Debts (Tables)

12 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Components of Notes Payable and Capital Leases

Notes and leases payable consisted of the following:

		As of June 30, 2015
				Current		Long-Term
Name		Total		Maturities		Maturities
D&O Insurance	(1)	$	79,872	$	79,872	$	-
Habib Bank Line of Credit	(2)		-		-		-
Bank Overdraft Facility	(3)		-		-		-
HSBC Loan	(4)		447,161		322,349		124,812
Term Finance Facility	(5)		-		-		-
Loan Payable Bank	(6)		2,892,961		2,892,961		-
Loan From Related Party	(7)		129,979		129,979		-
			3,549,973		3,425,161		124,812
Subsidiary Capital Leases	(8)		833,872		471,192		362,680
		$	4,383,845	$	3,896,353	$	487,492

		As of June 30, 2014
				Current		Long-Term
Name		Total		Maturities		Maturities
D&O Insurance	(1)	$	54,547	$	54,547	$	-
Habib Bank Line of Credit	(2)		2,438,844		2,438,844		-
Bank Overdraft Facility	(3)		-		-		-
HSBC Loan	(4)		835,899		346,138		489,761
Term Finance Facility	(5)		632,527		253,011		379,516
Loan Payable Bank	(6)		2,024,087		2,024,087		-
Loan From Related Party	(7)		322,600.00		194,740.00		127,860.00
			6,308,504		5,311,367		997,137
Subsidiary Capital Leases	(8)		1,014,834		479,891		534,943
		$	7,323,338	$	5,791,258	$	1,532,080

(1) The Company finances Directors’ and Officers’ (“D&O”) liability insurance as well as Errors and Omissions (“E&O”) liability insurance, for which the total balances are renewed on an annual basis and as such are recorded in current maturities. The interest rate on the insurance financing was 0.49% and 0.55% as of June 30, 2015 and 2014, respectively.

(2) In April 2008, the Company entered into an agreement with Habib American Bank to secure a line of credit to be collateralized by certificates of deposit held at the bank. The interest rate on this line of credit is variable and was 1.5% as of June 30, 2015 and 2014, respectively. In June 2012, the Company’s subsidiary, NTA, entered into an agreement with Habib American Bank to secure a line of credit up to $500,000 to be collateralized by certificates of deposit of the same value held at the bank. The interest rate on this line of credit is variable and was 1.9% as of June 30, 2015 and 2014, respectively. Combined interest expense for the years ended June 30, 2015 and 2014 was $8,658 and $35,764, respectively.

(3) During the year ended June 30, 2008, the Company’s subsidiary, NTE entered into an overdraft facility with HSBC Bank plc whereby the bank would cover any overdrafts up to £300,000, or approximately $471,550. The annual interest rate was 4.75% as of June 30, 2015 and 2014, 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 June 30, 2015, NTE was in compliance with this covenant.

(4) In October 2011, the Company’s subsidiary, NTE, entered into a loan agreement with HSBC Bank to finance the acquisition of 51% of a controlling interest in Virtual Leasing Services Limited. HSBC Bank guaranteed the loan up to a limit of £1,000,000, or approximately $1,571,833 for a period of 5 years with monthly payments of £18,420, or approximately $28,953. The interest rate was 4% which is 3.5% above the bank sterling base rate. The loan is securitized against debenture comprising of fixed and floating charges over all the assets and undertakings of NTE including all present and future freehold and leasehold property, book and other debts, chattels, goodwill and uncalled capital, both present and future. Interest expense for the years ended June 30, 2015 and 2014 was $47,255 and $70,667, respectively.

This facility requires that NTE’s adjusted tangible net worth would not be less than £600,000. For this purpose, adjusted tangible net worth means shareholders’ funds less intangible assets plus non-redeemable preference shares. In addition, NTE’s cash debt service coverage would not fall below 150% of the aggregate debt service cost. As of June 30, 2015, NTE was in compliance with this covenant.

(5) The Company’s subsidiary, NetSol PK, entered into two different term finance facilities from Askari Bank to finance the construction of a new building. The total aggregate amount of these facilities is Rs. 112,500,000, or approximately $1,084,860 (secured by the first charge of Rs. 580 million or approximately $5.59 million over the land, building and equipment of NetSol PK). The interest rate was 9.79% and 12.39% as of June 30, 2015 and 2014, respectively, which is 2.75% above the six-month Karachi Inter Bank Offering Rate. During the year ended June 30, 2015, NetSol PK paid off the complete liability against this financing.

(6) 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. 300,000,000 or $2,892,961.The interest rate for the loans was 7.5% and 9.4% at June 30, 2015 and 2014, respectively. Interest expense for the year ended June 30, 2015 and 2014 was $146,264 and $169,795, respectively.

Both term and export refinance facilities from Askari Bank Limited amounting to Rupees 300 million ($2.89 million) 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, 2015, NetSol PK was in compliance with this covenant.

(7) In October 2013, the Company’s subsidiary, NTE, entered into a loan agreement with Investec, a related party, to finance VLS. The loan amount was £100,000, or approximately $157,183, for a period of 1 year with monthly payments of £8,676, or approximately $13,637. The interest rate was 4.1%. As of June 30, 2015, NTE has paid the loan in full.

In March 2014, the Company’s subsidiary, VLS, entered into a loan agreement with Investec. The loan amount was £150,000, or approximately $235,775, for a period of two years with annual payments of £75,000, or approximately $117,887. The interest rate was 3.13%. As of June 30, 2015, VLS has used this facility up to $129,979 including interest due, and was shown as a current maturity.

(8) The Company leases various fixed assets under capital lease arrangements expiring in various years through 2018. 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 depreciated over the lesser of their related lease terms or their estimated useful lives and are secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the years ended June 30, 2015 and 2014.

Schedule of Future Payments of Loans

The following table represents future payments of loans described in the above sub notes 1 to 7

	As of
	June 30, 2015
Loan Payments
Due FYE 6/30/16	$	3,425,161
Due FYE 6/30/17		124,812
Total Loan Payments		3,549,973
Less: Current portion		(3,425,161	)
Non-Current portion	$	124,812

Schedule of Aggregate Minimum Future Lease Payments under Capital Leases

Following is the aggregate minimum future lease payments under capital leases for the year ended June 30, 2015:

	Amount
Minimum Lease Payments
Due FYE 6/30/16	$	531,827
Due FYE 6/30/17		307,563
Due FYE 6/30/18		76,621
Total Minimum Lease Payments		916,011
Interest Expense relating to future periods		(82,139	)
Present Value of minimum lease payments		833,872
Less: Current portion		(471,192	)
Non-Current portion	$	362,680