| SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES |
Notes
payable and finance leases consisted of the following:
SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES
| |
|
|
|
|
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. |
|