Quarterly report pursuant to Section 13 or 15(d)

Long Term Investment

v3.21.1
Long Term Investment
9 Months Ended
Mar. 31, 2021
Investments, All Other Investments [Abstract]  
Long Term Investment

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 $437,500 in cash, provided services of $1,300,000 and has received 5,217 shares. The remaining $62,500 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 March 31, 2021, the Company owns 21.47% 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.

 

The Company did not perform any services during the three and nine months ended March 31, 2021. During the three and nine months ended March 31, 2020, the Company performed $355,051 and $862,767 of services, respectively.

 

Under the equity method of accounting, the Company recorded its share of net income of $Nil and $3,919 for the three and nine months ended March 31, 2021, respectively.

 

Under the equity method of accounting, the Company recorded its share of net loss of $5,667 and $16,915 for the three and nine months ended March 31, 2020, 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 and nine months ended March 31, 2021, and has provided services of $61,842 and $202,199 for the three and nine months ended March 31, 2020, 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 March 31, 2021.

 

Under the equity method of accounting, the Company recorded its share of net loss of $80,953 and $236,407 for the three and nine months ended March 31, 2021 and the Company recorded its share of net loss of $72,835 and $415,607 for the three and nine months ended March 31, 2020, respectively.

 

The following table reflects the above investments at March 31, 2021.

 

    Drivemate     WRLD3D     Total  
Gross investment   $ 1,800,000     $ 3,888,889     $ 5,688,889  
Cumulative net loss on investment     (15,839 )     (1,926,723 )     (1,942,562 )
Cumulative other comprehensive income (loss)     -       (550,347 )     (550,347 )
Net investment   $ 1,784,161     $ 1,411,819     $ 3,195,980