NETSOL TECHNOLOGIES INC

Previous wording

The following discussion is intended to assist in an understanding of the Company’s financial position and results of operations for the three and nine months ended March 31, 2024. The following discussion should be read in conjunction with the information included within our Annual Report on Form 10-K for the year ended June 30, 2023, and the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

The following discussion is intended to assist in an understanding of the Company’s financial position and results of operations for the three months ended September 30, 2024. The following discussion should be read in conjunction with the information included within our Annual Report on Form 10-K for the year ended June 30, 2024, and the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Our website is located atwww.netsoltech.com, and our investor relations website is located athttps://ir.netsoltech.com. The following filings are available through our investor relations website after we file with the SEC: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and our Proxy Statements for our annual meetings of stockholders. These filings are also available for download free of charge on our investor relations website. We also provide a link to the section of the SEC’s website atwww.sec.govthat has all of our public filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, our Proxy Statements and other ownership related filings. Further, a copy of this Quarterly Report on Form 10-Q is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

Current wording

Our website is located athttps://netsoltech.com/, and our investor relations website is located athttps://ir.netsoltech.com. The following filings are available through our investor relations website after we file with the SEC: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and our Proxy Statements for our annual meetings of stockholders. These filings are also available for download free of charge on our investor relations website. We also provide a link to the section of the SEC’s website atwww.sec.govthat has all of our public filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, our Proxy Statements and other ownership related filings. Further, a copy of this Quarterly Report on Form 10-Q is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

Previous wording

Our primary sources of revenues have been licensing, subscriptions, modification, enhancement and support of our suite of financial applications, under the brand name NFS Ascent® for leading businesses in the global finance and leasing space. With constant innovation being a major part of our DNA, we have enabled NFS Ascent® deployment on the cloud with several implementations already live and some underway. This shift to the cloud will enable our new customers to opt for a subscription-based pricing model rather than the traditional licensing model.

Current wording

Our primary sources of revenues have been licensing, subscriptions, modification, enhancement and support of our suite of financial applications, under the brand name Transcend™ Finance (formerly called NFS Ascent®) for leading businesses in the global finance and leasing space.

Previous wording

Founded in 1997, NetSol is headquartered in Los Angeles County, California. While the Company follows a global strategy for sales and delivery of its portfolio of solutions and services, it continues to maintain regional offices in the following locations:

Current wording

Founded in 1997, NETSOL is headquartered in Encino, California. While the Company follows a global strategy for sales and delivery of its portfolio of solutions and services, it continues to maintain regional offices in the following locations:

Previous wording

We believe that our strong technology solutions offer our customers a return on their investment and allows us to thrive in a hyper competitive and mature global marketplace. Our solutions are bolstered by our people. We believe that people are the drivers of success; therefore, we invest heavily in our hiring, training and retention of outstanding staff to ensure not only successful selling, but also the ongoing satisfaction of our clients. Taken together, this “selling and attentive servicing” approach creates a distinctive advantage for us and a unique value for our customers. We continue to underpin our proven and effective business model which is a combination of careful cost arbitrage, subject matter expertise, domain experience, scalability and proximity with our global and regional customers.

Current wording

We believe that our strong technology solutions offer our customers a return on their investment and allows us to thrive in a hyper competitive and mature global marketplace. Our solutions are bolstered by our people. We believe that people are the drivers of success; therefore, we invest heavily in our hiring, training and retention of top-notch staff to ensure not only successful selling, but also the ongoing satisfaction of our clients. Taken together, this “selling and attentive servicing” approach creates a distinctive advantage for us and a unique value for our customers. We continue to underpin our proven and effective business model which is a combination of careful cost arbitrage, subject matter expertise, domain experience, scalability and proximity with our global and regional customers.

Previous wording

Covering the complete finance and leasing cycle starting from quotation origination through contract settlements, NFS Ascent® is designed and developed for a highly flexible setting and can deal with multinational, multi-company, multi-asset, multi-lingual, multi-distributor and multi-manufacturer environments. The solution fully automates the entire financing/leasing cycle for companies of any size, including those with multi-billion-dollar portfolios. NFS Ascent®empowers financial institutions to effectively manage their complex lending portfolios, enabling them to thrive in hyper-competitive global markets.

Current wording

Covering the complete finance and leasing lifecycle starting from quotation origination through contract settlements, our products are designed and developed for highly flexible settings and are capable of dealing with multinational, multi-company, multi-asset, multi-lingual, multi-distributor and multi-manufacturer environments. Our solutions empower financial institutions to effectively manage their complex lending portfolios, enabling them to thrive in hyper-competitive global markets.

Previous wording

In addition to traditional lending companies, Hubex can also streamline the operations of dealerships, vendors, and consultants through an API library. With a ready-to-use service, Hubex makes it easy for businesses to seamlessly connect with multiple APIs and achieve their desired outcomes. Pre-integrated services in the Hubex library include, but are not limited to, payment processing, bank account authentication, finance and insurance products, fraud check, KYC service, driver license verification, address validation, vehicle valuation and notification service.

Current wording

Hubex™ is an API library that enables companies to standardize all their API integration procedures across multiple API services through a single integration. In addition to traditional lending companies, Hubex™ can also streamline the operations of dealerships, vendors and consultants. With a ready-to-use service, Hubex™ makes it easy for businesses to seamlessly connect with multiple APIs and achieve their desired outcomes. Pre-integrated services in the Hubex™ library include, but are not limited to, payment processing, bank account authentication, finance and insurance products, fraud check, know your customer (KYC) service, driver license verification, address validation, vehicle valuation and notification service.

Previous wording

License fees for the three months ended March 31, 2024 were $558,340 compared to $1,982,985 for the three months ended March 31, 2023 reflecting a decrease of $1,424,645 with a decrease in constant currency of $1,406,271. During the three months ended March 31, 2024, we recognized approximately $465,000 related to the additional sale of our NFS Ascent® CMS software to a renowned German auto manufacturer based in China. During the three months ended March 31, 2023, we recognized approximately $1,918,000 related to a new NFS Ascent® agreement with Kubota in Australia.

Current wording

License fees for the three months ended September 30, 2024 were $1,229 compared to $1,280,449 for the three months ended September 30, 2023 reflecting a decrease of $1,279,220 with a decrease in constant currency of $1,279,251. During the three months ended September 30, 2023, we recognized approximately $1,142,000 related to the license renewal with an existing customer.

Previous wording

Subscription and support fees for the three months ended March 31, 2024 were $7,140,358 compared to $6,656,082 for the three months ended March 31, 2023 reflecting an increase of $484,276 with an increase in constant currency of $534,352. Subscription and support fees begin once a customer has “gone live” with our product. Subscription and support fees are recurring in nature, and we anticipate these fees to gradually increase as we implement both our NFS legacy products and NFS Ascent®.

Current wording

Subscription and support fees for the three months ended September 30, 2024 were $8,192,471 compared to $6,512,243 for the three months ended September 30, 2023 reflecting an increase of $1,680,228 with an increase in constant currency of $1,625,032. The increase includes a one-time catch up of approximately $639,000 upon signing a new contract with an existing customer in China. Subscription and support fees begin once a customer has “gone live” with our product. Subscription and support fees are recurring in nature, and we anticipate these fees to gradually increase as we implement both our NFS legacy products and NFS Ascent®.

Previous wording

Services income for the three months ended March 31, 2024 was $7,765,818 compared to $4,867,322 for the three months ended March 31, 2023 reflecting an increase of $2,898,496 with an increase in constant currency of $2,968,472. The increase is due to the increase in fees associated with current implementations.

Current wording

Services income for the three months ended September 30, 2024 was $6,404,798 compared to $6,449,489 for the three months ended September 30, 2023 reflecting a decrease of $44,691 with a decrease in constant currency of $147,175.

Previous wording

The gross profit was $7,474,820, for the three months ended March 31, 2024 compared with $4,705,029 for the three months ended March 31, 2023. This is an increase of $2,769,791 with an increase in constant currency of $2,524,063. The gross profit percentage for the three months ended March 31, 2024 also increased to 48.3% from 34.8% for the three months ended March 31, 2023. The cost of sales was $7,989,696 for the three months ended March 31, 2024 compared to $8,801,360 for the three months ended March 31, 2023 for a decrease of $811,664 and on a constant currency basis a decrease of $427,511. As a percentage of sales, cost of sales decreased from 65.2% for the three months ended March 31, 2023 to 51.7% for the three months ended March 31, 2024.

Current wording

The gross profit was $6,564,112, for the three months ended September 30, 2024 compared with $6,162,017 for the three months ended September 30, 2023. This is an increase of $402,095 with an increase in constant currency of $523,754. The gross profit percentage for the three months ended September 30, 2024 also increased to 45.0% from 43.3% for the three months ended September 30, 2023. The cost of sales was $8,034,386 for the three months ended September 30, 2024 compared to $8,080,164 for the three months ended September 30, 2023 for a decrease of $45,778 and on a constant currency basis a decrease of $303,414. As a percentage of sales, cost of sales decreased from 56.7% for the three months ended September 30, 2023 to 55.0% for the three months ended September 30, 2024.

Previous wording

Salaries and consultant fees decreased by $649,904 from $6,453,814 for the three months ended March 31, 2023 to $5,803,910 for the three months ended March 31, 2024 and on a constant currency basis decreased by $377,178. As a percentage of sales, salaries and consultant expense decreased from 47.8% for the three months ended March 31, 2023 to 37.5% for the three months ended March 31, 2024.

Current wording

Salaries and consultant fees increased by $245,591 from $5,958,143 for the three months ended September 30, 2023 to $6,203,734 for the three months ended September 30, 2024 and on a constant currency basis increased by $48,406. The increase is due to annual salary raises. As a percentage of sales, salaries and consultant expense increased from 41.8% for the three months ended September 30, 2023 to 42.5% for the three months ended September 30, 2024.

Previous wording

Depreciation and amortization expense decreased to $250,126 compared to $602,829 for the three months ended March 31, 2023 or a decrease of $352,703 and on a constant currency basis a decrease of $334,639. The decrease is primarily attributed to the full amortization of capitalized software costs in the quarter ending March 31, 2024.

Current wording

Depreciation and amortization expense decreased to $228,550 compared to $392,983 for the three months ended September 30, 2023 or a decrease of $164,433 and on a constant currency basis a decrease of $173,914.

Previous wording

Operating expenses were $6,156,917 for the three months ended March 31, 2024 compared to $5,635,464, for the three months ended March 31, 2023 for an increase of $521,453 and on a constant currency basis an increase of $692,778. As a percentage of sales, it decreased from 41.7% to 39.8%. The increase in operating expenses was primarily due to increases in selling and marketing expenses, salaries and wages and other general and administrative expenses.

Current wording

Operating expenses were $7,324,270 for the three months ended September 30, 2024 compared to $5,811,388, for the three months ended September 30, 2023 for an increase of $1,512,882 and on a constant currency basis an increase of $1,345,545. As a percentage of sales, it increased from 40.8% to 50.2%. The increase in operating expenses was primarily due to increases in selling and marketing expenses, salaries and wages, professional services, provision for doubtful accounts, and other general and administrative expenses.

Previous wording

General and administrative expenses were $3,840,146 for the three months ended March 31, 2024 compared to $3,509,212 for the three months ended March 31, 2023 or an increase of $330,934 and on a constant currency basis an increase of $406,122. During the three months ended March 31, 2024, salaries increased by approximately $214,275 and increased $265,787 on a constant currency basis, and other general and administrative expenses increased approximately $116,659 or increased by $140,335 on a constant currency basis.

Current wording

General and administrative expenses were $4,534,675 for the three months ended September 30, 2024 compared to $3,586,301 for the three months ended September 30, 2023 or an increase of $948,374 and on a constant currency basis an increase of $848,669. During the three months ended September 30, 2024, salaries increased by approximately $439,044 and increased $385,664 on a constant currency basis, and other general and administrative expenses increased approximately $99,770 or increased by $69,090 on a constant currency basis.

Previous wording

Research and development cost was $345,582 for the three months ended March 31, 2024 compared to $302,262, for the three months ended March 31, 2023 for an increase of $43,320 and on a constant currency basis an increase of $67,526.

Current wording

Research and development cost was $359,949 for the three months ended September 30, 2024 compared to $378,419, for the three months ended September 30, 2023 for a decrease of $18,470 and on a constant currency basis a decrease of $33,790.

Previous wording

Income from operations was $1,317,903 for the three months ended March 31, 2024 compared to a loss of $930,435 for the three months ended March 31, 2023. This represents an increase in income from operations of $2,248,338 with an increase in income from operations of $1,831,285 on a constant currency basis for the three months ended March 31, 2024 compared with the three months ended March 31, 2023. As a percentage of sales, income from operations was 8.5% for the three months ended March 31, 2024 compared to loss of 6.9% for the three months ended March 31, 2023.

Current wording

Loss from operations was $760,158 for the three months ended September 30, 2024 compared to income from operations of $350,629 for the three months ended September 30, 2023. This represents an increase in loss of $1,110,787 with an increase in loss of $821,791 on a constant currency basis for the three months ended September 30, 2024 compared with the three months ended September 30, 2023. As a percentage of sales, loss from operations was 5.2% for the three months ended September 30, 2024 compared to income from operations of 2.5% for the three months ended September 30, 2023.

Previous wording

Other expense was $855,464 for the three months ended March 31, 2024 compared to other income of $5,400,684 for the three months ended March 31, 2023. This represents a decrease in other income of $6,256,148 with a decrease of $6,318,621 on a constant currency basis. The decrease is primarily due to the foreign currency exchange transactions. The majority of the contracts with NetSol PK are either in U.S. dollars or Euros; therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the value of the PKR compared to the U.S. dollar and the Euro. During the three months ended March 31, 2024, we recognized a loss of $963,887 in foreign currency exchange transactions compared to a gain of $5,385,591 for the three months ended March 31, 2023. During the three months ended March 31, 2024, the value of the U.S. dollar and the Euro decreased 0.6% and 2.8%, compared to the PKR. During the three months ended March 31, 2023, the value of the U.S. dollar increased 25.3% and the Euro increased 27.3%, compared to the PKR.

Current wording

Other income was $1,207,684 for the three months ended September 30, 2024 compared to $62,329 for the three months ended September 30, 2023. This represents an increase of $1,145,355 with an increase of $1,095,873 on a constant currency basis. The increase is primarily due to the foreign currency exchange transactions and interest income. The majority of the contracts with NetSol PK are either in U.S. dollars or Euros; therefore, the currency fluctuations will lead to foreign currency exchange gains or losses depending on the value of the PKR compared to the U.S. dollar and the Euro. During the three months ended September 30, 2024, we recognized a gain of $542,545 in foreign currency exchange transactions compared to a loss of $134,253 for the three months ended September 30, 2023. During the three months ended September 30, 2024, the value of the U.S. dollar decreased 0.2% and the Euro increased 3.9%, compared to the PKR. During the three months ended September 30, 2023, the value of the U.S. dollar increased 0.2% and the Euro decreased 2.6%, compared to the PKR. During the three months ended September 30, 2024, interest income was $769,867 compared to $414,718 for the three months ended September 30, 2023, for an increase of $355,149 and on constant currency basis an increase of $322,401.

Previous wording

For the nine months ended March 31, 2024, the net income attributable to non-controlling interest was $822,993, compared to $1,571,629 for the nine months ended March 31, 2023. The decrease in non-controlling interest is primarily due to the decrease in net income of NetSol PK and an increase in net loss from NetSol Innovation.

Current wording

For the three months ended September 30, 2024, the net income attributable to non-controlling interest was $146,914, compared to $260,173 for the three months ended September 30, 2023. The decrease in non-controlling interest is primarily due to the increase in net loss of NetSol Innovation.

Previous wording

Net income was $327,549 for the three months ended March 31, 2024 compared to $2,544,623 for the three months ended March 31, 2023. This is a decrease in net income of $2,217,074 with a decrease of $2,579,348 on a constant currency basis, compared to the prior year. For the three months ended March 31, 2024, net income per share was $0.03 for basic and diluted shares compared to net income per share of $0.23 for basic and diluted shares for the three months ended March 31, 2023.

Current wording

The net income was $70,795 for the three months ended September 30, 2024 compared to $30,890 for the three months ended September 30, 2023. This is an increase in income of $39,905 with an increase of $153,796 on a constant currency basis, compared to the prior year. For the three months ended September 30, 2024, net income per share was $0.006 for basic and diluted shares compared to net income per share of $0.003 for basic and diluted shares for the three months ended September 30, 2023.

Previous wording

Our reconciliation of the non-GAAP financial measures of adjusted EBITDA and non-GAAP earnings per basic and diluted share to the most comparable GAAP measures for the three and nine months ended March 31, 2024 and 2023 are as follows:

Current wording

Our reconciliation of the non-GAAP financial measures of adjusted EBITDA and non-GAAP earnings per basic and diluted share to the most comparable GAAP measures for the three months ended September 30, 2024 and 2023 are as follows:

Previous wording

Our cash position was $12,338,642 at March 31, 2024, compared to $15,533,254 at June 30, 2023.

Current wording

Our cash position was $24,525,956 at September 30, 2024, compared to $19,127,165 at June 30, 2024.

Previous wording

Net cash used in operating activities was $3,602,677 for the nine months ended March 31, 2024 compared to cash provided by operating activities of $2,564,619 for the nine months ended March 31, 2023. At March 31, 2024, we had current assets of $46,223,061 and current liabilities of $22,894,164. We had accounts receivable of $15,826,210 at March 31, 2024 compared to $11,714,422 at June 30, 2023. We had revenues in excess of billings of $16,412,388 at March 31, 2024 compared to $12,377,677 at June 30, 2023 of which $752,582 and $nil is shown as long term as of March 31, 2024 and June 30, 2023, respectively. The long-term portion was discounted by $73,867 and $nil at March 31, 2024 and June 30, 2023, respectively, using the discounted cash flow method with an interest rate of 7.24%. During the nine months ended March 31, 2024, our revenues in excess of billings were reclassified to accounts receivable pursuant to billing requirements detailed in each contract. The combined totals for accounts receivable and revenues in excess of billings increased by $8,146,499 from $24,092,099 at June 30, 2023 to $32,238,598 at March 31, 2024. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $6,707,937 and $6,047,511, respectively at March 31, 2024. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $6,552,181 and $5,779,510, respectively, at June 30, 2023.

Current wording

Net cash provided by operating activities was $5,517,745 for the three months ended September 30, 2024 compared to $1,663,619 for the three months ended September 30, 2023. At September 30, 2024, we had current assets of $46,533,702 and current liabilities of $22,372,380. We had accounts receivable of $5,936,063 at September 30, 2024 compared to $13,049,614 at June 30, 2024. We had revenues in excess of billings of $13,609,959 at September 30, 2024 compared to $13,638,547 at June 30, 2024 of which $866,388 and $954,029 is shown as long term as of September 30, 2024 and June 30, 2024, respectively. The long-term portion was discounted by $133,867 and $152,446 at September 30, 2024 and June 30, 2024, respectively, using the discounted cash flow method with interest rates ranging from 7.3% to 17.5%. During the three months ended September 30, 2024, our revenues in excess of billings were reclassified to accounts receivable pursuant to billing requirements detailed in each contract. The combined totals for accounts receivable and revenues in excess of billings decreased by $7,142,139 from $26,688,161 at June 30, 2024 to $19,546,022 at September 30, 2024. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $8,414,790 and $6,443,937, respectively at September 30, 2024. Accounts payable and accrued expenses, and current portions of loans and lease obligations amounted to $8,232,342 and $6,276,125, respectively, at June 30, 2024.

Previous wording

The average days sales outstanding for the nine months ended March 31, 2024 and 2023 were 172 and 167 days, respectively, for each period. The days sales outstanding have been calculated by taking into consideration the average combined balances of accounts receivable and revenues in excess of billings.

Current wording

The average days sales outstanding for the three months ended September 30, 2024 and 2023 were 150 and 144 days, respectively, for each period. The days sales outstanding have been calculated by taking into consideration the average combined balances of accounts receivable and revenues in excess of billings.

Previous wording

Net cash used in investing activities was $822,451 for the nine months ended March 31, 2024, compared to $1,421,657 for the nine months ended March 31, 2023. We had purchases of property and equipment of $948,337 compared to $1,575,059 for the nine months ended March 31, 2023.

Current wording

Net cash used in investing activities was $108,632 for the three months ended September 30, 2024, compared to $370,400 for the three months ended September 30, 2023. We had purchases of property and equipment of $100,737 compared to $371,630 for the three months ended September 30, 2023.

Previous wording

Net cash provided by financing activities was $33,612 for the nine months ended March 31, 2024, compared to cash used in financing activities of $517,349 for the nine months ended March 31, 2023. The nine months ended March 31, 2024 and 2023 included the cash inflow of $340,847 and $270,292, respectively, from bank proceeds. During the nine months ended March 31, 2024, we had net payments for bank loans and finance leases of $307,235 compared to $787,641 for the nine months ended March 31, 2023. We are operating in various geographical regions of the world through our various subsidiaries. Those subsidiaries have financial arrangements from various financial institutions to meet both their short and long-term funding requirements. These loans will become due at different maturity dates as described in Note 13 of the financial statements. We are in compliance with the covenants of the financial arrangements and there is no default, which may lead to early payment of these obligations. We anticipate paying back all these obligations on their respective due dates from its own sources.

Current wording

Net cash provided by financing activities was $153,189 for the three months ended September 30, 2024, compared to net cash used in financing activities of $44,474 for the three months ended September 30, 2023. During the three months ended September 30, 2024, we had net payments for bank loans and finance leases of $118,311 compared to $44,474 for the three months ended September 30, 2023. We are operating in various geographical regions of the world through our various subsidiaries. Those subsidiaries have financial arrangements from various financial institutions to meet both their short and long-term funding requirements. These loans will become due at different maturity dates as described in Note 12 of the financial statements. We are in compliance with the covenants of the financial arrangements and there is no default, which may lead to early payment of these obligations. We anticipate paying back all these obligations on their respective due dates from its own sources.

Previous wording

We typically fund the cash requirements for our operations in the U.S. through our license, services, and subscription and support agreements, intercompany charges for corporate services, and through the exercise of options and warrants. As of March 31, 2024, we had approximately $12.3 million of cash, cash equivalents and marketable securities of which approximately $11.8 million is held by our foreign subsidiaries. As of June 30, 2023, we had approximately $15.5 million of cash, cash equivalents and marketable securities of which approximately $13.5 million is held by our foreign subsidiaries.

Current wording

We typically fund the cash requirements for our operations in the U.S. through our license, services, and subscription and support agreements, intercompany charges for corporate services, and through the exercise of options and warrants. As of September 30, 2024, we had approximately $24.5 million of cash, cash equivalents and marketable securities of which approximately $22.8 million is held by our foreign subsidiaries. As of June 30, 2024, we had approximately $19.1 million of cash, cash equivalents and marketable securities of which approximately $18.2 million is held by our foreign subsidiaries.

Previous wording

As a growing company, we have on-going capital expenditure needs based on our short term and long-term business plans. Although our requirements for capital expenses vary from time to time, for the next 12 months, we anticipate needing $1.5 million for APAC, U.S. and Europe new business development activities and infrastructure enhancements, which we expect to provide from current operations.

Current wording

As a growing company, we have on-going capital expenditure needs based on our short term and long-term business plans. Although our requirements for capital expenses vary from time to time, for the next 12 months, we anticipate needing $2.5 million for APAC, U.S. and Europe new business development activities and infrastructure enhancements, which we expect to provide from current operations.

Previous wording

Our UK based subsidiary, NTE, has an approved overdraft facility of £300,000 ($379,747) which 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. The Pakistani subsidiary, NetSol PK has an approved facility for export refinance from Askari Bank Limited amounting to Rupees 500 million ($1,799,014) and a running finance facility of Rupees 53 million ($192,854). NetSol PK has an approved facility for export refinance from another Habib Metro Bank Limited amounting to Rupees 900 million ($3,238,225). These facilities require NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1. NetSol PK also has an approved export refinance facility of Rs. 380 million ($1,367,251) from Samba Bank Limited. During the loan tenure, these two facilities 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.

Current wording

Our UK based subsidiary, NTE, has an approved overdraft facility of £300,000 ($400,000) which 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. The Pakistani subsidiary, NetSol PK has an approved facility for export refinance from Askari Bank Limited amounting to Rupees 500 million ($1,800,504) and a running finance facility of Rupees 53 million ($193,014). NetSol PK has an approved facility for export refinance from another Habib Metro Bank Limited amounting to Rupees 900 million ($3,240,907). These facilities require NetSol PK to maintain a long-term debt equity ratio of 60:40 and the current ratio of 1:1. NetSol PK also has an approved export refinance facility of Rs. 380 million ($1,368,383) from Samba Bank Limited. During the loan tenure, these two facilities 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.