Quarterly report pursuant to Section 13 or 15(d)

DEBTS

v3.22.1
DEBTS
 9 Months Ended
Mar. 31, 2022
Debt Disclosure [Abstract]  
DEBTS

NOTE 15 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

        As of March 31, 2022  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 186,395     $ 186,395     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Term Finance Facility   (3)     711,264       711,264       -  
Loan Payable Bank - Export Refinance   (4)     2,728,811       2,728,811       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     2,073,896       2,073,896       -  
Loan Payable Bank - Running Finance II   (7)     -       -       -  
Loan Payable Bank - Export Refinance III   (8)     3,820,335       3,820,335       -  
Sale and Leaseback Financing   (9)     101,342       39,417       61,925  
Term Finance Facility   (10)     38,428       19,486       18,942  
Insurance Financing   (11)     5,010       5,010       -  
          9,665,481       9,584,614       80,867  
Subsidiary Finance Leases   (12)     85,087       38,055       47,032  
        $ 9,750,568     $ 9,622,669     $ 127,899  

 

        As of June 30, 2021  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 73,143     $ 73,143     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Term Finance Facility   (3)     1,648,818       1,090,259       558,559  
Loan Payable Bank - Export Refinance   (4)     3,162,555       3,162,555       -  
Loan Payable Bank - Running Finance   (5)     -       -       -  
Loan Payable Bank - Export Refinance II   (6)     2,403,542       2,403,542       -  
Loan Payable Bank - Running Finance II   (7)     -       -       -  
Loan Payable Bank - Export Refinance III   (8)     4,427,578       4,427,578       -  
Sale and Leaseback Financing   (9)     85,313       28,183       57,130  
Term Finance Facility   (10)     55,182       19,644       35,538  
Insurance Financing   (11)     41,774       41,774       -  
          11,897,905       11,246,678       651,227  
Subsidiary Finance Leases   (12)     168,107       119,493       48,614  
        $ 12,066,012     $ 11,366,171     $ 699,841  

 

(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 March 31, 2022 and June 30, 2021.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2022

(Unaudited)

 

(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 $394,737. The annual interest rate was 5.12% as of March 31, 2022. The total outstanding balance as of March 31, 2022 and June 30, 2021 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, 2022, NTE was in compliance with this covenant.

 

(3) 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 COVID-19 pandemic. This is a term loan payable in three years. The availed facility amount was Rs. 130,324,892 or $711,264, at March 31, 2022, which is shown as current. The availed facility amount was Rs. 260,678,818 or $1,648,818, at June 30, 2021, of which $1,090,259 is shown as current and the remaining $558,559 is shown as long term. The interest rate for the loan was 3% at March 31, 2022 and June 30, 2021.

 

(4) 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 $2,728,811 at March 31, 2022 and Rs. 500,000,000 or $3,162,555 at June 30, 2021. The interest rate for the loan was 3% at March 31, 2022 and June 30, 2021.

 

(5) 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 $409,322, at March 31, 2022. The balance outstanding at March 31, 2022 and June 30, 2021 was Rs. Nil. The interest rate for the loan was 14.0% and 9.5% at March 31, 2022 and June 30, 2021, 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 March 31, 2022, NetSol PK was in compliance with this covenant.

 

(6) 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 $2,073,896 and Rs. 380,000,000 or $2,403,542 at March 31, 2022 and June 30, 2021, respectively. The interest rate for the loan was 3% at March 31, 2022 and June 30, 2021.

 

(7) 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 $654,915 and Rs. 120,000,000 or $759,013, at March 31, 2022 and June 30, 2021, respectively. The interest rate for the loan was 13.5% and 9.0% at March 31, 2022 and June 30, 2021, respectively. The balance outstanding at March 31, 2022 and June 30, 2021 was Rs. Nil.

 

During the tenure of the 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, 2022, NetSol PK was in compliance with these covenants.

 

(8) 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 $4,911,859 and Rs. 900,000,000 or $5,692,600, at March 31, 2022 and June 30, 2021, respectively. NetSol PK used Rs. 700,000,000 or $3,820,335 and Rs. 700,000,000 or $4,427,578, at March 31, 2022 and June 30, 2021, respectively. The interest rate for the loan was 3% at March 31, 2022 and June 30, 2021.

 

(9) The Company’s subsidiary, NetSol PK, availed sale and leaseback financing from First Habib Modaraba secured by the transfer of the vehicles’ title. As of March 31, 2022, NetSol PK used Rs. 18,568,847 or $101,342 of which $61,925 was shown as long term and $39,417 as current. As of June 30, 2021, NetSol PK used Rs. 13,487,949 or $85,313 of which $57,130 was shown as long term and $28,183 as current. The interest rate for the loan was 9.0% at March 31, 2022, and June 30, 2021.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2022

(Unaudited)

 

(10) In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $91,512, for a period of 5 years with monthly payments of £1,349, or $1,775. As of March 31, 2022, the subsidiary has used this facility up to $34,428, of which $18,942 was shown as long-term and $19,486 as current. As of June 30, 2021, the subsidiary has used this facility up to $55,182, of which $35,538 was shown as long-term and $19,644 as current. The interest rate was 6.14% at March 31, 2022 and June 30, 2021.

 

(11) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $5,011 and $41,774 was recorded in current maturities, at March 31, 2022 and June 30, 2021, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of March 31, 2022 and was 9.7% as of June 30, 2021.

 

(12) 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 and nine months ended March 31, 2022 and 2021.

 

Following is the aggregate minimum future lease payments under finance leases as of March 31, 2022:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 44,278  
Within year 2     41,162  
Within year 3     8,749  
Total Minimum Lease Payments     94,189  
Interest Expense relating to future periods     (9,102 )
Present Value of minimum lease payments     85,087  
Less: Current portion     (38,055 )
Non-Current portion   $ 47,032  

 

Following is the aggregate future long term debt payments as of March 31, 2022

 

    Amount  
Loan Payments        
Within year 1   $ 770,167  
Within year 2     63,677  
Within year 3     17,190  
Total Loan Payments     851,034  
Less: Current portion     (770,167 )
Non-Current portion   $ 80,867  

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2022

(Unaudited)