Quarterly report pursuant to Section 13 or 15(d)

Debts

v3.20.2
Debts
3 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]  
Debts

NOTE 15 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

        As of September 30, 2020  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 17,234     $ 17,234     $ -  
Paycheck Protection Program Loans   (2)     469,721       212,589       257,132  
Bank Overdraft Facility   (3)     -       -       -  
Term Finance Facility   (4)     2,103,507       822,457       1,281,050  
Loan Payable Bank - Export Refinance   (5)     3,017,866       3,017,866       -  
Loan Payable Bank - Running Finance   (6)     -       -       -  
Loan Payable Bank - Export Refinance II   (7)     2,293,577       2,293,577       -  
Loan Payable Bank - Running Finance II   (8)     -       -       -  
Loan Payable Bank - Export Refinance III   (9)     3,017,867       3,017,867       -  
Term Finance Facility   (10)     63,825       17,318       46,507  
          10,983,597       9,398,908       1,584,689  
Subsidiary Finance Leases   (11)     399,379       278,369       121,010  
        $ 11,382,976     $ 9,677,277     $ 1,705,699  

 

        As of June 30, 2020  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 81,728     $ 81,728     $ -  
Paycheck Protection Program Loans   (2)     469,721       182,669       287,052  
Bank Overdraft Facility   (3)     -       -       -  
Term Finance Facility   (4)     1,380,878       354,337       1,026,541  
Loan Payable Bank - Export Refinance   (5)     2,975,482       2,975,482       -  
Loan Payable Bank - Running Finance   (6)     -       -       -  
Loan Payable Bank - Export Refinance II   (7)     2,261,365       2,261,365       -  
Loan Payable Bank - Running Finance II   (8)     -       -       -  
Loan Payable Bank - Export Refinance III   (9)     2,975,483       2,975,483       -  
Term Finance Facility   (10)     65,473       16,423       49,050  
          10,210,130       8,847,487       1,362,643  
Subsidiary Finance Leases   (11)     469,406       292,074       177,332  
        $ 10,679,536     $ 9,139,561     $ 1,539,975  

 

(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 5.0% to 7.0% as of September 30, 2020 and June 30, 2020.

 

(2) The Company and its subsidiary, NTA, received Paycheck Protection Program loans of $469,721 introduced by the U.S. Government during the COVID-19 Pandemic. This loan is forgivable if the Company meets the criteria set by the U.S. Government. The loans carry an interest rate of 1% and have a maturity date of two years from the date of the disbursement of the loan. As of September 30, 2020, the Company has not applied for the loan forgiveness.

 

(3) 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 $384,615. The annual interest rate was 5.12% as of September 30, 2020. The total outstanding balance as of September 30, 2020 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 September 30, 2020, NTE was in compliance with this covenant.

 

(4) 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 Pandemic COVID-19. This is a term loan payable in three years. The availed facility amount was Rs. 348,509,008 or $2,103,507, at September 30, 2020, of which $719,364 is shown as current and the remaining $1,384,143 is shown as long term. The availed facility amount was Rs. 232,042,664 or $1,380,878, at June 30, 2020, of which $354,337 is shown as current and the remaining $1,026,541 is shown as long term. The interest rate for the loan was 3% at September 30, 2020 and June 30, 2020.

 

(5) 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 nine months. The total facility amount is Rs. 500,000,000 or $3,017,867 at September 30, 2020 and Rs. 500,000,000 or $2,975,482 at June 30, 2020. The interest rate for the loan was 3% at September 30, 2020 and June 30, 2020.

 

(6) 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. 75,000,000 or $452,680, at September 30, 2020. The balance outstanding at September 30, 2020 and June 30, 2020 was Rs. Nil. The interest rate for the loan was 9.25% and 7.2% at September 30, 2020 and June 30, 2020, respectively.

 

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 September 30, 2020, NetSol PK was in compliance with this covenant.

 

(7) 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 nine months. The total facility amount is Rs. 380,000,000 or $2,297,577 and Rs. 380,000,000 or $2,261,366 at September 30, 2020 and June 30, 2020, respectively. The interest rate for the loan was 3% at September 30, 2020 and June 30, 2020.

 

(8) The Company’s subsidiary, NetSol PK, has a running finance facility with Samba Bank Limited, secured by NetSol PK’s assets. The total facility amount is Rs. 120,000,000 or $724,288 and Rs. 120,000,000 or $714,116, at September 30, 2020 and June 30, 2020, respectively. The interest rate for the loan was 8.75% and 7.7% at September 30, 2020 and June 30, 2020, respectively. The balance outstanding at September 30, 2020 and June 30, 2020 was Rs. Nil.

 

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 September 30, 2020, NetSol PK was in compliance with these covenants.

 

(9) 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 $5,432,158 and NetSol PK used Rs. 500,000,000 or $3,017,867 at September 30, 2020. The total facility amount is Rs. 900,000,000 or $5,355,868 and NetSol PK used Rs. 500,000,000 or $2,975,482 at June 30, 2020. The interest rate for the loan was 3% at September 30, 2020 and June 30, 2020.

 

(10) In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $85,863, for a period of 5 years with monthly payments of £1,349, or $1,666. As of September 30, 2020, the subsidiary has used this facility up to $61,462, of which $44,785 was shown as long-term and $16,677 as current. The interest rate was 6.14% at September 30, 2020.

 

(11) The Company leases various fixed assets under finance lease arrangements expiring in various years through 2024. The assets and liabilities under finance 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 finance leases is included in depreciation expense for the three months ended September 30, 2020 and 2019.

  

Following is the aggregate minimum future lease payments under finance leases as of September 30, 2020:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 295,594  
Within year 2     96,239  
Within year 3     20,615  
Within year 4     8,590  
Total Minimum Lease Payments     421,038  
Interest Expense relating to future periods     (21,659 )
Present Value of minimum lease payments     399,379  
Less:  Current portion     (278,369 )
Non-Current portion   $ 121,010