| SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES |
Notes
payable and capital leases consisted of the following:
SCHEDULE OF COMPONENTS OF NOTES PAYABLE AND CAPITAL LEASES
| | |
| |
As
of June 30, 2026 | |
| | |
| |
| | |
Current | | |
Long-Term | |
| Name | |
| |
Total | | |
Maturities | | |
Maturities | |
| | |
| |
| | |
| | |
| |
| D&O Insurance | |
(1) | |
$ | 121,043 | | |
$ | 121,043 | | |
$ | - | |
| Line of Credit | |
(2) | |
| - | | |
| - | | |
| - | |
| Bank Overdraft Facility | |
(3) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance | |
(4) | |
| 1,798,302 | | |
| 1,798,302 | | |
| - | |
| Loan Payable Bank - Running Finance | |
(5) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance II | |
(6) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance III | |
(7) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance IV | |
(8) | |
| 1,366,710 | | |
| 1,366,710 | | |
| - | |
| Loan Payable Bank - Export Refinance V | |
(9) | |
| 4,675,586 | | |
| 4,675,586 | | |
| - | |
| Sale and Leaseback
Financing | |
(10) | |
| 354,169 | | |
| 146,062 | | |
| 208,107 | |
| | |
| |
| 8,315,810 | | |
| 8,107,703 | | |
| 208,107 | |
| Subsidiary Finance
Leases | |
(11) | |
| 84,342 | | |
| 79,467 | | |
| 4,875 | |
| | |
| |
$ | 8,400,152 | | |
$ | 8,187,170 | | |
$ | 212,982 | |
| | |
| |
As
of June 30, 2025 | |
| | |
| |
| | |
Current | | |
Long-Term | |
| Name | |
| |
Total | | |
Maturities | | |
Maturities | |
| | |
| |
| | |
| | |
| |
| D&O Insurance | |
(1) | |
$ | 119,542 | | |
$ | 119,542 | | |
$ | - | |
| Line of Credit | |
(2) | |
| 405,000 | | |
| 405,000 | | |
| - | |
| Bank Overdraft Facility | |
(3) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance | |
(4) | |
| 1,759,634 | | |
| 1,759,634 | | |
| - | |
| Loan Payable Bank - Running Finance | |
(5) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance II | |
(6) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance III | |
(7) | |
| - | | |
| - | | |
| - | |
| Loan Payable Bank - Export Refinance IV | |
(8) | |
| 1,337,322 | | |
| 1,337,322 | | |
| - | |
| Loan Payable Bank - Export Refinance V | |
(9) | |
| 4,575,048 | | |
| 4,575,048 | | |
| - | |
| Sale and Leaseback
Financing | |
(10) | |
| 76,618 | | |
| 29,660 | | |
| 46,958 | |
| | |
| |
| 8,273,164 | | |
| 8,226,206 | | |
| 46,958 | |
| Subsidiary Finance
Leases | |
(11) | |
| 101,505 | | |
| 13,855 | | |
| 87,650 | |
| | |
| |
$ | 8,374,669 | | |
$ | 8,240,061 | | |
$ | 134,608 | |
| (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 rates on these financings range from 7.4% to 7.8% and 8.4% to 11.6% as of June 30, 2026 and 2025, respectively. |
NETSOL
TECHNOLOGIES, INC.
Notes
to Consolidated Financial Statements
June
30, 2026 and 2025
| (2) | | The Company has
an uncommitted discretionary demand line of credit up to an aggregate amount of $1,000,000 with HSBC, secured by a lien on the Company’s
assets. The annual interest rate was 8.0% and 7.75% as of June 30, 2026 and 2025, respectively. The total outstanding balance as of June
30, 2026 and 2025, was $nil and $405,000, respectively. |
| (3) | | 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 8.0% and 8.5% as of June 30, 2026 and 2025, respectively. The total outstanding balance as of
June 30, 2026 and 2025 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, 2026, NTE
was in compliance with this covenant. |
| (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. 600,000,000 or $2,157,963 and Rs. 600,000,000 or $2,111,561 at June
30, 2026 and 2025, respectively. NetSol PK used Rs. 500,000,000 or $1,798,302 at June 30, 2026 and Rs. 500,000,000 or $1,759,634 at June
30, 2025. The interest rate for the loan was 4.5% and 8.0% at June 30, 2026 and 2025, 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. 4,050,937 or $14,570 and Rs. 4,050,937 or $14,256, at June 30, 2026 and 2025, respectively. The balance outstanding at
June 30, 2026 and 2025 was Rs. Nil. The interest rate for the loan was 13.8% and 13.2% at June 30, 2026 and 2025, respectively. |
| (6) | | The Company’s
subsidiary, NetSol PK, has an export refinance facility with Bank Al-Habib Limited, secured by NetSol PK’s assets. This is a revolving
loan that matures every six months. The total facility amount is Rs. 400,000,000 or $1,438,642 at June 30, 2026. NetSol PK has not used
this facility at June 30, 2026. The interest rate for the loan was 4.5% at June 30, 2026. |
| (7) | | The Company’s
subsidiary, NetSol PK, has an export refinance facility with Bank of Punjab, secured by NetSol PK’s assets. This is a revolving
loan that matures every six months. The total facility amount is Rs. 200,000,000 or $719,321 at June 30, 2026. NetSol PK has not used
this facility at June 30, 2026. The interest rate for the loan was 4.5% at June 30, 2026. |
| | 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, 2026, NetSol PK was in
compliance with this covenant. |
| (8) | | 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 $1,366,710 and Rs. 380,000,000 or $1,337,322, at
June 30, 2026 and 2025, respectively. NetSol PK used Rs. 380,000,000 or $1,366,710 and Rs. 380,000,000 or $1,337,322, at June 30, 2026
and 2025, respectively. The interest rate for the loan was 4.5% and 8.0% at June 30, 2026 and 2025, 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, 2026, NetSol PK was in
compliance with these covenants. |
| (9) | | 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 six months. The total facility amount is Rs. 1,300,000,000 or $4,675,586 and Rs. 1,300,000,000 or $4,575,048,
at June 30, 2026 and 2025, respectively. NetSol PK used Rs. 1,300,000,000 or $4,675,586 and Rs. 1,300,000,000 or $4,575,048, at June
30, 2026 and 2025, respectively. The interest rate for the loan was 4.5% and 8.0% at June 30, 2026 and 2025, respectively. |
| (10) | | 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, 2026, NetSol PK used Rs. 98,473,095 or $354,169 of which $208,107 was shown as long-term and $146,062 as current.
As of June 30, 2025, NetSol PK used Rs. 21,771,042 or $76,618 of which $46,958 was shown as long-term and $29,660 as current. The interest
rate for the loan ranged between 11.4% and 12.3% at June 30, 2026. The interest rate for the loan ranged between 12.3% and 24.2% at June
30, 2025. |
NETSOL
TECHNOLOGIES, INC.
Notes
to Consolidated Financial Statements
June
30, 2026 and 2025
| (11) | | The Company leases
various fixed assets under capital lease arrangements expiring in various years through 2029. 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,
2026 and 2025. |
|