Quarterly report pursuant to Section 13 or 15(d)

DEBTS

v3.23.1
DEBTS
 9 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
DEBTS

NOTE 14 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

    As of March 31, 2023  
                Current     Long-Term  
Name         Total     Maturities     Maturities  
                         
D&O Insurance     (1 )   $ 179,887     $ 179,887     $ -  
Bank Overdraft Facility     (2 )     -       -       -  
Term Finance Facility     (3 )     -       -       -  
Loan Payable Bank - Export Refinance     (4 )     1,762,363       1,762,363       -  
Loan Payable Bank - Running Finance     (5 )     -       -       -  
Loan Payable Bank - Export Refinance II     (6 )     1,339,396       1,339,396       -  
Loan Payable Bank - Export Refinance III     (7 )     2,467,308       2,467,308       -  
Sale and Leaseback Financing     (8 )     358,939       149,396       209,543  
Term Finance Facility     (9 )     17,773       17,773       -  
Insurance Financing     (10 )     22,594       22,594       -  
              6,148,260       5,938,717       209,543  
Subsidiary Finance Leases     (11 )     36,027       30,327       5,700  
            $ 6,184,287     $ 5,969,044     $ 215,243  

 

          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 7.9% and 5.0% to 7.0% as of March 31, 2023 and June 30, 2022, respectively.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

(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 $370,370. The annual interest rate was 5.5% as of March 31, 2023. The total outstanding balance as of March 31, 2023 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 March 31, 2023, 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 March 31, 2023. 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 3.0% at March 31, 2023 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 $1,762,363 at March 31, 2023 and Rs. 500,000,000 or $2,434,749 at June 30, 2022. The interest rate for the loan was 17.0% and 3.0% at March 31, 2023 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 $188,925, at March 31, 2023. The balance outstanding at March 31, 2023 and June 30, 2022 was Rs. Nil. The interest rate for the loan was 24.0% and 14.0% at March 31, 2023 and June 30, 2022, respectively.
   
 

This facility requires NetSol PK to maintain a long-term debt equity ratio of 60:40 and a current ratio of 1:1. As of March 31, 2023, 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 $1,339,936 and Rs. 380,000,000 or $1,850,409 at March 31, 2023 and June 30, 2022, respectively. The interest rate for the loan was 10.0% and 3.0% at March 31, 2023 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 March 31, 2023, 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 $3,172,253 and Rs. 900,000,000 or $4,382,548, at March 31, 2023 and June 30, 2022, respectively. NetSol PK used Rs. 700,000,000 or $2,467,308 and Rs. 700,000,000 or $3,408,648, at March 31, 2023 and June 30, 2022, respectively. The interest rate for the loan was 10.0% and 3.0% at March 31, 2023 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 March 31, 2023, NetSol PK used Rs. 101,834,660 or $358,939 of which $209,543 was shown as long term and $149,396 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 March 31, 2023, and June 30, 2022.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

(Unaudited)

 

(9) 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 $1,665. As of March 31, 2023, the subsidiary has used this facility up to $17,773, which was shown 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 March 31, 2023 and June 30, 2022.

 

(10) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $22,594 and $118,026 was recorded in current maturities, at March 31, 2023 and June 30, 2022, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of March 31, 2023 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 nine months ended March 31, 2023 and 2022.

 

Following are the aggregate minimum future lease payments under finance leases as of March 31, 2023:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 33,135  
Within year 2     6,052  
Total Minimum Lease Payments     39,187  
Interest Expense relating to future periods     (3,160 )
Present Value of minimum lease payments     36,027  
Less: Current portion     (30,327 )
Current portion of loans and obligations under finance leases        
Non-Current portion   $ 5,700  
Loans and obligations under finance leases; less current maturities        

 

Following are the aggregate future long term debt payments as of March 31, 2023

 

    Amount  
Loan Payments        
Within year 1   $ 167,169  
Within year 2     156,040  
Within year 3     53,503  
Total Loan Payments     376,712  
Less: Current portion     (167,169 )
Non-Current portion   $ 209,543  

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

(Unaudited)