK used Rs. 700,000,000 or $2,515,181 and Rs. 700,000,000 or $2,438,089, at June 30, 2024 and 2023, respectively. The interest rate for the loan was 17.5% and 18.0% at June 30, 2024 and 2023, 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, 2024, NetSol PK used Rs. 15,819,683 or $56,842 of which $9,684 was shown as long term and $47,158 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 ranging from 22.7% to 24.2% at June 30, 2024. The interest rate for the loan was ranging from 9.0% to 16.0% at June 30, 2023.

 

(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. The subsidiary has paid this facility in full. 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, NetSol Beijing , has a short term loan facility with Bank of China, secured by personal guarantee of General Manager of NetSol Beijing for a period of one year. The facility amount is CNY 3,000,000 or $412,655. NetSol Beijing used CNY 3,000,000 or $412,655, at June 30, 2024. The interest rate of the loan was 3.8% at June 30, 2024.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2024 and 2023

 

(11) The Company leases various fixed assets under capital lease arrangements expiring in various years through 2027. 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, 2024 and 2023.

 

Following is the aggregate minimum future lease payments under capital leases as of June 30, 2024:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 26,467  
Within year 2     22,805  
Within year 3     82,321  
Total Minimum Lease Payments     131,593  
Interest Expense relating to future periods     (30,631 )
Present Value of minimum lease payments     100,962  
Less: Current portion     (14,875 )
Non-Current portion   $ 86,087  

 

Following is the aggregate future long term debt payments, which consists of “Sale and Leaseback Financing (8)”, as of June 30, 2024:

 

    Amount  
Loan Payments        
Within year 1   $ 47,158  
Within year 2     9,684  
Total Loan Payments     56,842  
Less: Current portion     (47,158 )
Non-Current portion   $ 9,684  

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2024 and 2023