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DEBTS
 12 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
DEBTS

NOTE 15 – DEBTS

 

Notes payable and capital leases consisted of the following:

 

 SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES

       As of June 30, 2023 
           Current   Long-Term 
Name      Total   Maturities   Maturities 
                 
D&O Insurance  (1)  $89,823   $89,823   $- 
Bank Overdraft Facility  (2)   -    -    - 
Term Finance Facility  (3)   -    -    - 
Loan Payable Bank - Export Refinance  (4)   1,741,493    1,741,493    - 
Loan Payable Bank - Running Finance  (5)   -    -    - 
Loan Payable Bank - Export Refinance II  (6)   1,323,535    1,323,535    - 
Loan Payable Bank - Export Refinance III  (7)   2,438,089    2,438,089    - 
Sale and Leaseback Financing  (8)   321,113    148,264    172,849 
Term Finance Facility  (9)   13,356    13,356    - 
Insurance Financing  (10)   -    -    - 
        5,927,409    5,754,560    172,849 
Subsidiary Finance Leases  (11)   28,330    24,950    3,380 
       $5,955,739   $5,779,510   $176,229 

 

       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 range from 5.0% to 7.9% and 5.0% to 7.0% as of June 30, 2023 and 2022, respectively.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2023 and 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 $379,747. The annual interest rate was 9.5% and 5.5% as of June 30, 2023 and 2022, respectively. The total outstanding balance as of June 30, 2023 and 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 June 30, 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 is Rs. nil or $nil, at June 30, 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% at June 30, 2023 and 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 six months. The total facility amount is Rs. 500,000,000 or $1,741,493 and Rs. 500,000,000 or $2,434,749 at June 30, 2023 and 2022, respectively. The interest rate for the loan was 17.0% and 3.0% at June 30, 2023 and 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. 53,600,000 or $186,688 and Rs. 53,600,000 or $261,005, at June 30, 2023 and 2022, respectively. The balance outstanding at June 30, 2023 and 2022 was Rs. Nil. The interest rate for the loan was 24.9% and 14.0% at June 30, 2023 and 2022, respectively.

 

These facilities require NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1. As of June 30, 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 six months. The total facility amount is Rs. 380,000,000 or $1,323,535 and Rs. 380,000,000 or $1,850,409, at June 30, 2023 and 2022, respectively. The interest rate for the loan was 18.0% and 3.0% at June 30, 2023 and 2022, respectively.

 

During the loan tenure, 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 June 30, 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 $3,134,687 and Rs. 900,000,000 or $4,382,548, at June 30, 2023 and 2022, respectively. NetSol PK used Rs. 700,000,000 or $2,438,089 and Rs. 700,000,000 or $3,408,648, at June 30, 2023 and 2022, respectively. The interest rate for the loan was 18.0% and 3.0% at June 30, 2023 and 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 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. 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 ranging from 9.0% to 16.0% at June 30, 2023 and 2022.

 

(9)In March 2020, the Company’s subsidiary, VLS, entered into a loan agreement with Investec Bank PLC. 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 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 June 30, 2023.

 

(10)The Company’s subsidiary, VLS, finances Directors’ and Officers’ (“D&O”) liability insurance, and $nil and $96,781 was recorded in current maturities, at June 30, 2023 and 2022, respectively. The interest rate on this financing ranged from 9.7% to 12.7% as of June 30, 2023 and 2022.

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

 

(11)The Company leases various fixed assets under capital lease arrangements expiring in various years through 2024. 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 years ended June 30, 2023 and 2022.

 

Following is the aggregate minimum future lease payments under capital leases as of June 30, 2023:

 

SCHEDULE OF AGGREGATE MINIMUM FUTURE LEASE PAYMENTS UNDER CAPITAL LEASES

   Amount 
Minimum Lease Payments     
Within year 1  $27,363 
Within year 2   3,546 
Total Minimum Lease Payments   30,909 
Interest Expense relating to future periods   (2,579)
Present Value of minimum lease payments   28,330 

Less: Current portion

   (24,950)
Current portion of loans and obligations under finance leases     
Non-Current portion  $3,380 
Loans and obligations under finance leases; less current maturities     

 

Following is the aggregate future long term debt payments, which consists of “Sale and Leasback Financing (8)” and “Term Finance Facility (9)”, as of June 30, 2023:

 

SCHEDULE OF AGGREGATE FUTURE LONG TERM DEBT PAYMENTS

   Amount 
Loan Payments     
Within year 1  $161,620 
Within year 2   158,258 
Within year 3   14,591 
Total Loan Payments   334,469 
Less: Current portion   (161,620)
Non-Current portion  $172,849 

 

 

NETSOL TECHNOLOGIES, INC.

Notes to Consolidated Financial Statements

June 30, 2023 and 2022