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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)
before income 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
loss attributable 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

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