Science & Technology
Science and Technology
Science and Technology
Thu, November 12, 2009 NetSol Technologies Reports First Quarter Fiscal Year 2010 Financial Results
CALABASAS, CA--(Marketwire - November 12, 2009) - NetSol Technologies, Inc. "NetSol" (
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. (
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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 =========== ============ =========== =========== Diluted EBITDA $ 0.04 $ 0.08 $ 0.04 $ 0.02 =========== ============ =========== ===========
