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Note 15 - Convertible Note Payable
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12 Months Ended |
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Jun. 30, 2013
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| Debt Disclosure [Abstract] | |
| Debt Disclosure [Text Block] |
NOTE
15 – CONVERTIBLE NOTE PAYABLE
On
September 13, 2011, NetSol Technologies, Inc. entered into
a purchase agreement to sell convertible notes with a total
principal value of $4,000,000 and warrants to purchase
shares of common stock to an investment fund managed by CIM
Investment Management Limited and another accredited
investor. The notes had a 2 year maturity date and were
convertible into shares of common stock at the initial
conversion price of $8.95 per share. The warrants entitled
the investors to acquire a total of 140,845 shares of
common stock, had a 5 year term, and had an initial
exercise price of $8.95 per share. The convertible notes
and warrant terms contained standard anti-dilution
protection. The Company raised new capital
through a follow on offering under its registered shelf
offering on form S-3 in March 2012 and as a result, the
conversion price of the convertible note and exercise price
of warrants had been adjusted downward from $8.95 to $7.73.
Resultantly, the number of warrants had also been increased
to 163,021. The proceeds of the convertible note
were assigned between warrants and convertible note per ASC
470-20. The Company recorded $401,648 as capitalized
financing cost and discount of $19,665 on shares to be
issued upon conversion of the convertible note into
equity.
On
September 13, 2012, the parties replaced the convertible
note with a new convertible note for the same principal
amount, an elimination of a shareholders’ receivable
condition, a decrease in the interest rate and a decrease
in the conversion price from $7.73 to $4.93.
From
July 1, 2012 to the date of exchange, the Company accrued
interest amounting to $144,000 at the default rate due to
non-compliance of one of the convertible note
provisions.
The
Company amortized the remaining capitalized
financing cost and discount of $254,543 related to the old
convertible note at the date of replacement and recorded a
further discount of $381,339 which would be amortized over
the remaining life of new convertible note. Due to the
reduction in conversion price, the number of warrants was
adjusted to 168,943.
During
the year ended June 30, 2013, the investors converted
$4,000,000 of principal into 811,360 shares of common stock
at the rate of $4.93. They also converted $391,111 of
interest into 72,428 shares of common stock at the rate of
$5.40. Upon the conversion of the new convertible note, the
Company expensed the $381,339 of capitalized finance
cost.
For
the years-ended June 30, 2013 and 2012, total interest
expensed on convertible notes was $251,278 and $461,262,
respectively.
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