NOTE 12 – LONG TERM INVESTMENT

Drivemate

The Company and Drivemate Co., Ltd. (“Drivemate”) entered into a subscription agreement on April 25, 2019, (“Drivemate Agreement”) whereby the Company will purchase an equity interest of 30% in Drivemate. Per the Drivemate Agreement, the Company will purchase 5,469 preferred shares for $1,800,000 consisting of $500,000 cash and $1,300,000 in services. The Company has paid $405,000 and has received 1,267 shares. The remaining $95,000 will be paid in increments based on the contract with the final payment due 24 months from the date of the Drivemate Agreement signing. As of September 30, 2020, the Company owns 6.23% of Drivemate. Per the Drivemate Agreement, the Company appointed two directors to the Drivemate board. The Company determined that it met the significant influence criteria since two of the four directors are appointed by the Company and the Company is to own 30% of Drivemate at the final payment date; therefore, the Company accounts for the investment using the equity method of accounting.

During the three months ended September 30, 2020 and 2019, the Company performed $Nil and $204,615 of services, respectively.

Under the equity method of accounting, the Company recorded its share of net income of $595 and share of net loss of $5,392 for the three months ended September 30, 2020 and 2019, respectively.

WRLD3D-Related Party

On March 2, 2017, the Company purchased a 4.9% interest in WRLD3D, a non-public company, for $1,111,111. The Company paid $555,556 at the initial closing and $555,555 on September 1, 2017. NetSol PK, the subsidiary of the Company, purchased a 12.2% investment in WRLD3D, for $2,777,778 which was earned by providing IT and enterprise software solutions.

NetSol PK has not provided services to WRLD3D for the three months ended September 30, 2020, and has provided services of $82,933 for the three months ended September 30, 2019, which is recorded as services-related party. Accounts receivable and revenue in excess of billing were $1,373,099 and $8,163 at June 30, 2020, respectively. Upon adoption of ASC 326, an allowance was established for the full amounts of these accounts. The net balances of accounts receivable and revenues in excess of billing were $Nil at September 30, 2020.

Under the equity method of accounting, the Company recorded its share of net loss of $108,445 and $183,832 for the three months ended September 30, 2020 and 2019, respectively.

The following table reflects the above investments at September 30, 2020.