Quarterly report pursuant to Section 13 or 15(d)

DEBTS

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DEBTS
 9 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
DEBTS

NOTE 13 – DEBTS

 

Notes payable and finance leases consisted of the following:

 

        As of March 31, 2024  
              Current     Long-Term  
Name       Total     Maturities     Maturities  
                       
D&O Insurance   (1)   $ 237,600     $ 237,600     $ -  
Bank Overdraft Facility   (2)     -       -       -  
Loan Payable Bank - Export Refinance   (3)     1,799,014       1,799,014       -  
Loan Payable Bank - Running Finance   (4)     -       -       -  
Loan Payable Bank - Export Refinance II   (5)     1,367,251       1,367,251       -  
Loan Payable Bank - Export Refinance III   (6)     2,518,620       2,518,620       -  
Sale and Leaseback Financing   (7)     149,141       107,694       41,447  
Term Finance Facility   (8)     -       -       -  
          6,071,626       6,030,179       41,447  
Subsidiary Finance Leases   (9)     106,266       17,332       88,934  
        $ 6,177,892     $ 6,047,511     $ 130,381  

 

        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       -  
          5,927,409       5,754,560       172,849  
Subsidiary Finance Leases   (9)     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 8.6% to 10.9% as of March 31, 2024 and 5.0% to 7.9% as of 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 March 31, 2024. The total outstanding balance as of March 31, 2024 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 March 31, 2024, NTE was in compliance with this covenant.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(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 $1,799,014 at March 31, 2024 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 March 31, 2024 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 $192,854, at March 31, 2024. The balance outstanding at March 31, 2024 and June 30, 2023 was Rs. Nil. The interest rate for the loan was 24.0% and 24.9% at March 31, 2024 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 March 31, 2024, 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 $1,367,251 and Rs. 380,000,000 or $1,323,535 at March 31, 2024 and June 30, 2023, respectively. The interest rate for the loan was 19.0% and 18.0% at March 31, 2024 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 March 31, 2024, 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 $3,238,225 and Rs. 900,000,000 or $3,134,687, at March 31, 2024 and June 30, 2023, respectively. NetSol PK used Rs. 700,000,000 or $2,518,620 and Rs. 700,000,000 or $2,438,089, at March 31, 2024 and June 30, 2023, respectively. The interest rate for the loan was 19.0% and 18.0% at March 31, 2024 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 March 31, 2024, NetSol PK used Rs. 41,450,876 or $149,141 of which $41,447 was shown as long term and $107,694 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 March 31, 2024, 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 March 31, 2024, the subsidiary has paid this facility in full. 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 March 31, 2024 and June 30, 2023.

 

(9) The Company leases various fixed assets under finance lease arrangements expiring in various years through 2028. 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 March 31, 2024 and 2023.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(Unaudited)

 

Following are the aggregate minimum future lease payments under finance leases as of March 31, 2024:

 

    Amount  
Minimum Lease Payments        
Within year 1   $ 29,213  
Within year 2     22,805  
Within year 3     88,023  
Total Minimum Lease Payments     140,041  
Interest Expense relating to future periods     (33,775 )
Present Value of minimum lease payments     106,266  
Less: Current portion     (17,332 )
Non-Current portion   $ 88,934  

 

Following are the aggregate future long term debt payments as of March 31, 2024 which consists of “Sale and Leaseback Financing (7)” and “Term Finance Facility (8)”.

 

    Amount  
Loan Payments        
Within year 1   $ 107,696  
Within year 2     41,445  
Total Loan Payments     149,141  
Less: Current portion     (107,694 )
Non-Current portion   $ 41,447