Quarterly report pursuant to Section 13 or 15(d)

DEBTS

v3.24.0.1
DEBTS
 6 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
DEBTS

NOTE 13 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

      As of December 31, 2023  
            Current     Long-Term  
Name     Total     Maturities     Maturities  
                     
D&O Insurance (1)   $ 120,533     $ 120,533     $ -  
Bank Overdraft Facility (2)     -       -       -  
Loan Payable Bank - Export Refinance (3)     1,787,821       1,787,821       -  
Loan Payable Bank - Running Finance (4)     -       -       -  
Loan Payable Bank - Export Refinance II (5)     1,358,744       1,358,744       -  
Loan Payable Bank - Export Refinance III (6)     2,502,951       2,502,951       -  
Sale and Leaseback Financing (7)     256,921       157,394       99,527  
Term Finance Facility (8)     3,392       3,392       -  
Insurance Financing (9)     39,587       39,587       -  
        6,069,949       5,970,422       99,527  
Subsidiary Finance Leases (10)     12,044       12,044       -  
      $ 6,081,993     $ 5,982,466     $ 99,527  

 

      As of June 30, 2023  
            Current     Long-Term  
Name     Total     Maturities     Maturities  
                     
D&O Insurance (1)   $ 89,823     $ 89,823     $ -  
Bank Overdraft Facility (2)     -       -       -  
Loan Payable Bank - Export Refinance (3)     1,741,493       1,741,493       -  
Loan Payable Bank - Running Finance (4)     -       -       -  
Loan Payable Bank - Export Refinance II (5)     1,323,535       1,323,535       -  
Loan Payable Bank - Export Refinance III (6)     2,438,089       2,438,089       -  
Sale and Leaseback Financing (7)     321,113       148,264       172,849  
Term Finance Facility (8)     13,356       13,356       -  
Insurance Financing (9)     -       -       -  
        5,927,409       5,754,560       172,849  
Subsidiary Finance Leases (10)     28,330       24,950       3,380  
      $ 5,955,739     $ 5,779,510     $ 176,229  

 

(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% as of December 31, 2023 and June 30, 2023, respectively.

 

(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 $379,747. The annual interest rate was 9.5% as of December 31, 2023. The total outstanding balance as of December 31, 2023 and June 30, 2023 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, 2023, NTE was in compliance with this covenant.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2023

(Unaudited)

 

(3) 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 $1,787,821 at December 31, 2023 and Rs. 500,000,000 or $1,741,493 at June 30, 2023. The interest rate for the loan was 19.0% and 17.0% at December 31, 2023 and June 30, 2023, respectively.

 

(4) 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 $191,654, at December 31, 2023. The balance outstanding at December 31, 2023 and June 30, 2023 was Rs. Nil. The interest rate for the loan was 23.5 and 24.9% at December 31, 2023 and June 30, 2023, 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 December 31, 2023, NetSol PK was in compliance with this covenant.

 

(5) 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 $1,358,744 and Rs. 380,000,000 or $1,323,535 at December 31, 2023 and June 30, 2023, respectively. The interest rate for the loan was 19.0% and 18.0% at December 31, 2023 and June 30, 2023, 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, 2023, NetSol PK was in compliance with these covenants.

 

(6) 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 $3,218,078 and Rs. 900,000,000 or $3,134,687, at December 31, 2023 and June 30, 2023, respectively. NetSol PK used Rs. 700,000,000 or $2,502,951 and Rs. 700,000,000 or $2,438,089, at December 31, 2023 and June 30, 2023, respectively. The interest rate for the loan was 19.0% and 18.0% at December 31, 2023 and June 30, 2023, respectively.

 

(7) 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, 2023, NetSol PK used Rs. 71,853,193 or $256,921 of which $99,527 was shown as long term and $157,394 as current. As of June 30, 2023, NetSol PK used Rs. 92,194,774 or $321,113 of which $172,849 was shown as long term and $148,264 as current. The interest rate for the loan was 9.0% to 16.0% at December 31, 2023, and June 30, 2023.

 

(8) In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $88,037, for a period of 5 years with monthly payments of £1,349, or $1,708. As of December 31, 2023, the subsidiary has used this facility up to $3,392, which was shown as current. As of June 30, 2023, the subsidiary has used this facility up to $13,356, which was shown as current. The interest rate was 6.14% at December 31, 2023 and June 30, 2023.

 

(9) The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $39,587 and $nil was recorded in current maturities, at December 31, 2023 and June 30, 2023, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of December 31, 2023 and June 30, 2023.

 

(10) 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 months ended December 31, 2023 and 2022.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

December 31, 2023

(Unaudited)

 

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

 

    Amount  
Minimum Lease Payments Within year 1   $ 13,005  
Total Minimum Lease Payments     13,005  
Interest Expense relating to future periods     (961 )
Present Value of minimum lease payments     12,044  
Less: Current portion     (12,044 )
Current portion of loans and obligations under finance leases        
Non-Current portion   $ -  
Loans and obligations under finance leases; less current maturities        

 

Following are the aggregate future long term debt payments as of December 31, 2023 which consists of “Sale and Leaseback Financing (7)” and “Term Finance Facility (8)”.

 

    Amount  
Loan Payments        
Within year 1   $ 160,788  
Within year 2     98,657  
Within year 3     868  
Total Loan Payments     260,313  
Less: Current portion     (160,786 )
Non-Current portion   $ 99,527