Quarterly report pursuant to Section 13 or 15(d)

Other Long Term Assets

v3.5.0.2
Other Long Term Assets
 3 Months Ended
Sep. 30, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Other Long Term Assets

NOTE 8 – OTHER LONG TERM ASSETS

 

        As of     As of  
        September 30, 2016     June 30, 2016  
                     
Investment   (1)   $ 1,524,563     $ 720,350  
Long Term Security Deposits         80,168       122,203  
Total       $ 1,604,731     $ 842,553  

 

  (1) Investment under cost method

 

On March 2, 2016, the Company purchased a 4.9% interest in eeGeo, Inc. a non-public company for $1,111,111. The Company paid $555,556 at the initial closing and $555,555 on September 1, 2016. NetSol PK, the subsidiary of the Company, purchased a 12.2% investment in eeGeo, Inc., for $2,777,778 which will be earned over future periods by providing IT and enterprise software solutions. Per the agreement, NetSol PK is to provide a minimum of $200,000 of services in each three-month period and the entire balance is required to be provided within three years of the date of the agreement. NetSol PK may be required to forfeit the shares back to eeGeo, Inc., if NetSol PK fails to provide the future services. During three months ended September 30, 2016, NetSol PK provided services valued at $248,658. As of September 30, 2016, accumulated balance of services provided was $413,452 which is recorded as investment.

 

In connection with the investment, the Company and NetSol PK received a warrant to purchase preferred stock which included the following key terms and features:

 

  ● The warrants are exercisable into share of the “Next Round Preferred”, only if and when the Next Round Preferred is issued by eeGeo, Inc., in a “Qualified Financing”.
     
  ● The warrants expire on March 2, 2020.
     
  ● “Next Round Preferred” is defined as occurring if eeGeo, Inc.’s preferred stock (or securities convertible into preferred stock) are issued in a Qualified Financing that occurs after March 2, 2016.
     
  ● “Qualified Financing” is defined as financing with total proceeds of at least $2 million.
     
  ● The total number of common stock shares to be issued is equal to $1,250,000 divided by the per share price of the Next Round Preferred.
     
  ● The exercise price of the warrants is equal to the greater of

 

  a) 70% of the per share price of the Next Round Preferred sold in a Qualified Financing, or
     
  b) $25,000,000 divided by the total number of shares of common stock outstanding immediately prior to the Qualified Financing (on a fully-diluted basis, excluding the number of common stock shares issuable upon the exercise of any given warrant).

 

The Company accounted for this investment using the cost method. At September 30, 2016, the Company has determined that there is no impairment.