EX-99.B1 4 v019887_ex-b1.txt NETSOL TECHNOLOGIES INC AND SUBSIDIARIES PRO-FORMA FINANCIAL STATEMENTS JUNE 30, 2004 (UNAUDITED) The following unaudited Pro-Forma Statement of Financial Conditions and Statement of Operations have been derived from the audited consolidated financial statements of NetSol Technologies, Inc. ("NetSol") as of June 30, 2004 and the audited financial statements of CQ Systems Limited (a UK corporation) ("CQ Systems") as of March 31, 2004. The unaudited Pro Forma Statement of Financial Conditions and Statement of Operations reflect the 100% acquisition of CQ Systems by NetSol under a stock purchase agreement. The pro-forma Statement of Financial Conditions assumes the acquisition was consummated as of June 30, 2004, and the pro-forma Statements of Operations assumes the acquisition was consummated as of July 1, 2003, the beginning of NetSol Technologies fiscal year. The purchase price is (pound)3,576,335 or $6,730,382 of which one-half is due in cash and shares of NetSol's common stock at closing. The other half is due within one year; no interest accrues on the outstanding balance. The initial purchase price is based on the March 31, 2005 audited financial statements of CQ Systems. The final purchase price will be adjusted either up or down when the audited March 31, 2006 financial statements are completed. The Pro-Forma Statement of Financial Conditions and Statement of Operations should be read in conjunction with the Consolidated Financial Statements of NetSol, related Notes to the financial statements, and the Financial Statements of CQ Systems. The Pro-Forma statements do not purport to represent what the Company's financial condition and results of operations would actually have been if the acquisition of CQ Systems had occurred on the date indicated or to project the Company's results of operations for any future period or date. The Pro-Forma adjustments, as described in the accompanying data, are based on available information and the assumptions set forth in the notes below, which management believes are reasonable. NETSOL TECHNOLOGIES INC AND SUBSIDIARIES CONSOLIDATED PRO-FORMA STATEMENT OF FINANCIAL CONDITIONS FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
NetSol CQ Systems as of 6/30/04 as of 3/31/04 Pro Forma Pro Forma (Historical) (Historical) Adjustment Combined -------------- -------------- -------------- -------------- ASSETS Current Assets $ 3,563,501 $ 2,337,549 $ (700,000) (1) ($)5,201,050 Property & equipment, net 4,203,580 260,517 -- 4,464,097 Intangible assets, net 4,218,040 -- 5,809,020 (1) 10,027,060 -------------- -------------- -------------- -------------- Total assets $ 11,985,121 $ 2,598,066 $ 5,109,020 $ 19,692,207 ============== ============== ============== ============== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities $ 3,573,948 $ 1,600,914 $ -- $ 5,174,862 Obligations under capitalized leases, less current maturities 27,604 70,424 -- 98,028 Deferred tax -- 5,366 -- 5,366 Notes payable 89,656 -- 4,353,587 (1) 4,443,242 Convertible debenture 937,500 -- -- 937,500 -------------- -------------- -------------- -------------- Total liabilities 4,628,708 1,676,704 4,353,587 10,658,998 Stockholders' equity; Common stock 9,483 159,210 (158,528) (1) 10,165 Additional paid in capital 38,933,621 -- 1,676,113 (1) (140,609,734 Stock subscription receivable (497,559) -- -- (497,559) Treasury stock (21,457) -- -- (21,457) Other comprehensive income (loss) (150,210) 138,784 (138,784) (1) (150,210) Accumulated earnings (deficit) (30,917,465) 623,368 (623,368) (1) (30,917,465) -------------- -------------- -------------- -------------- Total stockholders' equity 7,356,413 921,362 755,433 9,033,208 -------------- -------------- -------------- -------------- Total liabilities and stockholders' equity $ 11,985,121 $ 2,598,066 $ 5,109,020 $ 19,692,206 ============== ============== ============== ==============
NOTES: (1) Elimination of Common stock and accumulated earnings of CQ Systems before the acquisition and to record the purchase of CQ Systems by NetSol. The initial purchase price is $6,730,382, of which one-half is due at closing in cash and stock and the remaining half to be paid within one year, and after the price has been adjusted up or down when the audited 3/31/06 numbers are available. No interest is accrued on the balance remaining after closing. Purchase Price allocation: $ Common Stock, 681,965 shares 682 Additional paid in capital 1,676,113 Cash 700,000 Cash, provided by short-term notes 1,000,000 Notes payable 3,353,587 ------------ Total purchase price 6,730,382 ============ CQ equity (net assets and liabilities) 921,362 Intangible assets: Customer Lists 1,316,880 Licenses 2,190,807 Goodwill 2,301,333 ------------- 5,809,020 5,809,020 ------------ 6,730,382 ============ NETSOL TECHNOLOGIES INC AND SUBSIDIARIES CONSOLIDATED PRO-FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2004 (UNAUDITED)
NetSol CQ Systems as of 6/30/04 as of 3/31/04 Pro Forma Pro Forma (Historical) (Historical) Adjustment Combined -------------- -------------- -------------- -------------- Net Revenue $ 5,749,062 $ 4,640,653 $ -- $ 10,389,715- Cost of revenue 2,656,377 1,833,994 -- 4,490,371 -------------- -------------- -------------- -------------- Gross profit 3,092,685 2,806,659 -- 5,899,344 Operating expenses 6,028,055 1,895,988 701,537(3) 8,625,577 -------------- -------------- -------------- -------------- Income (loss) from operations (2,935,370) 910,671 (701,537) (2,726,233) Other income and (expenses) (307,764) (214,819) -- (522,583) -------------- -------------- -------------- -------------- Income (loss) from continuing operations (3,243,134) 695,852 (701,537) (3,248,816) Minority interest in subsidiary 273,159 -- -- 273,159 -------------- -------------- -------------- -------------- Net income (loss) (2,969,975) 695,852 (701,537) (2,975,657) Other comprehensive income (loss): Translation adjustment (299,507) 110,837 -- (188,670) -------------- -------------- -------------- -------------- Comprehensive income (loss) $ (3,269,482) $ 806,689 $ (701,537) $ (3,164,327) ============== ============== ============== ============== EARNINGS PER SHARE Weighted -average number of shares outstanding 8,563,518 100,000 8,663,518 ============== ============== ============== Income (loss) per share $ (0.35) $ 6.96 $ (0.34) ============== ============== ==============
NOTES: (1) Loss per share data shown above are applicable for both primary and fully diluted. (2) Weighted-average number of shares outstanding for the combined entity includes all shares issued for the acquisition of 681,964 shares as if outstanding as of July 1, 2003. (3) Amortization of intangible assets acquired in acquisition NETSOL TECHNOLOGIES INC AND SUBSIDIARIES PRO-FORMA FINANCIAL STATEMENTS JUNE 30, 2003 (UNAUDITED) The following unaudited Pro-Forma Statement of Financial Conditions and Statement of Operations has been derived from the audited consolidated financial statements of NetSol Technologies, Inc. ("NetSol") as of June 30, 2003 and the audited financial statements of CQ Systems Limited (a UK corporation) ("CQ Systems") as of March 31, 2003. The unaudited Pro Forma Statement of Financial Conditions and Statement of Operations reflect the 100% acquisition of CQ Systems by NetSol under a stock purchase agreement. The pro-forma Statement of Financial Conditions assumes the acquisition was consummated as of June 30, 2003, and the pro-forma Statements of Operations assumes the acquisition was consummated as of July 1, 2002, the beginning of NetSol Technologies fiscal year. The purchase price is (pound)3,576,335 or $6,730,382 of which one-half is due in cash and shares of NetSol's common stock at closing. The other half is due within one year; no interest accrues on the outstanding balance. The initial purchase price is based on the March 31, 2005 audited financial statements of CQ Systems. The final purchase price will be adjusted either up or down when the audited March 31, 2006 financial statements are completed. The Pro-Forma Statement of Financial Conditions and Statement of Operations should be read in conjunction with the Consolidated Financial Statements of NetSol, related Notes to the financial statements, and the Financial Statements of CQ Systems. The Pro-Forma statements do not purport to represent what the Company's financial condition and results of operations would actually have been if the acquisition of CQ Systems had occurred on the date indicated or to project the Company's results of operations for any future period or date. The Pro-Forma adjustments, as described in the accompanying data, are based on available information and the assumptions set forth in the notes below, which management believes are reasonable. NETSOL TECHNOLOGIES INC AND SUBSIDIARIES CONSOLIDATED PRO-FORMA STATEMENT OF FINANCIAL CONDITIONS FOR THE PERIOD ENDED JUNE 30, 2003 (UNAUDITED)
NetSol CQ Systems as of 6/30/03 as of 3/31/03 Pro Forma Pro Forma (Historical) (Historical) Adjustment Combined -------------- -------------- -------------- -------------- ASSETS Current Assets $ 1,774,553 $ 1,470,485 $ (700,000) $ 2,545,038 Property & equipment, net 2,037,507 197,481 -- 2,234,988 Intangible assets, net 4,930,191 -- 6,212,409 (1) 11,142,599 -------------- -------------- -------------- -------------- Total assets $ 8,742,251 $ 1,667,966 $ 5,512,409 $ 15,922,625 ============== ============== ============== ============== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities $ 3,533,614 $ 1,139,770 $ -- $ 4,673,384 Obligations under capitalized leases, less current maturities 7,111 8,330 15,441 Deferred tax -- 1,892 1,892 Notes payable 126,674 -- 4,353,587 (1) 4,480,260 -------------- -------------- -------------- -------------- Total liabilities 3,667,399 1,149,992 4,353,587 9,170,977 Stockholders' equity; Common stock 5,757 159,210 (158,528)(1) 6,439 Additional paid in capital 33,409,953 -- 1,676,113 (1) 35,086,066 Stock subscription receivable (84,900) (84,900) Other comprehensive income (loss) 149,297 27,947 (27,947)(1) 149,297 Accumulated earnings (deficit) (28,405,255) 330,816 (330,816)(1) (28,405,255) -------------- -------------- -------------- -------------- Total stockholders' equity 5,074,852 517,973 (2) 1,158,822 6,751,647 -------------- -------------- -------------- -------------- Total liabilities and stockholders' equity $ 8,742,251 $ 1,667,965 $ 5,512,409 $ 15,922,624 ============== ============== ============== ==============
NOTES: (1) Elimination of Common stock and accumulated earnings of CQ Systems before the acquisition and to record the purchase of CQ Systems by NetSol. The initial purchase price is $6,730,382, of which one-half is due at closing in cash and stock and the remaining half to be paid within one year, and after the price has been adjusted up or down when the audited 3/31/06 numbers are available. No interest is accrued on the balance remaining after closing. Purchase Price allocation: $ Common Stock, 681,965 shares 682 Additional paid in capital 1,676,113 Cash 700,000 Cash, provided by short-term notes 1,000,000 Notes payable 3,353,587 ------------ Total purchase price 6,730,382 ============ CQ equity (net assets and liabilities) 517,973 Intangible assets: Customer Lists 1,316,880 Licenses 2,190,807 Goodwill 2,704,722 ------------- 6,212,409 6,212,409 ------------ 6,730,382 ============ NETSOL TECHNOLOGIES INC AND SUBSIDIARIES CONSOLIDATED PRO-FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2003 (UNAUDITED)
NetSol CQ Systems as of 6/30/03 as of 3/31/03 Pro Forma Pro Forma (Historical) (Historical) Adjustment Combined -------------- -------------- -------------- -------------- Net Revenue $ 3,745,386 $ 3,821,892 $ -- $ 7,567,278 - Cost of revenue 1,778,993 1,654,608 -- 3,433,601 -------------- -------------- -------------- -------------- Gross profit 1,966,393 2,167,284 -- 4,133,677 Operating expenses 4,434,643 2,013,685 701,537 (3) 7,149,862 -------------- -------------- -------------- -------------- Income (loss) from operations (2,468,250) 153,599 (701,537) (3,016,185) Other income and (expenses) (147,331) (34,560) -- (181,891) -------------- -------------- -------------- -------------- Income (loss) from continuing operations (2,615,581) 119,039 (701,537) (3,198,076) Gain from discontinuation of a subsidiary 478,075 -- -- 478,075 -------------- -------------- -------------- -------------- Net income (loss) (2,137,506) 119,039 (701,537) (2,720,001) Other comprehensive income (loss): Translation adjustment (380,978) 70,997 -- (309,981) -------------- -------------- -------------- -------------- Comprehensive income (loss) $ (2,518,484) $ 190,036 $ (701,537) $ (3,029,982) ============== ============== ============== ============== EARNINGS PER SHARE Weighted -average number of shares outstanding 5,194,167 100,000 5,294,167 ============== ============== ============== Income (loss) per share $ (0.41) $ 1.19 $ (0.51) ============== ============== ==============
NOTES: (1) Loss per share data shown above are applicable for both primary and fully diluted. (2) Weighted-average number of shares outstanding for the combined entity includes all shares issued for the acquisition of 681,964 as if outstanding as of July 1, 2002. (3) Amortization of intangible assets acquired in acquisition NETSOL TECHNOLOGIES INC AND SUBSIDIARIES PRO-FORMA FINANCIAL STATEMENTS DECEMBER 31, 2004 (UNAUDITED) The following unaudited Pro-Forma Statement of Financial Conditions and Statement of Operations have been derived from the unaudited consolidated financial statements of NetSol Technologies, Inc. ("NetSol") for the six months ending December, 2004 and the unaudited financial statements of CQ Systems Limited (a UK corporation) ("CQ Systems") for the six months ending December 31, 2004. The unaudited Pro Forma Statement of Financial Conditions and Statement of Operations reflect the 100% acquisition of CQ Systems by NetSol under a stock purchase agreement. The Company has accounted for the acquisition under the purchase method of accounting for business combinations. The pro-forma Statement of Financial Conditions assumes the acquisition was consummated as of December 31, 2004, and the pro-forma Statements of Operations assumes the acquisition was consummated as of July 1, 2003, the beginning of NetSol Technologies fiscal year. The purchase price is (pound)3,576,335 or $6,730,382 of which one-half is due in cash and shares of NetSol's common stock at closing. The other half is due within one year; no interest accrues on the outstanding balance. The initial purchase price is based on the March 31, 2005 audited financial statements of CQ Systems. The final purchase price will be adjusted either up or down when the audited March 31, 2006 financial statements are completed. The Pro-Forma Statement of Financial Conditions and Statement of Operations should be read in conjunction with the Consolidated Financial Statements of NetSol, related Notes to the financial statements, and the Financial Statements of CQ Systems. The Pro-Forma statements do not purport to represent what the Company's financial condition and results of operations would actually have been if the acquisition of CQ Systems had occurred on the date indicated or to project the Company's results of operations for any future period or date. The Pro-Forma adjustments, as described in the accompanying data, are based on available information and the assumptions set forth in the notes below, which management believes are reasonable. NETSOL TECHNOLOGIES INC AND SUBSIDIARIES CONSOLIDATED PRO-FORMA STATEMENT OF FINANCIAL CONDITIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (UNAUDITED)
NetSol CQ Systems as of 12/31/04 as of 12/31/04 Pro Forma Pro Forma (Historical) (Historical) Adjustment Combined -------------- -------------- -------------- -------------- ASSETS Current Assets $ 5,554,445 $ 2,013,642 $ (700,000)(1)$ 6,868,087 Property & equipment, net 4,276,307 339,527 -- 4,615,834 Intangible assets, net 4,003,152 -- 5,974,686 (1) 9,977,838 -------------- -------------- -------------- -------------- Total assets $ 13,833,904 $ 2,353,169 $ 5,274,686 $ 21,461,759 ============== ============== ============== ============== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities $ 2,527,728 $ 1,467,228 $ -- $ 3,994,957 Obligations under capitalized leases, less current maturities 56,910 124,803 -- 181,713 Deferred tax -- 5,442 -- 5,442 Notes payable -- -- 4,353,587 (1) 4,353,586 Convertible debenture 112,500 -- -- 112,500 -------------- -------------- -------------- -------------- Total liabilities 2,697,138 1,597,473 4,353,587 8,648,198 Minority Interest 99,752 -- -- 99,752 Stockholders' equity; Common stock 12,254 159,210 (158,528)(1) 12,936 Additional paid in capital 43,119,861 -- 1,676,113 (1) 44,795,974 Common stock to be issued 254,800 -- -- 254,800 Stock subscription receivable (1,375,642) -- -- (1,375,642) Treasury stock (27,197) -- -- (27,197) Other comprehensive income (loss) (323,619) 43,149 (43,149)(1) (323,619) Accumulated earnings (deficit) (30,623,443) 553,337 (553,337)(1) (30,623,443) -------------- -------------- -------------- -------------- Total stockholders' equity 11,037,014 755,696 921,099 12,713,809 -------------- -------------- -------------- -------------- Total liabilities and stockholders' equity $ 13,833,904 $ 2,353,169 $ 5,274,686 $ 21,461,759 ============== ============== ============== ==============
NOTES: (1) Elimination of Common stock and accumulated earnings of CQ Systems before the acquisition and to record the purchase of CQ Systems by NetSol. The initial purchase price is $6,730,382, of which one-half is due at closing in cash and stock and the remaining half to be paid within one year, and after the price has been adjusted up or down when the audited 3/31/06 numbers are available. No interest is accrued on the balance remaining after closing. Purchase Price allocation: $ Common Stock, 681,965 shares 682 Additional paid in capital 1,676,113 Cash 700,000 Cash, provided by short-term notes 1,000,000 Notes payable 3,353,587 ------------ Total purchase price 6,730,382 ============ CQ equity (net assets and liabilities) 755,696 Intangible assets: Customer Lists 1,316,880 Licenses 2,190,807 Goodwill 2,466,999 ------------- 5,974,686 5,974,686 ------------ 6,730,382 ============ NETSOL TECHNOLOGIES INC AND SUBSIDIARIES CONSOLIDATED PRO-FORMA STATEMENT OF OPERATIONS FOR THE PERIOD ENDED DECEMBER 31, 2004 (UNAUDITED)
NetSol CQ Systems as of 12/31/04 as of 12/31/04 Pro Forma Pro Forma (Historical) (Historical) Adjustment Combined -------------- -------------- -------------- -------------- Net Revenue $ 4,781,532 $ 2,485,266 $ -- $ 7,266,798- Cost of revenue 1,580,620 1,550,006 -- 3,130,626 -------------- -------------- -------------- -------------- Gross profit 3,200,912 935,260 -- 4,136,172 Operating expenses 2,757,165 833,863 350,769 (3) 3,941,794 -------------- -------------- -------------- -------------- Income (loss) from operations 443,747 101,397 (350,769) 194,378 Other income and (expenses) (379,314) 6,782 -- (372,532) -------------- -------------- -------------- -------------- Income (loss) from continuing operations 64,433 108,179 (350,769) (178,154) Minority interest in subsidiary 14,259 -- -- 14,259 -------------- -------------- -------------- -------------- Net income (loss) 78,692 108,179 (350,769) (163,895) Other comprehensive income (loss): Translation adjustment (173,409) (95,635) -- (269,044) -------------- -------------- -------------- -------------- Comprehensive income (loss) $ (94,717) $ 12,544 $ (350,769) $ (432,939) ============== ============== ============== ============== EARNINGS PER SHARE Weighted -average number of shares outstanding 10,755,918 100,000 10,855,918 ============== ============== ============== Income (loss) per share $ 0.01 $ 1.08 $ (0.02) ============== ============== ==============
NOTES: (1) Loss per share data shown above are applicable for primary (2) Weighted-average number of shares outstanding for the combined entity includes all shares issued for the acquisition of 681,964 shares as if outstanding as of July 1, 2003. (3) Amortization of intangible assets acquired in acquisition