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Debts | 3 Months Ended
--- | ---
Sep. 30, 2018
Debt Disclosure [Abstract] |
Debts | NOTE 15 – DEBTS Notes payable and capital leases consisted of the following:
|  |  |  |  | As of September 30, 2018 |
|  |  |  |  |  |  |  | Current |  |  | Long-Term |
Name |  |  |  |  | Total |  |  | Maturities |  |  | Maturities |
D&O Insurance |  |  | (1 | ) |  | $ | 22,475 |  |  | $ | 22,475 |  |  | $ | - |
Bank Overdraft Facility |  |  | (2 | ) |  |  | - |  |  |  | - |  |  |  | - |
Loan Payable Bank - Export Refinance |  |  | (3 | ) |  |  | 4,043,018 |  |  |  | 4,043,018 |  |  |  | - |
Loan Payable Bank - Running Finance |  |  | (4 | ) |  |  | - |  |  |  | - |  |  |  | - |
Loan Payable Bank - Export Refinance II |  |  | (5 | ) |  |  | 2,830,112 |  |  |  | 2,830,112 |  |  |  | - |
Loan Payable Bank - Running Finance II |  |  | (6 | ) |  |  | 1,212,905 |  |  |  | 1,212,905 |  |  |  | - |
|  |  |  |  |  |  | 8,108,510 |  |  |  | 8,108,510 |  |  |  | - |
Subsidiary Capital Leases |  |  | (7 | ) |  |  | 621,845 |  |  |  | 325,165 |  |  |  | 296,680 |
|  |  |  |  |  | $ | 8,730,355 |  |  | $ | 8,433,675 |  |  | $ | 296,680 |
|  |  |  |  | As of June 30, 2018 |
|  |  |  |  |  |  |  | Current |  |  | Long-Term |
Name |  |  |  |  | Total |  |  | Maturities |  |  | Maturities |
D&O Insurance |  |  | (1 | ) |  | $ | 69,578 |  |  | $ | 69,578 |  |  | $ | - |
Bank Overdraft Facility |  |  | (2 | ) |  |  | - |  |  |  | - |  |  |  | - |
Loan Payable Bank - Export Refinance |  |  | (3 | ) |  |  | 4,107,451 |  |  |  | 4,107,451 |  |  |  | - |
Loan Payable Bank - Running Finance |  |  | (4 | ) |  |  | - |  |  |  | - |  |  |  | - |
Loan Payable Bank - Export Refinance II |  |  | (5 | ) |  |  | 2,875,216 |  |  |  | 2,875,216 |  |  |  | - |
Loan Payable Bank - Running Finance II |  |  | (6 | ) |  |  | 1,232,235 |  |  |  | 1,232,235 |  |  |  | - |
|  |  |  |  |  |  | 8,284,480 |  |  |  | 8,284,480 |  |  |  | - |
Subsidiary Capital Leases |  |  | (7 | ) |  |  | 642,035 |  |  |  | 311,439 |  |  |  | 330,596 |
|  |  |  |  |  | $ | 8,926,515 |  |  | $ | 8,595,919 |  |  | $ | 330,596 |
(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 5.25% to 6.48% as of September 30, 2018 and June 30, 2018. (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 $389,610. The annual interest rate was 5.12% as of September 30, 2018. Total outstanding balance as of September 30, 2018 was £Nil. Interest expense for the three months ended September 30, 2018 and 2017 was $Nil and $2,054, respectively. 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 September 30, 2018, NTE was in compliance with this covenant. (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 six months. Total facility amount is Rs. 500,000,000 or $4,043,018 at September 30, 2018 and June 30, 2018. The interest rate for the loan was 3% at September 30, 2018 and June 30, 2018. Interest expense for the three months ended September 30, 2018 and 2017 was $30,508 and $35,898, respectively. (4) The Company’s subsidiary, NetSol PK, has a running finance facility with Askari Bank Limited, secured by NetSol PK’s assets. Total facility amount is Rs. 75,000,000 or $606,453, at September 30, 2018. NetSol PK used Rs. Nil or $Nil, at September 30, 2018. The interest rate for the loan was 10.32% at September 30, 2018. 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 September 30, 2018, 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 six months. Total facility amount is Rs. 350,000,000 or $2,830,112 and Rs. 350,000,000 or $2,875,216, at September 30, 2018 and June 30, 2018, respectively. The interest rate for the loan was 3% at September 30, 2018 and June 30, 2018. Interest expense for the three months ended September 30, 2018 and 2017 was $29,260 and $22,122, respectively. (6) The Company’s subsidiary, NetSol PK, has a running finance facility with Samba Bank Limited, secured by NetSol PK’s assets. Total facility amount is Rs. 150,000,000 or $1,212,905 and Rs. 150,000,000 or $1,232,235, at September 30, 2018 and June 30, 2018, respectively. The interest rate for the loan was 8.43% and 8.14% at September 30, 2018 and June 30, 2018, respectively. Interest expense for the three months ended September 30, 2018 was $25,718 and $44,095, respectively. During the tenure of 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 September 30, 2018, NetSol PK was in compliance with these covenants. (7) The Company leases various fixed assets under capital lease arrangements expiring in various years through 2022. The assets and liabilities under capital 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 capital leases is included in depreciation expense for the three months ended September 30, 2018 and 2017. Following is the aggregate minimum future lease payments under capital leases as of September 30, 2018:
|  | Amount |
Minimum Lease Payments |  |  |  |
Due FYE 9/30/19 |  | $ | 323,855 |
Due FYE 9/30/20 |  |  | 255,483 |
Due FYE 9/30/21 |  |  | 105,029 |
Due FYE 9/30/22 |  |  | 470 |
Total Minimum Lease Payments |  |  | 684,837 |
Interest Expense relating to future periods |  |  | (62,992 | )
Present Value of minimum lease payments |  |  | 621,845 |
Less: Current portion |  |  | (325,165 | )
Non-Current portion |  | $ | 296,680 |

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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