Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Sep. 12, 2016 | Dec. 31, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NETSOL TECHNOLOGIES INC | ||
Entity Central Index Key | 1,039,280 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 73,199,126 | ||
Entity Common Stock, Shares Outstanding | 10,737,437 | ||
Trading Symbol | NTWK | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 11,557,527 | $ 14,168,957 |
Accounts receivable, net of allowance of $492,498 and $524,565 | 9,691,229 | 6,480,344 |
Accounts receivable, net - related party | 5,691,178 | 3,491,899 |
Revenues in excess of billings | 10,493,096 | 5,251,005 |
Revenues in excess of billings - related party | 804,168 | 16,270 |
Other current assets | 2,214,628 | 1,871,040 |
Total current assets | 40,451,826 | 31,279,515 |
Restricted cash | 90,000 | 90,000 |
Property and equipment, net | 22,774,435 | 25,119,634 |
Other assets | 842,553 | 141,150 |
Intangible assets, net | 19,674,033 | 22,815,467 |
Goodwill | 9,516,568 | 9,516,568 |
Total assets | 93,349,415 | 88,962,334 |
Current liabilities: | ||
Accounts payable and accrued expenses | 5,962,770 | 5,952,561 |
Current portion of loans and obligations under capitalized leases | 4,440,084 | 3,896,353 |
Unearned revenues | 4,739,214 | 4,897,327 |
Common stock to be issued | 88,324 | 88,324 |
Total current liabilities | 15,230,392 | 14,834,565 |
Long term loans and obligations under capitalized leases; less current maturities | 477,692 | 487,492 |
Total liabilities | 15,708,084 | 15,322,057 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value; 500,000 shares authorized; | ||
Common stock, $.01 par value; 14,500,000 shares authorized; 10,713,372 shares issued and 10,686,093 outstanding as of June 30, 2016 and 10,307,826 shares issued and 10,280,547 outstanding as of June 30, 2015 | 107,134 | 103,078 |
Additional paid-in-capital | 121,448,946 | 119,209,807 |
Treasury stock (27,279 shares) | (415,425) | (415,425) |
Accumulated deficit | (37,323,360) | (40,726,121) |
Stock subscription receivable | (783,172) | (1,204,603) |
Other comprehensive loss | (18,730,494) | (17,167,100) |
Total NetSol stockholders' equity | 64,303,629 | 59,799,636 |
Non-controlling interest | 13,337,702 | 13,840,641 |
Total stockholders' equity | 77,641,331 | 73,640,277 |
Total liabilities and stockholders' equity | $ 93,349,415 | $ 88,962,334 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance net | $ 492,498 | $ 524,565 |
Preferred stock, par value | $ .01 | $ .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 | 10,713,372 | 10,307,826 |
Common stock, shares outstanding | 10,686,093 | 10,280,547 |
Treasury stock, shares | 27,279 | 27,279 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Net Revenues: | ||
License fees | $ 6,352,441 | $ 6,328,989 |
Maintenance fees | 13,310,591 | 12,196,073 |
Services | 32,288,229 | 24,827,822 |
License fees - related party | 1,616,138 | |
Maintenance fees - related party | 365,772 | 395,951 |
Services - related party | 10,617,022 | 7,299,743 |
Total net revenues | 64,550,193 | 51,048,578 |
Cost of revenues: | ||
Salaries and consultants | 21,789,329 | 19,859,684 |
Travel | 2,334,019 | 2,374,864 |
Depreciation and amortization | 5,926,969 | 8,336,857 |
Other | 3,698,290 | 3,020,107 |
Total cost of revenues | 33,748,607 | 33,591,512 |
Gross profit | 30,801,586 | 17,457,066 |
Operating expenses: | ||
Selling and marketing | 7,823,916 | 6,092,530 |
Depreciation and amortization | 1,225,170 | 2,006,957 |
General and administrative | 14,965,016 | 14,208,493 |
Research and development cost | 485,783 | 314,892 |
Total operating expenses | 24,499,885 | 22,622,872 |
Income (loss) from operations | 6,301,701 | (5,165,806) |
Other income and (expenses) | ||
Gain (loss) on sale of assets | 23,930 | (64,598) |
Interest expense | (264,511) | (166,962) |
Interest income | 161,794 | 331,432 |
Loss on foreign currency exchange transactions | (738,158) | (453,770) |
Other income | 224,931 | 684,030 |
Total other income (expenses) | (592,014) | 330,132 |
Net income (loss) before income taxes | 5,709,687 | (4,835,674) |
Income tax provision | (652,546) | (413,498) |
Net income (loss) | 5,057,141 | (5,249,172) |
Non-controlling interest | (1,654,380) | (299,646) |
Net income (loss) attributable to NetSol | $ 3,402,761 | $ (5,548,818) |
Net income (loss) per common share | ||
Basic | $ 0.33 | $ (0.57) |
Diluted | $ 0.32 | $ (0.57) |
Weighted average number of shares outstanding | ||
Basic | 10,391,157 | 9,728,122 |
Diluted | 10,584,835 | 9,728,122 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 3,402,761 | $ (5,548,818) |
Other comprehensive income (loss): | ||
Translation adjustment | (2,011,810) | (3,239,086) |
Comprehensive income (loss) | 1,390,951 | (8,787,904) |
Comprehensive income (loss) attributable to non-controlling interest | (448,416) | (1,051,209) |
Comprehensive income (loss) attributable to NetSol | $ 1,839,367 | $ (7,736,695) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Shares [Member] | Accumulated Deficit [Member] | Stock Subscriptions Receivable [Member] | Shares to be Issued [Member] | Other Comprehensive Loss [Member] | Non Controlling Interest [Member] | Total |
Balance at Jun. 30, 2014 | $ 91,509 | $ 115,394,097 | $ (415,425) | $ (35,177,303) | $ (2,280,488) | $ (14,979,223) | $ 16,124,512 | $ 78,757,679 | |
Balance, shares at Jun. 30, 2014 | 9,150,889 | ||||||||
Excercise of common stock options | $ 493 | 190,907 | 191,400 | ||||||
Excercise of common stock options, shares | 49,329 | ||||||||
Excercise of subsidiary common stock options | (16,079) | 28,264 | 12,185 | ||||||
Common stock issued for: Cash | $ 7,430 | 2,352,100 | (64,931) | 2,294,599 | |||||
Common stock issued for: Cash, shares | 743,107 | ||||||||
Common stock issued for: Services | $ 3,646 | 1,472,062 | 158,635 | (259,194) | 1,375,149 | ||||
Common stock issued for: Services, shares | 364,501 | ||||||||
Equity component shown as current liability | 347,518 | 347,518 | |||||||
Equity component shown as current liability | (88,324) | (88,324) | |||||||
Fair value of options issued | 622,488 | 622,488 | |||||||
Acqusition of non controlling interest in subsidiary | 176,413 | (753,635) | (577,222) | ||||||
Dividend to non controlling interest | (806,937) | (806,937) | |||||||
Adjustment in subscription receivable | (982,181) | 982,181 | |||||||
Foreign currency translation adjustment | (2,187,877) | (1,051,209) | (3,239,086) | ||||||
Net loss for the year | (5,548,818) | 299,646 | (5,249,172) | ||||||
Balance at Jun. 30, 2015 | $ 103,078 | 119,209,807 | (415,425) | (40,726,121) | (1,204,603) | (17,167,100) | 13,840,641 | 73,640,277 | |
Balance, shares at Jun. 30, 2015 | 10,307,826 | ||||||||
Excercise of common stock options | $ 1,770 | 779,210 | 780,980 | ||||||
Excercise of common stock options, shares | 177,024 | ||||||||
Excercise of subsidiary common stock options | (28,331) | 45,075 | 16,744 | ||||||
Common stock issued for: Cash | 64,931 | 64,931 | |||||||
Common stock issued for: Cash, shares | |||||||||
Common stock issued for: Services | $ 2,286 | 1,262,332 | 1,264,618 | ||||||
Common stock issued for: Services, shares | 228,522 | ||||||||
Adjustment for payment of cash in lieu of shares | (25,391) | (25,391) | |||||||
Equity component shown as current liability | 88,324 | 88,324 | |||||||
Equity component shown as current liability | (88,324) | (88,324) | |||||||
Fair value of options issued | 145,716 | 145,716 | |||||||
Fair value of options extended | 122,875 | 1,225,875 | |||||||
Acqusition of non controlling interest in subsidiary | (17,272) | (750,125) | (767,397) | ||||||
Dividend to non controlling interest | (1,003,853) | (1,003,853) | |||||||
Payment received for stock subscription | 356,500 | 356,500 | |||||||
Foreign currency translation adjustment | (1,563,394) | (448,416) | (2,011,810) | ||||||
Net loss for the year | 3,402,761 | 1,654,380 | 5,057,141 | ||||||
Balance at Jun. 30, 2016 | $ 107,134 | $ 121,448,946 | $ (415,425) | $ (37,323,360) | $ (783,172) | $ (18,730,494) | $ 13,337,702 | $ 77,641,331 | |
Balance, shares at Jun. 30, 2016 | 10,713,372 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 5,057,141 | $ (5,249,172) |
Adjustments to reconcile net income (loss)to net cash provided by operating activities: | ||
Depreciation and amortization | 7,152,139 | 10,343,814 |
Provision for bad debts | 237,703 | (434,928) |
(Gain) loss on sale of assets | (23,930) | 64,598 |
Stock issued for services | 1,264,618 | 1,375,149 |
Fair market value of warrants and stock options granted | 268,591 | 622,488 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,758,422) | (871,959) |
Accounts receivable - related party | (2,564,819) | (1,179,931) |
Revenues in excess of billing | (4,987,772) | (2,997,449) |
Revenues in excess of billing - related party | (884,738) | (16,281) |
Other current assets | (729,359) | 580,618 |
Accounts payable and accrued expenses | 558,033 | 726,700 |
Unearned revenue | 69,851 | 2,114,635 |
Net cash provided by operating activities | 1,659,036 | 5,078,282 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (3,335,921) | (3,558,712) |
Sales of property and equipment | 986,433 | 1,102,615 |
Investment | (555,556) | |
Purchase of subsidiary shares from open market | (767,397) | (577,222) |
Net cash used in investing activities | (3,672,441) | (3,033,319) |
Cash flows from financing activities: | ||
Proceeds from sale of common stock | 64,931 | 2,294,599 |
Proceeds from the exercise of stock options and warrants | 1,137,480 | 191,400 |
Proceeds from exercise of subsidiary options | 16,744 | 12,185 |
Restricted cash | 2,438,844 | |
Dividend paid by subsidiary to Non controlling interest | (1,003,853) | (806,937) |
Proceeds from bank loans | 1,333,406 | 1,410,313 |
Payments on capital lease obligations and loans - net | (950,529) | (4,079,174) |
Net cash provided by financing activities | 598,179 | 1,461,230 |
Effect of exchange rate changes | (1,196,204) | (799,931) |
Net increase (decrease) in cash and cash equivalents | (2,611,430) | 2,706,262 |
Cash and cash equivalents, beginning of the period | 14,168,957 | 11,462,695 |
Cash and cash equivalents, end of period | 11,557,527 | 14,168,957 |
SUPPLEMENTAL DISCLOSURES: | ||
Interest | 251,551 | 162,904 |
Taxes | 391,285 | 503,924 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Provided services for investment in eeGeo, Inc. | 164,794 | |
Assets acquired under capital lease | 269,427 | |
Adjustment of uncollectable subscription receivable with additional paid in capital | $ 982,181 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS NetSol Technologies, Inc. and subsidiaries (collectively, the Company), was incorporated under the laws of the State of Nevada on March 18, 1997. The Company designs, develops, markets, and exports proprietary software products to customers in the automobile finance and leasing, banking, healthcare, and financial services industries worldwide. The Company also provides system integration, consulting, IT products and services in exchange for fees from customers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company as follows: Wholly-owned Subsidiaries NetSol Connect (Private), Ltd. (Connect) NetSol Technologies (Beijing) Co. Ltd. (NetSol Beijing) NetSol Omni (Private) Ltd. (Omni) NetSol Technologies (GmbH) (NTG) Majority-owned Subsidiaries NetSol Technologies Thailand Limited (NetSol Thai) Virtual Lease Services Holdings Limited (VLSH) The Company consolidates any variable interest entities of which it is the primary beneficiary. Equity investments through which the Company exercises significant influence over but does not control the investee and is not the primary beneficiary of the investees activities are accounted for using the equity method. Investments through which the Company is not able to exercise significant influence over the investee and which do not have readily determinable fair values are accounted for under the cost method. All material inter-company accounts have been eliminated in the consolidation. (B) Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). (C) 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. (D) Cash and Cash Equivalents Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. (E) Concentration of Credit Risk Cash includes cash on hand and demand deposits in accounts maintained within the United States as well as in foreign countries. Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the United States. Balances at financial institutions within certain foreign countries are not covered by insurance. As of June 30, 2016 and 2015, the Company had uninsured deposits related to cash deposits in accounts maintained within foreign entities of approximately $7,640,095 and $8,969,443, respectively. The Company has not experienced any losses in such accounts. The Companys operations are carried out globally. Accordingly, the Companys business, financial condition and results of operations may be influenced by the political, economic and legal environments of each country and by the general state of the countrys economy. The Companys operations in each foreign country are subject to specific considerations and significant risks not typically associated with companies in economically developed nations. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Companys results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Also, due to the current economic conditions in China and challenges being faced by the Chinese economy, the Company may face a risk of reduction in future revenue growth and non collection of receivables from the customers in China. On June 23, 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the European Union (E.U.), commonly referred to as Brexit. As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.s future relationship with the E.U. Although it is unknown what those terms will be, it is possible that there will be greater restrictions on imports and exports between the U.K. and E.U. countries and perhaps increased regulatory complexities. These changes may adversely affect the Companys operations and financial results. (F) Restricted Cash The Company has placed $90,000 in a savings account with HSBC as collateral against a standby letter of credit issued by the bank in favor of the landlord for office space. (G) Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, customer concentrations, current economic trends and changes in customer payment patterns. Reserves are recorded primarily on a specific identification basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2016 and 2015, the Company had recorded allowance for doubtful accounts of $492,498 and $524,565, respectively. (H) Revenues in Excess of Billings Revenues in excess of billings represent the total of the project to be billed to the customer over the revenues recognized per US GAAP. As the customers are billed under the terms of their contract, the corresponding amount is transferred from this account to Accounts Receivable. (I) Property and Equipment Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation is computed using various methods over the estimated useful lives of the assets, ranging from three to twenty years. Following is the summary of estimated useful lives of the assets: Category Estimated Useful Life Computer Equipment & Software 3 to 5 Years Office furniture and equipment: 5 to 10 Years Building 20 Years Autos 5 Years Assets under capital leases 3 to 10 Years Improvements 5 to 10 Years The Company capitalizes costs of materials, consultants, and payroll and payroll-related costs for employees incurred in developing internal-use computer software. These costs are included with Computer equipment and software. (J) Impairment of Long-Lived Assets The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. (K) Intangible Assets Intangible assets consist of product licenses, renewals, enhancements, copyrights, trademarks, trade names, and customer lists. Intangible assets with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the discounted expected future cash flows. If the future discounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. (L) Software Development Costs Costs incurred to internally develop computer software products or to enhance an existing product are recorded as research and development costs and expensed when incurred until technological feasibility for the respective product is established. Thereafter, all software development costs are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers. The Company makes on-going evaluations of the recoverability of its capitalized software projects by comparing the amount capitalized for each product to the estimated present value of expected future net income from the product. If such evaluations indicate that the unamortized software development costs exceed the present value of expected future net income, the Company writes off the amount which the unamortized software development costs exceed such present value. Capitalized and purchased computer software development costs are being amortized ratably based on the projected revenue associated with the related software or on a straight-line basis. (M) Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase businesses combination. Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value including goodwill. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test. Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. (N) Fair Value of Financial Instruments The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. The three levels of valuation hierarchy are defined as follows: Level 1: Valuations consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority. Level 2: Valuations rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability. Level 3: Valuations are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement and are less observable and thus have the lowest priority. Management analyzes all financial instruments with features of both liabilities and equity under ASC 480, Distinguishing Liabilities From Equity Derivatives and Hedging. (O) Revenue Recognition The Company derives revenues from the following sources: (1) software licenses, (2) services, which include implementation and consulting services, and (3) maintenance, which includes post contract customer support. The Company recognizes revenue from license contracts without major customization when a non-cancelable, non-contingent license agreement has been signed, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. Delivery is considered to have occurred upon electronic transfer of the license key that provides immediate availability of the product to the purchaser. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue the Company reports. If an arrangement does not qualify for separate accounting of the software license and consulting transactions, then new software license revenue is generally recognized together with the consulting services based on contract accounting using either the percentage-of-completion or completed-contract method. Contract accounting is applied to any arrangements: (1) that include milestones or customer specific acceptance criteria that may affect collection of the software license fees; (2) where services include significant modification or customization of the software; (3) where significant consulting services are provided for in the software license contract without additional charge or are substantially discounted; or (4) where the software license payment is tied to the performance of consulting services. Revenue from consulting services is recognized as the services are performed for time-and-materials contracts. Revenue from training and development services is recognized as the services are performed. Revenue from maintenance agreements is recognized ratably over the term of the maintenance agreement, typically one year. Multiple Element Arrangements The Company may enter into multiple element revenue arrangements in which a customer may purchase a number of different combinations of software licenses, consulting services, maintenance and support, as well as training and development. Vendor specific objective evidence (VSOE) of fair value for each element is based on the price for which the element is sold separately. The Company determines the VSOE of fair value of each element based on historical evidence of the Companys stand-alone sales of these elements to third-parties or from the stated renewal rate for the elements contained in the initial software license arrangement. When VSOE of fair value does not exist for any undelivered element, revenue is deferred until the earlier of the point at which such VSOE of fair value exists or until all elements of the arrangement have been delivered. The only exception to this guidance is when the only undelivered element is maintenance and support or other services, then the entire arrangement fee is recognized ratably over the performance period. (P) Unearned Revenue Unearned revenue represents billings in excess of revenue earned on contracts and are recognized on a pro-rata basis over the life of the contract. Unearned revenue was $4,739,214 and $4,897,327 as of June 30, 2016 and 2015, respectively. (Q) Cost of Revenues Cost of revenues includes salaries and benefits for technical employees, consultant costs, amortization of capitalized computer software development costs, depreciation of computer and equipment, travel costs, and indirect costs such as rent and insurance. (R) Advertising Costs The Company expenses the cost of advertising as incurred. Advertising costs for the years ended June 30, 2016 and 2015 were $293,683 and $250,801, respectively. (S) Share-Based Compensation The Company records stock compensation in accordance with ASC 718, Compensation Stock Compensation (T) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations. (U) Foreign Currency Translation The Company transacts business in various foreign currencies. The accounts of NetSol UK, NTE, 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; NetSol Australia uses the Australian dollar; and NetSol Beijing uses the Chinese Yuan as the functional currencies. NetSol Technologies, Inc., and its subsidiary, NTA, use the U.S. dollar as the functional currency. Consequently, revenues and expenses of operations outside the United States are translated into U.S. Dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into U.S. Dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are recorded to other comprehensive income. Accumulated translation losses classified as an item of accumulated other comprehensive loss in the stockholders equity section of the consolidated balance sheets were $18,730,494 and $17,167,100 as of June 30, 2016 and 2015, respectively. During the years ended June 30, 2016 and 2015, comprehensive income (loss) in the consolidated statements of operations included NetSols share of translation loss of $1,563,394 and $2,187,877, respectively. Net foreign exchange transaction losses included in non-operating income (expense) in the accompanying consolidated statements of operations were $738,158 and $453,770 for the years ended June 30, 2016 and 2015, respectively. (V) Statement of Cash Flows The Companys cash flows from operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. (W) Segment Reporting The Company defines operating segments as components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. The Company allocates its resources and assesses the performance of its sales activities based on the geographic locations of its subsidiaries (see Note 17). (X) Reclassifications Certain 2015 balances have been reclassified to conform to the 2016 presentation. (Y) New Accounting Pronouncements 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 standards 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. In August 2015, the FASB deferred the effective date of the new revenue standard by one year, which will make it effective for the Company in the first quarter of its fiscal year ending June 30, 2019. 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 Companys 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 Entitys Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth managements responsibility to evaluate whether there is substantial doubt about an entitys 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 entitys 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 managements 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 Companys 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 Companys consolidated financial statements. In February 2015, FASB issued ASU No. 2015-02, (Topic 810): Amendments to the Consolidation Analysis. ASU No. 2015-02 provides amendments to respond to stakeholders concerns about the current accounting for consolidation of certain legal entities. Stakeholders expressed concerns that GAAP might require a reporting entity to consolidate another legal entity in situations in which the reporting entitys contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entitys voting rights, or the reporting entity is not exposed to a majority of the legal entitys economic benefits or obligations. ASU No. 2015-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Companys results of operations, financial position or disclosures. In April 2015, FASB issued ASU No. 2015-03, (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In April 2015, FASB issued ASU No. 2015-05, (Subtopic 350-40): Customers Accounting for Fees Paid in a Cloud Computing Arrangements. In September 2015, the Financial Accounting Standards Board (FASB) issued ASU No. 2015-16, Business Combinations (Topic 805) Simplifying the Accounting for Measurement-Period Adjustments. In November 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which changes how deferred taxes are classified on the balance sheet and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. The adoption of this guidance is not expected to have a material impact on the Companys results of operations, financial position or disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and updates certain presentation and disclosure requirements. ASU 2016-01 is effective beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Companys results of operations, financial position or disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize right-of-use assets and lease liabilities, for all leases, with the exception of short-term leases, at the commencement date of each lease. This ASU requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The amendments of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update 2016-07, Investments- Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting (ASU 2016-07). ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of this standard would have on our financial condition, results of operations and cash flows. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The guidance simplifies accounting for share-based payments, most notably by requiring all excess tax benefits and tax deficiencies to be recorded as income tax benefits or expense in the income statement and by allowing entities to recognize forfeitures of awards when they occur. This new guidance is effective for annual reporting periods beginning after December 15, 2016 and may be adopted prospectively or retroactively. We are currently evaluating the impact the adoption of this standard would have on our financial condition, results of operations and cash flows. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Jun. 30, 2016 | |
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. The components of basic and diluted earnings per share were as follows: For the year ended June 30, 2016 Net Income Shares Per Share Basic income per share: Net income available to common shareholders $ 3,402,761 10,391,157 $ 0.33 Effect of dilutive securities Stock options - 190,595 - Warrants - 3,083 - Diluted income per share $ 3,402,761 10,584,835 $ 0.32 For the year ended June 30, 2015 Net Loss Shares Per Share Basic loss per share: Net loss available to common shareholders $ (5,548,818 ) 9,728,122 $ (0.57 ) Effect of dilutive securities Stock options - - - Warrants - - - Diluted loss per share $ (5,548,818 ) 9,728,122 $ (0.57 ) As of June 30, 2016 and 2015, the following potential dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive. 2016 2015 Stock Options - 708,133 Warrants - 163,124 - 871,257 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 4 RELATED PARTY TRANSACTIONS NetSol-Innovation In November 2004, the Company entered into a joint venture agreement with 1insurer formerly Innovation Group Investec Asset Finance In October 2011, NTE entered into an agreement with Investec Asset Finance to acquire VLS. NTE and VLS provide support services to Investec. During the year ended June 30, 2016 and 2015, NTE and VLS provided maintenance and services of $4,437,917 and $1,652,077, respectively. Accounts receivable at June 30, 2016 and 2015 were $1,001,856 and $265,166, respectively. Revenue in excess of billing was $804,168 as of June 30, 2016. G-Force; LLC Najeeb Ghauri, CEO and Chairman of the Board, and Naeem Ghauri, Director, have a financial interest in G-Force, LLC which purchased a 4.9% investment in eeGeo, Inc. for $1,111,111. G-Force, LLC paid $555,556 at the initial closing and $555,555 on September 1, 2016. See Note 8 Other Long Term Assets |
Major Customers
Major Customers | 12 Months Ended |
Jun. 30, 2016 | |
Risks and Uncertainties [Abstract] | |
Major Customers | NOTE 5 MAJOR CUSTOMERS The Company is a strategic business partner for Daimler Financial Services (which consists of a group of many companies in different countries), which accounts for approximately 19.96% and 12.89% of revenue, and 1insurer accounts for approximately 12.64% and 11.84% of revenue for the fiscal years ended June 30, 2016 and 2015, respectively. Accounts receivable at June 30, 2016 for these companies were $5,306,166 and $4,689,322, respectively. Accounts receivable at June 30, 2015 for these companies were $446,754 and $3,226,733, respectively. |
Other Current Assets
Other Current Assets | 12 Months Ended |
Jun. 30, 2016 | |
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 June 30, As of June 30, 2016 2015 Prepaid Expenses $ 386,578 $ 452,314 Advance Income Tax 968,334 895,075 Employee Advances 83,978 36,816 Security Deposits 72,985 54,186 Other Receivables 486,562 322,647 Other Assets 216,191 110,002 Total $ 2,214,628 $ 1,871,040 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 7 PROPERTY AND EQUIPMENT Property and equipment consisted of the following: As of June 30, As of June 30, 2016 2015 Office Furniture and Equipment $ 3,346,156 $ 3,104,375 Computer Equipment 25,935,620 25,911,422 Assets Under Capital Leases 2,409,074 1,887,767 Building 9,185,570 8,743,130 Land 2,410,664 2,451,577 Capital Work In Progress - 392,243 Autos 1,073,447 943,873 Improvements 385,135 204,779 Subtotal 44,745,666 43,639,166 Accumulated Depreciation (21,971,231 ) (18,519,532 ) Property and Equipment, Net $ 22,774,435 $ 25,119,634 For the years ended June 30, 2016 and 2015, depreciation expense totaled $4,387,121 and $5,671,155, respectively. Of these amounts, $3,161,951 and $3,888,122 are reflected as part of cost of revenues for the years ended June 30, 2016 and 2015, respectively. Following is a summary of fixed assets held under capital leases as of June 30, 2016 and 2015, respectively: As of June 30, As of June 30, 2016 2015 Computers and Other Equipment $ 503,926 $ 590,625 Furniture and Fixtures 408,200 414,023 Vehicles 1,496,948 883,119 Total 2,409,074 1,887,767 Less: Accumulated Depreciation - Net (713,248 ) (577,215 ) $ 1,695,826 $ 1,310,552 |
Other Long Term Assets
Other Long Term Assets | 12 Months Ended |
Jun. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Long Term Assets | NOTE 8 OTHER LONG TERM ASSETS As of June 30, As of June 30, 2016 2015 Investment (1) $ 720,350 $ - Long Term Security Deposits 122,203 141,150 Total $ 842,553 $ 141,150 (1) Investment under cost method On March 2, 2016, the Company purchased a 4.9% interest in eeGeo, Inc. a non-public company for $1,111,111. The Company paid $555,556 at the initial closing and $555,555 on September 1, 2016. NetSol PK, the subsidiary of the Company, purchased a 12.2% investment in eeGeo, Inc., for $2,777,778 which will be earned over future periods by providing IT and enterprise software solutions. Per the agreement, NetSol PK is to provide a minimum of $200,000 of services in each three-month period and the entire balance is required to be provided within three years of the date of the agreement. NetSol PK may be required to forfeit the shares back to eeGeo, Inc., if NetSol PK fails to provide the future services. As of June 30, 2016, NetSol PK has provided services valued at $164,794 which is recorded as investment. In connection with the investment, the Company and NetSol PK received a warrant to purchase preferred stock which included the following key terms and features: ● The warrants are exercisable into share of the Next Round Preferred, only if and when the Next Round Preferred is issued by eeGeo, Inc., in a Qualified Financing. ● The warrants expire on March 2, 2020. ● Next Round Preferred is defined as occurring if eeGeo, Inc.,s preferred stock (or securities convertible into preferred stock) are issued in a Qualified Financing that occurs after March 2, 2016. ● Qualified Financing is defined as financing with total proceeds of at least $2 million. ● The total number of common stock shares to be issued is equal to $1,250,000 divided by the per share price of the Next Round Preferred. ● The exercise price of the warrants is equal to the greater of a) 70% of the per share price of the Next Round Preferred sold in a Qualified Financing, or b) $25,000,000 divided by the total number of shares of common stock outstanding immediately prior to the Qualified Financing (on a fully-diluted basis, excluding the number of common stock shares issuable upon the exercise of any given warrant). The Company accounted for this investment using the cost method. At June 30, 2016, the Company has determined that there is no impairment. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | NOTE 9 INTANGIBLE ASSETS Intangible assets consisted of the following: As of June 30, As of June 30, 2016 2015 Product Licenses - Cost $ 48,632,368 $ 48,632,368 Additions - - Deletion (1,387,371 ) - Effect of Translation Adjustment (3,323,518 ) (2,325,008 ) Accumulated Amortization (24,247,446 ) (23,491,893 ) Net Balance $ 19,674,033 $ 22,815,467 (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 $19,674,033 will be amortized over the next 7.75 years. Amortization expense for the years ended June 30, 2016 and 2015 was $2,765,018 and $4,448,735, respectively. During the year ended June 30, 2015, the Company recorded amortization expense of $113,243 and $110,681 related to customer lists and technology, respectively, and they were fully amortized as of June 30, 2015. (B) Future Amortization Estimated amortization expense of intangible assets over the next five years is as follows: Year ended: June 30, 2017 $ 2,758,035 June 30, 2018 2,758,035 June 30, 2019 2,758,035 June 30, 2020 2,758,035 June 30, 2021 2,758,035 Thereafter 5,883,858 $ 19,674,033 |
Goodwill
Goodwill | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | NOTE 10 GOODWILL Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in prior period business combinations. Goodwill was comprised of the following amounts: As of June 30, As of June 30, 2016 2015 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 year ended June 30, 2016. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | NOTE 11 ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following: As of June 30, As of June 30, 2016 2015 Accounts Payable $ 1,346,532 $ 1,514,841 Accrued Liabilities 4,171,058 3,978,435 Accrued Payroll & Taxes 231,881 291,546 Taxes Payable 66,437 22,957 Other Payable 146,862 144,782 Total $ 5,962,770 $ 5,952,561 |
Debts
Debts | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debts | NOTE 12 DEBTS Notes and leases payable consisted of the following: As of June 30, 2016 Current Long-Term Name Total Maturities Maturities D&O Insurance (1) $ 65,114 $ 65,114 $ - HSBC Loan (2) 93,704 93,704 - Loan Payable Bank (3) 3,792,907 3,792,907 - Loan From Related Party (4) - - - 3,951,725 3,951,725 - Subsidiary Capital Leases (5) 966,051 488,359 477,692 $ 4,917,776 $ 4,440,084 $ 477,692 As of June 30, 2015 Current Long-Term Name Total Maturities Maturities D&O Insurance (1) $ 79,872 $ 79,872 $ - HSBC Loan (2) 447,161 322,349 124,812 Loan Payable Bank (3) 2,892,961 2,892,961 - Loan From Related Party (4) 129,979 129,979 - 3,549,973 3,425,161 124,812 Subsidiary Capital Leases (5) 833,872 471,192 362,680 $ 4,383,845 $ 3,896,353 $ 487,492 (1) The Company finances Directors and Officers (D&O) liability insurance as well as Errors and Omissions (E&O) liability insurance, for which the total balances are renewed on an annual basis and as such are recorded in current maturities. The interest rate on the insurance financing was 0.49% as of June 30, 2016 and 2015, respectively. (2) In October 2011, the Companys subsidiary, NTE, entered into a loan agreement with HSBC Bank to finance the acquisition of 51% of a controlling interest in Virtual Leasing Services Limited. HSBC Bank guaranteed the loan up to a limit of £1,000,000, or approximately $1,333,333 for a period of 5 years with monthly payments of £18,420, or approximately $24,560. The interest rate was 4% which is 3.5% above the bank sterling base rate. The loan is securitized against debenture comprising of fixed and floating charges over all the assets and undertakings of NTE including all present and future freehold and leasehold property, book and other debts, chattels, goodwill and uncalled capital, both present and future. Interest expense for the years ended June 30, 2016 and 2015 was $12,846 and $47,255, respectively. This facility requires that NTEs adjusted tangible net worth would not be less than £600,000. For this purpose, adjusted tangible net worth means shareholders funds less intangible assets plus non-redeemable preference shares. In addition, NTEs cash debt service coverage would not fall below 150% of the aggregate debt service cost. As of June 30, 2016, NTE was in compliance with this covenant. (3) The Companys subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by NetSol PKs assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 400,000,000 or $3,792,907. This facility requires NetSol PK to maintain a long term debt equity ratio of 60:40 and the current ratio of 1:1. As of June 30, 2016, NetSol PK was in compliance with this covenant. (4) In March 2014, the Companys subsidiary, VLS, entered into a loan agreement with Investec. The loan amount was £150,000, or approximately $200,000, for a period of two years with annual payments of £75,000, or approximately $100,000. The interest rate was 3.13%. As of June 30, 2016, VLS has paid this facility in full. All future payments of the loans described in the above sub notes 1 to 4 are considered current maturities. (5) The Company leases various fixed assets under capital lease arrangements expiring in various years through 2018. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are depreciated over the lesser of their related lease terms or their estimated useful lives and are secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the years ended June 30, 2016 and 2015. Following is the aggregate minimum future lease payments under capital leases for the year ended June 30, 2016: Amount Minimum Lease Payments Due FYE 6/30/17 $ 548,023 Due FYE 6/30/18 316,115 Due FYE 6/30/19 195,956 Total Minimum Lease Payments 1,060,094 Interest Expense relating to future periods (94,043 ) Present Value of minimum lease payments 966,051 Less: Current portion (488,359 ) Non-Current portion $ 477,692 |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 13 INCOME TAXES The Company is incorporated in the State of Nevada and registered to do business in the State of California. The following is a breakdown of income before the provision for income taxes: Consolidated pre-tax income (loss) consists of the following: Years Ended June 30, 2016 2015 US operations $ (2,527,545 ) $ (3,621,392 ) Foreign operations 8,237,232 (1,214,282 ) $ 5,709,687 $ (4,835,674 ) The components of the provision for income taxes are as follows: Years Ended June 30, 2016 2015 Current: Federal $ - $ - State and Local - - Foreign 652,546 413,498 Deferred: Federal - - State and Local - - Foreign - - Provision for income taxes $ 652,546 $ 413,498 A reconciliation of taxes computed at the statutory federal income tax rate to income tax expense (benefit) is as follows: Years Ended June 30, 2016 2015 Income tax (benefit) provision at statutory rate $ 1,998,390 35.0 % $ (1,692,486 ) 35.0 % State income (benefit) taxes, net of federal tax benefit 328,307 5.7 % (278,051 ) 5.7 % Foreign earnings taxed at different rates (2,026,031 ) -35.5 % 1,655,514 -34.2 % Change in valuation allowance for deferred tax assets 476,646 8.3 % 843,390 -17.4 % Share of net (income) loss in equity method investee - 0.0 % - 0.0 % Other (124,766 ) -2.19 % (114,869 ) 2.4 % Provision for income taxes $ 652,546 11.4 % $ 413,498 -8.6 % Deferred income tax assets and liabilities as of June 30, 2016 and 2015 consist of tax effects of temporary differences related to the following: Years Ended June 30, 2016 2015 Net operating loss carry forwards $ 14,924,107 $ 14,527,578 Other 559,792 479,674 Net deferred tax assets 15,483,899 15,007,252 Valuation allowance for deferred tax assets (15,483,899 ) (15,007,252 ) Net deferred tax assets $ - $ - The Company has established a full valuation allowance as management believes it is more likely than not that these assets will not be realized in the future. The valuation allowance increased by $476,647 for the year ended June 30, 2016 mainly due to adjusting the Companys net operating loss carry forwards for current year operating losses in certain subsidiaries. At June 30, 2016, federal and state net operating loss carry forwards in the United States of America were $39,205,468 and $6,614,243, respectively. Federal net operating loss carry forwards begin to expire in 2020, while state net operating loss carry forwards are expiring each year. Due to both historical and recent changes in the capitalization structure of the Company, the utilization of net operating losses may be limited pursuant to section 382 of the Internal Revenue Code. Net operating losses related to foreign entities were $2,827,685 at June 30, 2016. As of June 30, 2016, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters. The Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company is subject to U.S. federal income tax, as well as various state and foreign jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ending June 30, 2013 through 2015. The Company does not anticipate any material amount of unrecognized tax benefits within the next 12 months. The cumulative amount of undistributed earnings of foreign subsidiaries that the Company intends to permanently invest and upon which no deferred US income taxes have been provided is $29,195,810 as of June 30, 2016. The additional US income tax on unremitted foreign earnings, if repatriated, would be offset in part by foreign tax credits. The extent of this offset would depend on many factors, including the method of distribution, and specific earnings distributed. The Company determined that it is not practicable to determine unrecognized deferred tax liability associated with the unremitted earnings attributable to the foreign subsidiaries. Income from the export of computer software and its related services developed in Pakistan is exempt from tax through June 30, 2018. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 14 STOCKHOLDERS EQUITY During the years ended June 30, 2016 and 2015, the Company issued 54,318 and 152,500 shares of common stock, respectively, for services rendered by officers of the Company. These shares were valued at the fair market value of $304,138 and $699,000, respectively, and recorded as compensation expense in the accompanying consolidated financial statements. During the years ended June 30, 2016 and 2015, the Company issued 33,000 and 41,726 shares of common stock respectively, 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 $167,974 and $173,633 respectively, and recorded as compensation expense in the accompanying consolidated financial statements. During the years ended June 30, 2016 and 2015, the Company issued 141,204 and 170,275 shares of common stock, respectively, to employees pursuant to the terms of their employment agreements. These shares were valued at the fair market value of $792,506 and $603,075, respectively, and recorded as compensation expense in the accompanying consolidated financial statements. During the year ended June 30, 2016, the Company collected subscription receivable of $356,500 related to the exercise of stock options in previous years. During the year ended June 30, 2016 and 2015, the Company received $780,980 and $191,400, respectively, pursuant to a stock option agreement for the exercise of 177,024 and 49,329 shares of common stock, respectively, at prices ranging from $3.88 to $4.92 and $3.88 per share, respectively. During the year ended June 30, 2015, the Company received $2,359,530 pursuant to a stock purchase agreement for the purchase of 743,107 restricted shares of common stock at prices ranging from $2.85 to $4.46 per share. During the year ended June 30, 2015, the Company determined that certain subscription receivables related to stock issuances in previous years were deemed uncollectible and reduced the subscription receivable account $982,181 with a corresponding entry to additional-paid-in-capital. During the year ended June 30, 2015, the Company determined that certain subscription receivables related to the exercise of stock options were deemed uncollectible and reduced the subscription receivable account by $158,635 with a corresponding entry to compensation expense. |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | NOTE 15 STOCK BASED COMPENSATION The Company maintains several Incentive and Non-Statutory Stock Option Plans (Plans) for its employees and consultants. Options granted under these Plans to an employee of the Company become exercisable over a period of no longer than ten (10) years and no less than twenty percent (20%) of the shares are exercisable annually. Options are not exercisable, in whole or in part, prior to one (1) year from the date of grant unless the board of directors specifically determines otherwise, as provided. Two types of options may be granted under these Plans: (1) Incentive Stock Options (also known as Qualified Stock Options) which may only be issued to employees of the Company and whereby the exercise price of the option is not less than the fair market value of the common stock on the date it was reserved for issuance under the Plan; and (2) Non-statutory Stock Options which may be issued to either employees or consultants of the Company and whereby the exercise price of the option is less than the fair market value of the common stock on the date it was reserved for issuance under the plan. Grants of options may be made to employees and consultants without regard to any performance measures. All options issued pursuant to the Plan are nontransferable and subject to forfeiture. In May 2015, the shareholders approved the 2015 Equity Incentive Plan (the 2015 Plan) which provides for the grant of equity-based awards, including options, stock appreciation rights, restricted stock awards or performance share awards or any other right or interest relating to shares or cash, to eligible participants. The aggregate number of shares reserved and available for award under the 2015 Plan was 1,250,000. The 2015 Plan contemplates the issuance of common stock upon exercise of options or other awards granted to eligible persons under the 2015 Plan. Shares issued under the 2015 Plan may be both authorized and unissued shares or previously issued shares acquired by the Company. Upon termination or expiration of an unexercised option, stock appreciation right or other stock-based award under the 2015 Plan, in whole or in part, the number of shares of common stock subject to such award again becomes available for grant under the 2015 Plan. Any shares of restricted stock forfeited as described below will become available for grant. The maximum number of shares that may be granted to any one participant in any calendar year may not exceed 50,000 shares. All options issued pursuant to the Plan are nontransferable and subject to forfeiture. Options granted under the 2015 Plan are not generally transferable and must be exercised within 10 years, subject to earlier termination upon termination of the option holders employment, but in no event later than the expiration of the options term. The exercise price of each option may not be less than the fair market value of a share of the Companys common stock on the date of grant (except in connection with the assumption or substitution for another option in a manner qualifying under Section 424(a) of the Internal Revenue Code of 1986, as amended. Incentive stock options granted to any participant who owns 10% or more of the Companys outstanding common stock (a Ten Percent Shareholder) must have an exercise price equal to or exceeding 110% of the fair market value of a share of our common stock on the date of the grant and must not be exercisable for longer than five years. Options become vested and exercisable at such times or upon such events and subject to such terms, conditions, performance criteria or restrictions as specified by the Committee. The maximum term of any option granted under the 2015 Plan is ten years, provided that an incentive stock option granted to a Ten Percent Shareholder must have a term not exceeding five years. Under the 2015 Plan, a participant may also be awarded a performance award, which means that the participant may receive cash, stock or other awards contingent upon achieving performance goals established by the Committee. The Committee may also make deferred share awards, which entitle the participant to receive the Companys stock in the future for services performed between the date of the award and the date the participant may receive the stock. The vesting of deferred share awards may be based on performance criteria and/or continued service with the Company. A participant who is granted a stock appreciation right under the Plan has the right to receive all or a percentage of the fair market value of a share of stock on the date of exercise of the stock appreciation right minus the grant price of the stock appreciation right determined by the Committee (but in no event less than the fair market value of the stock on the date of grant). Finally, the Committee may make restricted stock awards under the 2015 Plan, which are subject to such terms and conditions as the Committee determines and as are set forth in the award agreement related to the restricted stock. As of June 30, 2015, 460,500 shares were allocated under this plan to non-officer employees. A summary of option and warrant activity for the years ended June 30, 2016 and 2015 is presented below: OPTIONS: # of shares Weighted Ave Exericse Price Weighted Average Remaining Contractual Life (in years) Aggregated Intrinsic Value Outstanding and exercisable, June 30, 2014 757,462 $ 6.65 2.2 $ - Granted - - Exercised (49,329 ) $ 3.88 Expired / Cancelled - - Outstanding and exercisable, June 30, 2015 708,133 $ 6.84 1.22 $ 572,352 Granted 152,024 $ 4.50 Exercised (177,024 ) $ 4.37 Expired / Cancelled (73,000 ) $ 24.08 Outstanding and exercisable, June 30, 2016 610,133 $ 4.90 0.99 $ 799,030 WARRANTS: Outstanding and exercisable, June 30, 2015 163,124 $ 7.29 1.22 $ - Granted / adjusted - - Exercised - - Expired - - Outstanding and exercisable, June 30, 2016 163,124 $ 7.29 0.23 $ 9,303 The following table summarizes information about stock options and warrants outstanding and exercisable at June 30, 2016: Exercise Price Number Outstanding and Exercisable Weighted Average Remaining Contractual Life Weighted Ave Exericse Price OPTIONS: $0.10 - $9.90 609,133 0.99 $ 4.88 $10.00 - $19.90 1,000 1.05 $ 16.00 Totals 610,133 0.99 $ 4.90 WARRANTS: $5.00 - $7.50 163,124 0.23 $ 7.29 Totals 163,124 0.23 $ 7.29 The assumptions used in calculating the fair value of options granted using the Black-Scholes option-pricing model for options granted during the year ended June 30, 2016 are as follows: June 30, 2016 Risk-free interest rate 0.01% - 0.02 % Expected life 3 months - 5 months Expected volatility 41.65% - 47.89 % Expected dividend 0 % The weighted average grant-date fair value for the options granted during the year ended June 30, 2016, was $0.96. The Company recorded compensation expense of $268,591 and $622,488 for the years ended June 30, 2016 and 2015, respectively. During 2016, the Company extended the contractual life for one year for 425,671 fully vested share options held by 2 officers and an employee. As a result of that modification, the Company recognized additional compensation expense of The following table summarizes stock grants awarded as compensation: # of shares Weighted Average Grant Date Fair Value ($) Unvested, June 30, 2014 232,000 $ 3.88 Granted 113,275 $ 3.26 Vested (338,608 ) $ 3.60 Unvested, June 30, 2015 6,667 $ 6.00 Granted 864,500 $ 5.91 Vested (240,939 ) $ 5.51 Unvested, March 31, 2016 630,228 $ 6.07 For the years ended June 30, 2016 and 2015, the Company recorded compensation expense of $1,264,618 and $1,475,707, respectively. The compensation expense related to the unvested stock grants as of June 30, 2016 was $3,810,765 which will be recognized during the fiscal years of 2017 to 2019. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 16 COMMITMENTS AND CONTINGENCIES (A) Non-cancellable operating leases ● The Companys headquarters is located in Calabasas California with approximately 7,210 rentable square feet for $23,128 per month. The term of the lease is for five years and five months and expires August 31, 2017. A $23,821 security deposit is included in other assets in the accompanying consolidated financial statements. ● The Australia lease is a three-year lease that expires in June 2018 with a monthly rent of approximately $4,820. ● The Beijing lease is a three-year lease that expires in January 2017 with a monthly rent of approximately $12,649. ● The Bangkok lease is a three year lease expiring in November 2016 with a monthly rent of approximately $8,541. ● The NetSol Europe facilities, located in Horsham, United Kingdom, are leased until June 23, 2021 with a monthly rent of approximately $7,778. ● VLS facilities, located in Chester, United Kingdom, are leased until July 2016 with a monthly rent of approximately $2,361. ● NTA facilities are located in Alameda, California with a monthly rent of $8,381. The Alameda lease expired in November 2014, which has been renewed through January 2018. ● The NetSol Karachi office lease expires in November 2019 and currently is rented at the rate of approximately $8,344 per month. Upon expiration of the leases, the Company does not anticipate any difficulty in obtaining renewals or alternative space. Rent expense amounted to $1,529,618 and $1,524,677 for the years ended June 30, 2016 and 2015, respectively. The total annual lease commitment for the next five years is as follows: FYE 6/30/17 $ 915,219 FYE 6/30/18 486,320 FYE 6/30/19 231,250 FYE 6/30/20 104,439 FYE 6/30/21 93,333 (B) Litigation As previously disclosed, on July 25, 2014, purported class action lawsuits were filed in the U.S. District Court for the Central District of California against the Company and certain of its current or former officers and/or directors, which have been consolidated under the caption Rand-Heart of New York, Inc. v. NetSol Technologies, Inc., et al. On October 27, 2015, a shareholder derivative lawsuit was filed in the California state court entitled McArthur v Ghauri, et al. On December 30, 2015, a virtually identical shareholder derivative lawsuit was filed in Nevada state court, Paulovits v. Ghauri, et al. On June 15, 2016, the parties in the California and the Nevada cases jointly executed a Stipulation and Agreement of Settlement of Derivative Claims, which is intended to fully resolve both cases. Pursuant to the stipulation and subject to the courts approval, the Company has agreed to adopt or maintain certain corporate governance measures, and has agreed to cause its insurers to pay plaintiff counsels fees and expenses in an aggregate amount not to exceed $175,000. On June 16, 2016, the California plaintiff filed a motion for preliminary approval of the derivative settlement. The motion is scheduled to be heard by the California court on October 25, 2016. |
Segment Information and Geograp
Segment Information and Geographic Areas | 12 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information and Geographic Areas | NOTE 17 SEGMENT INFORMATION AND GEOGRAPHIC AREAS The Company has identified three global regions or segments for its products and services; North America, Europe, and Asia-Pacific. The 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 operational issues and strategies unique to their particular regional location. We account for intercompany sales and expenses as if the sales or expenses were to third parties and eliminate them in consolidation. The following table presents a summary of identifiable assets as of June 30, 2016 and 2015: As of June 30, As of June 30, 2016 2015 Identifiable assets: Corporate headquarters $ 3,646,160 $ 4,896,334 North America 6,845,444 7,162,846 Europe 7,857,427 6,631,945 Asia - Pacific 75,000,384 70,271,209 Consolidated $ 93,349,415 $ 88,962,334 The following table presents a summary of operating information for the years ended June 30: 2016 2015 Revenues from unaffiliated customers: North America $ 5,464,740 $ 5,535,183 Europe 6,232,200 5,707,127 Asia - Pacific 40,254,321 32,110,574 51,951,261 43,352,884 Revenue from affiliated customers Europe 4,437,917 1,652,077 Asia - Pacific 8,161,015 6,043,617 12,598,932 7,695,694 Consolidated $ 64,550,193 $ 51,048,578 Intercompany revenue Europe $ 558,645 $ 302,812 Asia - Pacific 4,807,276 4,620,426 Eliminated $ 5,365,921 $ 4,923,238 Net income (loss) after taxes and before non-controlling interest: Corporate headquarters $ (3,252,340 ) $ (3,665,755 ) North America 635,203 221,433 Europe 1,576,176 (1,262,222 ) Asia - Pacific 6,098,102 (542,628 ) Consolidated $ 5,057,141 $ (5,249,172 ) Depreciation and amortization: Corporate headquarters $ - $ 16,148 North America 35,268 165,240 Europe 172,755 665,826 Asia - Pacific 6,944,116 9,496,600 Consolidated $ 7,152,139 $ 10,343,814 Interest expense: Corporate headquarters $ 6,236 $ 13,783 North America 117 1,588 Europe 40,302 52,926 Asia - Pacific 217,856 98,665 Consolidated $ 264,511 $ 166,962 Income tax expense: Europe $ 46,691 $ 1,244 Asia - Pacific 605,855 412,254 Consolidated $ 652,546 $ 413,498 The following table presents a summary of capital expenditures for the years ended June 30: 2016 2015 Capital expenditures: Corporate headquarters $ - $ 3,439 North America 66,764 47,497 Europe 417,861 140,870 Asia - Pacific 2,851,296 3,366,906 Consolidated $ 3,335,921 $ 3,558,712 Geographic Information Disclosed in the table below is geographic information for each country that comprised greater than five percent of total revenues for the years ended June 30 2016 and 2015. June 30, 2016 June 30, 2015 Revenue Long-lived Assets Revenue Long-lived Assets China $ 17,276,250 $ 19,851 $ 15,119,518 $ 27,453 Thailand 6,428,041 309,498 4,842,577 123,097 USA 5,843,204 5,360,684 7,190,905 4,715,670 UK 16,894,973 4,036,925 10,641,565 4,075,864 Pakistan & India 1,842,046 43,047,590 1,868,090 48,457,329 Australia & New Zealand 4,308,784 30,259 2,672,265 37,303 Mexico 1,542,530 - 1,202,832 - Indonesia 6,201,642 - 5,212,919 - Other Countries 4,212,723 2,782 2,297,907 14,953 Total $ 64,550,193 $ 52,807,589 $ 51,048,578 $ 57,451,669 Disclosed in the table below is the reconciliation of revenue by each entity and country disclosed above for the years ended June 30 2016 and 2015. Revenues 2016 Total China Thailand USA UK Pakistan & India Australia & New Zealand Mexico Indonesia Other Countries North America: $ 5,464,740 $ - $ - $ 3,922,210 $ - $ - $ - $ 1,542,530 $ - $ - Europe: 10,670,117 - - - 10,446,098 - - - - 224,019 Asia-Pacific: 48,415,336 17,276,250 6,428,041 1,920,994 6,448,875 1,842,046 4,308,784 - 6,201,642 3,988,704 Total $ 64,550,193 $ 17,276,250 $ 6,428,041 $ 5,843,204 $ 16,894,973 $ 1,842,046 $ 4,308,784 $ 1,542,530 $ 6,201,642 $ 4,212,723 Revenues 2015 Total China Thailand USA UK Pakistan & India Australia & New Zealand Mexico Indonesia Other Countries North America: $ 5,535,183 $ - $ - $ 4,332,351 $ - $ - $ - $ 1,202,832 $ - $ - Europe: 7,375,527 - - - 7,094,304 - - - - 281,223 Asia-Pacific: 38,137,868 15,119,518 4,842,577 2,858,554 3,547,261 1,868,090 2,672,265 - 5,212,919 2,016,684 Total $ 51,048,578 $ 15,119,518 $ 4,842,577 $ 7,190,905 $ 10,641,565 $ 1,868,090 $ 2,672,265 $ 1,202,832 $ 5,212,919 $ 2,297,907 |
Non-Controlling Interest in Sub
Non-Controlling Interest in Subsidiary | 12 Months Ended |
Jun. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interest in Subsidiary | NOTE 18 NON-CONTROLLING INTEREST IN SUBSIDIARY The Company had non-controlling interests in several of its subsidiaries. The balance of non-controlling interest as of June 30, 2016 and 2015 was as follows: SUBSIDIARY Non Controlling Interest % Non-Controlling Interest at June 30, 2016 NetSol PK 33.40 % $ 10,292,495 NetSol-Innovation 49.90 % 2,735,998 VLS, VLSH & VLSIL Combined 49.00 % 309,213 NetSol Thai 0.006 % (4 ) Total $ 13,337,702 SUBSIDIARY Non Controlling Interest % Non-Controlling Interest at June 30, 2015 NetSol PK 34.90 % $ 11,411,954 NetSol-Innovation 49.90 % 2,035,548 VLS, VLHS & VLSIL Combined 49.00 % 393,139 Total $ 13,840,641 NetSol PK During the year ended June 30, 2016, employees of NetSol PK exercised 108,000 of options of common stock pursuant to employees exercising stock options and NetSol PK received cash of $16,744. The Company purchased 1,374,000 shares of common stock of NetSol PK from the open market for $767,397, resulting in an overall decrease in non-controlling interest from 34.90% to 33.40%. NetSol-Innovation During the year ended June 30, 2016 and 2015, NetSol-Innovation paid a cash dividend of $2,028,805 and $1,500,000, respectively. NetSol Thai During the year ended June 30, 2016, NetSol Thai issued 3 qualification shares to each of its directors. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 19 SUBSEQUENT EVENTS On September 1, 2016, the Company paid $555,555 as required by the share purchase agreement described in Note 8. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | (A) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company as follows: Wholly-owned Subsidiaries NetSol Connect (Private), Ltd. (Connect) NetSol Technologies (Beijing) Co. Ltd. (NetSol Beijing) NetSol Omni (Private) Ltd. (Omni) NetSol Technologies (GmbH) (NTG) Majority-owned Subsidiaries NetSol Technologies Thailand Limited (NetSol Thai) Virtual Lease Services Holdings Limited (VLSH) The Company consolidates any variable interest entities of which it is the primary beneficiary. Equity investments through which the Company exercises significant influence over but does not control the investee and is not the primary beneficiary of the investees activities are accounted for using the equity method. Investments through which the Company is not able to exercise significant influence over the investee and which do not have readily determinable fair values are accounted for under the cost method. All material inter-company accounts have been eliminated in the consolidation. |
Basis of Presentation | (B) Basis of Presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). |
Use of Estimates | (C) 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. |
Cash and Cash Equivalents | (D) Cash and Cash Equivalents Cash and cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. |
Concentration of Credit Risk | (E) Concentration of Credit Risk Cash includes cash on hand and demand deposits in accounts maintained within the United States as well as in foreign countries. Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash and restricted cash. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the United States. Balances at financial institutions within certain foreign countries are not covered by insurance. As of June 30, 2016 and 2015, the Company had uninsured deposits related to cash deposits in accounts maintained within foreign entities of approximately $7,640,095 and $8,969,443, respectively. The Company has not experienced any losses in such accounts. The Companys operations are carried out globally. Accordingly, the Companys business, financial condition and results of operations may be influenced by the political, economic and legal environments of each country and by the general state of the countrys economy. The Companys operations in each foreign country are subject to specific considerations and significant risks not typically associated with companies in economically developed nations. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Companys results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Also, due to the current economic conditions in China and challenges being faced by the Chinese economy, the Company may face a risk of reduction in future revenue growth and non collection of receivables from the customers in China. On June 23, 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the European Union (E.U.), commonly referred to as Brexit. As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.s future relationship with the E.U. Although it is unknown what those terms will be, it is possible that there will be greater restrictions on imports and exports between the U.K. and E.U. countries and perhaps increased regulatory complexities. These changes may adversely affect the Companys operations and financial results. |
Restricted Cash | (F) Restricted Cash The Company has placed $90,000 in a savings account with HSBC as collateral against a standby letter of credit issued by the bank in favor of the landlord for office space. |
Allowance for Doubtful Accounts | (G) Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, customer concentrations, current economic trends and changes in customer payment patterns. Reserves are recorded primarily on a specific identification basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2016 and 2015, the Company had recorded allowance for doubtful accounts of $492,498 and $524,565, respectively. |
Revenues in Excess of Billings | (H) Revenues in Excess of Billings Revenues in excess of billings represent the total of the project to be billed to the customer over the revenues recognized per US GAAP. As the customers are billed under the terms of their contract, the corresponding amount is transferred from this account to Accounts Receivable. |
Property and Equipment | (I) Property and Equipment Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation is computed using various methods over the estimated useful lives of the assets, ranging from three to twenty years. Following is the summary of estimated useful lives of the assets: Category Estimated Useful Life Computer Equipment & Software 3 to 5 Years Office furniture and equipment: 5 to 10 Years Building 20 Years Autos 5 Years Assets under capital leases 3 to 10 Years Improvements 5 to 10 Years The Company capitalizes costs of materials, consultants, and payroll and payroll-related costs for employees incurred in developing internal-use computer software. These costs are included with Computer equipment and software. |
Impairment of Long-Lived Assets | (J) Impairment of Long-Lived Assets The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. |
Intangible Assets | (K) Intangible Assets Intangible assets consist of product licenses, renewals, enhancements, copyrights, trademarks, trade names, and customer lists. Intangible assets with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company assesses recoverability by determining whether the carrying value of such assets will be recovered through the discounted expected future cash flows. If the future discounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. |
Software Development Costs | (L) Software Development Costs Costs incurred to internally develop computer software products or to enhance an existing product are recorded as research and development costs and expensed when incurred until technological feasibility for the respective product is established. Thereafter, all software development costs are capitalized and reported at the lower of unamortized cost or net realizable value. Capitalization ceases when the product or enhancement is available for general release to customers. The Company makes on-going evaluations of the recoverability of its capitalized software projects by comparing the amount capitalized for each product to the estimated present value of expected future net income from the product. If such evaluations indicate that the unamortized software development costs exceed the present value of expected future net income, the Company writes off the amount which the unamortized software development costs exceed such present value. Capitalized and purchased computer software development costs are being amortized ratably based on the projected revenue associated with the related software or on a straight-line basis. |
Goodwill | (M) Goodwill Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a purchase businesses combination. Goodwill is reviewed for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value including goodwill. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test. Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. |
Fair Value of Financial Instruments | (N) Fair Value of Financial Instruments The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. The three levels of valuation hierarchy are defined as follows: Level 1: Valuations consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority. Level 2: Valuations rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability. Level 3: Valuations are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement and are less observable and thus have the lowest priority. Management analyzes all financial instruments with features of both liabilities and equity under ASC 480, Distinguishing Liabilities From Equity Derivatives and Hedging. |
Revenue Recognition | (O) Revenue Recognition The Company derives revenues from the following sources: (1) software licenses, (2) services, which include implementation and consulting services, and (3) maintenance, which includes post contract customer support. The Company recognizes revenue from license contracts without major customization when a non-cancelable, non-contingent license agreement has been signed, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. Delivery is considered to have occurred upon electronic transfer of the license key that provides immediate availability of the product to the purchaser. Determining whether and when some of these criteria have been satisfied often involves assumptions and judgments that can have a significant impact on the timing and amount of revenue the Company reports. If an arrangement does not qualify for separate accounting of the software license and consulting transactions, then new software license revenue is generally recognized together with the consulting services based on contract accounting using either the percentage-of-completion or completed-contract method. Contract accounting is applied to any arrangements: (1) that include milestones or customer specific acceptance criteria that may affect collection of the software license fees; (2) where services include significant modification or customization of the software; (3) where significant consulting services are provided for in the software license contract without additional charge or are substantially discounted; or (4) where the software license payment is tied to the performance of consulting services. Revenue from consulting services is recognized as the services are performed for time-and-materials contracts. Revenue from training and development services is recognized as the services are performed. Revenue from maintenance agreements is recognized ratably over the term of the maintenance agreement, typically one year. |
Unearned Revenue | (P) Unearned Revenue Unearned revenue represents billings in excess of revenue earned on contracts and are recognized on a pro-rata basis over the life of the contract. Unearned revenue was $4,739,214 and $4,897,327 as of June 30, 2016 and 2015, respectively. |
Cost of Revenues | (Q) Cost of Revenues Cost of revenues includes salaries and benefits for technical employees, consultant costs, amortization of capitalized computer software development costs, depreciation of computer and equipment, travel costs, and indirect costs such as rent and insurance. |
Advertising Costs | (R) Advertising Costs The Company expenses the cost of advertising as incurred. Advertising costs for the years ended June 30, 2016 and 2015 were $293,683 and $250,801, respectively. |
Share-Based Compensation | (S) Share-Based Compensation The Company records stock compensation in accordance with ASC 718, Compensation Stock Compensation |
Income Taxes | (T) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations. |
Foreign Currency Translation | (U) Foreign Currency Translation The Company transacts business in various foreign currencies. The accounts of NetSol UK, NTE, 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; NetSol Australia uses the Australian dollar; and NetSol Beijing uses the Chinese Yuan as the functional currencies. NetSol Technologies, Inc., and its subsidiary, NTA, use the U.S. dollar as the functional currency. Consequently, revenues and expenses of operations outside the United States are translated into U.S. Dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into U.S. Dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are recorded to other comprehensive income. Accumulated translation losses classified as an item of accumulated other comprehensive loss in the stockholders equity section of the consolidated balance sheets were $18,730,494 and $17,167,100 as of June 30, 2016 and 2015, respectively. During the years ended June 30, 2016 and 2015, comprehensive income (loss) in the consolidated statements of operations included NetSols share of translation loss of $1,563,394 and $2,187,877, respectively. Net foreign exchange transaction losses included in non-operating income (expense) in the accompanying consolidated statements of operations were $738,158 and $453,770 for the years ended June 30, 2016 and 2015, respectively. |
Statement of Cash Flows | (V) Statement of Cash Flows The Companys cash flows from operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. |
Segment Reporting | (W) Segment Reporting The Company defines operating segments as components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. The Company allocates its resources and assesses the performance of its sales activities based on the geographic locations of its subsidiaries (see Note 17). |
Reclassifications | (X) Reclassifications Certain 2015 balances have been reclassified to conform to the 2016 presentation. |
New Accounting Pronouncements | (Y) New Accounting Pronouncements 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 standards 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. In August 2015, the FASB deferred the effective date of the new revenue standard by one year, which will make it effective for the Company in the first quarter of its fiscal year ending June 30, 2019. 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 Companys 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 Entitys Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth managements responsibility to evaluate whether there is substantial doubt about an entitys 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 entitys 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 managements 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 Companys 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 Companys consolidated financial statements. In February 2015, FASB issued ASU No. 2015-02, (Topic 810): Amendments to the Consolidation Analysis. ASU No. 2015-02 provides amendments to respond to stakeholders concerns about the current accounting for consolidation of certain legal entities. Stakeholders expressed concerns that GAAP might require a reporting entity to consolidate another legal entity in situations in which the reporting entitys contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entitys voting rights, or the reporting entity is not exposed to a majority of the legal entitys economic benefits or obligations. ASU No. 2015-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this guidance is not expected to have a material impact on the Companys results of operations, financial position or disclosures. In April 2015, FASB issued ASU No. 2015-03, (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In April 2015, FASB issued ASU No. 2015-05, (Subtopic 350-40): Customers Accounting for Fees Paid in a Cloud Computing Arrangements. In September 2015, the Financial Accounting Standards Board (FASB) issued ASU No. 2015-16, Business Combinations (Topic 805) Simplifying the Accounting for Measurement-Period Adjustments. In November 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which changes how deferred taxes are classified on the balance sheet and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. The adoption of this guidance is not expected to have a material impact on the Companys results of operations, financial position or disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and updates certain presentation and disclosure requirements. ASU 2016-01 is effective beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the Companys results of operations, financial position or disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize right-of-use assets and lease liabilities, for all leases, with the exception of short-term leases, at the commencement date of each lease. This ASU requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The amendments of this update should be applied using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update 2016-07, Investments- Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting (ASU 2016-07). ASU 2016-07 eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. ASU 2016-07 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of this standard would have on our financial condition, results of operations and cash flows. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The guidance simplifies accounting for share-based payments, most notably by requiring all excess tax benefits and tax deficiencies to be recorded as income tax benefits or expense in the income statement and by allowing entities to recognize forfeitures of awards when they occur. This new guidance is effective for annual reporting periods beginning after December 15, 2016 and may be adopted prospectively or retroactively. We are currently evaluating the impact the adoption of this standard would have on our financial condition, results of operations and cash flows. |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Estimated Useful Lives of Assets | Following is the summary of estimated useful lives of the assets: Category Estimated Useful Life Computer Equipment & Software 3 to 5 Years Office furniture and equipment: 5 to 10 Years Building 20 Years Autos 5 Years Assets under capital leases 3 to 10 Years Improvements 5 to 10 Years |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Earnings Per Share | The components of basic and diluted earnings per share were as follows: For the year ended June 30, 2016 Net Income Shares Per Share Basic income per share: Net income available to common shareholders $ 3,402,761 10,391,157 $ 0.33 Effect of dilutive securities Stock options - 190,595 - Warrants - 3,083 - Diluted income per share $ 3,402,761 10,584,835 $ 0.32 For the year ended June 30, 2015 Net Loss Shares Per Share Basic loss per share: Net loss available to common shareholders $ (5,548,818 ) 9,728,122 $ (0.57 ) Effect of dilutive securities Stock options - - - Warrants - - - Diluted loss per share $ (5,548,818 ) 9,728,122 $ (0.57 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | As of June 30, 2016 and 2015, the following potential dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive. 2016 2015 Stock Options - 708,133 Warrants - 163,124 - 871,257 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consisted of the following: As of June 30, As of June 30, 2016 2015 Prepaid Expenses $ 386,578 $ 452,314 Advance Income Tax 968,334 895,075 Employee Advances 83,978 36,816 Security Deposits 72,985 54,186 Other Receivables 486,562 322,647 Other Assets 216,191 110,002 Total $ 2,214,628 $ 1,871,040 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following: As of June 30, As of June 30, 2016 2015 Office Furniture and Equipment $ 3,346,156 $ 3,104,375 Computer Equipment 25,935,620 25,911,422 Assets Under Capital Leases 2,409,074 1,887,767 Building 9,185,570 8,743,130 Land 2,410,664 2,451,577 Capital Work In Progress - 392,243 Autos 1,073,447 943,873 Improvements 385,135 204,779 Subtotal 44,745,666 43,639,166 Accumulated Depreciation (21,971,231 ) (18,519,532 ) Property and Equipment, Net $ 22,774,435 $ 25,119,634 |
Summary of Fixed Assets Held Under Capital Leases | Following is a summary of fixed assets held under capital leases as of June 30, 2016 and 2015, respectively: As of June 30, As of June 30, 2016 2015 Computers and Other Equipment $ 503,926 $ 590,625 Furniture and Fixtures 408,200 414,023 Vehicles 1,496,948 883,119 Total 2,409,074 1,887,767 Less: Accumulated Depreciation - Net (713,248 ) (577,215 ) $ 1,695,826 $ 1,310,552 |
Other Long Term Assets (Tables)
Other Long Term Assets (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Long Term Assets | As of June 30, As of June 30, 2016 2015 Investment (1) $ 720,350 $ - Long Term Security Deposits 122,203 141,150 Total $ 842,553 $ 141,150 (1) Investment under cost method |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following: As of June 30, As of June 30, 2016 2015 Product Licenses - Cost $ 48,632,368 $ 48,632,368 Additions - - Deletion (1,387,371 ) - Effect of Translation Adjustment (3,323,518 ) (2,325,008 ) Accumulated Amortization (24,247,446 ) (23,491,893 ) Net Balance $ 19,674,033 $ 22,815,467 |
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: June 30, 2017 $ 2,758,035 June 30, 2018 2,758,035 June 30, 2019 2,758,035 June 30, 2020 2,758,035 June 30, 2021 2,758,035 Thereafter 5,883,858 $ 19,674,033 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill Acquired | Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in prior period businesses combinations. Goodwill was comprised of the following amounts: As of June 30, As of June 30, 2016 2015 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 35
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following: As of June 30, As of June 30, 2016 2015 Accounts Payable $ 1,346,532 $ 1,514,841 Accrued Liabilities 4,171,058 3,978,435 Accrued Payroll & Taxes 231,881 291,546 Taxes Payable 66,437 22,957 Other Payable 146,862 144,782 Total $ 5,962,770 $ 5,952,561 |
Debts (Tables)
Debts (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Components of Notes Payable and Capital Leases | Notes and leases payable consisted of the following: As of June 30, 2016 Current Long-Term Name Total Maturities Maturities D&O Insurance (1) $ 65,114 $ 65,114 $ - HSBC Loan (2) 93,704 93,704 - Loan Payable Bank (3) 3,792,907 3,792,907 - Loan From Related Party (4) - - - 3,951,725 3,951,725 - Subsidiary Capital Leases (5) 966,051 488,359 477,692 $ 4,917,776 $ 4,440,084 $ 477,692 As of June 30, 2015 Current Long-Term Name Total Maturities Maturities D&O Insurance (1) $ 79,872 $ 79,872 $ - HSBC Loan (2) 447,161 322,349 124,812 Loan Payable Bank (3) 2,892,961 2,892,961 - Loan From Related Party (4) 129,979 129,979 - 3,549,973 3,425,161 124,812 Subsidiary Capital Leases (5) 833,872 471,192 362,680 $ 4,383,845 $ 3,896,353 $ 487,492 (1) The Company finances Directors and Officers (D&O) liability insurance as well as Errors and Omissions (E&O) liability insurance, for which the total balances are renewed on an annual basis and as such are recorded in current maturities. The interest rate on the insurance financing was 0.49% as of June 30, 2016 and 2015, respectively. (2) In October 2011, the Companys subsidiary, NTE, entered into a loan agreement with HSBC Bank to finance the acquisition of 51% of a controlling interest in Virtual Leasing Services Limited. HSBC Bank guaranteed the loan up to a limit of £1,000,000, or approximately $1,333,333 for a period of 5 years with monthly payments of £18,420, or approximately $24,560. The interest rate was 4% which is 3.5% above the bank sterling base rate. The loan is securitized against debenture comprising of fixed and floating charges over all the assets and undertakings of NTE including all present and future freehold and leasehold property, book and other debts, chattels, goodwill and uncalled capital, both present and future. Interest expense for the years ended June 30, 2016 and 2015 was $12,846 and $47,255, respectively. This facility requires that NTEs adjusted tangible net worth would not be less than £600,000. For this purpose, adjusted tangible net worth means shareholders funds less intangible assets plus non-redeemable preference shares. In addition, NTEs cash debt service coverage would not fall below 150% of the aggregate debt service cost. As of June 30, 2016, NTE was in compliance with this covenant. (3) The Companys subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by NetSol PKs assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 400,000,000 or $3,792,907. This facility requires NetSol PK to maintain a long term debt equity ratio of 60:40 and the current ratio of 1:1. As of June 30, 2016, NetSol PK was in compliance with this covenant. (4) In March 2014, the Companys subsidiary, VLS, entered into a loan agreement with Investec. The loan amount was £150,000, or approximately $200,000, for a period of two years with annual payments of £75,000, or approximately $100,000. The interest rate was 3.13%. As of June 30, 2016, VLS has paid in full this facility. All future payments of the loans described in the above sub notes 1 to 4 are considered current maturities. (5) The Company leases various fixed assets under capital lease arrangements expiring in various years through 2018. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are depreciated over the lesser of their related lease terms or their estimated useful lives and are secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the years ended June 30, 2016 and 2015. |
Schedule of Aggregate Minimum Future Lease Payments Under Capital Leases | Following is the aggregate minimum future lease payments under capital leases for the year ended June 30, 2016: Amount Minimum Lease Payments Due FYE 6/30/17 $ 548,023 Due FYE 6/30/18 316,115 Due FYE 6/30/19 195,956 Total Minimum Lease Payments 1,060,094 Interest Expense relating to future periods (94,043 ) Present Value of minimum lease payments 966,051 Less: Current portion (488,359 ) Non-Current portion $ 477,692 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Consolidated Pre-Tax Income (Loss) | Consolidated pre-tax income (loss) consists of the following: Years Ended June 30, 2016 2015 US operations $ (2,527,545 ) $ (3,621,392 ) Foreign operations 8,237,232 (1,214,282 ) $ 5,709,687 $ (4,835,674 ) |
Components of Provision for Income Taxes | The components of the provision for income taxes are as follows: Years Ended June 30, 2016 2015 Current: Federal $ - $ - State and Local - - Foreign 652,546 413,498 Deferred: Federal - - State and Local - - Foreign - - Provision for income taxes $ 652,546 $ 413,498 |
Schedule of Reconciliation of Taxes at Statutory Federal Income Tax Rate Income Tax Expense Benefits | A reconciliation of taxes computed at the statutory federal income tax rate to income tax expense (benefit) is as follows: Years Ended June 30, 2016 2015 Income tax (benefit) provision at statutory rate $ 1,998,390 35.0 % $ (1,692,486 ) 35.0 % State income (benefit) taxes, net of federal tax benefit 328,307 5.7 % (278,051 ) 5.7 % Foreign earnings taxed at different rates (2,026,031 ) -35.5 % 1,655,514 -34.2 % Change in valuation allowance for deferred tax assets 476,646 8.3 % 843,390 -17.4 % Share of net (income) loss in equity method investee - 0.0 % - 0.0 % Other (124,766 ) -2.19 % (114,869 ) 2.4 % Provision for income taxes $ 652,546 11.4 % $ 413,498 -8.6 % |
Schedule of Deferred Income Tax Assets and Liabilities | Deferred income tax assets and liabilities as of June 30, 2016 and 2015 consist of tax effects of temporary differences related to the following: Years Ended June 30, 2016 2015 Net operating loss carry forwards $ 14,924,107 $ 14,527,578 Other 559,792 479,674 Net deferred tax assets 15,483,899 15,007,252 Valuation allowance for deferred tax assets (15,483,899 ) (15,007,252 ) Net deferred tax assets $ - $ - |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Components of Common Stock Purchase Options and Warrants | A summary of option and warrant activity for the years ended June 30, 2016 and 2015 is presented below: OPTIONS: # of shares Weighted Ave Exericse Price Weighted Average Remaining Contractual Life (in years) Aggregated Intrinsic Value Outstanding and exercisable, June 30, 2014 757,462 $ 6.65 2.2 $ - Granted - - Exercised (49,329 ) $ 3.88 Expired / Cancelled - - Outstanding and exercisable, June 30, 2015 708,133 $ 6.84 1.22 $ 572,352 Granted 152,024 $ 4.50 Exercised (177,024 ) $ 4.37 Expired / Cancelled (73,000 ) $ 24.08 Outstanding and exercisable, June 30, 2016 610,133 $ 4.90 0.99 $ 799,030 WARRANTS: Outstanding and exercisable, June 30, 2015 163,124 $ 7.29 1.22 $ - Granted / adjusted - - Exercised - - Expired - - Outstanding and exercisable, June 30, 2016 163,124 $ 7.29 0.23 $ 9,303 |
Schedule of Stock Options and Warrants Outstanding and Exercisable Activity | The following table summarizes information about stock options and warrants outstanding and exercisable at June 30, 2016: Exercise Price Number Outstanding and Exercisable Weighted Average Remaining Contractual Life Weighted Ave Exericse Price OPTIONS: $0.10 - $9.90 609,133 0.99 $ 4.88 $10.00 - $19.90 1,000 1.05 $ 16.00 Totals 610,133 0.99 $ 4.90 WARRANTS: $5.00 - $7.50 163,124 0.23 $ 7.29 Totals 163,124 0.23 $ 7.29 |
Schedule of Fair Value of Options Granted Assumptions | The assumptions used in calculating the fair value of options granted using the Black-Scholes option-pricing model for options granted during the year ended June 30, 2016 are as follows: June 30, 2016 Risk-free interest rate 0.01% - 0.02 % Expected life 3 months - 5 months Expected volatility 41.65% - 47.89 % Expected dividend 0 % |
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, 2014 232,000 $ 3.88 Granted 113,275 $ 3.26 Vested (338,608 ) $ 3.60 Unvested, June 30, 2015 6,667 $ 6.00 Granted 864,500 $ 5.91 Vested (240,939 ) $ 5.51 Unvested, March 31, 2016 630,228 $ 6.07 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Annual Lease Commitment | The total annual lease commitment for the next five years is as follows: FYE 6/30/17 $ 915,219 FYE 6/30/18 486,320 FYE 6/30/19 231,250 FYE 6/30/20 104,439 FYE 6/30/21 93,333 |
Segment Information and Geogr40
Segment Information and Geographic Areas (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Summary of Identifiable Assets | The following table presents a summary of identifiable assets as of June 30, 2016 and 2015: As of June 30, As of June 30, 2016 2015 Identifiable assets: Corporate headquarters $ 3,646,160 $ 4,896,334 North America 6,845,444 7,162,846 Europe 7,857,427 6,631,945 Asia - Pacific 75,000,384 70,271,209 Consolidated $ 93,349,415 $ 88,962,334 |
Summary of Operating Information | The following table presents a summary of operating information for the years ended June 30: 2016 2015 Revenues from unaffiliated customers: North America $ 5,464,740 $ 5,535,183 Europe 6,232,200 5,707,127 Asia - Pacific 40,254,321 32,110,574 51,951,261 43,352,884 Revenue from affiliated customers Europe 4,437,917 1,652,077 Asia - Pacific 8,161,015 6,043,617 12,598,932 7,695,694 Consolidated $ 64,550,193 $ 51,048,578 Intercompany revenue Europe $ 558,645 $ 302,812 Asia - Pacific 4,807,276 4,620,426 Eliminated $ 5,365,921 $ 4,923,238 Net income (loss) after taxes and before non-controlling interest: Corporate headquarters $ (3,252,340 ) $ (3,665,755 ) North America 635,203 221,433 Europe 1,576,176 (1,262,222 ) Asia - Pacific 6,098,102 (542,628 ) Consolidated $ 5,057,141 $ (5,249,172 ) Depreciation and amortization: Corporate headquarters $ - $ 16,148 North America 35,268 165,240 Europe 172,755 665,826 Asia - Pacific 6,944,116 9,496,600 Consolidated $ 7,152,139 $ 10,343,814 Interest expense: Corporate headquarters $ 6,236 $ 13,783 North America 117 1,588 Europe 40,302 52,926 Asia - Pacific 217,856 98,665 Consolidated $ 264,511 $ 166,962 Income tax expense: Europe $ 46,691 $ 1,244 Asia - Pacific 605,855 412,254 Consolidated $ 652,546 $ 413,498 |
Summary of Capital Expenditures | The following table presents a summary of capital expenditures for the years ended June 30: 2016 2015 Capital expenditures: Corporate headquarters $ - $ 3,439 North America 66,764 47,497 Europe 417,861 140,870 Asia - Pacific 2,851,296 3,366,906 Consolidated $ 3,335,921 $ 3,558,712 |
Summary of Geographic Information | Disclosed in the table below is geographic information for each country that comprised greater than five percent of total revenues for the years ended June 30 2016 and 2015. June 30, 2016 June 30, 2015 Revenue Long-lived Assets Revenue Long-lived Assets China $ 17,276,250 $ 19,851 $ 15,119,518 $ 27,453 Thailand 6,428,041 309,498 4,842,577 123,097 USA 5,843,204 5,360,684 7,190,905 4,715,670 UK 16,894,973 4,036,925 10,641,565 4,075,864 Pakistan & India 1,842,046 43,047,590 1,868,090 48,457,329 Australia & New Zealand 4,308,784 30,259 2,672,265 37,303 Mexico 1,542,530 - 1,202,832 - Indonesia 6,201,642 - 5,212,919 - Other Countries 4,212,723 2,782 2,297,907 14,953 Total $ 64,550,193 $ 52,807,589 $ 51,048,578 $ 57,451,669 |
Summary of Reconciliation of Revenue | Disclosed in the table below is the reconciliation of revenue by each entity and country disclosed above for the years ended June 30 2016 and 2015. Revenues 2016 Total China Thailand USA UK Pakistan & India Australia & New Zealand Mexico Indonesia Other Countries North America: $ 5,464,740 $ - $ - $ 3,922,210 $ - $ - $ - $ 1,542,530 $ - $ - Europe: 10,670,117 - - - 10,446,098 - - - - 224,019 Asia-Pacific: 48,415,336 17,276,250 6,428,041 1,920,994 6,448,875 1,842,046 4,308,784 - 6,201,642 3,988,704 Total $ 64,550,193 $ 17,276,250 $ 6,428,041 $ 5,843,204 $ 16,894,973 $ 1,842,046 $ 4,308,784 $ 1,542,530 $ 6,201,642 $ 4,212,723 Revenues 2015 Total China Thailand USA UK Pakistan & India Australia & New Zealand Mexico Indonesia Other Countries North America: $ 5,535,183 $ - $ - $ 4,332,351 $ - $ - $ - $ 1,202,832 $ - $ - Europe: 7,375,527 - - - 7,094,304 - - - - 281,223 Asia-Pacific: 38,137,868 15,119,518 4,842,577 2,858,554 3,547,261 1,868,090 2,672,265 - 5,212,919 2,016,684 Total $ 51,048,578 $ 15,119,518 $ 4,842,577 $ 7,190,905 $ 10,641,565 $ 1,868,090 $ 2,672,265 $ 1,202,832 $ 5,212,919 $ 2,297,907 |
Non-Controlling Interest in S41
Non-Controlling Interest in Subsidiary (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Balance of Non-Controlling Interest | The Company had non-controlling interests in several of its subsidiaries. The balance of non-controlling interest as of June 30, 2016 and 2015 was as follows: SUBSIDIARY Non Controlling Interest % Non-Controlling Interest at June 30, 2016 NetSol PK 33.40 % $ 10,292,495 NetSol-Innovation 49.90 % 2,735,998 VLS, VLSH & VLSIL Combined 49.00 % 309,213 NetSol Thai 0.006 % (4 ) Total $ 13,337,702 SUBSIDIARY Non Controlling Interest % Non-Controlling Interest at June 30, 2015 NetSol PK 34.90 % $ 11,411,954 NetSol-Innovation 49.90 % 2,035,548 VLS, VLHS & VLSIL Combined 49.00 % 393,139 Total $ 13,840,641 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Uninsured deposits related to cash deposits | $ 7,640,095 | $ 8,969,443 |
Restricted cash | 90,000 | 90,000 |
Allowance for doubtful accounts | 492,498 | 524,565 |
Unearned revenue | 4,739,214 | 4,897,327 |
Advertising costs | $ 293,683 | $ 250,801 |
Tax benefit | 11.40% | (8.60%) |
Accumulated other comprehensive loss | $ 18,730,494 | $ 17,167,100 |
Comprehensive income (loss) | 1,563,394 | 2,187,877 |
Net foreign exchange transaction losses | $ 738,158 | $ 453,770 |
Minimum [Member] | ||
Tax benefit | 50.00% |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Assets (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Computer Equipment & Software [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Computer Equipment & Software [Member] | Maximum [Member] | |
Estimated useful lives | 5 years |
Office Furniture and Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Office Furniture and Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Building [Member] | |
Estimated useful lives | 20 years |
Autos [Member] | |
Estimated useful lives | 5 years |
Assets under Capital Leases [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Assets under Capital Leases [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Improvements [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Improvements [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Earnings Per Share - Components
Earnings Per Share - Components of Basic and Diluted Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||
Net income (loss) available to common shareholders, Net Income | $ 3,402,761 | $ (5,548,818) |
Net income (loss) available to common shareholders, Shares | 10,391,157 | 9,728,122 |
Net income (loss) available to common shareholders, Per Share | $ 0.33 | $ (0.57) |
Effect of dilutive securities Stock options | 190,595 | |
Effect of dilutive securities Warrants | 3,083 | |
Diluted income (loss) per share, Net Income | $ 3,402,761 | $ (5,548,818) |
Diluted income (loss) per share, Shares | 10,584,835 | 9,728,122 |
Diluted income (loss) per share, Per share | $ 0.32 | $ (0.57) |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Potential dilutive shares | 871,257 | |
Stock Options [Member] | ||
Potential dilutive shares | 708,133 | |
Warrants [Member] | ||
Potential dilutive shares | 163,124 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Services of related parties | $ 10,617,022 | $ 7,299,743 |
Accounts receivable, related parties | 5,691,178 | 3,491,899 |
Revenues in excess of billings | 10,493,096 | 5,251,005 |
Payment to acquire investment | $ 555,556 | |
G-Force LLC [Member] | Chief Executive Officer [Member] | ||
Percentage of investment in subsidiary | 4.90% | |
Payments for financial interest | $ 1,111,111 | |
Payment to acquire investment | 555,556 | |
G-Force LLC [Member] | Chief Executive Officer [Member] | September 1, 2016 [Member] | ||
Payment to acquire investment | 555,555 | |
Net Sol Innovation [Member] | ||
Services of related parties | 8,161,015 | 6,043,617 |
Accounts receivable, related parties | 4,689,322 | 3,226,733 |
Investec Asset Finance [Member] | ||
Services of related parties | 4,437,917 | 1,652,077 |
Accounts receivable, related parties | 1,001,856 | $ 265,166 |
Revenues in excess of billings | $ 804,168 |
Major Customers (Details Narrat
Major Customers (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Daimler Financial Services [Member] | ||
Accounts receivable, gross | $ 5,306,166 | $ 446,754 |
Daimler Financial Services [Member] | Revenue [Member] | ||
Concentration risk, percentage | 19.96% | 12.89% |
Innovation Group [Member] | ||
Accounts receivable, gross | $ 4,689,322 | $ 3,226,733 |
Innovation Group [Member] | Revenue [Member] | ||
Concentration risk, percentage | 12.64% | 11.84% |
Other Current Assets - Schedule
Other Current Assets - Schedule of Other Current Assets (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid Expenses | $ 386,578 | $ 452,314 |
Advance Income Tax | 968,334 | 895,075 |
Employee Advances | 83,978 | 36,816 |
Security Deposits | 72,985 | 54,186 |
Other Receivables | 486,562 | 322,647 |
Other Assets | 216,191 | 110,002 |
Total | $ 2,214,628 | $ 1,871,040 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 4,387,121 | $ 5,671,155 |
Depreciation reflected in cost of revenues | $ 3,161,951 | $ 3,888,122 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | $ 44,745,666 | $ 43,639,166 |
Accumulated Depreciation | (21,971,231) | (18,519,532) |
Property and Equipment, Net | 22,774,435 | 25,119,634 |
Office Furniture and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 3,346,156 | 3,104,375 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 25,935,620 | 25,911,422 |
Assets Under Capital Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 2,409,074 | 1,887,767 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 9,185,570 | 8,743,130 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 2,410,664 | 2,451,577 |
Capital Work In Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 392,243 | |
Autos [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | 1,073,447 | 943,873 |
Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Subtotal | $ 385,135 | $ 204,779 |
Property and Equipment - Summar
Property and Equipment - Summary of Fixed Assets Held Under Capital Leases (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases, Total | $ 2,409,074 | $ 1,887,767 |
Less: Accumulated Depreciation - Net | (713,248) | (577,215) |
Fixed assets held under capital leases, Net | 1,695,826 | 1,310,552 |
Computers And Other Equipment [Member] | ||
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases, Total | 503,926 | 590,625 |
Furniture and Fixtures [Member] | ||
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases, Total | 408,200 | 414,023 |
Vehicles [Member] | ||
Capital Leased Assets [Line Items] | ||
Fixed assets held under capital leases, Total | $ 1,496,948 | $ 883,119 |
Other Long Term Assets (Details
Other Long Term Assets (Details Narrative) | 12 Months Ended |
Jun. 30, 2016USD ($) | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Qualified financing, description | In connection with the investment, the Company and NetSol PK received a warrant to purchase preferred stock which included the following key terms and features: |
Expiration date of warrant | Mar. 2, 2020 |
Value of qualified financing | $ 2,000,000 |
Number of common stock shares issuable upon the exercise of warrant | $ 1,250,000 |
Percentage of per share price of next round preferred stock sold in qualified financing | 70.00% |
Number of shares of common stock outstanding immediately prior to the Qualified Financing | $ 25,000,000 |
Other Long Term Assets - Schedu
Other Long Term Assets - Schedule of Other Long Term Assets (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Investment | $ 720,350 | |
Long Term Security Deposits | 122,203 | 141,150 |
Total | $ 842,553 | $ 141,150 |
Other Long Term Assets - Sche54
Other Long Term Assets - Schedule of Other Long Term Assets (Details) (Parenthetical) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Mar. 02, 2016 | |
Payments to acquire investment | $ 555,556 | ||
Revenue from services | 10,617,022 | $ 7,299,743 | |
NetSol PK [Member] | |||
Payments to acquire investment | $ 2,777,778 | ||
Purchase of investment, percentage | 12.20% | ||
Revenue from services | $ 200,000 | ||
Provided services for investment | 164,794 | ||
EeGeo, Inc [Member] | |||
Percentage of interest in subsidiary | 4.90% | ||
G-Force LLC [Member] | Chief Executive Officer [Member] | |||
Payments to acquire investment | 555,556 | ||
G-Force LLC [Member] | Chief Executive Officer [Member] | September 1, 2016 [Member] | |||
Payments to acquire investment | $ 555,555 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Finite-lived unamortized amount | $ 19,674,033 | $ 22,815,467 |
Amortization expenses of intangible assets | 24,247,446 | 23,491,893 |
Product Licenses [Member] | ||
Finite-lived unamortized amount | $ 19,674,033 | |
Finite-lived intangible assets, amortization over period | 7 years 9 months | |
Amortization expenses of intangible assets | $ 2,765,018 | 4,448,735 |
Customer Lists [Member] | ||
Amortization expenses of intangible assets | 113,243 | |
Technology [Member] | ||
Amortization expenses of intangible assets | $ 110,681 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Product Licenses - Cost | $ 48,632,368 | $ 48,632,368 |
Additions | ||
Deletion | (1,387,371) | |
Effect of Translation Adjustment | (3,323,518) | (2,325,008) |
Accumulated Amortization | (24,247,446) | (23,491,893) |
Net Balance | $ 19,674,033 | $ 22,815,467 |
Intangible Assets - Estimated A
Intangible Assets - Estimated Amortization Expense of Intangible Assets Over Next Five Years (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
June 30, 2017 | $ 2,758,035 | |
June 30, 2018 | 2,758,035 | |
June 30, 2019 | 2,758,035 | |
June 30, 2020 | 2,758,035 | |
June 30, 2021 | 2,758,035 | |
Thereafter | 5,883,858 | |
Total | $ 19,674,033 | $ 22,815,467 |
Goodwill (Details Narrative)
Goodwill (Details Narrative) | 12 Months Ended |
Jun. 30, 2016USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill impairment |
Goodwill - Summary of Goodwill
Goodwill - Summary of Goodwill Acquired (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
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 60
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Payables and Accruals [Abstract] | ||
Accounts Payable | $ 1,346,532 | $ 1,514,841 |
Accrued Liabilities | 4,171,058 | 3,978,435 |
Accrued Payroll & Taxes | 231,881 | 291,546 |
Taxes Payable | 66,437 | 22,957 |
Other Payable | 146,862 | 144,782 |
Total | $ 5,962,770 | $ 5,952,561 |
Debts - Components of Notes Pay
Debts - Components of Notes Payable and Capital Leases (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 | |
Total | $ 3,951,725 | $ 3,549,973 | |
Current Maturities | 3,951,725 | 3,425,161 | |
Long-Term Maturities | 124,812 | ||
Subsidiary Capital Leases, Current Maturities | (488,359) | ||
Subsidiary Capital Leases, Long-Term Maturities | 477,692 | ||
Total | 4,917,776 | 4,383,845 | |
Current Maturities | 4,440,084 | 3,896,353 | |
Long-Term Maturities | 477,692 | 487,492 | |
D & O Insurance [Member] | |||
Total | [1] | 65,114 | 79,872 |
Current Maturities | [1] | 65,114 | 79,872 |
Long-Term Maturities | [1] | ||
HSBC Loan [Member] | |||
Total | [2] | 93,704 | 447,161 |
Current Maturities | [2] | 93,704 | 322,349 |
Long-Term Maturities | [2] | 124,812 | |
Loan Payable Bank [Member] | |||
Total | [3] | 3,792,907 | 2,892,961 |
Current Maturities | [3] | 3,792,907 | 2,892,961 |
Long-Term Maturities | [3] | ||
Loan From Related Party [Member] | |||
Total | [4] | 129,979 | |
Current Maturities | [4] | 129,979 | |
Long-Term Maturities | [4] | ||
Subsidiary Capital Leases [Member] | |||
Subsidiary Capital Leases, Total | [5] | 966,051 | 833,872 |
Subsidiary Capital Leases, Current Maturities | [5] | 488,359 | 471,192 |
Subsidiary Capital Leases, Long-Term Maturities | [5] | $ 477,692 | $ 362,680 |
[1] | The Company finances Directors' and Officers' ("D&O") liability insurance as well as Errors and Omissions ("E&O") liability insurance, for which the total balances are renewed on an annual basis and as such are recorded in current maturities. The interest rate on the insurance financing was 0.49% as of June 30, 2016 and June 30, 2015, respectively. | ||
[2] | In October 2011, the Company's subsidiary, NTE, entered into a loan agreement with HSBC Bank to finance the acquisition of 51% of a controlling interest in Virtual Leasing Services Limited. HSBC Bank guaranteed the loan up to a limit of £1,000,000, or approximately $1,333,333 for a period of 5 years with monthly payments of £18,420, or approximately $24,560. The interest rate was 4% which is 3.5% above the bank sterling base rate. The loan is securitized against debenture comprising of fixed and floating charges over all the assets and undertakings of NTE including all present and future freehold and leasehold property, book and other debts, chattels, goodwill and uncalled capital, both present and future. Interest expense for the years ended June 30, 2016 and 2015 was $12,846 and $47,255, respectively.This facility requires that NTE's adjusted tangible net worth would not be less than £600,000. For this purpose, adjusted tangible net worth means shareholders' funds less intangible assets plus non-redeemable preference shares. In addition, NTE's cash debt service coverage would not fall below 150% of the aggregate debt service cost. As of June 30, 2016, NTE was in compliance with this covenant. | ||
[3] | The Company's subsidiary, NetSol PK, has an export refinance facility with Askari Bank Limited, secured by NetSol PK's assets. This is a revolving loan that matures every six months. Total facility amount is Rs. 400,000,000 or $3,792,907. The interest rate for the loans was 4.5% and 7.5% at June 30, 2016 and 2015, respectively. Interest expense for the year ended June 30, 2016 and 2015 was $148,475 and $146,264, respectively.This facility requires NetSol PK to maintain a long term debt equity ratio of 60:40 and the current ratio of 1:1. As of June 30, 2016, NetSol PK was in compliance with this covenant. | ||
[4] | In March 2014, the Company's subsidiary, VLS, entered into a loan agreement with Investec. The loan amount was £150,000, or approximately $200,000, for a period of two years with annual payments of £75,000, or approximately $100,000. The interest rate was 3.13%. As of June 30, 2016, VLS has paid in full this facility.All future payments of the loans described in the above sub notes 1 to 4 are considered current maturities. | ||
[5] | The Company leases various fixed assets under capital lease arrangements expiring in various years through 2018. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are depreciated over the lesser of their related lease terms or their estimated useful lives and are secured by the assets themselves. Depreciation of assets under capital leases is included in depreciation expense for the years ended June 30, 2016 and 2015 |
Debts - Components of Notes P62
Debts - Components of Notes Payable and Capital Leases (Details) (Parenthetical) | 1 Months Ended | 12 Months Ended | |||||||
Mar. 31, 2014USD ($) | Oct. 31, 2011USD ($) | Oct. 31, 2011GBP (£) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016GBP (£) | Jun. 30, 2016INR (₨) | Mar. 31, 2014GBP (£) | Oct. 31, 2011GBP (£) | |
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 | ||||||||
HSBC Bank [Member] | NTE [Member] | |||||||||
Business acquisition, percentage of voting interests acquired | 51.00% | 51.00% | |||||||
Line of credit facility, maximum borrowing capacity | $ 1,333,333 | ||||||||
Debt instrument, term | 5 years | 5 years | |||||||
Line of credit facility, periodic payment | $ 24,560 | ||||||||
Line of credit variable interest rate | 4.00% | 4.00% | |||||||
Interest expense | $ 12,846 | $ 47,255 | |||||||
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 | ||||||||
Debt instrument, base rate | 3.50% | 3.50% | |||||||
Asakari Bank Limited [Member] | NetSol PK [Member] | |||||||||
Interest expense | 148,475 | $ 146,264 | |||||||
Line of credit | $ 3,792,907 | ||||||||
Debt instrument, interest rate | 4.50% | 7.50% | 4.50% | 4.50% | |||||
Long term debt covenant 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 | ₨ | ₨ 400,000,000 | ||||||||
Investec [Member] | VLS [Member] | |||||||||
Debt instrument, term | 2 years | ||||||||
Line of credit | $ 200,000 | ||||||||
Debt instrument, interest rate | 3.13% | 3.13% | |||||||
Debt instrument annual payment | $ 100,000 | ||||||||
Investec [Member] | VLS [Member] | GBP [Member] | |||||||||
Line of credit | £ | £ 150,000 | ||||||||
Debt instrument annual payment | £ | £ 75,000 | ||||||||
Directors' and Officers And Errors and Omissions Liability Insurance [Member] | |||||||||
Line of credit facility interest rate | 0.49% | 0.49% | 0.49% | 0.49% |
Debts - Schedule of Aggregate M
Debts - Schedule of Aggregate Minimum Future Lease Payments under Capital Leases (Details) | Jun. 30, 2016USD ($) |
Debt Disclosure [Abstract] | |
Due FYE 6/30/17 | $ 548,023 |
Due FYE 6/30/18 | 316,115 |
Due FYE 6/30/19 | 195,956 |
Total Minimum Lease Payments | 1,060,094 |
Interest Expense relating to future periods | (94,043) |
Present Value of minimum lease payments | 966,051 |
Less: Current portion | (488,359) |
Non-Current portion | $ 477,692 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Increase in valuation allowance | $ 476,647 | |
Operating loss carryforward expiration date | expire in 2020 | |
Net operating loss | $ 6,301,701 | $ (5,165,806) |
Unrecognized tax benefits related to various federal and state income tax matters | ||
Undistributed earnings of foreign subsidiaries | 29,195,810 | |
United States of America [Member] | Federal [Member] | ||
Operating loss carryforwards | 39,205,468 | |
United States of America [Member] | State [Member] | ||
Operating loss carryforwards | 6,614,243 | |
Foreign Entities [Member] | ||
Net operating loss | $ 2,827,685 |
Income Taxes - Schedule of Cons
Income Taxes - Schedule of Consolidated Pre-Tax Income (Loss) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||
US operations | $ (2,527,545) | $ (3,621,392) |
Foreign operations | 8,237,232 | (1,214,282) |
Net income (loss) before income taxes | $ 5,709,687 | $ (4,835,674) |
Income Taxes - Components of Pr
Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal | ||
State and Local | ||
Foreign | 652,546 | 413,498 |
Federal | ||
State and Local | ||
Foreign | ||
Income tax provision | $ 652,546 | $ 413,498 |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Taxes at Statutory Federal Income Tax Rate Income Tax Expense Benefits (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax (benefit) provision at statutory rate | $ 1,998,390 | $ (1,692,486) |
State income (benefit) taxes, net of federal tax benefit | 328,307 | (278,051) |
Foreign earnings taxed at different rates | (2,026,031) | 1,655,514 |
Change in valuation allowance for deferred tax assets | 476,646 | 843,390 |
Share of net (income) loss in equity method investee | ||
Other | (124,766) | (114,869) |
Provision for income taxes | $ 652,546 | $ 413,498 |
Income tax (benefit) provision at statutory rate | 35.00% | 35.00% |
State income (benefit) taxes, net of federal tax benefit | 5.70% | 5.70% |
Foreign earnings taxed at different rates | (35.50%) | (34.20%) |
Change in valuation allowance for deferred tax assets | 8.30% | (17.40%) |
Share of net (income) loss in equity method investee | 0.00% | 0.00% |
Other | (2.19%) | 2.40% |
Provision for income taxes | 11.40% | (8.60%) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Income Tax Assets and Liabilities (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forwards | $ 14,924,107 | $ 14,527,578 |
Other | 559,792 | 479,674 |
Net deferred tax assets | 15,483,899 | 15,007,252 |
Valuation allowance for deferred tax assets | (15,483,899) | (15,007,252) |
Net deferred tax assets |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Issuance of common stock value for services rendered | $ 1,264,618 | $ 1,375,149 |
Subscription receivable | 88,324 | 88,324 |
Adjustment of uncollectable subscription receivable with additional paid in capital | 982,181 | |
Adjustment of uncollectable subscription receivable with compensation expense | 158,635 | |
Stock Option [Member] | ||
Subscription receivable | 356,500 | |
Stock Option Agreement [Member] | ||
Issuance of restricted common stock, value | $ 780,980 | $ 191,400 |
Issuance of restricted common stock, shares | 177,024 | 49,329 |
Common stock price per share | $ 3.88 | |
Stock Option Agreement [Member] | Minimum [Member] | ||
Common stock price per share | $ 3.88 | |
Stock Option Agreement [Member] | Maximum [Member] | ||
Common stock price per share | $ 4.92 | |
Stock Purchase Agreement [Member] | ||
Issuance of restricted common stock, value | $ 2,359,530 | |
Issuance of restricted common stock, shares | 743,107 | |
Stock Purchase Agreement [Member] | Minimum [Member] | ||
Common stock price per share | $ 2.85 | |
Stock Purchase Agreement [Member] | Maximum [Member] | ||
Common stock price per share | $ 4.46 | |
Officers [Member] | ||
Issuance of common stock shares for services rendered | 54,318 | 152,500 |
Issuance of common stock value for services rendered | $ 304,138 | $ 699,000 |
Board of Directors [Member] | ||
Issuance of common stock shares for services rendered | 33,000 | 41,726 |
Issuance of common stock value for services rendered | $ 167,974 | $ 173,633 |
Employees [Member] | Employment Agreements [Member] | ||
Issuance of common stock shares under employment agreement | 141,204 | 170,275 |
Issuance of common stock value under employment agreement | $ 792,506 | $ 603,075 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | May 31, 2015 | |
Compensation expense | $ 1,264,618 | $ 1,375,149 | |
Compensation expense related to unvested options yet to be recognized | $ 3,810,765 | ||
Employee Stock Option [Member] | |||
Compensation expense | $ 622,490 | ||
Stock Options [Member] | |||
Weighted average grant-date fair value for the options granted | $ 0.96 | ||
Compensation expense | $ 268,591 | ||
Non Officer Employees [Member] | |||
Number of shares were allocated under this plan | 460,500 | ||
Two Officer And Employees [Member] | |||
Compensation expense | $ 122,875 | ||
Weighted average contractual term | 1 year | ||
Number of fully vested shares option | 425,671 | ||
Incentive and Non-Statutory Stock Option Plans [Member] | Employees and Consultants [Member] | |||
Stock options granted exercisable over a period | 10 years | ||
Stock options granted exercisable percentage | 20.00% | ||
Stock options granted expiration period | 1 year | ||
2015 Equity Incentive Plan [Member] | |||
Stock options granted exercisable over a period | 10 years | ||
Number of shares reserved and available for awards | 1,250,000 | ||
Maximum number of shares granted | 50,000 | ||
Percentage of outstanding common stock | 10.00% | ||
2015 Equity Incentive Plan [Member] | Maximum [Member] | |||
Stock options granted expiration period | 5 years | ||
Percentage of fair market value of shares of common stock grant | 110.00% |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Common Stock Purchase Options and Warrants (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Warrants [Member] | ||
Number of shares, Outstanding and Exercisable Beginning | 163,124 | |
Number of shares, Granted | ||
Number of shares, Exercised | ||
Number of shares, Expired / Cancelled | ||
Number of shares, Outstanding and Exercisable Ending | 163,124 | 163,124 |
Weighted Average Exercise Price, Outstanding and Exercisable Beginning | $ 7.29 | |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Expired / Cancelled | ||
Weighted Average Exercise Price, Outstanding and Exercisable Ending | $ 7.29 | $ 7.29 |
Weighted Average Remaining Contractual Life, Outstanding and Exercisable | 1 year 2 months 19 days | |
Weighted Average Remaining Contractual Life, Outstanding and Exercisable | 2 months 23 days | |
Aggregated Intrinsic Value, Outstanding and Exercisable | ||
Aggregated Intrinsic Value, Outstanding and Exercisable | $ 9,303 | |
Options [Member] | ||
Number of shares, Outstanding and Exercisable Beginning | 708,133 | 757,462 |
Number of shares, Granted | 152,024 | |
Number of shares, Exercised | (177,024) | (49,329) |
Number of shares, Expired / Cancelled | (73,000) | |
Number of shares, Outstanding and Exercisable Ending | 610,133 | 708,133 |
Weighted Average Exercise Price, Outstanding and Exercisable Beginning | $ 6.84 | $ 6.65 |
Weighted Average Exercise Price, Granted | 4.50 | |
Weighted Average Exercise Price, Exercised | 4.37 | 3.88 |
Weighted Average Exercise Price, Expired / Cancelled | 24.08 | |
Weighted Average Exercise Price, Outstanding and Exercisable Ending | $ 4.90 | $ 6.84 |
Weighted Average Remaining Contractual Life, Outstanding and Exercisable | 1 year 2 months 19 days | 2 years 2 months 12 days |
Weighted Average Remaining Contractual Life, Outstanding and Exercisable | 11 months 27 days | 1 year 2 months 19 days |
Aggregated Intrinsic Value, Outstanding and Exercisable | $ 572,352 | |
Aggregated Intrinsic Value, Outstanding and Exercisable | $ 799,030 | $ 572,352 |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Stock Options and Warrants Outstanding and Exercisable (Details) - $ / shares | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Warrants [Member] | |||
Number Outstanding and Exercisable, shares | 163,124 | 163,124 | |
Weighted Average Remaining Contractual Life | 2 months 23 days | ||
Weighted Ave Exercise Price | $ 7.29 | ||
Options [Member] | |||
Number Outstanding and Exercisable, shares | 610,133 | 708,133 | 757,462 |
Weighted Average Remaining Contractual Life | 11 months 27 days | ||
Weighted Ave Exercise Price | $ 4.90 | ||
Price Range One [Member] | Warrants [Member] | |||
Exercise Price, Lower | 5 | ||
Exercise Price, Upper | $ 7.50 | ||
Number Outstanding and Exercisable, shares | 163,124 | ||
Weighted Average Remaining Contractual Life | 2 months 23 days | ||
Weighted Ave Exercise Price | $ 7.29 | ||
Price Range One [Member] | Options [Member] | |||
Exercise Price, Lower | 0.10 | ||
Exercise Price, Upper | $ 9.90 | ||
Number Outstanding and Exercisable, shares | 609,133 | ||
Weighted Average Remaining Contractual Life | 11 months 27 days | ||
Weighted Ave Exercise Price | $ 4.88 | ||
Price Range Two [Member] | Options [Member] | |||
Exercise Price, Lower | 10 | ||
Exercise Price, Upper | $ 19.90 | ||
Number Outstanding and Exercisable, shares | 1,000 | ||
Weighted Average Remaining Contractual Life | 1 year 18 days | ||
Weighted Ave Exercise Price | $ 16 |
Stock Based Compensation - Sc73
Stock Based Compensation - Schedule of Fair Value of Options Granted Assumptions (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Risk-free interest rate, minimum | 0.01% |
Risk-free interest rate, maximum | 0.02% |
Expected volatility, minimum | 41.65% |
Expected volatility, maximum | 47.89% |
Expected dividend | 0.00% |
Minimum [Member] | |
Expected life | 3 months |
Maximum [Member] | |
Expected life | 5 months |
Stock Based Compensation - Su74
Stock Based Compensation - Summary of Unvested Stock Grants Awarded as Compensation (Details) - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Based Compensation - Summary Of Unvested Stock Grants Awarded As Compensation Details | ||
Number of shares, Unvested beginning balance | 6,667 | 232,000 |
Number of shares, Granted | 864,500 | 113,275 |
Number of shares, Vested | (240,939) | (338,608) |
Number of shares, Unvested ending balance | 630,228 | 6,667 |
Weighted Average Grant Date Fair Value, Unvested beginning balance | $ 6 | $ 3.88 |
Weighted Average Grant Date Fair Value, Granted | 5.91 | 3.26 |
Weighted Average Grant Date Fair Value, Vested | 5.51 | 3.60 |
Weighted Average Grant Date Fair Value, Unvested ending balance | $ 6.07 | $ 6 |
Commitments and Contingencies75
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Monthly rental payments | $ 23,128 | |
Operating lease terms | 5 years 5 months | |
Expiry date of lease | Aug. 31, 2017 | |
Security deposit | $ 72,985 | $ 54,186 |
Operating lease rent expense | 1,529,618 | $ 1,524,677 |
Counsel fee and expense | 175,000 | |
Australia [Member] | ||
Monthly rental payments | $ 4,820 | |
Operating lease terms | 3 years | |
Beijing [Member] | ||
Monthly rental payments | $ 12,649 | |
Operating lease terms | 3 years | |
Lease expiration date | January 2,017 | |
Bangkok [Member] | ||
Monthly rental payments | $ 8,541 | |
Operating lease terms | 3 years | |
Lease expiration date | November 2,016 | |
NetSol Europe [Member] | ||
Monthly rental payments | $ 7,778 | |
Expiry date of lease | Jun. 23, 2021 | |
VLS facilities [Member] | ||
Monthly rental payments | $ 2,361 | |
Lease expiration date | July 2,016 | |
NTA Facilities [Member] | ||
Monthly rental payments | $ 8,381 | |
Lease expiration date | November 2,014 | |
NetSol Karachi [Member] | ||
Monthly rental payments | $ 8,344 | |
Lease expiration date | November 2,019 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Annual Lease Commitment (Details) | Jun. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
FYE 6/30/17 | $ 915,219 |
FYE 6/30/18 | 486,320 |
FYE 6/30/19 | 231,250 |
FYE 6/30/20 | 104,439 |
FYE 6/30/21 | $ 93,333 |
Segment Information and Geogr77
Segment Information and Geographic Areas (Details Narrative) | 12 Months Ended |
Jun. 30, 2016Segment | |
Segment Reporting [Abstract] | |
Number of Operating Segments | 3 |
Segment Information and Geogr78
Segment Information and Geographic Areas - Summary of Identifiable Assets (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Identifiable Assets | $ 93,349,415 | $ 88,962,334 |
Corporate Headquaters [Member] | ||
Identifiable Assets | 3,646,160 | 4,896,334 |
North America [Member] | ||
Identifiable Assets | 6,845,444 | 7,162,846 |
Europe [Member] | ||
Identifiable Assets | 7,857,427 | 6,631,945 |
Asia - Pacific [Member] | ||
Identifiable Assets | $ 75,000,384 | $ 70,271,209 |
Segment Information and Geogr79
Segment Information and Geographic Areas - Summary of Operating Information (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues | $ 64,550,193 | $ 51,048,578 |
Net income (loss) after taxes and before non-controlling interest | 5,057,141 | (5,249,172) |
Depreciation and amortization | 7,152,139 | 10,343,814 |
Interest expense | 264,511 | 166,962 |
Income tax expense benefit | 652,546 | 413,498 |
Intercompany Revenue [Member] | ||
Revenues | 5,365,921 | 4,923,238 |
North America [Member] | ||
Net income (loss) after taxes and before non-controlling interest | 635,203 | 221,433 |
Depreciation and amortization | 35,268 | 165,240 |
Interest expense | 117 | 1,588 |
Europe [Member] | ||
Net income (loss) after taxes and before non-controlling interest | 1,576,176 | (1,262,222) |
Depreciation and amortization | 172,755 | 665,826 |
Interest expense | 40,302 | 52,926 |
Income tax expense benefit | 46,691 | 1,244 |
Europe [Member] | Intercompany Revenue [Member] | ||
Revenues | 558,645 | 302,812 |
Asia - Pacific [Member] | ||
Net income (loss) after taxes and before non-controlling interest | 6,098,102 | (542,628) |
Depreciation and amortization | 6,944,116 | 9,496,600 |
Interest expense | 217,856 | 98,665 |
Income tax expense benefit | 605,855 | 412,254 |
Asia - Pacific [Member] | Intercompany Revenue [Member] | ||
Revenues | 4,807,276 | 4,620,426 |
Corporate Headquaters [Member] | ||
Net income (loss) after taxes and before non-controlling interest | (3,252,340) | (3,665,755) |
Depreciation and amortization | 16,148 | |
Interest expense | 6,236 | 13,783 |
Unaffiliated Customers [Member] | ||
Revenues | 51,951,261 | 43,352,884 |
Unaffiliated Customers [Member] | North America [Member] | ||
Revenues | 5,464,740 | 5,535,183 |
Unaffiliated Customers [Member] | Europe [Member] | ||
Revenues | 6,232,200 | 5,707,127 |
Unaffiliated Customers [Member] | Asia - Pacific [Member] | ||
Revenues | 40,254,321 | 32,110,574 |
Affiliated Customers [Member] | ||
Revenues | 12,598,932 | 7,695,694 |
Affiliated Customers [Member] | Europe [Member] | ||
Revenues | 4,437,917 | 1,652,077 |
Affiliated Customers [Member] | Asia - Pacific [Member] | ||
Revenues | $ 8,161,015 | $ 6,043,617 |
Segment Information and Geogr80
Segment Information and Geographic Areas - Summary of Capital Expenditures (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Capital expenditures | $ 3,335,921 | $ 3,558,712 |
Corporate Headquaters [Member] | ||
Capital expenditures | 3,439 | |
North America [Member] | ||
Capital expenditures | 66,764 | 47,497 |
Europe [Member] | ||
Capital expenditures | 417,861 | 140,870 |
Asia - Pacific [Member] | ||
Capital expenditures | $ 2,851,296 | $ 3,366,906 |
Segment Information and Geogr81
Segment Information and Geographic Areas - Summary of Geographic Information (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues | $ 64,550,193 | $ 51,048,578 |
Long-Lived Assets | 52,807,589 | 57,451,669 |
China [Member] | ||
Revenues | 17,276,250 | 15,119,518 |
Long-Lived Assets | 19,851 | 27,453 |
Thailand [Member] | ||
Revenues | 6,428,041 | 4,842,577 |
Long-Lived Assets | 309,498 | 123,097 |
USA [Member] | ||
Revenues | 5,843,204 | 7,190,905 |
Long-Lived Assets | 5,360,684 | 4,715,670 |
UK [Member] | ||
Revenues | 16,894,973 | 10,641,565 |
Long-Lived Assets | 4,036,925 | 4,075,864 |
Pakistan & India [Member] | ||
Revenues | 1,842,046 | 1,868,090 |
Long-Lived Assets | 43,047,590 | 48,457,329 |
Australia & New Zealand [Member] | ||
Revenues | 4,308,784 | 2,672,265 |
Long-Lived Assets | 30,259 | 37,303 |
Mexico [Member] | ||
Revenues | 1,542,530 | 1,202,832 |
Long-Lived Assets | ||
Indonesia [Member] | ||
Revenues | 6,201,642 | 5,212,919 |
Long-Lived Assets | ||
Other Countries [Member] | ||
Revenues | 4,212,723 | 2,297,907 |
Long-Lived Assets | $ 2,782 | $ 14,953 |
Segment Information and Geogr82
Segment Information and Geographics Areas - Summary of Reconciliation of Revenue (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues | $ 64,550,193 | $ 51,048,578 |
North America [Member] | ||
Revenues | 5,464,740 | 5,535,183 |
Europe [Member] | ||
Revenues | 10,670,117 | 7,375,527 |
Asia - Pacific [Member] | ||
Revenues | 48,415,336 | 38,137,868 |
China [Member] | ||
Revenues | 17,276,250 | 15,119,518 |
China [Member] | North America [Member] | ||
Revenues | ||
China [Member] | Europe [Member] | ||
Revenues | ||
China [Member] | Asia - Pacific [Member] | ||
Revenues | 17,276,250 | 15,119,518 |
China [Member] | North America [Member] | ||
Revenues | ||
Thailand [Member] | ||
Revenues | 6,428,041 | 4,842,577 |
Thailand [Member] | North America [Member] | ||
Revenues | ||
Thailand [Member] | Europe [Member] | ||
Revenues | ||
Thailand [Member] | Asia - Pacific [Member] | ||
Revenues | 6,428,041 | 4,842,577 |
USA [Member] | ||
Revenues | 5,843,204 | 7,190,905 |
USA [Member] | North America [Member] | ||
Revenues | 3,922,210 | 4,332,351 |
USA [Member] | Europe [Member] | ||
Revenues | ||
USA [Member] | Asia - Pacific [Member] | ||
Revenues | 1,920,994 | 2,858,554 |
UK [Member] | ||
Revenues | 16,894,973 | 10,641,565 |
UK [Member] | North America [Member] | ||
Revenues | ||
UK [Member] | Europe [Member] | ||
Revenues | 10,446,098 | 7,094,304 |
UK [Member] | Asia - Pacific [Member] | ||
Revenues | 6,448,875 | 3,547,261 |
Pakistan & India [Member] | ||
Revenues | 1,842,046 | 1,868,090 |
Pakistan & India [Member] | North America [Member] | ||
Revenues | ||
Pakistan & India [Member] | Europe [Member] | ||
Revenues | ||
Pakistan & India [Member] | Asia - Pacific [Member] | ||
Revenues | 1,842,046 | 1,868,090 |
Australia & New Zealand [Member] | ||
Revenues | 4,308,784 | 2,672,265 |
Australia & New Zealand [Member] | North America [Member] | ||
Revenues | ||
Australia & New Zealand [Member] | Europe [Member] | ||
Revenues | ||
Australia & New Zealand [Member] | Asia - Pacific [Member] | ||
Revenues | 4,308,784 | 2,672,265 |
Mexico [Member] | ||
Revenues | 1,542,530 | 1,202,832 |
Mexico [Member] | North America [Member] | ||
Revenues | 1,542,530 | 1,202,832 |
Mexico [Member] | Europe [Member] | ||
Revenues | ||
Mexico [Member] | Asia - Pacific [Member] | ||
Revenues | ||
Indonesia [Member] | ||
Revenues | 6,201,642 | 5,212,919 |
Indonesia [Member] | North America [Member] | ||
Revenues | ||
Indonesia [Member] | Europe [Member] | ||
Revenues | ||
Indonesia [Member] | Asia - Pacific [Member] | ||
Revenues | 6,201,642 | 5,212,919 |
Other Countries [Member] | ||
Revenues | 4,212,723 | 2,297,907 |
Other Countries [Member] | North America [Member] | ||
Revenues | ||
Other Countries [Member] | Europe [Member] | ||
Revenues | 224,019 | 281,223 |
Other Countries [Member] | Asia - Pacific [Member] | ||
Revenues | $ 3,988,704 | $ 2,016,684 |
Non-Controlling Interest in S83
Non-Controlling Interest in Subsidiary (Details Narrative) | 12 Months Ended | |
Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($)Segment | |
Stock option exercising stock cash | $ 780,980 | $ 191,400 |
Shares open market value | 64,931 | 2,294,599 |
Cash dividend | $ 1,003,853 | $ 806,937 |
NetSol PK [Member] | ||
Stock option exercising stock | shares | 108,000 | |
Stock option exercising stock cash | $ 16,744 | |
Company purchased shares of common stock | shares | 1,374,000 | |
Shares open market value | $ 767,397 | |
Non-Controlling Interest, Percentage | 33.40% | 34.90% |
NetSol PK [Member] | Maximum [Member] | ||
Non-Controlling Interest, Percentage | 34.90% | |
NetSol PK [Member] | Minimum [Member] | ||
Non-Controlling Interest, Percentage | 33.40% | |
Net Sol Innovation [Member] | ||
Non-Controlling Interest, Percentage | 49.90% | 49.90% |
Cash dividend | $ 2,028,805 | $ 1,500,000 |
Number of qualification shares | Segment | 3 |
Non-Controlling Interest in S84
Non-Controlling Interest in Subsidiary - Balance of Non-Controlling Interest (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Non-Controlling Interest | $ 13,337,702 | $ 13,840,641 |
NetSol PK [Member] | ||
Non-Controlling Interest, Percentage | 33.40% | 34.90% |
Non-Controlling Interest | $ 10,292,495 | $ 11,411,954 |
Net Sol Innovation [Member] | ||
Non-Controlling Interest, Percentage | 49.90% | 49.90% |
Non-Controlling Interest | $ 2,735,998 | $ 2,035,548 |
VLS, VLHS And VLSIL Combined [Member] | ||
Non-Controlling Interest, Percentage | 49.00% | 49.00% |
Non-Controlling Interest | $ 309,213 | $ 393,139 |
NetSol Thai [Member] | ||
Non-Controlling Interest, Percentage | 0.006% | |
Non-Controlling Interest | $ (4) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Sep. 01, 2016USD ($) |
Subsequent Event [Member] | Share Purchase Agreement [Member] | |
Payment to acquire shares value | $ 555,555 |