Quarterly report pursuant to Section 13 or 15(d)

Debts

v3.19.1
Debts
9 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Debts

NOTE 15 – DEBTS

 

Notes payable and capital leases consisted of the following:

 

        As of March 31, 2019  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 132,971     $ 132,971     $ -  
Loan Payable Bank - Export Refinance   (3)     3,557,865       3,557,865       -  
Loan Payable Bank - Running Finance   (4)     377,144       377,144       -  
Loan Payable Bank - Export Refinance II   (5)     2,704,049       2,704,049       -  
Loan Payable Bank - Running Finance II   (6)     853,910       853,910       -  
Related Party Loan   (7)     89,033       16,002       73,031  
          7,714,972       7,641,941       73,031  
Subsidiary Capital Leases   (8)     1,112,923       469,391       643,532  
        $ 8,827,895     $ 8,111,332     $ 716,563  

 

        As of June 30, 2018  
Name       Total     Current Maturities     Long-Term Maturities  
                       
D&O Insurance   (1)   $ 69,578     $ 69,578     $ -  
Loan Payable Bank - Export Refinance   (3)     4,107,451       4,107,451       -  
Loan Payable Bank - Running Finance   (4)     -       -       -  
Loan Payable Bank - Export Refinance II   (5)     2,875,216       2,875,216       -  
Loan Payable Bank - Running Finance II   (6)     1,232,235       1,232,235       -  
Related Party Loan   (7)     -       -       -  
          8,284,480       8,284,480       -  
Subsidiary Capital Leases   (8)     642,035       311,439       330,596  
        $ 8,926,515     $ 8,595,919     $ 330,596  

 

(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 were ranging from 5.2% to 6.5% as of March 31, 2019 and June 30, 2018.

 

(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 $389,610. The annual interest rate was 5.1% as of March 31, 2019. Total outstanding balance as of March 31, 2019 and June 30, 2018 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 March 31, 2019, NTE was in compliance with this covenant.

 

(3) 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. Total facility amount is Rs. 500,000,000 or $3,557,865 and Rs. 500,000,000 or $4,107,451 at March 31, 2019 and June 30, 2018, respectively. The interest rate for the loan was 3% at March 31, 2019 and June 30, 2018.

 

(4) The Company’s subsidiary, NetSol PK, has a running finance facility with Askari Bank Limited, secured by NetSol PK’s assets. Total facility amount is Rs. 75,000,000 or $533,694, at March 31, 2019. NetSol PK used Rs. 53,000,000 or $377,144, at March 31, 2019. The interest rate for the loan was 12.99% at March 31, 2019.

 

This facility requires NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1. As of March 31, 2019, NetSol PK was in compliance with this covenant.

 

(5) 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. Total facility amount is Rs. 380,000,000 or $2,704,049 and Rs. 350,000,000 or $2,875,216, at March 31, 2019 and June 30, 2018, respectively. The interest rate for the loan was 3% at March 31, 2019 and June 30, 2018.

 

(6) The Company’s subsidiary, NetSol PK, has a running finance facility with Samba Bank Limited, secured by NetSol PK’s assets. Total facility amount is Rs. 120,000,000 or $853,910 and Rs. 150,000,000 or $1,232,235, at March 31, 2019 and June 30, 2018, respectively. The interest rate for the loan was 12.43% and 8.1% at March 31, 2019 and June 30, 2018, respectively.

 

During the tenure of loan, 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 March 31, 2019, NetSol PK was in compliance with these covenants.

 

(7) In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement with Investec a related party. The loan amount was £69,549, or $90,323, for a period of 5 years with monthly payment of £1,349, or $1,752. As of March 31, 2019, the subsidiary has used this facility up to $89,033, of which $73,031 was shown as long-term liabilities and remainder $16,002 as current maturity. The interest rate was 6.14% at March 31, 2019.

 

(8) The Company leases various fixed assets under capital lease arrangements expiring in various years through 2022. 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 three and nine months ended March 31, 2019 and 2017.

 

Following is the aggregate minimum future lease payments under capital leases as of March 31, 2019:

 

    Amount  
Minimum Lease Payments        
Due FYE 3/31/20   $ 563,847  
Due FYE 3/31/21     412,570  
Due FYE 3/31/22     253,643  
Due FYE 3/31/23     20,883  
Due FYE 3/31/24     19,143  
Total Minimum Lease Payments     1,270,086  
Interest Expense relating to future periods     (157,163 )
Present Value of minimum lease payments     1,112,923  
Less: Current portion     (469,391 )
Non-Current portion   $ 643,532