| DEBTS |
NOTE 15 –
DEBTS
Notes payable
and finance leases consisted of the following:
SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES
| |
|
|
|
|
As of December 31, 2022 |
|
| |
|
|
|
|
|
|
|
Current |
|
|
Long-Term |
|
| Name |
|
|
|
|
Total |
|
|
Maturities |
|
|
Maturities |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| D&O Insurance |
|
|
(1 |
) |
|
$ |
127,599 |
|
|
$ |
127,599 |
|
|
$ |
- |
|
| Bank Overdraft Facility |
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Term Finance Facility |
|
|
(3 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance |
|
|
(4 |
) |
|
|
2,208,285 |
|
|
|
2,208,285 |
|
|
|
- |
|
| Loan Payable Bank - Running Finance |
|
|
(5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance II |
|
|
(6 |
) |
|
|
1,678,297 |
|
|
|
1,678,297 |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance III |
|
|
(7 |
) |
|
|
3,091,600 |
|
|
|
3,091,600 |
|
|
|
- |
|
| Sale and Leaseback Financing |
|
|
(8 |
) |
|
|
463,011 |
|
|
|
172,983 |
|
|
|
290,028 |
|
| Term Finance Facility |
|
|
(9 |
) |
|
|
21,908 |
|
|
|
18,682 |
|
|
|
3,226 |
|
| Insurance Financing |
|
|
(10 |
) |
|
|
54,405 |
|
|
|
54,405 |
|
|
|
- |
|
| |
|
|
|
|
|
|
7,645,105 |
|
|
|
7,351,851 |
|
|
|
293,254 |
|
| Subsidiary Finance Leases |
|
|
(11 |
) |
|
|
48,590 |
|
|
|
34,899 |
|
|
|
13,691 |
|
| |
|
|
|
|
|
$ |
7,693,695 |
|
|
$ |
7,386,750 |
|
|
$ |
306,945 |
|
| |
|
|
|
|
As of June 30, 2022 |
|
| |
|
|
|
|
|
|
|
Current |
|
|
Long-Term |
|
| Name |
|
|
|
|
Total |
|
|
Maturities |
|
|
Maturities |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| D&O Insurance |
|
|
(1 |
) |
|
$ |
89,552 |
|
|
$ |
89,552 |
|
|
$ |
- |
|
| Bank Overdraft Facility |
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Term Finance Facility |
|
|
(3 |
) |
|
|
423,101 |
|
|
|
423,101 |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance |
|
|
(4 |
) |
|
|
2,434,749 |
|
|
|
2,434,749 |
|
|
|
- |
|
| Loan Payable Bank - Running Finance |
|
|
(5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance II |
|
|
(6 |
) |
|
|
1,850,409 |
|
|
|
1,850,409 |
|
|
|
- |
|
| Loan Payable Bank - Export Refinance III |
|
|
(7 |
) |
|
|
3,408,648 |
|
|
|
3,408,648 |
|
|
|
- |
|
| Sale and Leaseback Financing |
|
|
(8 |
) |
|
|
619,108 |
|
|
|
189,226 |
|
|
|
429,882 |
|
| Term Finance Facility |
|
|
(9 |
) |
|
|
31,204 |
|
|
|
18,339 |
|
|
|
12,865 |
|
| Insurance Financing |
|
|
(10 |
) |
|
|
118,026 |
|
|
|
118,026 |
|
|
|
- |
|
| |
|
|
|
|
|
|
8,974,797 |
|
|
|
8,532,050 |
|
|
|
442,747 |
|
| Subsidiary Finance Leases |
|
|
(11 |
) |
|
|
68,571 |
|
|
|
35,095 |
|
|
|
33,476 |
|
| |
|
|
|
|
|
$ |
9,043,368 |
|
|
$ |
8,567,145 |
|
|
$ |
476,223 |
|
| (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 December 31, 2022 and June 30, 2022. |
NETSOL
TECHNOLOGIES, INC.
Notes
to Condensed Consolidated Financial Statements
December 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
$361,446. The annual interest rate was 5.5% as of December 31, 2022. The total outstanding balance as of December 31, 2022 and June 30,
2022 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 December 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. nil or $nil, at December
31, 2022. The availed facility amount is Rs. 86,887,974 or $423,101, at June 30, 2022, which is shown as current. The interest rate for
the loan was 3% at December 31, 2022 and June 30, 2022. |
| (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 $2,208,285 at December 31, 2022 and Rs. 500,000,000 or $2,434,749
at June 30, 2022. The interest rate for the loan was 10% and 3% at December 31, 2022 and June 30, 2022, respectively. |
| (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. 53,000,000 or $236,728, at December 31, 2022. The balance outstanding at December 31, 2022 and June 30, 2022 was Rs. Nil. The interest
rate for the loan was 19.0% and 14.0% at December 31, 2022 and June 30, 2022, 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 December 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 $1,678,297 and Rs. 380,000,000 or $1,850,409 at December 31,
2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at December 31, 2022 and June 30, 2022, respectively. |
|
|
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 December 31, 2022, NetSol
PK was in compliance with these covenants. |
| (7) |
|
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 $3,974,914 and Rs. 900,000,000 or $4,382,548, at December
31, 2022 and June 30, 2022, respectively. NetSol PK used Rs. 700,000,000 or $3,091,600 and Rs. 700,000,000 or $3,408,648, at December
31, 2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at December 31, 2022 and June 30, 2022, respectively. |
| (8) |
|
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
December 31, 2022, NetSol PK used Rs. 104,834,901 or $463,011 of which $290,028 was shown as long term and $172,983 as current. As of
June 30, 2022, NetSol PK used Rs. 127,140,038 or $619,108 of which $429,882 was shown as long term and $189,226 as current. The interest
rate for the loan was 9.0% to 16.0% at December 31, 2022, and June 30, 2022. |
NETSOL
TECHNOLOGIES, INC.
Notes
to Condensed Consolidated Financial Statements
December 31, 2022
(Unaudited)
| (9) |
|
In March 2019, the Company’s
subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $83,794, for a period of 5 years with monthly payments
of £1,349, or $1,625. As of December 31, 2022, the subsidiary has used this facility up to $21,907, of which $3,226 was shown as
long-term and $18,681 as current. As of June 30, 2022, the subsidiary has used this facility up to $31,204, of which $12,865 was shown
as long-term and $18,339 as current. The interest rate was 6.14% at December 31, 2022 and June 30, 2022. |
| (10) |
|
The Company’s subsidiary,
VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $54,405 and $96,781 was recorded
in current maturities, at December 31, 2022 and June 30, 2022, respectively. The interest rate on this financing ranged from 9.7% to
12.7% as of December 31, 2022 and June 30, 2022. |
| (11) |
|
The Company leases various fixed
assets under finance lease arrangements expiring in various years through 2025. 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 six months ended December
31, 2022 and 2021. |
Following are
the aggregate minimum future lease payments under finance leases as of December 31, 2022:
SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES
| |
|
|
|
| |
|
Amount |
|
| Minimum Lease Payments |
|
|
|
|
| Within year 1 |
|
$ |
39,033 |
|
| Within year 2 |
|
|
14,514 |
|
| Total Minimum Lease Payments |
|
|
53,547 |
|
| Interest Expense relating to future periods |
|
|
(4,957 |
) |
| Present Value of minimum lease payments |
|
|
48,590 |
|
| Less: Current portion |
|
|
(34,899 |
) |
| Current portion of loans and obligations under finance leases |
|
|
|
|
| Non-Current portion |
|
$ |
13,691 |
|
| Loans and obligations under finance leases; less current maturities |
|
|
|
|
Following are
the aggregate future long term debt payments as of December 31, 2022
SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS
| |
|
Amount |
|
| Loan Payments |
|
|
|
|
| Within year 1 |
|
$ |
191,664 |
|
| Within year 2 |
|
|
188,283 |
|
| Within year 3 |
|
|
104,972 |
|
| Total Loan Payments |
|
|
484,919 |
|
| Less: Current portion |
|
|
(191,665 |
) |
| Non-Current portion |
|
$ |
293,254 |
|
NETSOL
TECHNOLOGIES, INC.
Notes
to Condensed Consolidated Financial Statements
December 31, 2022
(Unaudited)
|