Debts (Tables)

12 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Components of Notes Payable and Capital Leases

Notes and leases payable consisted of the following:

		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

		As of June 30, 2017
				Current		Long-Term
Name		Total		Maturities		Maturities
D&O Insurance	(1)	$	87,485	$	87,485	$	-
Bank Overdraft Facility	(2)		221,379		221,379		-
Loan Payable Bank - Export Refinance	(3)		4,776,461		4,776,461		-
Loan Payable Bank - Export Refinance II	(5)		1,910,585		1,910,585		-
Loan Payable Bank - Running Finance II	(6)		2,865,877		2,865,877		-
			9,861,787		9,861,787		-
Subsidiary Capital Leases	(7)		727,770		361,008		366,762
		$	10,589,557	$	10,222,795	$	366,762

(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 these financings range from 5.25% to 6.48% and from 4.8% to 7.69% as of June 30, 2018 and 2017, 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 $394,737. The annual interest rate was 4.75% as of June 30, 2018. Total outstanding balance as of June 30, 2018 was nil. Interest expense for years ended June 30, 2018 and 2017 was $8,788 and $9,077, 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, 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 $4,107,451 at June 30, 2018 and 2017. The interest rate for the loan was 3% at June 30, 2018 and 2017, respectively. Interest expense for the years ended June 30, 2018 and 2017 was $126,800 and $121,306, 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 $616,118, at June 30, 2018. NetSol PK used Rs. Nil or $Nil, at June 30, 2018 and 2017, respectively. The interest rate for the loan was 8.16% at June 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 June 30, 2018, NetSol PK was in compliance with these covenants.

(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 $2,875,216 and Rs. 200,000,000 or $1,910,585, at June 30, 2018 and 2017, respectively. The interest rate for the loan was 3% at June 30, 2018 and 2017. Interest expense for the years ended June 30, 2018 and 2017 was $92,262 and $2,511, 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 $1,232,235 and Rs. 300,000,000 or $2,865,877, at June 30, 2018 and 2017, respectively. The interest rate for the loan was 8.47% and 8.13% at June 30, 2018 and 2017, respectively. Interest expense for the years ended June 30, 2018 and 2017 was $125,830 and $78,251, 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 June 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 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, 2018 and 2017.

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, 2018:

	Amount
Minimum Lease Payments
Due FYE 6/30/19	$	341,990
Due FYE 6/30/20		251,970
Due FYE 6/30/21		103,835
Due FYE 6/30/22		1,885
Total Minimum Lease Payments		699,680
Interest Expense relating to future periods		(57,645	)
Present Value of minimum lease payments		642,035
Less: Current portion		(311,439	)
Non-Current portion	$	330,596