NetSol Technologies Reports Record Fiscal Second-Quarter Revenue

NetSol Technologies Reports Record Fiscal Second-Quarter Revenue

            Second-Quarter Revenue Increases 37% to $11.8 Million;
       Net Income Advances to $2.2 Million, or $0.28 per Diluted Share

           EBITDA Rises to $3.7 Million, or $0.47 per Diluted Share

CALABASAS, Calif., Feb. 12, 2013 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc.
(Nasdaq:NTWK), a worldwide provider of global IT and enterprise application
solutions, today reported sharply improved financial results for its fiscal
2013 second quarter ended December 31, 2012.

Total revenue for the second quarter rose to $11.8 million, the highest second
quarter in the company's history. This compares with $8.6 million in the
second quarter of fiscal 2012.

Second-quarter license revenue increased to $3.5 million from $2.0 million in
the comparable period in fiscal 2012. Maintenance revenue improved to $2.7
million from $2.1 million, as a result of select price increases, bringing
certain customers up to market. Service revenue grew to $5.6 million from $4.4
million in the same period last fiscal year, primarily as a result of an
increase in customization and enhancement of the company's NFS solution for
Asia-based clients.

"Our financial performance demonstrates that the strategic initiatives we put
in place to bring NetSol to its next stage of growth are well underway,
evidenced by two consecutive record setting quarters and a record 2012 fiscal
year," said Najeeb Ghauri, CEO of NetSol. "With favorable trends and brand
recognition in Asia, especially in China, combined with marketing efforts for
new products in the U.S. and across the world, we are well positioned for
continued growth."

Click here to watch a video of Najeeb discussing the quarter and the trends
that are driving NetSol's growth or visit
http://bit.ly/NetSol-2Q2013-Earnings.

Total operating expenses for the fiscal 2013 second quarter amounted to $3.8
million, sequentially equal to the first quarter, although up from $3.5
million in the fiscal 2012 second quarter. The increase is related to hiring
of new sales and marketing staff both at Vroozi and the NFS division, and a
larger headcount as a result of the VLS acquisition.

Operating income for the second quarter of fiscal 2013 rose to $2.9 million
from $1.2 million in the comparable period last year.

NetSol achieved second-quarter net income of $2.2 million, equal to $0.28 per
diluted share, compared with $320,000, or $0.06 per share, in the comparable
period of the prior fiscal year. This includes a $1.5 million deduction of net
income for non-controlling interest, compared with a deduction of $826,000 in
the prior year period. Weighted average number of diluted shares outstanding
for the period was 8.0 million shares, compared with 5.7 million shares for
the second quarter of fiscal 2012.

The net EBITDA (a non-GAAP measure), was $3.7 million for the fiscal 2013
second quarter or $0.47 per diluted share, versus $1.6 million or $0.28 per
diluted share for the fiscal 2012 second quarter. The reconciliation of net
EBITDA to net income, the most comparable non-GAAP financial measure, as well
as a further explanation about adjusted EBITDA, is included in the financial
tables at the end of this news release.

For the first half of fiscal 2013, total revenue rose to $22.9 million from
$14.8 million for the first six months of fiscal 2012. Net income for the
fiscal 2013 year-to-date period was $3.2 million, or $0.40 per diluted share,
compared with a net loss of $1.1 million, or a loss of $0.20 per share, last
year.

NetSol's cash and cash equivalents balance rose to $9.6 million at December
31, 2012, up from $7.6 million at June 30, 2012.

Recent Highlights:

  *Received three new orders for NetSol Financial Suite (NFS™) solution,
    representing more than $5 million in combined license, maintenance, and
    service billings;
  *Completed two NFS implementations in China;
  *Renegotiated maintenance agreements with NetSol Technologies Europe
    clients, resulting in increased maintenance revenue;
  *Secured a sole partnership contract in Pakistan with Encase Guidance
    Software, a world leader in digital forensics, to carry out
    investigations, including intellectual property theft, incident response
    and audit compliance;
  *Signed an information security consulting and implementation agreement
    through Atheeb NetSol Saudi Company Limited;
  *Began development of mobile applications for clients;
  *Virtual Lease Services, NetSol's joint venture with Investec, was awarded
    a new chip and pin contract, resulting in sustained increase in business
    volume and incremental revenue contribution from the division;
  *Vroozi signed an agreement with a global packaging company to conduct a
    multi-country roll-out of its cloud-based business shopping platform.

Business and Financial Outlook

"As we look at the second half of the year, our pipeline visibility continues
to improve for new NFS implementations," Ghauri said. "Combined with
anticipated improvements in maintenance revenue, an increase in custom
projects, and incremental revenue contributions from our VLS and Vroozi
subsidiaries, the second half of the year is shaping up to be a strong period
for NetSol."

The company maintains its financial guidance, anticipating growing total
annual revenue to a range of approximately $46 million to $49 million for
fiscal 2013, and achieving earnings per diluted share of approximately $0.80
to $1.00 for the year.

Fiscal 2013 Second Quarter Conference Call

When:          Tuesday, February 12
Time:          11:00 a.m. Eastern
Phone:         1-888-549-7760 (domestic)
              1-480-629-9866 (international)
Conference ID: 4595976

A live Webcast will be available online on NetSol's website at
http://www.netsoltech.com/us/investors/event-presentation, where it will be
archived for 90 days.

About NetSol Technologies

NetSol Technologies, Inc. (www.netsoltech.com) is a worldwide provider of
global IT and enterprise application solutions that include credit and finance
portfolio management systems, SAP consulting and services, custom development,
systems integration, and technical services for the global Financial, Leasing,
Insurance, Energy, and Technology markets.Headquartered in Calabasas, Calif.,
NetSol's product and services offerings have achieved ISO 9001, ISO 20000, ISO
27001, and SEI (Software Engineering Institute) CMMI (Capability Maturity
Model) Maturity Level 5 assessments, a distinction shared by only 178
companies worldwide. The company's clients include Fortune 500 manufacturers,
global automakers, financial institutions, utilities, technology providers,
and government agencies.NetSol has delivery and support locations in San
Francisco, London, Beijing, Bangkok, Lahore, Adelaide and Riyadh.

Investors can receive news releases and invitations to special events by
accessing our online signup form at
http://www.netsoltech.com/us/investors/signupform

The NetSol Technologies, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=9832

Forward-Looking Statements

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 "expects," "anticipates,"
variations of such words, and similar expressions, identify forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, 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. The subject Companies expressly disclaim
any obligation or undertaking to update or revise any forward-looking
statement contained herein to reflect any change in the company's expectations
with regard thereto or any change in events, conditions or circumstances upon
which any statement is based.


NetSol Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
                                                            
                                        As of December 31, As of June 30,
ASSETS                                   2012               2012
Current assets:                                              
Cash and cash equivalents                $9,579,693         $7,599,607
Restricted cash                          2,398,659           141,231
Accounts receivable, net                15,621,790          13,757,637
Revenues in excess of billings           11,443,669          12,131,329
Other current assets                     2,118,234           2,648,302
Total current assets                     41,162,045          36,278,106
Investment under equity method           547,306             --
Property and equipment, net              18,434,767          16,912,795
                                                            
Intangible assets, net                   28,756,690          28,502,983
Goodwill                                 9,653,330           9,653,330
Total intangibles                        38,410,020          38,156,313
Total assets                             $98,554,138        $91,347,214
                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:                                         
Accounts payable and accrued expenses    $4,034,587         $3,869,355
Current portion of loans and obligations 3,473,417           1,896,238
under capitalized leases
Other payables - acquisitions            103,226             103,226
Unearned revenues                        4,510,426           2,704,661
Convertible notes payable , current      2,656,245           2,809,093
portion
Loans payable, bank                      2,051,282           2,116,402
Common stock to be issued                88,325              105,575
Total current liabilities                16,917,508          13,604,550
Obligations under capitalized leases,    276,821             260,107
less current maturities
Convertible notes payable less current   --                  936,364
maturities
Long term loans; less current maturities 1,294,976           1,551,541
Total liabilities                        18,489,305          16,352,562
Commitments and contingencies                                
Stockholders' equity:                                        
Common stock, $.01 par value; 15,000,000
shares authorized;8,021,489& 7,513,745 80,215              75,137
issued and outstanding as of December
31, 2012 and June 30, 2012
Additional paid-in-capital               109,220,684         106,101,165
Treasury stock                           (415,425)           (415,425)
Accumulated deficit                      (28,532,291)        (31,684,399)
Stock subscription receivable            (2,342,238)         (2,119,488)
Other comprehensive loss                 (13,893,118)        (12,361,759)
Total NetSol shareholders' equity        64,117,827          59,595,231
Non-controlling interest                 15,947,006          15,399,421
Total stockholders' equity               80,064,833          74,994,652
Total liabilities and stockholders'      $98,554,138        $91,347,214
equity



NetSol Technologies, Inc. and Subsidiaries
Consolidated Statement of Operations
                                                            
                        For the Three Months    For the Six Months
                        Ended December 31,      Ended December 31,
                        2012         2011         2012         2011
Net Revenues:                                                
License fees             3,505,847   2,047,855   6,747,348   3,123,705
Maintenance fees         2,664,813   2,121,282   4,710,519   4,158,488
Services                 5,637,009   4,436,915   11,421,702  7,552,567
Total net revenues      11,807,669  8,606,052   22,879,569  14,834,760
Cost of revenues:                                            
Salaries and             2,948,533   2,287,803   6,334,201   4,671,214
consultants
Travel                  386,194     254,169     711,488     539,841
Repairs and maintenance 123,722     96,723      251,719     170,917
Insurance               41,007      31,348      78,726      67,216
Depreciation and         1,024,007   812,510     1,982,158   1,601,615
amortization
Other                   558,777     421,416     1,480,635   937,825
Total cost of revenues   5,082,240   3,903,969   10,838,927  7,988,628
Gross profit             6,725,429   4,702,083   12,040,642  6,846,132
Operating expenses:                                          
Selling and marketing    931,210     735,132     1,694,173   1,435,413
Depreciation and         333,435     289,030     675,436     480,704
amortization
Bad debt expense         54,889      --          54,889      192,250
Salaries and wages       1,192,787   1,152,023   2,346,660   1,958,587
Professional services,
including non-cash       156,668     236,911     363,170     423,660
compensation
General and              1,136,792   1,072,483   2,484,720   1,965,455
administrative
Total operating expenses 3,805,781   3,485,579   7,619,048   6,456,069
Income from operations   2,919,648   1,216,504   4,421,594   390,063
Other income and                                             
(expenses)
(Loss) gain on sale of   (275)       (1,633)     14,021      (3,274)
assets
Interest expense         (179,932)   (158,957)   (472,321)   (419,164)
Interest income          31,617      7,264       55,784      40,069
Gain on foreign currency 504,738     160,125     899,894     39,219
exchange transactions
Share of net income
(loss) from equity       484,487     --          484,487     (100,000)
investment
Beneficial conversion    (74,384)    (61,441)    (442,128)   (74,247)
feature
Other income (expense)  36          (8,987)     4           (16,706)
Total other income       766,287     (63,629)    539,741     (534,103)
(expenses)
Net income (loss)        3,685,935   1,152,875   4,961,335   (144,040)
beforeincome taxes
Income taxes             2,548       (7,005)     (11,448)    (31,539)
Net income (loss) after  3,688,483   1,145,870   4,949,887   (175,579)
tax
Non-controlling interest (1,465,500) (826,303)   (1,797,779) (963,561)
Net income (loss)        2,222,983   319,567     3,152,108   (1,139,140)
attributable to NetSol
                                                            
Other comprehensive                                          
income (loss):
Translation adjustment   (1,394,216) (1,039,343) (2,163,011) (2,013,541)
Comprehensive income     828,767     (719,776)   989,097     (3,152,681)
(loss)
Comprehensive
lossattributable to non (399,096)   (437,533)   (631,652)   (854,892)
controlling interest
Comprehensive income
(loss) attributable to   1,227,863   (282,243)   1,620,749   (2,297,789)
NetSol
                                                            
Net income (loss) per                                        
share:
Basic                    $0.28      $0.06      $0.41      $(0.20)
Diluted                  $0.28      $0.06      $0.40      $(0.20)
Weighted average number                                      
of shares outstanding
Basic                    7,957,521   5,665,562   7,774,719   5,626,944
Diluted                  7,968,598   5,726,155   7,785,796   5,626,944
                                                            
Amounts attributable to
NetSol common                                                
shareholders
Net income / (loss)      $2,222,983 $319,567   $3,152,108 $(1,139,140)



NetSol Technologies, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
                                                                
                                                    For the Six Months
                                                    Ended December 31,
                                                    2012         2011
Cash flows from operating activities:                           
Net income (loss)                                   $4,949,887 $(175,580)
Adjustments to reconcile net income (loss)to net                
cash provided by operating activities:
Depreciation and amortization                       2,657,594   2,082,319
Provision for bad debts                             54,889      192,250
Share of net (income) loss from investment under     (484,487)   100,000
equity method
(Gain) loss on sale of assets                       (14,021)    3,274
Stock issued for interest on notes payable          211,111     --
Stock issued for services                           29,670      155,500
Fair market value of warrants and stock options      320,021     256,479
granted
Beneficial conversion feature                       442,128     74,247
Changes in operating assets and liabilities:                    
(Increase) decrease in accounts receivable          (1,864,153) 3,322,973
Decrease (increase) in other current assets         1,217,728   (2,042,183)
Increase (decrease) in accounts payable and accrued  1,908,178   (11,801)
expenses
Net cash provided by operating activities           9,428,545   3,957,478
Cash flows from investing activities:                           
Purchases of property and equipment                 (3,537,918) (2,832,212)
Sales of property and equipment                     59,350      73,048
Purchase of treasury stock                          --          (19,417)
Investment under equity method                      --          (100,000)
Purchase of non-controlling interest in              (621,563)   --
subsidiaries
Acquisition, net of cash acquired                   --          (253,192)
Increase in intangible assets                       (2,132,595) (3,713,090)
Net cash used in investing activities               (6,232,726) (6,844,863)
Cash flows from financing activities:                           
Proceeds from the exercise of stock options and      612,650     368,000
warrants
Payment to common shareholders against fractional    (194)       --
shares
Proceeds from sale of subsidiary stock to            3,031       --
non-controlling interest
Proceeds from convertible notes payable             --          4,000,000
Payments on convertible notes payable               --          (2,758,330)
Restricted cash                                     (2,257,428) 2,996,382
Proceeds from bank loans                            2,049,698   3,866,758
Payments on capital lease obligations & loans - net (723,936)   (5,123,981)
Net cash (used) provided by financing activities    (316,179)   3,348,829
Effect of exchange rate changes in cash             (899,554)   89,120
Net increase in cash and cash equivalents           1,980,086   550,564
Cash and cash equivalents, beginning of year        7,599,607   4,172,802
Cash and cash equivalents, end of year              $9,579,693 $4,723,366



NetSol Technologies, Inc. and Subsidiaries
Reconciliation to GAAP
                                                            
                        Three Months Three Months Six Months   Six Months
                        Ended        Ended        Ended        Ended
                        December 31, December 31, December 31, December 31,
                         2012         2011         2012         2011
                                                            
Net Income (loss)
before preferred         $2,222,983 $319,567   $3,152,108 $(1,139,141)
dividend, per GAAP
Income Taxes           (2,548)     7,005       11,448      31,539
Depreciation and        1,357,442   1,101,540   2,657,594   2,082,319
amortization
Interest expense       179,932     158,957     472,321     419,164
Interest (income)      (31,617)    (7,264)     (55,784)    (40,069)
EBITDA                 $3,726,192 $1,579,805 $6,237,687 $1,353,813
                                                            
Weighted Average number                                     
of shares outstanding
Basic                  7,957,521   5,665,562   7,774,719   5,626,944
Diluted                7,968,598   5,726,155   7,785,796   5,687,537
                                                            
Basic EBITDA           $0.47      $0.28      $0.80      $0.24
Diluted EBITDA         $0.47      $0.28      $0.80      $0.24

Although the net EBITDA income is a non-GAAP measure of performance, we are
providing it because we believe it to be an important supplemental measure of
our performance that is commonly used by securities analysts, investors, and
other interested parties in the evaluation of companies in our industry.It
should not be considered as an alternative to net income, operating income or
any other financial measures calculated and presented, nor as an alternative
to cash flow from operating activities as a measure of our liquidity.It may
not be indicative of the Company's historical operating results nor is it
intended to be predictive of potential future results.

Investor Contacts:

PondelWilkinson
Roger Pondel | Matt Sheldon
investors@netsoltech.com
(310) 279-5980

Media Contacts:

PondelWilkinson
George Medici | gmedici@pondel.com
(310) 279-5968

company logo
 
Press spacebar to pause and continue. Press esc to stop.