Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Dec. 31, 2014 | Feb. 04, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NETSOL TECHNOLOGIES INC | |
Entity Central Index Key | 1039280 | |
Document Type | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -24 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,826,463 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2015 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $13,486,526 | $11,462,695 |
Restricted cash | 90,000 | 2,528,844 |
Accounts receivable, net of allowance of $1,058,214 and $1,088,172 | 7,706,162 | 5,403,165 |
Accounts receivable, net - related party | 2,123,567 | 2,232,610 |
Revenues in excess of billings | 3,098,226 | 2,377,367 |
Other current assets | 2,564,116 | 2,857,879 |
Total current assets | 29,068,597 | 26,862,560 |
Property and equipment, net | 27,543,489 | 29,721,128 |
Intangible assets, net | 26,030,664 | 28,803,018 |
Goodwill | 9,516,568 | 9,516,568 |
Total assets | 92,159,318 | 94,903,274 |
Current liabilities: | ||
Accounts payable and accrued expenses | 4,971,101 | 5,234,887 |
Current portion of loans and obligations under capitalized leases | 3,217,397 | 5,791,258 |
Unearned revenues | 8,141,083 | 3,239,852 |
Common stock to be issued | 721,592 | 347,518 |
Total current liabilities | 17,051,173 | 14,613,515 |
Long term loans and obligations under capitalized leases; less current maturities | 1,082,310 | 1,532,080 |
Total liabilities | 18,133,483 | 16,145,595 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value; 500,000 shares authorized; | ||
Common stock, $.01 par value; 14,500,000 shares authorized; 9,743,850 and 9,150,889 issued and outstanding as of December 31, 2014 and June 30, 2014 | 97,439 | 91,509 |
Additional paid-in-capital | 117,834,686 | 115,394,097 |
Treasury stock | -415,425 | -415,425 |
Accumulated deficit | -38,382,498 | -35,177,303 |
Stock subscription receivable | -2,280,488 | -2,280,488 |
Other comprehensive loss | -16,208,648 | -14,979,223 |
Total NetSol stockholders' equity | 60,645,066 | 62,633,167 |
Non-controlling interest | 13,380,769 | 16,124,512 |
Total stockholders' equity | 74,025,835 | 78,757,679 |
Total liabilities and stockholders' equity | $92,159,318 | $94,903,274 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $1,058,214 | $1,088,172 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 14,500,000 | 14,500,000 |
Common stock, shares issued | 9,743,850 | 9,150,889 |
Common stock, shares outstanding | 9,743,850 | 9,150,889 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net Revenues: | ||||
License fees | $2,100,715 | $455,616 | $3,685,268 | $2,708,183 |
Maintenance fees | 3,329,587 | 2,867,195 | 6,178,228 | 5,247,604 |
Services | 5,567,826 | 3,974,591 | 9,965,783 | 7,294,814 |
Services - related party | 1,354,476 | 1,256,899 | 2,750,476 | 2,224,442 |
Total net revenues | 12,352,604 | 8,554,301 | 22,579,755 | 17,475,043 |
Cost of revenues: | ||||
Salaries and consultants | 4,298,900 | 3,160,760 | 8,415,117 | 6,420,551 |
Travel | 590,353 | 347,670 | 1,012,224 | 736,255 |
Depreciation and amortization | 1,800,753 | 1,120,363 | 3,602,320 | 2,046,678 |
Other | 662,046 | 1,006,465 | 1,336,909 | 1,695,009 |
Total cost of revenues | 7,352,052 | 5,635,258 | 14,366,570 | 10,898,493 |
Gross profit | 5,000,552 | 2,919,043 | 8,213,185 | 6,576,550 |
Operating expenses: | ||||
Selling and marketing | 1,574,955 | 893,781 | 2,707,315 | 1,948,922 |
Depreciation and amortization | 438,003 | 430,947 | 1,018,776 | 857,564 |
General and administrative | 3,911,754 | 2,997,431 | 7,587,510 | 6,404,431 |
Research and development cost | 80,437 | 55,114 | 146,702 | 113,802 |
Total operating expenses | 6,005,149 | 4,377,273 | 11,460,303 | 9,324,719 |
Loss from operations | -1,004,597 | -1,458,230 | -3,247,118 | -2,748,169 |
Other income and (expenses) | ||||
Loss on sale of assets | -69,543 | -175,237 | -80,595 | -189,032 |
Interest expense | -47,265 | -92,738 | -120,358 | -161,955 |
Interest income | 106,078 | 39,931 | 163,997 | 72,785 |
Gain (loss) on foreign currency exchange transactions | -421,082 | 96,039 | -341,862 | 1,207,462 |
Other income | 18,162 | 59 | 18,539 | 665 |
Total other income (expenses) | -413,650 | -307,786 | -360,279 | 763,277 |
Net loss before income taxes | -1,418,247 | -1,766,016 | -3,607,397 | -1,984,892 |
Income tax provision | -87,683 | -29,270 | -127,759 | -40,401 |
Net loss from continuing operations | -1,505,930 | -1,795,286 | -3,735,156 | -2,025,293 |
Loss from discontinued operations | -145,527 | -378,468 | ||
Net loss | -1,505,930 | -1,940,813 | -3,735,156 | -2,403,761 |
Non-controlling interest | 138,764 | 313,905 | 529,961 | -320,262 |
Net loss attributable to NetSol | -1,367,166 | -1,626,908 | -3,205,195 | -2,724,023 |
Amount attributable to NetSol common shareholders: | ||||
Loss from continuing operations | -1,367,166 | -1,481,381 | -3,205,195 | -2,345,555 |
Loss from discontinued operations | -145,527 | -378,468 | ||
Net loss | ($1,367,166) | ($1,626,908) | ($3,205,195) | ($2,724,023) |
Net loss per share from continuing operations: | ||||
Basic | ($0.14) | ($0.16) | ($0.34) | ($0.26) |
Diluted | ($0.14) | ($0.16) | ($0.34) | ($0.26) |
Net loss per share from discontinued operations: | ||||
Basic | ($0.02) | ($0.04) | ||
Diluted | ($0.02) | ($0.04) | ||
Net loss per common share | ||||
Basic | ($0.14) | ($0.18) | ($0.34) | ($0.30) |
Diluted | ($0.14) | ($0.18) | ($0.34) | ($0.30) |
Weighted average number of shares outstanding | ||||
Basic | 9,654,334 | 9,056,024 | 9,433,829 | 9,006,015 |
Diluted | 9,654,334 | 9,056,024 | 9,433,829 | 9,006,015 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | ($1,367,166) | ($1,626,908) | ($3,205,195) | ($2,724,023) |
Other comprehensive income (loss): | ||||
Translation adjustment | 1,116,563 | -420,309 | -1,909,466 | -3,843,025 |
Comprehensive income (loss) | -250,603 | -2,047,217 | -5,114,661 | -6,567,048 |
Comprehensive income (loss) attributable to non-controlling interest | 390,434 | -40,980 | -680,041 | -1,261,514 |
Comprehensive income (loss) attributable to NetSol | ($641,037) | ($2,006,237) | ($4,434,620) | ($5,305,534) |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($3,735,156) | ($2,403,761) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 4,621,096 | 3,144,948 |
Provision for bad debts | 259,306 | |
Share of net loss from investment under equity method | 166,648 | |
Loss on sale of assets | 80,595 | 189,032 |
Stock issued for services | 606,536 | 640,247 |
Fair market value of warrants and stock options granted | 311,244 | 158,783 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -2,279,774 | -1,246,995 |
Accounts receivable - related party | 40,907 | -842,503 |
Revenues in excess of billing | -765,672 | 8,612,283 |
Other current assets | 286,838 | 367,741 |
Accounts payable and accrued expenses | 59 | 1,388,473 |
Unearned revenue | 4,857,469 | 2,228,992 |
Net cash provided by operating activities | 4,024,142 | 12,663,194 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -1,772,866 | -6,059,596 |
Sales of property and equipment | 179,904 | 78,678 |
Purchase of non-controlling interest in subsidiaries | -577,222 | -17,853 |
Increase in intangible assets | -2,312,919 | |
Net cash used in investing activities | -2,170,184 | -8,311,690 |
Cash flows from financing activities: | ||
Proceeds from sale of common stock | 1,610,000 | |
Proceeds from the exercise of stock options and warrants | 116,400 | 560,500 |
Proceeds from exercise of subsidiary options | 311,709 | |
Restricted cash | 2,438,844 | -660,672 |
Dividend paid by subsidiary to Non controlling interest | -780,106 | -266,343 |
Proceeds from bank loans | 57,405 | 1,276,505 |
Payments on capital lease obligations and loans - net | -2,867,974 | -781,756 |
Net cash provided by financing activities | 574,569 | 439,943 |
Effect of exchange rate changes | -404,696 | -1,084,723 |
Net increase in cash and cash equivalents | 2,023,831 | 3,706,724 |
Cash and cash equivalents, beginning of the period | 11,462,695 | 7,874,318 |
Cash and cash equivalents, end of period | 13,486,526 | 11,581,042 |
Cash paid during the period for: | ||
Interest | 107,418 | 152,239 |
Taxes | 74,850 | 213,957 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Stock issued for the payment of vendors | $210,060 |
Basis_of_Presentation_and_Prin
Basis of Presentation and Principles of Consolidation | 6 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | NOTE 1 – BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION |
The Company designs, develops, markets, and exports proprietary software products to customers in the automobile financing and leasing, banking, healthcare, and financial services industries worldwide. The Company also provides system integration, consulting, and IT products and services in exchange for fees from customers. | |
The consolidated condensed interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. | |
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended June 30, 2014. The Company follows the same accounting policies in preparation of interim reports. Results of operations for the interim periods are not indicative of annual results. | |
The accompanying condensed consolidated financial statements include the accounts of NetSol Technologies, Inc. and subsidiaries (collectively, the “Company”) as follows: | |
Wholly owned Subsidiaries | |
NetSol Technologies Americas, Inc. (“NTA”) | |
NetSol Connect (Private), Ltd. (“Connect”) | |
NetSol Technologies Australia Pty Limited. (“Australia”) | |
NetSol Technologies Europe Limited (“NTE”) | |
NetSol Technologies Limited (“NetSol UK”) | |
NTPK (Thailand) Co. Limited (“NTPK Thailand”) | |
NetSol Technologies Thailand Limited (“NetSol Thai”) | |
NetSol Technologies (Beijing) Co. Ltd. (“NetSol Beijing”) | |
NetSol Omni (Private) Ltd. (“Omni”) | |
NetSol Technologies (GmbH) (“NTG”) | |
Majority-owned Subsidiaries | |
NetSol Technologies, Ltd. (“NetSol PK”) | |
NetSol Innovation (Private) Limited (“NetSol Innovation”) | |
Virtual Lease Services Holdings Limited (“VLSH”) | |
Virtual Lease Services Limited (“VLS”) | |
Virtual Lease Services (Ireland) Limited (“VLSIL”) | |
Vroozi, Inc. (“Vroozi”) – discontinued on March 31, 2014 | |
For comparative purposes, prior year’s condensed consolidated financial statements have been reclassified to conform to report classifications of the current year. |
Accounting_Policies
Accounting Policies | 6 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Accounting Policies | NOTE 2 – ACCOUNTING POLICIES |
Use of Estimates | |
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
New Accounting Pronouncements | |
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360).” ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company’s operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company’s results of operations or financial condition. | |
In May 2014, the (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the Company in the first quarter of its fiscal year ending June 30, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on its consolidated financial statements. | |
In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) (ASU 2014-12). The guidance applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. The Company is currently evaluating the impact of adopting ASU 2014-12 on the Company’s results of operations or financial condition. | |
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern(ASU 2014-15). The guidance in ASU 2014-15 sets forth management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management’s plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. | |
In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement – Extraordinary and Unusual items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (ASU 2015-01). The amendment eliminates from U.S. GAAP the concept of extraordinary items. This guidance is effective for the Company in the first quarter of fiscal 2017. Early adoption is permitted and allows the Company to apply the amendment prospectively or retrospectively. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. |
Earnings_Per_Share
Earnings Per Share | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||
Earnings Per Share | NOTE 3 – EARNINGS PER SHARE | ||||||||||||||||
Basic earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, warrants, and stock awards. All options and warrants were excluded from the diluted loss per share calculation due to their anti-dilution effect. | |||||||||||||||||
The following potential dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive. | |||||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Stock Options | 727,462 | 302,462 | 727,462 | 302,462 | |||||||||||||
Warrants | 163,124 | 163,124 | 163,124 | 163,124 | |||||||||||||
890,586 | 465,586 | 890,586 | 465,586 |
Other_Comprehensive_Income_and
Other Comprehensive Income and Foreign Currency | 6 Months Ended |
Dec. 31, 2014 | |
Other Comprehensive Income And Foreign Currency [Abstract] | |
Other Comprehensive Income and Foreign Currency | NOTE 4 – OTHER COMPREHENSIVE INCOME AND FOREIGN CURRENCY: |
The accounts of NTE, NetSol UK, VLSH and VLS use the British Pound; VLSIL and NTG use the Euro; NetSol PK, Connect, Omni and NetSol Innovation use Pakistan Rupees; NTPK Thailand and NetSol Thai use Thai Baht; Australia uses the Australian dollar; and NetSol Beijing uses Chinese Yuan as the functional currencies. NetSol Technologies, Inc., and its subsidiaries, NTA and Vroozi, use the U.S. dollar as the functional currency. Assets and liabilities are translated at the exchange rate on the balance sheet date, and operating results are translated at the average exchange rate throughout the period. Accumulated translation losses classified as an item of accumulated other comprehensive loss in the stockholders’ equity section of the consolidated balance sheet were $16,208,648 and $14,979,223 as of December 31, 2014 and June 30, 2014, respectively. During the three and six months ended December 31, 2014, comprehensive income (loss) in the consolidated statements of operations included translation income of $726,129 and a loss of $1,229,425, respectively. During the three and six months ended December 31, 2013, comprehensive loss in the consolidated statements of operations included translation losses of $379,329 and $2,581,511, respectively. |
Related_Party_Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 5 – RELATED PARTY TRANSACTIONS |
In November 2004, the Company entered into a joint venture agreement with the Innovation Group called NetSol-Innovation (Pvt) Ltd., (“NetSol-Innovation”), a Pakistani company. NetSol-Innovation provides support services to the Innovation Group. During the three and six months ended December 31, 2014, NetSol-Innovation provided services of $1,354,476 and $2,750,476, respectively. During the three and six months ended December 31, 2013, NetSol-Innovation provided services of $1,256,899 and $2,224,442, respectively. Accounts receivable at December 31, 2014 and June 30, 2014 were $2,123,567 and $2,232,610, respectively. |
Other_Current_Assets
Other Current Assets | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Other Current Assets | NOTE 6 – OTHER CURRENT ASSETS | ||||||||
Other current assets consisted of the following: | |||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Prepaid Expenses | $ | 622,431 | $ | 450,451 | |||||
Advance Income Tax | 944,796 | 918,300 | |||||||
Employee Advances | 61,864 | 46,730 | |||||||
Security Deposits | 144,850 | 189,905 | |||||||
Tender Money Receivable | 63,076 | 81,420 | |||||||
Other Receivables | 280,143 | 645,397 | |||||||
Other Assets | 368,548 | 430,508 | |||||||
Due From Related Party | -1 | 78,408 | 95,168 | ||||||
Total | $ | 2,564,116 | $ | 2,857,879 | |||||
(1) Due from related party as of December 31, 2014 and June 30, 2014 is a receivable from Atheeb NetSol Saudi Company Limited. |
Property_and_Equipment
Property and Equipment | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and Equipment | NOTE 7 - PROPERTY AND EQUIPMENT | ||||||||
Property and equipment consisted of the following: | |||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Office Furniture and Equipment | $ | 2,624,218 | $ | 2,628,814 | |||||
Computer Equipment | 25,899,260 | 27,215,091 | |||||||
Assets Under Capital Leases | 1,804,147 | 1,861,445 | |||||||
Building | 6,068,353 | 6,259,290 | |||||||
Land | 3,249,086 | 3,351,316 | |||||||
Capital Work In Progress | 3,184,387 | 2,812,181 | |||||||
Autos | 994,641 | 999,277 | |||||||
Improvements | 510,573 | 533,102 | |||||||
Subtotal | 44,334,665 | 45,660,516 | |||||||
Accumulated Depreciation | (16,791,176 | ) | (15,939,388 | ) | |||||
Property and Equipment, Net | $ | 27,543,489 | $ | 29,721,128 | |||||
For the three and six months ended December 31, 2014, depreciation expense totaled $1,360,652 and $2,729,359, respectively. Of these amounts, $932,063 and $1,850,955, respectively, are reflected in cost of revenues. For the three and six months ended December 31, 2013, depreciation expense totaled $1,116,347 and $2,113,907, respectively. Of these amounts, $715,871 and $1,327,961, respectively, are reflected in cost of revenues. | |||||||||
The Company’s capital work in progress consists of ongoing enhancements to its facilities and infrastructure necessary to meet expected long term growth needs. Accumulated capitalized interest was $776,463 and $664,614 as of December 31, 2014 and June 30, 2014, respectively. | |||||||||
Following is a summary of fixed assets held under capital leases as of December 31, 2014 and June 30, 2014: | |||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Computers and Other Equipment | $ | 684,941 | $ | 731,354 | |||||
Furniture and Fixtures | 355,037 | 280,184 | |||||||
Vehicles | 764,169 | 849,907 | |||||||
Total | 1,804,147 | 1,861,445 | |||||||
Less: Accumulated Depreciation - Net | (514,566 | ) | (469,336 | ) | |||||
$ | 1,289,581 | $ | 1,392,109 |
Intangible_Assets
Intangible Assets | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Intangible Assets | NOTE 8 – INTANGIBLE ASSETS | ||||||||||||||||
Intangible assets consisted of the following: | |||||||||||||||||
Product Licenses | Customer Lists | Technology | Total | ||||||||||||||
Intangible Assets - June 30, 2014 - Cost | $ | 48,632,368 | $ | 6,052,377 | $ | 242,702 | $ | 54,927,447 | |||||||||
Additions | - | - | - | - | |||||||||||||
Effect of Translation Adjustment | (2,208,657 | ) | - | - | (2,208,657 | ) | |||||||||||
Accumulated Amortization | (20,479,959 | ) | (5,965,465 | ) | (242,702 | ) | (26,688,126 | ) | |||||||||
Net Balance - December 31, 2014 | $ | 25,943,752 | $ | 86,912 | $ | - | $ | 26,030,664 | |||||||||
(A) Product Licenses | |||||||||||||||||
Product licenses include internally developed original license issues, renewals, enhancements, copyrights, trademarks, and trade names. Product licenses are amortized on a straight-line basis over their respective lives, and the unamortized amount of $25,943,752 will be amortized over the next 9.25 years. Amortization expense for the three and six months ended December 31, 2014 was $868,690 and $1,751,365, respectively. Amortization expense for the three and six months ended December 31, 2013 was $523,825 and $957,384, respectively. | |||||||||||||||||
(B) Customer Lists | |||||||||||||||||
Customer lists are being amortized on a straight-line basis over five years, which approximates the anticipated rate of attrition. The unamortized balance of $86,912 will be amortized over the next 1.75 years. Amortization expense for the three and six months ended December 31, 2014 was $12,636 and $26,004, respectively. Amortization expense for the three and six months ended December 31, 2013 was $18,832 and $48,880, respectively. | |||||||||||||||||
(C) Technology | |||||||||||||||||
Technology assets are being amortized on a straight-line basis over five years, which approximates the anticipated rate of attrition. Amortization expense for the three and six months ended December 31, 2014 was $114,368. Amortization expense for the three and six months ended December 31, 2013 was $12,658 and $24,777 respectively. | |||||||||||||||||
(D) Future Amortization | |||||||||||||||||
Estimated amortization expense of intangible assets over the next five years is as follows: | |||||||||||||||||
Year ended: | |||||||||||||||||
31-Dec-15 | $ | 3,349,208 | |||||||||||||||
31-Dec-16 | 3,130,881 | ||||||||||||||||
31-Dec-17 | 3,093,637 | ||||||||||||||||
31-Dec-18 | 3,093,637 | ||||||||||||||||
31-Dec-19 | 3,026,353 | ||||||||||||||||
Thereafter | 10,336,950 | ||||||||||||||||
$ | 26,030,664 |
Goodwill
Goodwill | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||
Goodwill | NOTE 9 – GOODWILL | ||||||||
Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in businesses combinations. Goodwill was comprised of the following amounts: | |||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
NetSol PK | $ | 1,166,610 | $ | 1,166,610 | |||||
NTE | 3,471,814 | 3,471,814 | |||||||
VLS | 214,044 | 214,044 | |||||||
NTA | 4,664,100 | 4,664,100 | |||||||
Total | $ | 9,516,568 | $ | 9,516,568 | |||||
The Company tests for goodwill impairment at each reporting unit. There was no goodwill impairment for the period ended December 31, 2014. |
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Accounts Payable and Accrued Expenses | NOTE 10 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||||||||
Accounts payable and accrued expenses consisted of the following: | |||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Accounts Payable | $ | 1,496,813 | $ | 1,642,325 | |||||
Accrued Liabilities | 2,896,417 | 2,956,686 | |||||||
Accrued Payroll | 8,052 | 44,185 | |||||||
Accrued Payroll Taxes | 213,728 | 261,261 | |||||||
Interest Payable | 48,522 | 61,555 | |||||||
Taxes Payable | 204,343 | 165,649 | |||||||
Other Payable | 103,226 | 103,226 | |||||||
Total | $ | 4,971,101 | $ | 5,234,887 |
Debts
Debts | 6 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||
Debts | NOTE 11 – DEBTS | ||||||||||||||
Notes payable and capital leases consisted of the following: | |||||||||||||||
As of December 31, 2014 | |||||||||||||||
Current | Long-Term | ||||||||||||||
Name | Total | Maturities | Maturities | ||||||||||||
D&O Insurance | -1 | $ | 106,690 | $ | 106,690 | $ | - | ||||||||
Habib Bank Line of Credit | -2 | - | - | - | |||||||||||
Bank Overdraft Facility | -3 | - | - | - | |||||||||||
HSBC Loan | -4 | 603,373 | 321,747 | 281,626 | |||||||||||
Term Finance Facility | -5 | 490,586 | 245,293 | 245,293 | |||||||||||
Loan Payable Bank | -6 | 1,962,343 | 1,962,343 | - | |||||||||||
Loan From Related Party | -7 | 253,153 | 130,861 | 122,292 | |||||||||||
3,416,145 | 2,766,934 | 649,211 | |||||||||||||
Subsidiary Capital Leases | -8 | 883,562 | 450,463 | 433,099 | |||||||||||
$ | 4,299,707 | $ | 3,217,397 | $ | 1,082,310 | ||||||||||
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 | 194,740 | 127,860 | |||||||||||
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, are recorded in current maturities. The interest rate on the insurance financing was 0.43% and 0.55% as of December 31, 2014 and June 30, 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 December 31, 2014 and June 30, 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 December 31, 2014 and June 30, 2014, respectively. Interest expense for the three and six months ended December 31, 2014 was $nil and $8,658, respectively. Interest expense for the three and six months ended December 31, 2013 was $9,430 and $16,726, respectively. Amounts of both lines of credit were paid down during the period. | |||||||||||||||
(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 $465,983. The annual interest rate was 4.75% as of December 31, 2014 and June 30, 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 December 31, 2014, 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% in Virtual Leasing Services Limited. HSBC Bank guaranteed the loan up to a limit of £1,000,000, or approximately $1,553,277 for a period of 5 years with monthly payments of £18,420, or approximately $28,611. 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 three and six months ended December 31, 2014 was $13,248 and $29,950, respectively. Interest expense, during the three and six months ended December 31, 2013, was $19,047 and $41,489, respectively. | |||||||||||||||
This facility requires that NTE’s adjusted tangible net worth to be 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, the facility requires NTE’s cash debt service coverage to not fall below 150% of the aggregate debt service cost. As of December 31, 2014, 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 $1,103,818 (availed Rs. 50,000,000 or $490,586), (secured by the first charge of Rs. 580 million or approximately $5.69 million over the land, building and equipment of the company). The interest rate was 12.90% as of December 31, 2014 and June 30, 2014, respectively, which is 2.75% above the six-month Karachi Inter Bank Offering Rate. | |||||||||||||||
(6) The Company’s subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by the Company’s assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 300,000,000 or $2,943,514 (availed Rs. 200,000,000 or $1,962,343). The interest rate for the loans was 7.5% and 9.4% at December 31, 2014 and June 30, 2014 respectively. Interest expense for the three and six months ended December 31, 2014 was $37,068 and $72,775, respectively. Interest expense for the three and six months ended December 31, 2013, was $42,081 and $86,181, respectively. | |||||||||||||||
Both term and export refinance facilities from Askari Bank Limited amounting to Rupees 250 million ($2.45 million) require NetSol PK to maintain a long term debt equity ratio of 60:40 and the current ratio of 1:1. As of December 31, 2014, 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 $155,327, for a period of 1 year with monthly payments of £8,676, or approximately $13,476. The interest rate was 4.1%. As of December 31, 2014, the company has paid off full amount of loan. | |||||||||||||||
In March 2014, the Company’s subsidiary, VLS, entered into a loan agreement with Investec. The loan amount was £150,000, or approximately $232,990, for a period of two years with annual payments of £75,000, or approximately $116,495. The interest rate was 3.13%. As of December 31, 2014, the subsidiary has used this facility up to $253,152 including interest due, of which $122,292 was shown as long term and $130,861 as current maturity, including seven months of accrued interest. | |||||||||||||||
(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 secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the three and six months ended December 31, 2014 and 2013. | |||||||||||||||
Following is the aggregate minimum future lease payments under capital leases as of December 31, 2014: | |||||||||||||||
Amount | |||||||||||||||
Minimum Lease Payments | |||||||||||||||
Due FYE 12/31/15 | $ | 531,224 | |||||||||||||
Due FYE 12/31/16 | 382,127 | ||||||||||||||
Due FYE 12/31/17 | 85,482 | ||||||||||||||
Total Minimum Lease Payments | 998,833 | ||||||||||||||
Interest Expense relating to future periods | (115,271 | ) | |||||||||||||
Present Value of minimum lease payments | 883,562 | ||||||||||||||
Less: Current portion | (450,463 | ) | |||||||||||||
Non-Current portion | $ | 433,099 |
Stockholders_Equity
Stockholders' Equity | 6 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 12 – STOCKHOLDERS’ EQUITY |
Share-Based Payment Transactions | |
During the six months ended December 31, 2014, the Company issued 52,500 shares of restricted common stock for services rendered by officers of the Company. These shares were valued at the fair market value of $305,700. | |
During the six months ended December 31, 2014, the Company issued 11,726 shares of restricted common stock for services rendered by the independent members of the Board of Directors as part of their board compensation. These shares were valued at the fair market value of $57,233. | |
During the six months ended December 31, 2014, the Company issued 49,613 shares of its common stock to employees pursuant to the terms of their employment agreements valued at $199,528. | |
During six months ended December 31, 2014, the Company received $1,280,000 pursuant to a stock purchase agreement for the purchase of 449,122 restricted shares of common stock at $2.85 per share. The company also received $330,000 pursuant to stock purchase agreement for the purchase of 107,842 restricted shares of common stock at $3.06 per share. These shares were issued in January 2015 and recorded in stock to be issued. |
Incentive_and_NonStatutory_Sto
Incentive and Non-Statutory Stock Option Plan | 6 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||
Incentive and Non-Statutory Stock Option Plan | NOTE 13 – INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN | ||||||||||||||||||||||||
Common stock purchase options and warrants consisted of the following: | |||||||||||||||||||||||||
OPTIONS: | |||||||||||||||||||||||||
# of shares | Weighted | Weighted | Aggregated | ||||||||||||||||||||||
Ave | Average | Intrinsic Value | |||||||||||||||||||||||
Exercise Price | Remaining | ||||||||||||||||||||||||
Contractual | |||||||||||||||||||||||||
Life (in years) | |||||||||||||||||||||||||
Outstanding June 30, 2014 | 757,462 | $ | 6.65 | 2.2 | |||||||||||||||||||||
Granted | - | - | |||||||||||||||||||||||
Exercised | (30,000 | ) | $ | 3.88 | |||||||||||||||||||||
Expired / Cancelled | - | - | |||||||||||||||||||||||
Outstanding December 31, 2014 | 727,462 | $ | 6.76 | 1.71 | $ | - | |||||||||||||||||||
Exercisable, December 31, 2014 | 477,462 | $ | 8.27 | 1.83 | $ | - | |||||||||||||||||||
WARRANTS: | |||||||||||||||||||||||||
Outstanding and exercisable, June 30, 2014 | 163,124 | $ | 7.29 | 2.2 | |||||||||||||||||||||
Granted / adjusted | - | - | |||||||||||||||||||||||
Exercised | - | - | |||||||||||||||||||||||
Expired | - | - | |||||||||||||||||||||||
Outstanding and exercisable, December 31, 2014 | 163,124 | $ | 7.29 | 1.71 | $ | - | |||||||||||||||||||
The following table summarizes information about stock options and warrants outstanding and exercisable at December 31, 2014. | |||||||||||||||||||||||||
Exercise Price | Number | Weighted | Weighted | Number | Weighted | Weighted | |||||||||||||||||||
Outstanding | Average | Ave | Exercisable | Average | Ave | ||||||||||||||||||||
Remaining | Exercise | Remaining | Exercise | ||||||||||||||||||||||
Contractual | Price | Contractual | Price | ||||||||||||||||||||||
Life | Life | ||||||||||||||||||||||||
OPTIONS: | |||||||||||||||||||||||||
$0.10 - $9.90 | 653,462 | 1.76 | $ | 4.81 | 403,462 | 1.93 | $ | 5.39 | |||||||||||||||||
$10.00 - $19.90 | 14,000 | 1.12 | $ | 18.18 | 14,000 | 1.12 | $ | 18.18 | |||||||||||||||||
$20.00 - $29.90 | 60,000 | 1.33 | $ | 25.33 | 60,000 | 1.33 | $ | 25.33 | |||||||||||||||||
Totals | 727,462 | 1.71 | $ | 6.76 | 477,462 | 1.83 | $ | 8.27 | |||||||||||||||||
WARRANTS: | |||||||||||||||||||||||||
$5.00 - $7.50 | 163,124 | 1.71 | $ | 7.29 | 163,124 | 1.71 | $ | 7.29 | |||||||||||||||||
Totals | 163,124 | 1.71 | $ | 7.29 | 163,124 | 1.71 | $ | 7.29 | |||||||||||||||||
The Company recorded compensation expense of $155,623 and $311,245 for the three and six months ended December 31, 2014, respectively, related to vested options. The compensation expense related to the unvested options as of December 31, 2014 was $311,244 which will be recognized during the fiscal year of 2015. The Company recorded compensation expense of $33,214 and $158,251 for the three and six months ended December 31, 2013, respectively. | |||||||||||||||||||||||||
The following table summarizes stock grants awarded as compensation: | |||||||||||||||||||||||||
# of shares | Weighted | ||||||||||||||||||||||||
Average Grant | |||||||||||||||||||||||||
Date Fair Value | |||||||||||||||||||||||||
($) | |||||||||||||||||||||||||
Unvested, June 30, 2013 | - | - | |||||||||||||||||||||||
Granted | 337,899 | $ | 5.78 | ||||||||||||||||||||||
Vested | (105,899 | ) | $ | 10 | |||||||||||||||||||||
Unvested, June 30, 2014 | 232,000 | $ | 3.88 | ||||||||||||||||||||||
Granted | 110,500 | $ | 2.9 | ||||||||||||||||||||||
Vested | (172,226 | ) | $ | 3.57 | |||||||||||||||||||||
Unvested, December 31, 2014 | 170,274 | $ | 3.56 | ||||||||||||||||||||||
For the three and six months ended December 31, 2014, the Company recorded compensation expense of $316,370 and $614,293 respectively. For the three and six months ended December 31, 2013, the Company recorded compensation expense of $232,012 and $464,025 respectively. The compensation expense related to the unvested stock grants as of December 31, 2014 was $606,675 which will be recognized during the fiscal year of 2015. |
Contingencies
Contingencies | 6 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | NOTE 14 – CONTINGENCIES |
As previously disclosed, on July 25, 2014, a Federal Securities class action lawsuit entitled Rand-Heart of New York, Inc. v. NetSol Technologies, Inc., Najeeb Ghauri, Naeem Ghauri, and Salim Ghauri was filed in Central District of California. The action generally alleges the Company violated certain federal securities laws by allegedly issuing false and misleading statements regarding the Company’s product and business prospect of that product. Specifically, the complaint alleges the next-generation product did not exist as of November 8, 2011 and there was no reasonable basis for stating that there was a growing interest or serious interest in the product; the product had been gaining momentum or that it had been well received. The plaintiff has filed an amended consolidated complaint including the previous allegations. On January 21, 2015, defendants filed a motion to dismiss the lawsuit stating that the plaintiff’s complaint fails to sufficiently plead the allegations and essential elements of the claims. Following responsive pleadings by plaintiff and defendant, the motion is scheduled to be heard on March 16, 2015. The Company believes the lawsuit to be meritless and intends to vigorously defend the action including but not limited to motions to dismiss. The Company has engaged counsel and has liability insurance. Given the early stage of the litigation, however, at this time the Company is unable to form a professional judgment that an unfavorable outcome is either probable or remote, and it is not possible to assess whether or not the outcome of these proceedings will or will not have material adverse effect on the Company. As of the date of this filing, a class had not yet been established. |
Operating_Segments
Operating Segments | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
Operating Segments | NOTE 15 – OPERATING SEGMENTS | ||||||||||||||||
The Company has identified three segments for its products and services; North America, Europe and Asia-Pacific. Our reportable segments are business units located in different global regions. Each business unit provides similar products and services; license fees for leasing and asset-based software, related maintenance fees, and implementation and IT consulting services. Separate management of each segment is required because each business unit is subject to different operational issues and strategies due to their particular regional location. The Company accounts for intra-company sales and expenses as if the sales or expenses were to third parties and eliminates them in the consolidation. The following table presents a summary of identifiable assets as of December 31, 2014 and June 30, 2014: | |||||||||||||||||
As of | As of | ||||||||||||||||
31-Dec-14 | 30-Jun-14 | ||||||||||||||||
Identifiable assets: | |||||||||||||||||
Corporate headquarters | $ | 3,001,697 | $ | 5,150,823 | |||||||||||||
North America | 8,194,933 | 7,406,631 | |||||||||||||||
Europe | 6,490,081 | 6,169,265 | |||||||||||||||
Asia - Pacific | 74,472,607 | 76,176,555 | |||||||||||||||
Consolidated | $ | 92,159,318 | $ | 94,903,274 | |||||||||||||
The following table presents a summary of operating information for the three and six months ended December 31: | |||||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues from unaffiliated customers: | |||||||||||||||||
North America | $ | 1,423,560 | $ | 857,904 | $ | 2,590,337 | $ | 1,939,522 | |||||||||
Europe | 1,921,596 | 1,559,880 | 3,771,609 | 2,768,382 | |||||||||||||
Asia - Pacific | 7,652,972 | 4,879,618 | 13,467,333 | 10,542,697 | |||||||||||||
10,998,128 | 7,297,402 | 19,829,279 | 15,250,601 | ||||||||||||||
Revenue from affiliated customers | |||||||||||||||||
Asia - Pacific | 1,354,476 | 1,256,899 | 2,750,476 | 2,224,442 | |||||||||||||
1,354,476 | 1,256,899 | 2,750,476 | 2,224,442 | ||||||||||||||
Consolidated | $ | 12,352,604 | $ | 8,554,301 | $ | 22,579,755 | $ | 17,475,043 | |||||||||
Intercompany revenue | |||||||||||||||||
Europe | $ | 92,641 | $ | 187,136 | $ | 223,169 | $ | 336,532 | |||||||||
Asia - Pacific | 1,410,145 | 649,479 | 1,691,264 | 952,557 | |||||||||||||
Eliminated | $ | 1,502,786 | $ | 836,615 | $ | 1,914,433 | $ | 1,289,089 | |||||||||
Net income (loss) after taxes and before non-controlling interest: | |||||||||||||||||
Corporate headquarters | $ | (1,091,128 | ) | $ | (1,270,154 | ) | $ | (2,083,685 | ) | $ | (2,420,062 | ) | |||||
North America | 446,050 | 23,271 | 711,773 | 216,472 | |||||||||||||
Europe | (274,697 | ) | (297,595 | ) | (257,873 | ) | (851,313 | ) | |||||||||
Asia - Pacific | (586,155 | ) | (250,808 | ) | (2,105,371 | ) | 1,029,610 | ||||||||||
Discontinued operation | - | (145,527 | ) | - | (378,468 | ) | |||||||||||
Consolidated | $ | (1,505,930 | ) | $ | (1,940,813 | ) | $ | (3,735,156 | ) | $ | (2,403,761 | ) | |||||
The following table presents a summary of capital expenditures for the six months ended December 31: | |||||||||||||||||
For the Six Months | |||||||||||||||||
Ended December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Capital expenditures: | |||||||||||||||||
Corporate headquarters | $ | 1,786 | $ | 4,531 | |||||||||||||
North America | 4,866 | 16,386 | |||||||||||||||
Europe | 155,895 | 90,423 | |||||||||||||||
Asia - Pacific | 1,610,319 | 5,948,256 | |||||||||||||||
Consolidated | $ | 1,772,866 | $ | 6,059,596 |
Discontinued_Operations
Discontinued Operations | 6 Months Ended |
Dec. 31, 2014 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 16 – DISCONTINUED OPERATIONS |
On March 31, 2014, the Company sold 100% of its stock in Vroozi, Inc. for a purchase price of $2,716,050 consisting of $1,810,700 cash, a $452,675 non-interest bearing note receivable due September 30, 2014, and a $452,675 non-interest bearing note receivable contingent upon the occurrence of future events; however, the future events must occur before March 31, 2015. The $452,675 non-interest bearing note receivable that is contingent upon the occurrence of future events was not included in the gain calculation due to the uncertainty that the future events would occur. The Company received $452,675 on September 30, 2014 as payment for the non-interest bearing note receivable. |
NonControlling_Interest_in_Sub
Non-Controlling Interest in Subsidiary | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Noncontrolling Interest [Abstract] | |||||||||
Non-Controlling Interest in Subsidiary | NOTE 17 – NON-CONTROLLING INTEREST IN SUBSIDIARY | ||||||||
The Company had non-controlling interests in several of its subsidiaries. The balance of non-controlling interest was as follows: | |||||||||
SUBSIDIARY | Non Controlling | Non-Controlling | |||||||
Interest % | Interest at | ||||||||
31-Dec-14 | |||||||||
NetSol PK | 34.85 | % | $ | 11,821,972 | |||||
NetSol-Innovation | 49.9 | % | 1,321,452 | ||||||
VLS, VLHS & VLSIL Combined | 49 | % | 237,345 | ||||||
Total | $ | 13,380,769 | |||||||
SUBSIDIARY | Non Controlling | Non-Controlling | |||||||
Interest % | Interest at | ||||||||
30-Jun-14 | |||||||||
NetSol PK | 36.62 | % | $ | 14,317,233 | |||||
NetSol-Innovation | 49.9 | % | 1,546,920 | ||||||
VLS, VLHS & VLSIL Combined | 49 | % | 260,359 | ||||||
Total | $ | 16,124,512 | |||||||
NETSOL TECHNOLOGIES, LIMITED | |||||||||
During the six months ended December 31, 2014, the Company purchased 1,580,000 shares of common stock of NetSol PK from the open market for $577,222 resulting in a decrease in non-controlling interest from 36.62% to 34.85%. | |||||||||
NETSOL-INNOVATION (PVT) LIMITED | |||||||||
During the six months ended December 31, 2014, NetSol-Innovation paid a cash dividend of $1,576,609. |
Accounting_Policies_Policies
Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates |
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
New Accounting Pronouncements | New Accounting Pronouncements |
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360).” ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company’s operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company’s results of operations or financial condition. | |
In May 2014, the (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the Company in the first quarter of its fiscal year ending June 30, 2018. The Company is currently in the process of evaluating the impact of adoption of this ASU on its consolidated financial statements. | |
In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) (ASU 2014-12). The guidance applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. The Company is currently evaluating the impact of adopting ASU 2014-12 on the Company’s results of operations or financial condition. | |
In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern(ASU 2014-15). The guidance in ASU 2014-15 sets forth management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management’s plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. | |
In January 2015, the FASB issued Accounting Standards Update No. 2015-01, Income Statement – Extraordinary and Unusual items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (ASU 2015-01). The amendment eliminates from U.S. GAAP the concept of extraordinary items. This guidance is effective for the Company in the first quarter of fiscal 2017. Early adoption is permitted and allows the Company to apply the amendment prospectively or retrospectively. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potential dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive. | ||||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Stock Options | 727,462 | 302,462 | 727,462 | 302,462 | |||||||||||||
Warrants | 163,124 | 163,124 | 163,124 | 163,124 | |||||||||||||
890,586 | 465,586 | 890,586 | 465,586 |
Other_Current_Assets_Tables
Other Current Assets (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Schedule of Other Current Assets | Other current assets consisted of the following: | ||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Prepaid Expenses | $ | 622,431 | $ | 450,451 | |||||
Advance Income Tax | 944,796 | 918,300 | |||||||
Employee Advances | 61,864 | 46,730 | |||||||
Security Deposits | 144,850 | 189,905 | |||||||
Tender Money Receivable | 63,076 | 81,420 | |||||||
Other Receivables | 280,143 | 645,397 | |||||||
Other Assets | 368,548 | 430,508 | |||||||
Due From Related Party | -1 | 78,408 | 95,168 | ||||||
Total | $ | 2,564,116 | $ | 2,857,879 | |||||
(1) Due from related party as of December 31, 2014 and June 30, 2014 is a receivable from Atheeb NetSol Saudi Company Limited. |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following: | ||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Office Furniture and Equipment | $ | 2,624,218 | $ | 2,628,814 | |||||
Computer Equipment | 25,899,260 | 27,215,091 | |||||||
Assets Under Capital Leases | 1,804,147 | 1,861,445 | |||||||
Building | 6,068,353 | 6,259,290 | |||||||
Land | 3,249,086 | 3,351,316 | |||||||
Capital Work In Progress | 3,184,387 | 2,812,181 | |||||||
Autos | 994,641 | 999,277 | |||||||
Improvements | 510,573 | 533,102 | |||||||
Subtotal | 44,334,665 | 45,660,516 | |||||||
Accumulated Depreciation | (16,791,176 | ) | (15,939,388 | ) | |||||
Property and Equipment, Net | $ | 27,543,489 | $ | 29,721,128 | |||||
Summary of Fixed Assets Held Under Capital Leases | Following is a summary of fixed assets held under capital leases as of December 31, 2014 and June 30, 2014: | ||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Computers and Other Equipment | $ | 684,941 | $ | 731,354 | |||||
Furniture and Fixtures | 355,037 | 280,184 | |||||||
Vehicles | 764,169 | 849,907 | |||||||
Total | 1,804,147 | 1,861,445 | |||||||
Less: Accumulated Depreciation - Net | (514,566 | ) | (469,336 | ) | |||||
$ | 1,289,581 | $ | 1,392,109 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||
Schedule of Intangible Assets | Intangible assets consisted of the following: | ||||||||||||||||
Product Licenses | Customer Lists | Technology | Total | ||||||||||||||
Intangible Assets - June 30, 2014 - Cost | $ | 48,632,368 | $ | 6,052,377 | $ | 242,702 | $ | 54,927,447 | |||||||||
Additions | - | - | - | - | |||||||||||||
Effect of Translation Adjustment | (2,208,657 | ) | - | - | (2,208,657 | ) | |||||||||||
Accumulated Amortization | (20,479,959 | ) | (5,965,465 | ) | (242,702 | ) | (26,688,126 | ) | |||||||||
Net Balance - December 31, 2014 | $ | 25,943,752 | $ | 86,912 | $ | - | $ | 26,030,664 | |||||||||
Estimated Amortization Expense of Intangible Assets over Next Five Years | Estimated amortization expense of intangible assets over the next five years is as follows: | ||||||||||||||||
Year ended: | |||||||||||||||||
31-Dec-15 | $ | 3,349,208 | |||||||||||||||
31-Dec-16 | 3,130,881 | ||||||||||||||||
31-Dec-17 | 3,093,637 | ||||||||||||||||
31-Dec-18 | 3,093,637 | ||||||||||||||||
31-Dec-19 | 3,026,353 | ||||||||||||||||
Thereafter | 10,336,950 | ||||||||||||||||
$ | 26,030,664 |
Goodwill_Tables
Goodwill (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||
Summary of Goodwill Acquired | Goodwill was comprised of the following amounts: | ||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
NetSol PK | $ | 1,166,610 | $ | 1,166,610 | |||||
NTE | 3,471,814 | 3,471,814 | |||||||
VLS | 214,044 | 214,044 | |||||||
NTA | 4,664,100 | 4,664,100 | |||||||
Total | $ | 9,516,568 | $ | 9,516,568 |
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following: | ||||||||
As of | As of | ||||||||
31-Dec-14 | 30-Jun-14 | ||||||||
Accounts Payable | $ | 1,496,813 | $ | 1,642,325 | |||||
Accrued Liabilities | 2,896,417 | 2,956,686 | |||||||
Accrued Payroll | 8,052 | 44,185 | |||||||
Accrued Payroll Taxes | 213,728 | 261,261 | |||||||
Interest Payable | 48,522 | 61,555 | |||||||
Taxes Payable | 204,343 | 165,649 | |||||||
Other Payable | 103,226 | 103,226 | |||||||
Total | $ | 4,971,101 | $ | 5,234,887 |
Debts_Tables
Debts (Tables) | 6 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||
Components of Notes Payable and Capital Leases | Notes payable and capital leases consisted of the following: | ||||||||||||||
As of December 31, 2014 | |||||||||||||||
Current | Long-Term | ||||||||||||||
Name | Total | Maturities | Maturities | ||||||||||||
D&O Insurance | -1 | $ | 106,690 | $ | 106,690 | $ | - | ||||||||
Habib Bank Line of Credit | -2 | - | - | - | |||||||||||
Bank Overdraft Facility | -3 | - | - | - | |||||||||||
HSBC Loan | -4 | 603,373 | 321,747 | 281,626 | |||||||||||
Term Finance Facility | -5 | 490,586 | 245,293 | 245,293 | |||||||||||
Loan Payable Bank | -6 | 1,962,343 | 1,962,343 | - | |||||||||||
Loan From Related Party | -7 | 253,153 | 130,861 | 122,292 | |||||||||||
3,416,145 | 2,766,934 | 649,211 | |||||||||||||
Subsidiary Capital Leases | -8 | 883,562 | 450,463 | 433,099 | |||||||||||
$ | 4,299,707 | $ | 3,217,397 | $ | 1,082,310 | ||||||||||
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 | 194,740 | 127,860 | |||||||||||
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, are recorded in current maturities. The interest rate on the insurance financing was 0.43% and 0.55% as of December 31, 2014 and June 30, 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 December 31, 2014 and June 30, 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 December 31, 2014 and June 30, 2014, respectively. Interest expense for the three and six months ended December 31, 2014 was $nil and $8,658, respectively. Interest expense for the three and six months ended December 31, 2013 was $9,430 and $16,726, respectively. Amounts of both lines of credit were paid down during the period. | |||||||||||||||
(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 $465,983. The annual interest rate was 4.75% as of December 31, 2014 and June 30, 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 December 31, 2014, 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% in Virtual Leasing Services Limited. HSBC Bank guaranteed the loan up to a limit of £1,000,000, or approximately $1,553,277 for a period of 5 years with monthly payments of £18,420, or approximately $28,611. 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 three and six months ended December 31, 2014 was $13,248 and $29,950, respectively. Interest expense, during the three and six months ended December 31, 2013, was $19,047 and $41,489, respectively. | |||||||||||||||
This facility requires that NTE’s adjusted tangible net worth to be 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, the facility requires NTE’s cash debt service coverage to not fall below 150% of the aggregate debt service cost. As of December 31, 2014, 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 $1,103,818 (availed Rs. 50,000,000 or $490,586), (secured by the first charge of Rs. 580 million or approximately $5.69 million over the land, building and equipment of the company). The interest rate was 12.90% as of December 31, 2014 and June 30, 2014, respectively, which is 2.75% above the six-month Karachi Inter Bank Offering Rate. | |||||||||||||||
(6) The Company’s subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by the Company’s assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 300,000,000 or $2,943,514 (availed Rs. 200,000,000 or $1,962,343). The interest rate for the loans was 7.5% and 9.4% at December 31, 2014 and June 30, 2014 respectively. Interest expense for the three and six months ended December 31, 2014 was $37,068 and $72,775, respectively. Interest expense for the three and six months ended December 31, 2013, was $42,081 and $86,181, respectively. | |||||||||||||||
Both term and export refinance facilities from Askari Bank Limited amounting to Rupees 250 million ($2.45 million) require NetSol PK to maintain a long term debt equity ratio of 60:40 and the current ratio of 1:1. As of December 31, 2014, 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 $155,327, for a period of 1 year with monthly payments of £8,676, or approximately $13,476. The interest rate was 4.1%. As of December 31, 2014, the company has paid off full amount of loan. | |||||||||||||||
In March 2014, the Company’s subsidiary, VLS, entered into a loan agreement with Investec. The loan amount was £150,000, or approximately $232,990, for a period of two years with annual payments of £75,000, or approximately $116,495. The interest rate was 3.13%. As of December 31, 2014, the subsidiary has used this facility up to $253,152 including interest due, of which $122,292 was shown as long term and $130,861 as current maturity, including seven months of accrued interest. | |||||||||||||||
(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 secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the three and six months ended December 31, 2014 and 2013. | |||||||||||||||
Schedule of Aggregate Minimum Future Lease Payments under Capital Leases | Following is the aggregate minimum future lease payments under capital leases as of December 31, 2014: | ||||||||||||||
Amount | |||||||||||||||
Minimum Lease Payments | |||||||||||||||
Due FYE 12/31/15 | $ | 531,224 | |||||||||||||
Due FYE 12/31/16 | 382,127 | ||||||||||||||
Due FYE 12/31/17 | 85,482 | ||||||||||||||
Total Minimum Lease Payments | 998,833 | ||||||||||||||
Interest Expense relating to future periods | (115,271 | ) | |||||||||||||
Present Value of minimum lease payments | 883,562 | ||||||||||||||
Less: Current portion | (450,463 | ) | |||||||||||||
Non-Current portion | $ | 433,099 |
Incentive_and_NonStatutory_Sto1
Incentive and Non-Statutory Stock Option Plan (Tables) | 6 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||
Components of Common Stock Purchase Options and Warrants | Common stock purchase options and warrants consisted of the following: | ||||||||||||||||||||||||
OPTIONS: | |||||||||||||||||||||||||
# of shares | Weighted | Weighted | Aggregated | ||||||||||||||||||||||
Ave | Average | Intrinsic Value | |||||||||||||||||||||||
Exercise Price | Remaining | ||||||||||||||||||||||||
Contractual | |||||||||||||||||||||||||
Life (in years) | |||||||||||||||||||||||||
Outstanding June 30, 2014 | 757,462 | $ | 6.65 | 2.2 | |||||||||||||||||||||
Granted | - | - | |||||||||||||||||||||||
Exercised | (30,000 | ) | $ | 3.88 | |||||||||||||||||||||
Expired / Cancelled | - | - | |||||||||||||||||||||||
Outstanding December 31, 2014 | 727,462 | $ | 6.76 | 1.71 | $ | - | |||||||||||||||||||
Exercisable, December 31, 2014 | 477,462 | $ | 8.27 | 1.83 | $ | - | |||||||||||||||||||
WARRANTS: | |||||||||||||||||||||||||
Outstanding and exercisable, June 30, 2014 | 163,124 | $ | 7.29 | 2.2 | |||||||||||||||||||||
Granted / adjusted | - | - | |||||||||||||||||||||||
Exercised | - | - | |||||||||||||||||||||||
Expired | - | - | |||||||||||||||||||||||
Outstanding and exercisable, December 31, 2014 | 163,124 | $ | 7.29 | 1.71 | $ | - | |||||||||||||||||||
Schedule of Stock Options and Warrants Outstanding and Exercisable Activity | The following table summarizes information about stock options and warrants outstanding and exercisable at December 31, 2014. | ||||||||||||||||||||||||
Exercise Price | Number | Weighted | Weighted | Number | Weighted | Weighted | |||||||||||||||||||
Outstanding | Average | Ave | Exercisable | Average | Ave | ||||||||||||||||||||
Remaining | Exercise | Remaining | Exercise | ||||||||||||||||||||||
Contractual | Price | Contractual | Price | ||||||||||||||||||||||
Life | Life | ||||||||||||||||||||||||
OPTIONS: | |||||||||||||||||||||||||
$0.10 - $9.90 | 653,462 | 1.76 | $ | 4.81 | 403,462 | 1.93 | $ | 5.39 | |||||||||||||||||
$10.00 - $19.90 | 14,000 | 1.12 | $ | 18.18 | 14,000 | 1.12 | $ | 18.18 | |||||||||||||||||
$20.00 - $29.90 | 60,000 | 1.33 | $ | 25.33 | 60,000 | 1.33 | $ | 25.33 | |||||||||||||||||
Totals | 727,462 | 1.71 | $ | 6.76 | 477,462 | 1.83 | $ | 8.27 | |||||||||||||||||
WARRANTS: | |||||||||||||||||||||||||
$5.00 - $7.50 | 163,124 | 1.71 | $ | 7.29 | 163,124 | 1.71 | $ | 7.29 | |||||||||||||||||
Totals | 163,124 | 1.71 | $ | 7.29 | 163,124 | 1.71 | $ | 7.29 | |||||||||||||||||
Summary of Unvested Stock Grants Awarded as Compensation | The following table summarizes stock grants awarded as compensation: | ||||||||||||||||||||||||
# of shares | Weighted | ||||||||||||||||||||||||
Average Grant | |||||||||||||||||||||||||
Date Fair Value | |||||||||||||||||||||||||
($) | |||||||||||||||||||||||||
Unvested, June 30, 2013 | - | - | |||||||||||||||||||||||
Granted | 337,899 | $ | 5.78 | ||||||||||||||||||||||
Vested | (105,899 | ) | $ | 10 | |||||||||||||||||||||
Unvested, June 30, 2014 | 232,000 | $ | 3.88 | ||||||||||||||||||||||
Granted | 110,500 | $ | 2.9 | ||||||||||||||||||||||
Vested | (172,226 | ) | $ | 3.57 | |||||||||||||||||||||
Unvested, December 31, 2014 | 170,274 | $ | 3.56 |
Operating_Segments_Tables
Operating Segments (Tables) | 6 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||
Summary of Identifiable Assets | The following table presents a summary of identifiable assets as of December 31, 2014 and June 30, 2014: | ||||||||||||||||
As of | As of | ||||||||||||||||
31-Dec-14 | 30-Jun-14 | ||||||||||||||||
Identifiable assets: | |||||||||||||||||
Corporate headquarters | $ | 3,001,697 | $ | 5,150,823 | |||||||||||||
North America | 8,194,933 | 7,406,631 | |||||||||||||||
Europe | 6,490,081 | 6,169,265 | |||||||||||||||
Asia - Pacific | 74,472,607 | 76,176,555 | |||||||||||||||
Consolidated | $ | 92,159,318 | $ | 94,903,274 | |||||||||||||
Summary of Operating Information | The following table presents a summary of operating information for the three and six months ended December 31: | ||||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues from unaffiliated customers: | |||||||||||||||||
North America | $ | 1,423,560 | $ | 857,904 | $ | 2,590,337 | $ | 1,939,522 | |||||||||
Europe | 1,921,596 | 1,559,880 | 3,771,609 | 2,768,382 | |||||||||||||
Asia - Pacific | 7,652,972 | 4,879,618 | 13,467,333 | 10,542,697 | |||||||||||||
10,998,128 | 7,297,402 | 19,829,279 | 15,250,601 | ||||||||||||||
Revenue from affiliated customers | |||||||||||||||||
Asia - Pacific | 1,354,476 | 1,256,899 | 2,750,476 | 2,224,442 | |||||||||||||
1,354,476 | 1,256,899 | 2,750,476 | 2,224,442 | ||||||||||||||
Consolidated | $ | 12,352,604 | $ | 8,554,301 | $ | 22,579,755 | $ | 17,475,043 | |||||||||
Intercompany revenue | |||||||||||||||||
Europe | $ | 92,641 | $ | 187,136 | $ | 223,169 | $ | 336,532 | |||||||||
Asia - Pacific | 1,410,145 | 649,479 | 1,691,264 | 952,557 | |||||||||||||
Eliminated | $ | 1,502,786 | $ | 836,615 | $ | 1,914,433 | $ | 1,289,089 | |||||||||
Net income (loss) after taxes and before non-controlling interest: | |||||||||||||||||
Corporate headquarters | $ | (1,091,128 | ) | $ | (1,270,154 | ) | $ | (2,083,685 | ) | $ | (2,420,062 | ) | |||||
North America | 446,050 | 23,271 | 711,773 | 216,472 | |||||||||||||
Europe | (274,697 | ) | (297,595 | ) | (257,873 | ) | (851,313 | ) | |||||||||
Asia - Pacific | (586,155 | ) | (250,808 | ) | (2,105,371 | ) | 1,029,610 | ||||||||||
Discontinued operation | - | (145,527 | ) | - | (378,468 | ) | |||||||||||
Consolidated | $ | (1,505,930 | ) | $ | (1,940,813 | ) | $ | (3,735,156 | ) | $ | (2,403,761 | ) | |||||
Summary of Capital Expenditures | The following table presents a summary of capital expenditures for the six months ended December 31: | ||||||||||||||||
For the Six Months | |||||||||||||||||
Ended December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Capital expenditures: | |||||||||||||||||
Corporate headquarters | $ | 1,786 | $ | 4,531 | |||||||||||||
North America | 4,866 | 16,386 | |||||||||||||||
Europe | 155,895 | 90,423 | |||||||||||||||
Asia - Pacific | 1,610,319 | 5,948,256 | |||||||||||||||
Consolidated | $ | 1,772,866 | $ | 6,059,596 |
NonControlling_Interest_in_Sub1
Non-Controlling Interest in Subsidiary (Tables) | 6 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Noncontrolling Interest [Abstract] | |||||||||
Balance of Non-Controlling Interest | The balance of non-controlling interest was as follows: | ||||||||
SUBSIDIARY | Non Controlling | Non-Controlling | |||||||
Interest % | Interest at | ||||||||
31-Dec-14 | |||||||||
NetSol PK | 34.85 | % | $ | 11,821,972 | |||||
NetSol-Innovation | 49.9 | % | 1,321,452 | ||||||
VLS, VLHS & VLSIL Combined | 49 | % | 237,345 | ||||||
Total | $ | 13,380,769 | |||||||
SUBSIDIARY | Non Controlling | Non-Controlling | |||||||
Interest % | Interest at | ||||||||
30-Jun-14 | |||||||||
NetSol PK | 36.62 | % | $ | 14,317,233 | |||||
NetSol-Innovation | 49.9 | % | 1,546,920 | ||||||
VLS, VLHS & VLSIL Combined | 49 | % | 260,359 | ||||||
Total | $ | 16,124,512 |
Earnings_Per_Share_Schedule_of
Earnings Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Potential dilutive shares | 890,586 | 465,586 | 890,586 | 465,586 |
Stock Options [Member] | ||||
Potential dilutive shares | 727,462 | 302,462 | 727,462 | 302,462 |
Warrants [Member] | ||||
Potential dilutive shares | 163,124 | 163,124 | 163,124 | 163,124 |
Other_Comprehensive_Income_and1
Other Comprehensive Income and Foreign Currency (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Accumulated other comprehensive loss | $16,208,648 | $16,208,648 | $14,979,223 | ||
Net Sol [Member] | |||||
Comprehensive income (loss) | $726,129 | ($379,329) | ($1,229,425) | ($2,581,511) |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Related Party Transactions [Abstract] | |||||
Services of related parties | $1,354,476 | $1,256,899 | $2,750,476 | $2,224,442 | |
Accounts receivable, related parties | $2,123,567 | $2,123,567 | $2,232,610 |
Other_Current_Assets_Schedule_
Other Current Assets - Schedule of Other Current Assets (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 | ||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Prepaid Expenses | $622,431 | $450,451 | ||
Advance Income Tax | 944,796 | 918,300 | ||
Employee Advances | 61,864 | 46,730 | ||
Security Deposits | 144,850 | 189,905 | ||
Tender Money Receivable | 63,076 | 81,420 | ||
Other Receivables | 280,143 | 645,397 | ||
Other Assets | 368,548 | 430,508 | ||
Due From Related Party | 78,408 | [1] | 95,168 | [1] |
Total | $2,564,116 | $2,857,879 | ||
[1] | Due from related party as of December 31, 2014 and June 30, 2014 is a receivable from Atheeb NetSol Saudi Company Limited. |
Property_and_Equipment_Details
Property and Equipment (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation expense | $1,360,652 | $1,116,347 | $2,729,359 | $2,113,907 | |
Depreciation reflected in cost of revenues | 932,063 | 715,871 | 1,850,955 | 1,327,961 | |
Accumulated capitalized interest | $776,463 | $776,463 | $664,614 |
Property_and_Equipment_Schedul
Property and Equipment - Schedule of Property and Equipment (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | $44,334,665 | $45,660,516 |
Accumulated Depreciation | -16,791,176 | -15,939,388 |
Property and Equipment, Net | 27,543,489 | 29,721,128 |
Office Furniture and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 2,624,218 | 2,628,814 |
Computers and Other Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 25,899,260 | 27,215,091 |
Assets Under Capital Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 1,804,147 | 1,861,445 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 6,068,353 | 6,259,290 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 3,249,086 | 3,351,316 |
Capital Work In Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 3,184,387 | 2,812,181 |
Autos [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 994,641 | 999,277 |
Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | $510,573 | $533,102 |
Property_and_Equipment_Summary
Property and Equipment - Summary of Fixed Assets Held Under Capital Leases (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases,Total | $1,804,147 | $1,861,445 |
Less: Accumulated Depreciation - Net | -514,566 | -469,336 |
Fixed assets held under capital leases, Net | 1,289,581 | 1,392,109 |
Computers and Other Equipment [Member] | ||
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases,Total | 684,941 | 731,354 |
Furniture and Fixtures [Member] | ||
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases,Total | 355,037 | 280,184 |
Vehicles [Member] | ||
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases,Total | $764,169 | $849,907 |
Intangible_Assets_Details_Narr
Intangible Assets (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Product Licenses [Member] | ||||
Finite-lived unamortized amount | $25,943,752 | $25,943,752 | ||
Amortization expenses of intangible assets | 868,690 | 523,825 | 1,751,365 | 957,384 |
Finite-lived intangible assets, amortization over period | 9 years 3 months | |||
Customer Lists [Member] | ||||
Finite-lived unamortized amount | 86,912 | 86,912 | ||
Finite-lived intangible asset, useful life | 1 year 9 months | |||
Amortization expenses of intangible assets | 12,636 | 18,832 | 26,004 | 48,880 |
Finite-lived intangible assets, amortization over period | 5 years | |||
Technology [Member] | ||||
Finite-lived intangible asset, useful life | 5 years | |||
Amortization expenses of intangible assets | $114,368 | $12,658 | $114,368 | $24,777 |
Intangible_Assets_Schedule_of_
Intangible Assets - Schedule of Intangible Assets (Details) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
Intangible Assets - June 30, 2014 - Cost | $54,927,447 | |
Additions | ||
Effect of Translation Adjustment | -2,208,657 | |
Accumulated Amortization | -26,688,126 | |
Net Balance - December 31, 2014 | 26,030,664 | 28,803,018 |
Product Licenses [Member] | ||
Intangible Assets - June 30, 2014 - Cost | 48,632,368 | |
Additions | ||
Effect of Translation Adjustment | -2,208,657 | |
Accumulated Amortization | -20,479,959 | |
Net Balance - December 31, 2014 | 25,943,752 | |
Customer Lists [Member] | ||
Intangible Assets - June 30, 2014 - Cost | 6,052,377 | |
Additions | ||
Effect of Translation Adjustment | ||
Accumulated Amortization | -5,965,465 | |
Net Balance - December 31, 2014 | 86,912 | |
Technology [Member] | ||
Intangible Assets - June 30, 2014 - Cost | 242,702 | |
Additions | ||
Effect of Translation Adjustment | ||
Accumulated Amortization | -242,702 | |
Net Balance - December 31, 2014 |
Intangible_Assets_Estimated_Am
Intangible Assets - Estimated Amortization Expense of Intangible Assets over Next Five Years (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
31-Dec-15 | $3,349,208 | |
31-Dec-16 | 3,130,881 | |
31-Dec-17 | 3,093,637 | |
31-Dec-18 | 3,093,637 | |
31-Dec-19 | 3,026,353 | |
Thereafter | 10,336,950 | |
Total | $26,030,664 | $28,803,018 |
Goodwill_Details_Narrative
Goodwill (Details Narrative) (USD $) | 6 Months Ended |
Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill impairment | $0 |
Goodwill_Summary_of_Goodwill_A
Goodwill - Summary of Goodwill Acquired (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Goodwill | $9,516,568 | $9,516,568 |
NetSol PK [Member] | ||
Goodwill | 1,166,610 | 1,166,610 |
NTE [Member] | ||
Goodwill | 3,471,814 | 3,471,814 |
VLS [Member] | ||
Goodwill | 214,044 | 214,044 |
NTA [Member] | ||
Goodwill | $4,664,100 | $4,664,100 |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Accounts Payable and Accrued Expenses [Abstract] | ||
Accounts Payable | $1,496,813 | $1,642,325 |
Accrued Liabilities | 2,896,417 | 2,956,686 |
Accrued Payroll | 8,052 | 44,185 |
Accrued Payroll Taxes | 213,728 | 261,261 |
Interest Payable | 48,522 | 61,555 |
Taxes Payable | 204,343 | 165,649 |
Other Payable | 103,226 | 103,226 |
Total | $4,971,101 | $5,234,887 |
Debts_Details_Narrative
Debts (Details Narrative) (USD $) | 6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | |||||
Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 31, 2011 | Oct. 31, 2013 | Mar. 31, 2014 | Jun. 30, 2012 | Jun. 30, 2008 | |
Long-term debt, excluding current maturities | 1,082,310 | 1,532,080 | $1,082,310 | |||||||
Capital Lease Arrangements [Member] | ||||||||||
Lease arrangement expiration | years through 2018 | |||||||||
NTE [Member] | ||||||||||
Percentage of debt service cost | 150.00% | |||||||||
GBP [Member] | NTE [Member] | ||||||||||
Tangible adjusted net | 600,000 | 600,000 | ||||||||
Habib American Bank [Member] | ||||||||||
Line of credit variable interest rate | 1.50% | 1.50% | ||||||||
Habib American Bank [Member] | NTA [Member] | ||||||||||
Line of credit variable interest rate | 1.90% | 1.90% | ||||||||
Debt instrument, collateral amount | 500,000 | |||||||||
Habib American Bank [Member] | NTA [Member] | Line of Credit [Member] | ||||||||||
Interest expense | 8,658 | 0 | 9,430 | 16,726 | ||||||
HSBC Bank [Member] | NTE [Member] | ||||||||||
Line of credit variable interest rate | 4.00% | |||||||||
Interest expense | 29,950 | 13,248 | 19,047 | 41,489 | ||||||
Business acquisition, percentage of voting interests acquired | 51.00% | |||||||||
Line of credit facility, maximum borrowing capacity | 1,553,277 | |||||||||
Debt instrument maturity term | 5 years | |||||||||
Line of credit facility, periodic payment | 28,611 | |||||||||
Debt instrument, base rate | 3.50% | |||||||||
HSBC Bank [Member] | NTE [Member] | GBP [Member] | ||||||||||
Line of credit facility, maximum borrowing capacity | 1,000,000 | |||||||||
Line of credit facility, periodic payment | 18,420 | |||||||||
HSBC Bank [Member] | NTE [Member] | Overdraft Facility [Member] | ||||||||||
Line of credit variable interest rate | 4.75% | 4.75% | ||||||||
Line of credit | 465,983 | |||||||||
Overdraft credit facility maximum days of debt | 90 days | |||||||||
Overdraft credit facility minimum percentage | 200.00% | |||||||||
HSBC Bank [Member] | NTE [Member] | Overdraft Facility [Member] | GBP [Member] | ||||||||||
Line of credit | 300,000 | |||||||||
Askari Bank [Member] | NetSol PK [Member] | TwoTerm Finance Facility [Member] | ||||||||||
Line of credit | 1,103,818 | 1,103,818 | ||||||||
Debt instrument, base rate | 2.75% | 2.75% | ||||||||
Proceeds from Line of credit facility | 490,586 | |||||||||
Secured debt | 5,690,000 | 5,690,000 | ||||||||
Debt instrument, interest rate | 12.90% | 12.90% | 12.90% | |||||||
Askari Bank [Member] | NetSol PK [Member] | INR [Member] | TwoTerm Finance Facility [Member] | ||||||||||
Line of credit | 112,500,000 | 112,500,000 | ||||||||
Proceeds from Line of credit facility | 50,000,000 | |||||||||
Secured debt | 580,000,000 | 580,000,000 | ||||||||
Asakari Bank Limited [Member] | NetSol PK [Member] | ||||||||||
Interest expense | 72,775 | 37,068 | 42,081 | 86,181 | ||||||
Line of credit | 2,943,514 | 2,943,514 | ||||||||
Line of credit facility, maximum borrowing capacity | 2,450,000 | 2,450,000 | ||||||||
Proceeds from Line of credit facility | 1,962,343 | |||||||||
Debt instrument, interest rate | 7.50% | 9.40% | 7.50% | |||||||
Long term debt convenant description | long term debt equity ratio of 60:40 and the current ratio of 1:1 | |||||||||
Asakari Bank Limited [Member] | NetSol PK [Member] | INR [Member] | ||||||||||
Line of credit | 300,000,000 | 300,000,000 | ||||||||
Line of credit facility, maximum borrowing capacity | 250,000,000 | 250,000,000 | ||||||||
Proceeds from Line of credit facility | 200,000,000 | |||||||||
Investec [Member] | NTE [Member] | ||||||||||
Line of credit facility, interest rate | 4.10% | |||||||||
Line of credit | 155,327 | |||||||||
Line of credit facility, periodic payment | 13,476 | |||||||||
Debt instrument, term | 1 year | |||||||||
Investec [Member] | NTE [Member] | GBP [Member] | ||||||||||
Line of credit | 100,000 | |||||||||
Line of credit facility, periodic payment | 8,676 | |||||||||
Investec [Member] | VLS [Member] | ||||||||||
Line of credit facility, interest rate | 3.13% | |||||||||
Line of credit | 253,152 | 253,152 | 232,990 | |||||||
Debt instrument, term | 7 months | 2 years | ||||||||
Debt instrument annual payment | 116,495 | 116,495 | ||||||||
Long-term debt, excluding current maturities | 122,292 | 122,292 | ||||||||
Long-term debt, current maturities | 130,861 | 130,861 | ||||||||
Investec [Member] | VLS [Member] | GBP [Member] | ||||||||||
Line of credit | 150,000 | |||||||||
Debt instrument annual payment | 75,000 | $75,000 | ||||||||
Directors' and Officers And Errors and Omissions Liability Insurance [Member] | ||||||||||
Line of credit facility, interest rate | 0.43% | 0.55% | 0.43% |
Debts_Components_of_Notes_Paya
Debts - Components of Notes Payable and Capital Leases (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 | ||
Total | $3,416,145 | $6,308,504 | ||
Current Maturities | 2,766,934 | 5,311,367 | ||
Long-Term Maturities | 649,211 | 997,137 | ||
Subsidiary Capital Leases, Current Maturities | -450,463 | |||
Subsidiary Capital Leases, Long-Term Maturities | 433,099 | |||
Total | 4,299,707 | 7,323,338 | ||
Current Maturities | 3,217,397 | 5,791,258 | ||
Long-Term Maturities | 1,082,310 | 1,532,080 | ||
D and O Insurance [Member] | ||||
Total | 106,690 | [1] | 54,547 | [1] |
Current Maturities | 106,690 | [1] | 54,547 | [1] |
Long-Term Maturities | [1] | [1] | ||
Habib Bank Line of Credit [Member] | ||||
Total | [2] | 2,438,844 | [2] | |
Current Maturities | [2] | 2,438,844 | [2] | |
Long-Term Maturities | [2] | [2] | ||
Bank Overdraft Facility [Member] | ||||
Total | [3] | [3] | ||
Current Maturities | [3] | [3] | ||
Long-Term Maturities | [3] | [3] | ||
HSBC Loan [Member] | ||||
Total | 603,373 | [4] | 835,899 | [4] |
Current Maturities | 321,747 | [4] | 346,138 | [4] |
Long-Term Maturities | 281,626 | [4] | 489,761 | [4] |
Term Finance Facility [Member] | ||||
Total | 490,586 | [5] | 632,527 | [5] |
Current Maturities | 245,293 | [5] | 253,011 | [5] |
Long-Term Maturities | 245,293 | [5] | 379,516 | [5] |
Loan Payable Bank [Member] | ||||
Total | 1,962,343 | [6] | 2,024,087 | [6] |
Current Maturities | 1,962,343 | [6] | 2,024,087 | [6] |
Long-Term Maturities | [6] | [6] | ||
Loan From Related Party [Member] | ||||
Total | 253,153 | [7] | 322,600 | [7] |
Current Maturities | 130,861 | [7] | 194,740 | [7] |
Long-Term Maturities | 122,292 | [7] | 127,860 | [7] |
Subsidiary Capital Leases [Member] | ||||
Subsidiary Capital Leases, Total | 883,562 | [8] | 1,014,834 | [8] |
Subsidiary Capital Leases, Current Maturities | 450,463 | [8] | 479,891 | [8] |
Subsidiary Capital Leases, Long-Term Maturities | $433,099 | [8] | $534,943 | [8] |
[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, are recorded in current maturities. The interest rate on the insurance financing was 0.43% and 0.55% as of December 31, 2014 and June 30, 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 December 31, 2014 and June 30, 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 December 31, 2014 and June 30, 2014, respectively. Interest expense for the three and six months ended December 31, 2014 was $nil and $8,658, respectively. Interest expense for the three and six months ended December 31, 2013 was $9,430 and $16,726, respectively. Amounts of both lines of credit were paid down during the period. | |||
[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 $465,983. The annual interest rate was 4.75% as of December 31, 2014 and June 30, 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 December 31, 2014, 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% in Virtual Leasing Services Limited. HSBC Bank guaranteed the loan up to a limit of £1,000,000, or approximately $1,553,277 for a period of 5 years with monthly payments of £18,420, or approximately $28,611. 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 three and six months ended December 31, 2014 was $13,248 and $29,950, respectively. Interest expense, during the three and six months ended December 31, 2013, was $19,047 and $41,489, respectively. | |||
[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 $1,103,818 (availed Rs. 50,000,000 or $490,586), (secured by the first charge of Rs. 580 million or approximately $5.69 million over the land, building and equipment of the company). The interest rate was 12.90% as of December 31, 2014 and June 30, 2014, respectively, which is 2.75% above the six-month Karachi Inter Bank Offering Rate. | |||
[6] | The Company's subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by the Company's assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 300,000,000 or $2,943,514 (availed Rs. 200,000,000 or $1,962,343). The interest rate for the loans was 7.5% and 9.4% at December 31, 2014 and June 30, 2014 respectively. Interest expense for the three and six months ended December 31, 2014 was $37,068 and $72,775, respectively. Interest expense for the three and six months ended December 31, 2013, was $42,081 and $86,181, respectively. Both term and export refinance facilities from Askari Bank Limited amounting to Rupees 250 million ($2.45 million) require NetSol PK to maintain a long term debt equity ratio of 60:40 and the current ratio of 1:1. As of December 31, 2014, 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 $155,327, for a period of 1 year with monthly payments of £8,676, or approximately $13,476. The interest rate was 4.1%. As of December 31, 2014, the company has paid off full amount of loan. In March 2014, the Company's subsidiary, VLS, entered into a loan agreement with Investec. The loan amount was £150,000, or approximately $232,990, for a period of two years with annual payments of £75,000, or approximately $116,495. The interest rate was 3.13%. As of December 31, 2014, the subsidiary has used this facility up to $253,152 including interest due, of which $122,292 was shown as long term and $130,861 as current maturity, including seven months of accrued interest. | |||
[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 secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the three and six months ended December 31, 2014 and 2013. |
Debts_Schedule_of_Aggregate_Mi
Debts - Schedule of Aggregate Minimum Future Lease Payments under Capital Leases (Details) (USD $) | Dec. 31, 2014 |
Debt Disclosure [Abstract] | |
Due FYE 12/31/15 | $531,224 |
Due FYE 12/31/16 | 382,127 |
Due FYE 12/31/17 | 85,482 |
Total Minimum Lease Payments | 998,833 |
Interest Expense relating to future periods | -115,271 |
Present Value of minimum lease payments | 883,562 |
Less: Current portion | -450,463 |
Non-Current portion | $433,099 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 6 Months Ended |
Dec. 31, 2014 | |
Employees [Member] | |
Compensation expense | $199,528 |
Issuance of common stock shares under employment agreement | 49,613 |
Restricted Stock [Member] | Officer [Member] | |
Issuance of common stock shares for services rendered | 52,500 |
Compensation expense | 305,700 |
Restricted Stock [Member] | Board Of Directors [Member] | |
Issuance of common stock shares for services rendered | 11,726 |
Compensation expense | 57,233 |
Stock Purchase Agreement [Member] | |
Issuance of restricted common stock, shares | 449,122 |
Issuance of restricted common stock, value | 1,280,000 |
Common stock price per share | $2.85 |
Stock Purchase Agreement One [Member] | |
Issuance of restricted common stock, shares | 107,842 |
Issuance of restricted common stock, value | $330,000 |
Common stock price per share | $3.06 |
Incentive_and_NonStatutory_Sto2
Incentive and Non-Statutory Stock Option Plan (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Stock Option [Member] | ||||
Compensation expense | $155,623 | $33,214 | $311,245 | $158,251 |
Compensation expense related to unvested options yet to be recognized | 311,244 | 311,244 | ||
Stock Grants [Member] | ||||
Compensation expense | 316,370 | 232,012 | 614,293 | 464,025 |
Compensation expense related to unvested options yet to be recognized | $606,675 | $606,675 |
Incentive_and_NonStatutory_Sto3
Incentive and Non-Statutory Stock Option Plan - Components of Common Stock Purchase Options and Warrants (Details) (USD $) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Warrants [Member] | ||
Number of shares, Outstanding Beginning | 163,124 | |
Number of shares, Granted | ||
Number of shares, Exercised | ||
Number of shares, Expired / Cancelled | ||
Number of shares, Outstanding Ending | 163,124 | 163,124 |
Number of shares, Exercisable | 163,124 | |
Weighted Ave Exercise Price, Outstanding Beginning | $7.29 | |
Weighted Ave Exercise Price, Granted | ||
Weighted Ave Exercise Price, Exercised | ||
Weighted Ave Exercise Price, Expired / Cancelled | ||
Weighted Ave Exercise Price, Outstanding Ending | $7.29 | $7.29 |
Weighted Ave Exercise Price, Exercisable | $7.29 | |
Weighted Average Remaining Contractual Life, Outstanding | 2 years 2 months 12 days | |
Weighted Average Remaining Contractual Life, Exercisable | 1 year 8 months 16 days | |
Aggregated Intrinsic Value, Outstanding | ||
Aggregated Intrinsic Value, Exercisable | ||
Options [Member] | ||
Number of shares, Outstanding Beginning | 757,462 | |
Number of shares, Granted | ||
Number of shares, Exercised | -30,000 | |
Number of shares, Expired / Cancelled | ||
Number of shares, Outstanding Ending | 727,462 | 757,462 |
Number of shares, Exercisable | 477,462 | |
Weighted Ave Exercise Price, Outstanding Beginning | $6.65 | |
Weighted Ave Exercise Price, Granted | ||
Weighted Ave Exercise Price, Exercised | $3.88 | |
Weighted Ave Exercise Price, Expired / Cancelled | ||
Weighted Ave Exercise Price, Outstanding Ending | $6.76 | $6.65 |
Weighted Ave Exercise Price, Exercisable | $8.27 | |
Weighted Average Remaining Contractual Life, Outstanding | 1 year 8 months 16 days | 2 years 2 months 12 days |
Weighted Average Remaining Contractual Life, Exercisable | 1 year 9 months 29 days | |
Aggregated Intrinsic Value, Outstanding | ||
Aggregated Intrinsic Value, Exercisable |
Incentive_and_NonStatutory_Sto4
Incentive and Non-Statutory Stock Option Plan - Schedule of Stock Options and Warrants Outstanding and Exercisable Activity (Details) (USD $) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Warrants [Member] | ||
Number Outstanding, shares | 163,124 | 163,124 |
Weighted Average Remaining Contractual Life | 2 years 2 months 12 days | |
Weighted Ave Exericse Price | $7.29 | |
Number Exercisable | 163,124 | |
Weighted Average Remaining Contractual Life | 1 year 8 months 16 days | |
Weighted Ave Exericse Price | $7.29 | |
Options [Member] | ||
Number Outstanding, shares | 727,462 | 757,462 |
Weighted Average Remaining Contractual Life | 1 year 8 months 16 days | 2 years 2 months 12 days |
Weighted Ave Exericse Price | $6.76 | |
Number Exercisable | 477,462 | |
Weighted Average Remaining Contractual Life | 1 year 9 months 29 days | |
Weighted Ave Exericse Price | $8.27 | |
Price Range One [Member] | Warrants [Member] | ||
Exercise Price, Lower | $5 | |
Exercise Price, Upper | $7.50 | |
Number Outstanding, shares | 163,124 | |
Weighted Average Remaining Contractual Life | 1 year 8 months 16 days | |
Weighted Ave Exericse Price | $7.29 | |
Number Exercisable | 163,124 | |
Weighted Average Remaining Contractual Life | 1 year 8 months 16 days | |
Weighted Ave Exericse Price | $7.29 | |
Price Range One [Member] | Options [Member] | ||
Exercise Price, Lower | $0.10 | |
Exercise Price, Upper | $9.90 | |
Number Outstanding, shares | 653,462 | |
Weighted Average Remaining Contractual Life | 1 year 9 months 4 days | |
Weighted Ave Exericse Price | $4.81 | |
Number Exercisable | 403,462 | |
Weighted Average Remaining Contractual Life | 1 year 11 months 5 days | |
Weighted Ave Exericse Price | $5.39 | |
Price Range Two [Member] | Options [Member] | ||
Exercise Price, Lower | $10 | |
Exercise Price, Upper | $19.90 | |
Number Outstanding, shares | 14,000 | |
Weighted Average Remaining Contractual Life | 1 year 1 month 13 days | |
Weighted Ave Exericse Price | $18.18 | |
Number Exercisable | 14,000 | |
Weighted Average Remaining Contractual Life | 1 year 1 month 13 days | |
Weighted Ave Exericse Price | $18.18 | |
Price Range Three [Member] | Options [Member] | ||
Exercise Price, Lower | $20 | |
Exercise Price, Upper | $29.90 | |
Number Outstanding, shares | 60,000 | |
Weighted Average Remaining Contractual Life | 1 year 3 months 29 days | |
Weighted Ave Exericse Price | $25.33 | |
Number Exercisable | 60,000 | |
Weighted Average Remaining Contractual Life | 1 year 3 months 29 days | |
Weighted Ave Exericse Price | $25.33 |
Incentive_and_NonStatutory_Sto5
Incentive and Non-Statutory Stock Option Plan - Summary of Unvested Stock Grants Awarded as Compensation (Details) (USD $) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Jun. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of shares, Unvested beginning balance | 232,000 | |
Number of shares, Granted | 110,500 | 337,899 |
Number of shares, Vested | -172,226 | -105,899 |
Number of shares, Unvested ending balance | 170,274 | 232,000 |
Weighted Average Grant Date Fair Value, beginning balance | $3.88 | |
Weighted Average Grant Date Fair Value, granted | $2.90 | $5.78 |
Weighted Average Grant Date Fair Value, vested | $3.57 | $10 |
Weighted Average Grant Date Fair Value, ending balance | $3.56 | $3.88 |
Operating_Segments_Details_Nar
Operating Segments (Details Narrative) | 6 Months Ended |
Dec. 31, 2014 | |
Segment | |
Segment Reporting [Abstract] | |
Number of Operating Segments | 3 |
Operating_Segments_Summary_of_
Operating Segments - Summary of Identifiable Assets (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Identifiable Assets | $92,159,318 | $94,903,274 |
North America [Member] | ||
Identifiable Assets | 8,194,933 | 7,406,631 |
Europe [Member] | ||
Identifiable Assets | 6,490,081 | 6,169,265 |
Asia Pacific [Member] | ||
Identifiable Assets | 74,472,607 | 76,176,555 |
Corporate Headquaters [Member] | ||
Identifiable Assets | $3,001,697 | $5,150,823 |
Operating_Segments_Summary_of_1
Operating Segments - Summary of Operating Information (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues | $12,352,604 | $8,554,301 | $22,579,755 | $17,475,043 |
Net income (loss) after taxes and before non-controlling interest | -1,505,930 | -1,795,286 | -3,735,156 | -2,025,293 |
Discontinued operation | -145,527 | -378,468 | ||
Net loss - Consolidated | -1,505,930 | -1,940,813 | -3,735,156 | -2,403,761 |
Unaffiliated Customers [Member] | ||||
Revenues | 10,998,128 | 7,297,402 | 19,829,279 | 15,250,601 |
Affiliated Customers [Member] | ||||
Revenues | 1,354,476 | 1,256,899 | 2,750,476 | 2,224,442 |
Consolidated [Member] | ||||
Revenues | 12,352,604 | 8,554,301 | 22,579,755 | 17,475,043 |
North America [Member] | ||||
Net income (loss) after taxes and before non-controlling interest | 446,050 | 23,271 | 711,773 | 216,472 |
North America [Member] | Unaffiliated Customers [Member] | ||||
Revenues | 1,423,560 | 857,904 | 2,590,337 | 1,939,522 |
Europe [Member] | ||||
Net income (loss) after taxes and before non-controlling interest | -274,697 | -297,595 | -257,873 | -851,313 |
Europe [Member] | Unaffiliated Customers [Member] | ||||
Revenues | 1,921,596 | 1,559,880 | 3,771,609 | 2,768,382 |
Asia Pacific [Member] | ||||
Net income (loss) after taxes and before non-controlling interest | -274,697 | -250,808 | -2,105,371 | 1,029,610 |
Asia Pacific [Member] | Unaffiliated Customers [Member] | ||||
Revenues | 7,652,972 | 4,879,618 | 13,467,333 | 10,542,697 |
Asia Pacific [Member] | Affiliated Customers [Member] | ||||
Revenues | 1,354,476 | 1,256,899 | 2,750,476 | 2,224,442 |
Corporate Headquaters [Member] | ||||
Net income (loss) after taxes and before non-controlling interest | -1,091,128 | -1,270,154 | -2,083,685 | -2,420,062 |
Discontinued Operations [Member] | ||||
Discontinued operation | -145,527 | -378,468 | ||
Intersegment Eliminations [Member] | ||||
Revenues | 1,502,786 | 836,615 | 1,914,433 | 1,289,089 |
Intersegment Eliminations [Member] | Europe [Member] | ||||
Revenues | 92,641 | 187,136 | 223,169 | 336,532 |
Intersegment Eliminations [Member] | Asia Pacific [Member] | ||||
Revenues | $1,410,145 | $649,479 | $1,691,264 | $952,557 |
Operating_Segments_Summary_of_2
Operating Segments - Summary of Capital Expenditures (Details) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Capital expenditures | $1,772,866 | $6,059,596 |
Corporate Headquaters [Member] | ||
Capital expenditures | 1,786 | 4,531 |
North America [Member] | ||
Capital expenditures | 4,866 | 16,386 |
Europe [Member] | ||
Capital expenditures | 155,895 | 90,423 |
Asia Pacific [Member] | ||
Capital expenditures | $1,610,319 | $5,948,256 |
Discontinued_Operations_Detail
Discontinued Operations (Details Narrative) (Vroozi [Member], USD $) | 1 Months Ended | 3 Months Ended |
Mar. 31, 2014 | Sep. 30, 2014 | |
Percentage of shares sold | 100.00% | |
Sale of stock, purchase price | $2,716,050 | |
Sale of stock, purchase price, cash | 1,810,700 | 452,675 |
Due September 30, 2014 [Member] | ||
Sale of stock, purchase price, non-interest bearing note receivable due | 452,675 | |
Contingent Upon Future Events [Member] | ||
Sale of stock, purchase price, non-interest bearing note receivable due | $452,675 |
NonControlling_Interest_in_Sub2
Non-Controlling Interest in Subsidiary (Details Narrative) (USD $) | 6 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
NetSol PK [Member] | ||
Purchase of common stock, shares | 1,580,000 | |
Purchase of common stock, value | $577,222 | |
Decrease in non-controlling interest | 34.85% | 36.62% |
NetSol PK [Member] | Maximum [Member] | ||
Decrease in non-controlling interest | 36.62% | |
NetSol PK [Member] | Minimum [Member] | ||
Decrease in non-controlling interest | 34.85% | |
Net Sol Innovation [Member] | ||
Decrease in non-controlling interest | 49.90% | 49.90% |
Payment of cash dividend | $1,576,609 |
NonControlling_Interest_in_Sub3
Non-Controlling Interest in Subsidiary - Balance of Non-Controlling Interest (Details) (USD $) | Dec. 31, 2014 | Jun. 30, 2014 |
Non-Controlling Interest | $13,380,769 | $16,124,512 |
NetSol PK [Member] | ||
Non Controlling Interest, Percentage | 34.85% | 36.62% |
Non-Controlling Interest | 11,821,972 | 14,317,233 |
Net Sol Innovation [Member] | ||
Non Controlling Interest, Percentage | 49.90% | 49.90% |
Non-Controlling Interest | 1,321,452 | 1,546,920 |
VLSVLHS And VLSIL Combined [Member] | ||
Non Controlling Interest, Percentage | 49.00% | 49.00% |
Non-Controlling Interest | $237,345 | $260,359 |