Annual report pursuant to Section 13 and 15(d)

DEBTS

v3.22.2.2
DEBTS
 12 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
DEBTS

NOTE 15 – DEBTS

 

Notes payable and capital leases consisted of the following:

 

          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  

 

          As of June 30, 2021  
                Current     Long-Term  
Name         Total     Maturities     Maturities  
                         
D&O Insurance   (1)     $ 73,143     $ 73,143     $ -  
Bank Overdraft Facility   (2)       -       -       -  
Term Finance Facility   (3)       1,648,818       1,090,259       558,559  
Loan Payable Bank - Export Refinance   (4)       3,162,555       3,162,555       -  
Loan Payable Bank - Running Finance   (5)       -       -       -  
Loan Payable Bank - Export Refinance II   (6)       2,403,542       2,403,542       -  
Loan Payable Bank - Export Refinance III   (7)       4,427,578       4,427,578       -  
Sale and Leaseback Financing   (8)       85,313       28,183       57,130  
Term Finance Facility   (9)       55,182       19,644       35,538  
Insurance Financing   (10)       41,774       41,774       -  
            11,897,905       11,246,678       651,227  
Subsidiary Finance Leases   (11)       168,107       119,493       48,614  
          $ 12,066,012     $ 11,366,171     $ 699,841  

 

(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 7.0% as of June 30, 2022 and 2021, respectively.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2022 and 2021

 

(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 5.5% and 5.1% as of June 30, 2022 and 2021, respectively. The total outstanding balance as of June 30, 2022 and 2021 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, 2022, 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. 86,887,974 or $423,101, at June 30, 2022, which is shown as current. The availed facility amount was Rs. 260,678,180 or $1,648,818, at June 30, 2021, of which $1,090,259 is shown as current and the remaining $558,559 is shown as long term. The interest rate for the loan was 3% at June 30, 2022 and 2021.

 

(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 $2,434,749 and Rs. 500,000,000 or $3,162,555 at June 30, 2022 and 2021, respectively. The interest rate for the loan was 3% at June 30, 2022 and 2021.

 

(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 $261,005 and Rs. 75,000,000 or $474,383, at June 30, 2022 and 2021, respectively. The balance outstanding at June 30, 2022 and 2021 was Rs. Nil. The interest rate for the loan was 14.0% and 9.5% at June 30, 2022 and 2021, 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, 2022, 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 $1,850,409 and Rs. 380,000,000 or $2,403,542, at June 30, 2022 and 2021, respectively. The interest rate for the loan was 3% at June 30, 2022 and 2021.

 

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, 2022, 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 $4,382,548 and Rs. 900,000,000 or $5,692,600, at June 30, 2022 and 2021, respectively. NetSol PK used Rs. 700,000,000 or $3,408,648 and Rs. 700,000,000 or $4,427,578, at June 30, 2022 and 2021, respectively. The interest rate for the loan was 3% at June 30, 2022 and 2021.

 

(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, 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. As of June 30, 2021, NetSol PK used Rs. 13,487,949 or $85,313 of which $57,130 was shown as long term and $28,183 as current. The interest rate for the loan was ranging from 9.0% to 16.0% at June 30, 2022 and 2021.

 

(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 $84,816, for a period of 5 years with monthly payments of £1,349, or $1,645. As of June 30, 2022, the subsidiary has used this facility up to $31,204, of which $12,865 was shown as long-term and $18,339 as current. The interest rate was 6.14% at June 30, 2022.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2022 and 2021

 

(10) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $96,781 and $41,774 was recorded in current maturities, at March 31, 2022 and June 30, 2021, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of June 30, 2022 and was 9.7% as of June 30, 2021.

 

(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, 2022 and 2021.

 

Following is the aggregate minimum future lease payments under capital leases as of June 30, 2022:

 

         
    Amount  
Minimum Lease Payments        
Within year 1   $ 40,716  
Within year 2     31,057  
Within year 3     4,538  
Total Minimum Lease Payments     76,311  
Interest Expense relating to future periods     (7,740 )
Present Value of minimum lease payments     68,571  
Less: Current portion     (35,095 )
Non-Current portion   $ 33,476  

 

Following is the aggregate future long term debt payments, which consists of “Term Finance Facility (3)”, “Sale and Leasback Financing (8)” and “Term Finance Facility (9)”, as of June 30, 2022:

 

         
    Amount  
Loan Payments        
Within year 1   $ 630,666  
Within year 2     229,488  
Within year 3     213,259  
Total Loan Payments     1,073,413  
Less: Current portion     (630,666 )
Non-Current portion   $ 442,747  

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2022 and 2021