CALABASAS, CA -- (Marketwire) -- 11/12/09 -- NetSol Technologies, Inc. "NetSol" (NASDAQ: NTWK) (NASDAQ DUBAI: NTWK), a U.S. corporation providing global business services and enterprise application solutions to private and public sector organizations worldwide, today announced first quarter financial results for fiscal year 2010, for the period ended September 30, 2009.
First Quarter Fiscal Year 2010 Results
-- Revenues totaled $7.6 million
-- Service fees totaled $3.3 million
-- License fees totaled $2.6 million
-- Maintenance fees totaled $1.8 million
-- GAAP net loss applicable to common shareholders of $264,000, or a loss
of less than $0.01 per diluted share, compared to GAAP net income
applicable to common shareholders of $1.0 million, or $0.04 per diluted
share, in the year ago period. Compared to the prior quarter ended
June 30, 2009, fiscal first quarter 2010 quarterly GAAP net loss was
reduced by 71%.
-- EBITDA of $1.2 million, or $0.04 per diluted share, versus EBITDA of
$2.3 million, or $0.08 per diluted share, in the year ago period.
Compared to the prior quarter ended June 30, 2009, fiscal first
quarter 2010 quarterly EBITDA increased 117%.
Najeeb Ghauri, NetSol Technologies chairman and chief executive officer, commented, "NetSol began its fiscal year 2010 with continued positive momentum as the company delivered another quarter of double digit top line revenue growth compared to the prior quarter ended June 30, 2009, including a 99% sequential increase in license fees driven by the strength of our core NetSol Financial Suite (NFS). Higher sales, compared to the prior quarter, combined with significant improvements in our fiscal first quarter 2010 gross margin and operating margin, contributed to another significant reduction in GAAP net loss as we approach our targeted breakeven quarterly revenue run rate of $8 million. Fiscal first quarter EBITDA profitability also improved materially, more than doubling compared to the prior quarter ended June 30, 2009. Overall, our revenue and profitability gains reflect our improved execution and the greater leverage we are achieving from our streamlined global operating model.
"We are very optimistic of NetSol's short-term and long-term outlook as we see strong growth in Asia Pacific as well as the South East Asian emerging markets, while we envision unlimited scope for our niche solutions and services in the Americas from 2010 onwards. Based on the intrinsic value of NetSol's years of capital investment in its offerings, product maturity and the surge in demand amongst fortune 500 clients worldwide, we believe the company is extremely well positioned globally to become a significant IT company within our space. We are noticing very positive trends of clients interested in acquiring our solutions and services as our turnaround began in the fiscal fourth quarter of 2009. With our new business pipeline for fiscal 2010 continuing to expand, with particular strength in our China, Asia Pacific and Kingdom of Saudi Arabia operations, we are creating new global opportunities as customers in those regions look for asset finance and lending software solutions to meet the various needs of their other international and local operations," concluded Mr. Ghauri.
NetSol reported consolidated revenues of $7.6 million for the first quarter of fiscal year 2010, representing an 11% increase compared to the prior quarter ended June 30, 2009 and an 18% decline as compared to the same period a year ago.
U.S. GAAP (Generally Accepted Accounting Principles) net loss applicable to common shareholders for the first quarter of fiscal year 2010 was approximately $264,000, or a loss of less than $0.01 per diluted share, which compares to GAAP net income applicable to common shareholders of $1.0 million, or $0.04 per diluted share, in the same period a year ago. Compared to the prior quarter ended June 30, 2009, fiscal first quarter 2010 quarterly GAAP net loss was reduced by 71%.
NetSol reported EBITDA of $1.2 million, or $0.04 per diluted share, for the first quarter of fiscal year 2010 compared to EBITDA of $2.3 million, or $0.08 per diluted share, in the year ago period. Compared to the prior quarter ended June 30, 2009, fiscal first quarter 2010 quarterly EBITDA increased 117%.
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. The Company uses EBITDA as a measure of the Company's operating trends. Investors are cautioned that EBITDA is not a measure of liquidity or of financial performance under Generally Accepted Accounting Principles (GAAP). The EBITDA numbers presented may not be comparable to similarly titled measures reported by other companies. EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Consistent with the SEC Regulation G, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, and this reconciliation is located under the financial table heading "Reconciliation to GAAP."
First Quarter Business Highlights
-- NetSol was awarded another NFS license and services contract including
NetSol's Credit Application Processing (CAP), Contract Management System
(CMS) as well as comprehensive IT support services in China
-- Based on the strong growth of the Chinese captive finance and
automotive industries, NetSol announced the expansion of its Beijing
operations with the addition of enterprise systems engineers, sales and
support staff locally
-- NR Finance Mexico, S.A., an affiliate of Nissan Motor Company, awarded
NetSol a new contract to implement key NFS solution components
-- Major United Kingdom based short-term loan company awarded NetSol a
new NFS solutions contract
-- Netherlands based finance company awarded NetSol a European contract
to implement the a wholesale finance system, marking a new NFS penetration
in the European channel finance sector
-- The proposal for the Land Record Management Information Systems
(LRMIS) project has been revived by the province of Punjab in Pakistan
-- Positive momentum in services and development revenue with North
America based clients enhanced North America's contribution to 23% of group
revenue with positive net income
-- Cost rationalization continued across the group with additional
streamlining of NetSol North American office space aimed at improving
operating efficiencies
Conference Call & Webcast Information
Following the distribution of the fiscal first quarter 2010 financial results, NetSol will host a conference call today at 11:00 a.m. ET (8:00 a.m. PT) to review the quarterly financial and operational performance. Najeeb Ghauri, NetSol Technologies chairman and chief executive officer, will host the call, which will be webcast live. The webcast and a supporting slide presentation will be made available on the investor relations section of the NetSol corporate website at www.netsoltech.com. Telephone access to the conference call will be available in North America by dialing +1 (877) 407-0782 or internationally by dialing +1 (201) 689-8567.
An audio replay of the conference call will be available approximately two hours following the conclusion of the call and for the following 30 day period. To access the replay in North America, dial +1 (877) 660-6853 or, when calling internationally, dial +1 (201) 612-7415, using replay account code # 286 and conference ID # 336672. An archived replay of the conference webcast will also be available on the investor relations section of the NetSol corporate website at www.netsoltech.com.
About NetSol Technologies, Inc.
NetSol Technologies, Inc. (NASDAQ: NTWK) (NASDAQ DUBAI: NTWK) is a worldwide provider of global business services and enterprise application solutions. Since its inception in 1995, NetSol has used its BestShoring® practices and highly experienced resources in analysis, development, quality assurance, and implementation to deliver high-quality, cost-effective solutions. Specialized by industry, these product and services offerings include credit and finance portfolio management systems, hospital/healthcare information management systems (HIMS), SAP consulting and services, custom development, systems integration, and technical services for the global Financial, Healthcare, Insurance, Energy, and Technology markets. NetSol's commitment to quality is demonstrated by its achievement of the ISO 9001, ISO 27001, and SEI (Software Engineering Institute) CMMI (Capability Maturity Model) Maturity Level 5 assessments, a distinction shared by fewer than 100 companies worldwide. NetSol Technologies' clients include Fortune 500 manufacturers, global automakers, financial institutions, utilities, technology providers, and government agencies. Headquartered in Calabasas, California, NetSol Technologies has operations and offices in Adelaide, Bangkok, Beijing, Lahore, London, and San Pedro Sula.
To learn more about NetSol Technologies, Inc., visit www.netsoltech.com
To join the NetSol Technologies, Inc. email communications list, visit: http://www.b2i.us/irpass.asp?BzID=897&to=ea&s=0
NetSol Technologies, Inc. Forward-looking Statement
This press release may contain forward looking statements relating to the development of the Company's products and services and future operation results, including statements regarding the Company that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe," "expect," "anticipate," "intend," variations of such words, and similar expressions, identify forward looking statements, but their absence does not mean that the statement is not forward looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Factors that could affect the Company's actual results include the progress and costs of the development of products and services and the timing of the market acceptance.
Financial Tables Follow
NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months For the Three Months
Ended Ended
September 30, September 30, June 30
2009 2008 2009 2009
----------- ----------- ----------- -----------
Net Revenues:
License fees $ 2,551,593 $ 2,529,808 $ 2,551,593 $ 1,283,700
Maintenance fees 1,807,716 1,593,734 1,807,716 1,892,947
Services 3,262,764 5,177,425 3,262,764 3,676,533
----------- ----------- ----------- -----------
Total revenues 7,622,073 9,300,967 7,622,073 6,853,180
Cost of revenues:
Salaries and
consultants 2,013,753 2,640,713 2,013,753 2,135,294
Travel 60,200 485,936 60,200 341,589
Repairs and
maintenance 67,611 106,665 67,611 80,051
Insurance 36,679 32,839 36,679 39,371
Depreciation and
amortization 498,504 551,325 498,504 598,358
Other 882,338 751,068 882,338 1,107,766
----------- ----------- ----------- -----------
Total cost of
revenues 3,559,085 4,568,546 3,559,085 4,302,429
----------- ----------- ----------- -----------
Gross profit 4,062,988 4,732,421 4,062,988 2,550,751
Operating expenses:
Selling and
marketing 493,629 969,518 493,629 636,374
Depreciation and
amortization 512,362 480,208 512,362 497,716
Bad debt expense - - - (26,973)
Salaries and wages 714,899 979,254 714,899 745,859
Professional
services, including
non-cash
compensation 96,106 306,886 96,106 338,187
General and
administrative 1,099,806 868,117 1,099,806 896,667
----------- ----------- ----------- -----------
Total operating
expenses 2,916,802 3,603,983 2,916,802 3,087,830
----------- ----------- ----------- -----------
Income from operations 1,146,186 1,128,438 1,146,186 (537,079)
Other income and
(expenses)
Gain/(Loss) on sale
of assets 18 (165,738) 18 (96,564)
Interest expense (468,615) (203,892) (468,615) (327,547)
Interest income 47,352 27,941 47,352 44,423
Gain on sale of
subsidiary shares - - - 351,522
Gain on foreign
currency exchange
rates 383,825 2,007,882 383,825 549,733
Fair market value of
options issued - (117,300) - -
Other income (loss) (258,691) 16,454 (258,691) (1,823)
----------- ----------- ----------- -----------
Total other income
(expenses) (296,111) 1,565,347 (296,111) 519,744
----------- ----------- ----------- -----------
Net income (loss)
before minority
interest in subsidiary 850,075 2,693,785 850,075 (17,335)
Non-controlling
interest in subsidiary (1,108,975) (1,629,761) (1,108,975) (843,904)
Income taxes (5,017) (7,182) (5,017) (11,501)
----------- ----------- ----------- -----------
Net income (loss) (263,917) 1,056,842 (263,917) (872,740)
Dividend required for
preferred stockholders - (33,876) - (33,508)
----------- ----------- ----------- -----------
Net income (loss)
applicable to common
shareholders (263,917) 1,022,966 (263,917) (906,248)
Other comprehensive
income (loss):
Translation
adjustment (315,864) (2,895,310) (315,864) (114,548)
----------- ----------- ----------- -----------
Comprehensive income
(loss) $ (579,781) $(1,872,344) $ (579,781) $(1,020,796)
=========== =========== =========== ===========
Net income (loss) per
share:
Basic $ (0.01) $ 0.04 $ (0.01) $ (0.03)
=========== =========== =========== ===========
Diluted $ (0.01) $ 0.04 $ (0.01) $ (0.03)
=========== =========== =========== ===========
Weighted average number
of shares outstanding
Basic 31,636,379 26,307,175 31,636,379 28,706,163
Diluted 31,636,379 28,029,442 31,636,379 28,706,163
NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of Sept 30, As of June 30,
2009 2009
ASSETS
Current assets:
Cash and cash equivalents $ 3,956,279 $ 4,403,762
Restricted Cash 5,000,000 5,000,000
Accounts receivable, net of allowance for
doubtful accounts 12,724,576 11,394,844
Revenues in excess of billings 6,362,818 5,686,277
Other current assets 2,042,661 2,307,246
------------ ------------
Total current assets 30,086,334 28,792,129
Property and equipment, net of accumulated
depreciation 8,705,379 9,186,163
Other assets, long-term - 204,823
Intangibles:
Product licenses, renewals, enhancements,
copyrights, trademarks, and tradenames, net 14,633,099 13,802,607
Customer lists, net 1,152,710 1,344,019
Goodwill 9,439,285 9,439,285
------------ ------------
Total intangibles 25,225,094 24,585,911
------------ ------------
Total assets $ 64,016,807 $ 62,769,026
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 5,177,398 $ 5,106,266
Current portion of loans and obligations under
capitalized leases 6,771,389 6,207,830
Other payables - acquisitions 103,226 103,226
Unearned revenues 3,131,669 3,473,228
Dividend to preferred stockholders payable 2,445 44,409
Loans payable, bank 2,398,369 2,458,757
------------ ------------
Total current liabilities 17,584,496 17,393,716
Obligations under capitalized leases, less
current maturities 973,828 1,090,901
Convertible notes payable 5,763,418 5,809,508
Long term loans; less current maturities 1,049,287 1,113,832
------------ ------------
Total liabilities 25,371,029 25,407,957
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, 5,000,000 shares authorized;
Nil; 1,920 issued and outstanding - 1,920,000
Common stock, $.001 par value; 95,000,000
shares authorized; 33,461,307; 30,046,987
issued and outstanding 33,461 30,047
Additional paid-in-capital 83,037,807 78,198,523
Treasury stock (396,008) (396,008)
Accumulated deficit (41,492,581) (41,253,152)
Stock subscription receivable (2,549,813) (842,619)
Common stock to be issued 98,075 220,365
Other comprehensive loss (7,215,261) (6,899,397)
Non-controlling interest 7,130,098 6,383,310
------------ ------------
Total stockholders' equity 38,645,778 37,361,069
------------ ------------
Total liabilities and stockholders' equity $ 64,016,807 $ 62,769,026
============ ============
NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
Ended Sept 30,
2009 2008
------------ ------------
Cash flows from operating activities:
Net income (loss) $ (263,917) $ 1,056,842
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,010,867 1,031,533
Loss on transaction of debt 16,429 -
Loss on sale of assets - 165,738
Minority interest in subsidiary 1,108,975 1,629,761
Stock issued for services 226,720 33,163
Fair market value of warrants and stock
options granted 283,500 207,000
Beneficial conversion feature 297,999 -
Changes in operating assets and
liabilities:
Increase in accounts receivable (693,290) (3,942,317)
Increase in other current assets (345,240) (1,960,129)
Decrease in accounts payable and accrued
expenses (949,731) (259,967)
------------ ------------
Net cash provided by/(used in) operating
activities 692,312 (2,038,376)
Cash flows from investing activities:
Purchases of property and equipment (95,160) (930,058)
Sales of property and equipment - 40,900
Payments of acquisition payable - (742,989)
Purchase of treasury stock - (285,328)
Short-term investments held for sale - (113,738)
Increase in intangible assets (1,612,840) (689,544)
------------ ------------
Net cash used in investing activities (1,708,000) (2,720,757)
Cash flows from financing activities:
Proceeds from sale of common stock 158,906 150,000
Proceeds from the exercise of stock options
and warrants - 520,569
Purchase of subsidiary stock in Pakistan - (250,000)
Redemption of preferred stock (1,920,000) -
Proceeds from convertible notes payable 2,000,000 6,000,000
Dividend Paid (41,740) -
Bank overdraft 86,922 257,502
Proceeds from bank loans 2,617,881 1,768,212
Payments on bank loans (215,144) (75,732)
Payments on capital lease obligations &
loans (2,043,769) (121,418)
------------ ------------
Net cash provided by financing activities 643,057 8,249,133
Effect of exchange rate changes in cash (74,852) 13,451
------------ ------------
Net increase in cash and cash equivalents (447,483) 3,503,451
Cash and cash equivalents, beginning of year 4,403,762 6,275,239
------------ ------------
Cash and cash equivalents, end of year $ 3,956,279 $ 9,778,690
============ ============
NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION TO GAAP
(Unaudited)
Three Months Three Months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, June 30,
2009 2008 2009 2009
----------- ------------ ----------- -----------
Net Income (loss)
before preferred
dividend, per GAAP $ (263,917) $ 1,056,842 $ (263,917) $ (872,740)
Income Taxes 5,017 7,182 5,017 11,501
Depreciation and
amortization 1,010,866 1,031,533 1,010,866 1,096,074
Interest expense 468,615 203,892 468,615 327,547
----------- ------------ ----------- -----------
EBITDA $ 1,220,581 $ 2,299,449 $ 1,220,581 $ 562,382
=========== ============ =========== ===========
Weighted Average
number of shares
outstanding
Basic 31,636,379 26,307,175 31,636,379 28,706,163
Diluted 31,636,379 28,029,442 31,636,379 28,706,163
----------- ------------ ----------- -----------
Basic EBITDA $ 0.04 $ 0.09 $ 0.04 $ 0.02
=========== ============ =========== ===========
=========== ============ =========== ===========
