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DEBTS (Tables)
 3 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

Notes payable and finance leases consisted of the following:

 

      As of September 30, 2022 
          Current   Long-Term 
Name     Total   Maturities   Maturities 
                
D&O Insurance  (1)  $34,344   $34,344   $- 
Bank Overdraft Facility  (2)   -    -    - 
Term Finance Facility  (3)   190,425    190,425    - 
Loan Payable Bank - Export Refinance  (4)   2,192,694    2,192,694    - 
Loan Payable Bank - Running Finance  (5)   -    -    - 
Loan Payable Bank - Export Refinance II  (6)   1,666,447    1,666,447    - 
Loan Payable Bank - Export Refinance III  (7)   3,069,772    3,069,772    - 
Sale and Leaseback Financing  (8)   407,166    144,372    262,794 
Term Finance Facility  (9)   24,348    16,966    7,382 
Insurance Financing  (10)   79,234    79,234    - 
       7,664,430    7,394,254    270,176 
Subsidiary Finance Leases  (11)   54,998    32,718    22,280 
      $7,719,428   $7,426,972   $292,456 

 

      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 7.0% as of September 30, 2022 and June 30, 2022.

 

(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 $333,333. The annual interest rate was 5.5% as of September 30, 2022. The total outstanding balance as of September 30, 2022 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 September 30, 2022, NTE was in compliance with this covenant.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2022

(Unaudited)

 

(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. 43,422,699 or $190,425, at September 30, 2022, which is shown as current. 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% at September 30, 2022 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 $2,192,694 at September 30, 2022 and Rs. 500,000,000 or $2,434,749 at June 30, 2022. The interest rate for the loan was 10% and 3% at September 30, 2022 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 $235,057, at September 30, 2022. The balance outstanding at September 30, 2022 and June 30, 2022 was Rs. Nil. The interest rate for the loan was 17.8% and 14.0% at September 30, 2022 and June 30, 2022, respectively.

 

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, 2022, 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 $1,666,447 and Rs. 380,000,000 or $1,850,409 at September 30, 2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at September 30, 2022 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 September 30, 2022, 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 $3,946,849 and Rs. 900,000,000 or $4,382,548, at September 30, 2022 and June 30, 2022, respectively. NetSol PK used Rs. 700,000,000 or $3,069,772 and Rs. 700,000,000 or $3,408,648, at September 30, 2022 and June 30, 2022, respectively. The interest rate for the loan was 10% and 3% at September 30, 2022 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 September 30, 2022, NetSol PK used Rs. 92,846,015 or $407,166 of which $262,794 was shown as long term and $144,372 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 September 30, 2022, and June 30, 2022.

 

(9)In March 2019, the Company’s subsidiary, VLS, entered into a loan agreement. The loan amount was £69,549, or $77,277, for a period of 5 years with monthly payments of £1,349, or $1,499. As of September 30, 2022, the subsidiary has used this facility up to $24,348, of which $7,382 was shown as long-term and $16,966 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 September 30, 2022 and June 30, 2022.

 

(10)The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and the $79,234 and $96,781 was recorded in current maturities, at September 30, 2022 and June 30, 2022, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of September 30, 2022 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 months ended September 30, 2022 and 2021.
SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

Following is the aggregate minimum future lease payments under finance leases as of September 30, 2022:

 

   Amount 
Minimum Lease Payments     
Within year 1  $37,312 
Within year 2   22,390 
Within year 3   1,058 
Total Minimum Lease Payments   60,760 
Interest Expense relating to future periods   (5,762)
Present Value of minimum lease payments   54,998 
Less: Current portion   (32,718)
Current portion of loans and obligations under finance leases     
Non-Current portion  $22,280 
Loans and obligations under finance leases; less current maturities     
SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

Following is the aggregate future long term debt payments as of September 30, 2022

 

   Amount 
Loan Payments     
Within year 1  $351,765 
Within year 2   164,169 
Within year 3   106,005 
Total Loan Payments   621,939 
Less: Current portion   (351,763)
Non-Current portion  $270,176