Annual report [Section 13 and 15(d), not S-K Item 405]

DEBTS

v3.25.2
DEBTS
 12 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
DEBTS

NOTE 12 – DEBTS

 

Notes payable and capital leases consisted of the following:

 

        As of June 30, 2025  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 119,542     $ 119,542     $ -  
Line of Credit   (2)     405,000       405,000       -  
Bank Overdraft Facility   (3)     -       -       -  
Loan Payable Bank - Export Refinance   (4)     1,759,634       1,759,634       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     1,337,322       1,337,322       -  
Loan Payable Bank - Export Refinance III   (7)     4,575,048       4,575,048       -  
Sale and Leaseback Financing   (8)     76,618       29,660       46,958  
Short Term Financing   (9)     -       -       -  
          8,273,164       8,226,206       46,958  
Subsidiary Finance Leases   (10)     101,505       13,855       87,650  
        $ 8,374,669     $ 8,240,061     $ 134,608  

 

        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  
Short Term Financing   (9)     412,655       412,655       -  
          6,270,934       6,261,250       9,684  
Subsidiary Finance Leases   (10)     100,962       14,875       86,087  
        $ 6,371,896     $ 6,276,125     $ 95,771  

 

(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 rates on these financings range from 8.4% to 11.6% and 8.6% to 10.9% as of June 30, 2025 and 2024, respectively.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2025 and 2024

 

(2) The Company has an uncommitted discretionary demand line of credit up to an aggregate amount of $1,000,000 with HSBC, secured by a lien on the Company’s assets. The annual interest rate was 7.75% and 8.75% as of June 30, 2025 and 2024, respectively. The total outstanding balance as of June 30, 2025 and 2024, was $405,000 and $nil, respectively.

 

(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 $410,959. The annual interest rate was 8.5% and 9.5% as of June 30, 2025 and 2024, respectively. The total outstanding balance as of June 30, 2025 and 2024 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, 2025, 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. 600,000,000 or $2,111,561 and Rs. 500,000,000 or $1,796,558 at June 30, 2025 and 2024, respectively. NetSol PK used Rs. 500,000,000 or $1,759,634 at June 30, 2025 and Rs. 500,000,000 or $1,796,558 at June 30, 2024. The interest rate for the loan was 8.0% and 17.5% at June 30, 2025 and 2024, 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. 4,050,937 or $14,256 and Rs. 53,600,000 or $192,591, at June 30, 2025 and 2024, respectively. The balance outstanding at June 30, 2025 and 2024 was Rs. Nil. The interest rate for the loan was 13.2% and 22.2% at June 30, 2025 and 2024, 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, 2025, 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 $1,337,322 and Rs. 380,000,000 or $1,365,384, at June 30, 2025 and 2024, respectively. NetSol PK used Rs. 380,000,000 or $1,337,322 and Rs. 380,000,000 or $1,365,384, at June 30, 2025 and 2024, respectively. The interest rate for the loan was 8.0% and 17.5% at June 30, 2025 and 2024, 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, 2025, 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. 1,300,000,000 or $4,575,048 and Rs. 900,000,000 or $3,233,804, at June 30, 2025 and 2024, respectively. NetSol PK used Rs. 1,300,000,000 or $4,575,048 and Rs. 700,000,000 or $2,515,181, at June 30, 2025 and 2024, respectively. The interest rate for the loan was 8.0% and 17.5% at June 30, 2025 and 2024, 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, 2025, NetSol PK used Rs. 21,771,042 or $76,618 of which $46,958 was shown as long-term and $29,660 as current. 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. The interest rate for the loan ranged between 12.3% and 24.2% at June 30, 2025. The interest rate for the loan ranged between 22.7% and 24.2% at June 30, 2024.

 

(9) The Company’s subsidiary, NetSol Beijing, has a short-term loan facility with Bank of China, secured by the personal guarantee of the General Manager of NetSol Beijing for a period of one year. The facility amount was CNY 3,000,000 or $418,410. NetSol Beijing paid off this facility during the period ended June 30, 2025. At June 30, 2024, NetSol Beijing used CNY 3,000,000 or $412,655. The interest rate of the loan was 3.8% at June 30, 2025 and 2024, respectively.

 

(10) The Company leases various fixed assets under capital lease arrangements expiring in various years through 2028. 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, 2025 and 2024.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2025 and 2024

 

Following is the aggregate minimum future lease payments under capital leases as of June 30, 2025:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 27,582  
Within year 2     91,896  
Within year 3     6,162  
Total Minimum Lease Payments     125,640  
Interest Expense relating to future periods     (24,135 )
Present Value of minimum lease payments     101,505  
Less: Current portion     (13,855 )
Non-Current portion   $ 87,650  

 

Following is the aggregate future long term debt payments, which consists of “Sale and Leaseback Financing (8)”, as of June 30, 2025:

 

    Amount  
Loan Payments        
Within year 1   $ 29,660  
Within year 2     23,128  
Within year 3    

23,830

  
Total Loan Payments     76,618  
Less: Current portion     (29,660 )
Non-Current portion   $ 46,958