EX-99.1 2 v126775_ex99-1.htm
EXHIBIT 99.1

NEWS RELEASE DATED SEPTEMBER 19, 2007
 
 
NEWS RELEASE

NetSol Technologies Reports Record Fiscal Year 2008 Financial Results

Revenues Set New Annual and Quarterly Records, Rising 25% and 23% Year-Over-Year to Total $36.6 Million and $10.5 Million Respectively

GAAP Net Income Sets a Full Year Record of $7.2 Million, or $0.28 per Diluted Share; Versus a Year Ago Loss

Fourth Quarter GAAP Net Income Increased 58% to $2.1 Million, or $0.08 per Diluted Share

EBITDA Sets New Annual and Quarterly Records Rising to $11.3 Million and $3.3 Million Respectively

CALABASAS, CA - September 18, 2008 -- NetSol Technologies Inc. (“NetSol”) (NasdaqCM: NTWK) (DIFX: NTWK), a worldwide provider of global business services and enterprise application solutions, today announced fiscal fourth quarter and full year 2008 financial results, for the fiscal year ended June 30, 2008.

Fiscal Fourth Quarter 2008 Consolidated Financial Highlights
 
·  
Revenues increased 23% year-over-year to $10.5 million, up 16% sequentially from the fiscal third quarter
 
·  
License fees increased 67% to $4.9 million
 
·  
Maintenance fees increased 21% to $1.7 million
 
·  
Service fees decreased 8% to $3.8 million
 
·  
GAAP net income increased to $2.1 million, or $0.08 per fully diluted share, versus $1.3 million, or $0.07 per fully diluted share, in the year ago period
 
·  
EBITDA increased to a record $3.3 million, or $0.12 per diluted share, representing a 31% EBITDA margin, versus EBITDA of $2.0 million, or $0.10 per diluted share, in the year ago period
 
·  
NetSol reiterates its fiscal year 2009 financial guidance calling for annual revenue growth between 30% to 35% over fiscal year 2008 levels and diluted earnings per share between $0.40 to $0.45
 
Najeeb Ghauri, NetSol Technologies chairman and chief executive officer, commented, “NetSol delivered a truly outstanding performance in fiscal 2008, complemented by a strong fourth quarter, as we delivered record revenue, GAAP net income and EBITDA results, all meeting or exceeding our projected full year financial guidance. These exceptional financial results were supported by our ability to execute on our strategic product and growth objectives while further strengthening our global client servicing and delivery platform. The strength of our core NetSol financial suite of products helped drive double-digit annual growth in license, service and maintenance revenues. This was complemented by the rollout of our new BestShoring™ business model and Global Business Services platform which reflect our continued focus on meeting our international clients’ needs for local expertise matched will high quality offshore delivery capabilities. Our success in executing during fiscal 2008 was highlighted by rising average deal sizes as well as the expansion or penetration of business verticals such as finance, e-government and healthcare. We continue to diversify our revenue streams geographically as well as by customer focus as we expand NetSol’s presence globally, while also meeting our financial growth objectives.

“We are reiterating our fiscal year 2009 financial guidance and believe that our current business backlog, strong pipeline, expanded product and service offerings, combined with our 2009 strategic growth initiatives, will provide a solid platform to meet these ambitious goals. From a strategic perspective, we are continuing to invest in our sales and marketing resources to support our core operating divisions, particularly in North America where we recently announced the opening of our new global operating headquarters, while penetrating new growth markets such as the Middle East as well as Central and South America. Overall, we continue to focus on diversifying our customer base and client delivery centers to support our global growth initiatives. I am extremely pleased with our fiscal 2008 performance and believe NetSol has never been better positioned as we look to leverage the opportunities we are seeing in the international markets for fiscal 2009,” concluded Mr. Ghauri.

NetSol reported record consolidated revenues of $10.5 million for the fourth quarter of fiscal year 2008, a 23% increase compared to the $8.6 million in revenues reported for the same period a year ago. Consolidated gross profit for the fourth quarter was approximately $5.8 million, or 55% of total revenues.

U.S. GAAP (Generally Accepted Accounting Principles) net income for the fourth quarter of fiscal year 2008 was approximately $2.1 million, or $0.08 per diluted share, which compares to GAAP net income of $1.3 million or $0.07 per diluted share, in the same period of fiscal year 2007. NetSol reported EBITDA of $3.3 million, or $0.12 per diluted share, for the fourth quarter of fiscal year 2008 compared to EBITDA of $2.0 million, or $0.10 per diluted share, in the year ago period.

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."

Fiscal Year 2008 Business Highlights
 
·  
Introduced BestShoring™ and Global Business Services strategy as an evolution of NetSol’s core business offerings across NetSol’s international delivery centers.
 
·  
Increased sales of NetSol’s financial suite of products with multi-million deals in Asia, North America and Europe, supporting higher average deal sizes and increased diversification of NetSol’s global customer base.
 
·  
Expanded addressable markets and business verticals with increased penetration in finance, e-government, healthcare and defense.
 
·  
Strengthened North American operations with key management additions as well as additional sales and marketing resources.
 
·  
Billable resources in the NetSol Innovation Group joint venture increased to 130 employees.
 
·  
Increased branding and customer reach into the Middle East including a LeaseSoft contract win with one of the largest leasing companies in Saudi Arabia.
 
·  
Expanded global capital market access and Middle East market presence, becoming the first U.S. Company to successfully dual list on the Dubai International Financial Exchange (DIFX).
 
·  
Awarded second pilot project for the implementation of a Land Record Management Information System (LRMIS) for the Islamabad Capital Territory, Pakistan, the second LRMIS project NetSol has been awarded.
 
·  
NetSol Technologies' Development Center in Lahore achieved ISO 27001 certification.
 

Fiscal Year 2008 Consolidated Financial Highlights
 
·  
Revenues for the full fiscal 2008 year increased 25% to $36.6 million
 
·  
License fees improved 30% to $12.7 million
 
·  
Maintenance fees increased 16% to $6.3 million
 
·  
Service fees increased 26% to $17.7 million
 
·  
Gross margin improved to 57% compared to 53% in the same period a year ago
 
·  
GAAP net income increased to a record $7.2 million, or $0.28 per diluted share
 
·  
EBITDA increased to a record $11.3 million, or $0.44 per diluted share, representing a 31% EBITDA margin
 

NetSol reported record consolidated revenues of $36.6 million for the full fiscal 2008 year, a 25% increase compared to the $29.3 million in revenues reported for the full fiscal 2007 year. Consolidated gross profit for the full fiscal 2008 year was $20.9 million, or 57% of revenues.

GAAP net income for the 2008 full fiscal year was a record $7.2 million, or $0.28 per diluted share, compared to net loss of $4.9 million, or a loss of $0.28 per diluted share, for the full 2007 fiscal year. EBITDA increased to a record $11.3 million, or $0.44 per diluted share, as compared to EBITDA loss of $1.5 million, or a loss of $0.08 per diluted share, in the year ago period.
 
Conference Call & Webcast Information

NetSol will host a conference call at 11:00 a.m. ET (8:00 a.m. PT) to review the results. Najeeb Ghauri, chairman and chief executive officer, Tina Gilger, chief financial officer, and Naeem Ghauri, Europe division president, will host the call, which will be webcast live. The webcast and a supporting slide presentation will be made available online at http://www.netsoltek.com/investors/investor_relations.htm. Telephone access to the conference call is 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 one hour following the conclusion of the call and will be available for 30 days. 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 # 295907. An archived replay of the conference webcast will also be available on the NetSol Technologies web site at http://www.netsoltek.com/investors/investor_relations.htm.

About NetSol Technologies

NetSol Technologies (NasdaqCM: NTWK) (DIFX: NTWK) is a worldwide provider of global business services and enterprise application solutions. NetSol uses its BestShoring(TM) practices and highly experienced resources in analysis, development, quality assurance, and implementation to deliver high-quality, cost-effective solutions. Organized into specialized practices, these product and services offerings include portfolio management systems for the financial services industry, consulting, custom development, systems integration, and technical services for the global Healthcare, Insurance, Real Estate, and Technology markets. NetSol's commitment to quality is demonstrated by its achievement of the ISO 9001, ISO 279001, and SEI (Software Engineering Institute) CMMI (Capability Maturity Model) Level 5 assessments, a distinction shared by fewer than 100 companies worldwide. NetSol Technologies' clients include Fortune 500 manufacturers, global automakers, financial institutions, technology providers, and governmental agencies. Headquartered in Calabasas, California, NetSol Technologies has operations and offices in London, San Francisco, Sydney, Beijing, Bangkok, and Lahore. To join the NetSol Technologies Inc. email distribution list please visit: http://www.b2i.us/irpass.asp?BzID=897&to=ea&s=0.

To learn more about NetSol Technologies Inc., visit www.netsoltech.com


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 "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.

Contacts:

NetSol Technologies, Inc.
Investor Relations
Tina Gilger
Christopher Chu
Chief Financial Officer
Grayling Global
Tel: +1 818-222-9195, x112
Tel: +1-646-284-9426
 
Email: cchu@hfgcg.com


Financial Tables Follow


NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS

   
For the Three Months
 
For the Year
 
   
Ended June 30,
 
Ended June 30,
 
   
2008
 
2007
 
2008
 
2007
 
Net Revenues:
  
(UNAUDITED)
 
(AUDITED)
 
License fees
  
$
4,915,813
  
$
2,936,770
  
$
12,685,039
  
$
9,788,266
  
Maintenance fees
    
1,749,871
   
1,451,243
   
6,306,321
   
5,441,339
 
Services
    
3,849,971
   
4,188,426
   
17,650,815
   
14,052,481
 
 Total revenues
    
10,515,655
   
8,576,439
   
36,642,175
   
29,282,086
 
Cost of revenues
                          
Salaries and consultants
   
2,728,921
   
2,204,328
   
10,071,664
   
8,812,934
 
Travel
   
746,745
   
334,481
   
1,719,743
   
1,529,796
 
Repairs and maintenance
   
72,692
   
117,448
   
405,140
   
430,962
 
Insurance
   
85,283
   
58,302
   
239,043
   
211,897
 
Depreciation and amortization
   
551,166
   
100,779
   
1,398,454
   
794,482
 
Other
   
548,587
   
434,962
   
1,890,100
   
1,914,440
 
 Total cost of sales
    
4,733,394
   
3,250,300
   
15,724,144
   
13,694,511
 
Gross profit
    
5,782,261
   
5,326,139
   
20,918,031
   
15,587,575
 
Operating expenses:
                          
Selling and marketing
    
904,562
   
1,056,004
   
3,722,470
   
3,161,924
 
Depreciation and amortization
    
517,321
   
457,086
   
1,939,502
   
1,846,790
 
Bad debt expense
    
55,016
   
72,606
   
58,293
   
189,873
 
Salaries and wages
    
945,402
   
781,794
   
3,703,836
   
3,696,501
 
Professional services, including non-cash compensation
    
413,490
   
293,499
   
837,598
   
1,067,702
 
General and adminstrative
    
1,170,091
   
775,735
   
3,447,113
   
2,977,917
 
 Total operating expenses
    
4,005,882
   
3,436,724
   
13,708,812
   
12,940,707
 
Income from operations
    
1,776,379
   
1,889,415
   
7,209,219
   
2,646,868
 
Other income and (expenses):
                          
Gain (Loss) on sale of assets
    
(2,440
)
  
16,090
   
(35,484
)
  
(2,977
)
Beneficial conversion feature
    
-
   
-
   
-
   
(2,208,334
)
Amortization of debt discount and capitalized cost of debt
    
-
   
-
   
-
   
(2,803,691
)
Liquidation damages
    
-
   
-
   
-
   
(180,890
)
Fair market value of warrants issued
    
-
   
(34,424
)
  
-
   
(68,411
)
Interest expense
    
(82,043
)
  
(74,476
)
  
(626,708
)
  
(617,818
)
Interest income
    
35,234
   
38,092
   
195,103
   
201,015
 
Gain on sale of subsidiary shares
    
-
   
-
   
1,240,808
   
-
 
Gain on foreign currency exchange rates
    
1,430,669
   
42,434
   
2,020,839
   
178,522
 
Other income and (expenses)
    
29,600
   
18,210
   
148,544
   
74,050
 
 Total other income (expenses)
    
1,411,020
   
5,926
   
2,943,102
   
(5,428,534
)
Net income (loss) before minority interest in subsidiary
    
3,187,399
   
1,895,341
   
10,152,321
   
(2,781,666
)
Minority interest in subsidiary
    
(1,051,781
)
  
(561,508
)
  
(2,808,291
)
  
(1,935,589
)
Income taxes
    
(75,710
)
  
(33,686
)
  
(121,982
)
  
(160,306
)
Net income (loss)
    
2,059,908
   
1,300,147
   
7,222,048
   
(4,877,561
)
Dividend required for preferred stockholders
    
(33,508
)
  
(77,640
)
  
(178,541
)
  
(237,326
)
Subsidiary dividend (minority holders portion)
    
-
   
-
   
(817,173
)
  
-
 
Bonus stock distribution (minority holders portion)
    
(615,635
)
  
(345,415
)
  
(1,160,994
)
  
(345,415
)
Net income (loss) applicable to common shareholders
    
1,410,765
   
877,092
   
5,065,340
   
(5,460,302
)
Other comprehensive loss:
                          
Translation adjustment
    
(2,390,317
)
  
(259,113
)
  
(3,792,148
)
  
(55,770
)
Comprehensive income (loss)
  
$
(979,552
)
$
617,979
  
$
1,273,192
  
$
(5,516,072
)
Net income (loss) per share:
                          
Basic
  
$
0.08
  
$
0.06
  
$
0.29
  
$
(0.28
)
Diluted
  
$
0.08
  
$
0.07
  
$
0.28
  
$
(0.28
)
Weighted average number of shares outstanding
                          
Basic
    
25,425,042
   
19,706,920
   
24,118,538
   
18,189,590
 
Diluted
    
27,303,554
   
19,835,177
   
25,997,049
   
18,189,590
 


NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - AS OF JUNE 30, 2008
 
ASSETS
 
Current assets:
          
Cash and cash equivalents
  
$
6,275,238
        
Accounts receivable, net of allowance for doubtful accounts of $108,538
    
10,988,888
       
Revenues in excess of billings
    
11,053,042
       
Other current assets
    
2,406,407
       
 Total current assets
        
30,723,575
 
Property and equipment, net of accumulated depreciation
          
9,176,780
 
Other assets, long-term
          
1,866,437
 
Intangibles:
              
Product licenses, renewals, enhancements, copyrights,
              
 trademarks, and tradenames, net
    
10,837,856
       
Customer lists, net
    
1,732,761
       
Goodwill
    
9,439,285
       
 Total intangibles
          
22,009,902
 
 Total assets
        
$
63,776,694
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
Accounts payable and accrued expenses
  
$
4,116,659
        
Current portion of loans and obligations under capitalized leases
    
2,280,110
       
Other payables - acquisitions
    
846,215
       
Unearned revenues
    
3,293,728
       
Due to officers
    
184,173
       
Dividend to preferred stockholders payable
    
33,508
       
Loans payable, bank
    
2,932,551
       
 Total current liabilities
        
13,686,944
 
Obligations under capitalized leases, less current maturities
          
332,307
 
Long term loans; less current maturities
          
411,608
 
 Total liabilities
          
14,430,859
 
Minority interest
          
6,866,514
 
Commitments and contingencies
          
-
 
               
Stockholders' equity:
              
Preferred stock, 5,000,000 shares authorized;
             
 1,920 issued and outstanding
    
1,920,000
       
Common stock, $.001 par value; 95,000,000 shares authorized;
              
 25,545,482 issued and outstanding
    
25,545
       
Additional paid-in-capital
    
76,456,697
       
Treasury stock
    
(35,681
)
      
Accumulated deficit
   
(32,067,003
)
      
Stock subscription receivable
    
(600,907
)
      
Common stock to be issued
    
1,048,249
       
Other comprehensive loss
    
(4,267,579
)
      
 Total stockholders' equity
        
42,479,321
 
 Total liabilities and stockholders' equity
        
$
63,776,694
  


NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS


   
For the Years
 
   
Ended June 30,
 
   
2008
 
2007
 
Cash flows from operating activities:
         
Net income (loss) from continuing operations
 
$
7,222,048
  
$
(4,877,561
)
Adjustments to reconcile net income (loss) applicable to common
             
shareholders to net cash provided by (used in) operating activities:
             
Depreciation and amortization
   
3,337,956
   
2,641,272
 
Bad debt expense
   
58,293
   
189,873
 
Loss on sale of assets
   
35,484
   
2,977
 
Gain on sale of subsidiary shares in Pakistan
   
(1,240,808
)
  
-
 
Minority interest in subsidiary
   
2,808,291
   
1,935,589
 
Stock issued for services
   
167,926
   
88,099
 
Stock issued for convertible note payable interest
   
-
   
311,868
 
Fair market value of warrants and stock options granted
   
24,320
   
136,571
 
Beneficial conversion feature
   
-
   
2,208,334
 
Amortization of capitalized cost of debt
   
-
   
2,815,358
 
Changes in operating assets and liabilities:
             
Increase in accounts receivable
   
(4,123,995
)
  
(2,858,608
)
Increase in other current assets
   
(4,980,504
)
  
(3,359,736
)
Decrease in long-term assets
   
229,622
   
159,940
 
Increase in accounts payable and accrued expenses
   
233,408
   
560,136
 
Net cash provided by/(used in) operating activities
   
3,772,041
   
(45,888
)
Cash flows from investing activities:
             
Purchases of property and equipment
   
(4,435,755
)
  
(2,420,470
)
Sales of property and equipment
   
15,838
   
366,088
 
Net proceeds of certificates of deposit
   
-
   
1,737,481
 
Bank overdraft
   
85,335
   
-
 
Payments of acquisition payable
   
(879,007
)
  
(4,027,753
)
Increase in intangible assets
   
(4,829,369
)
  
(3,295,262
)
Net cash used in investing activities
   
(10,042,958
)
  
(7,639,916
)
Cash flows from financing activities:
             
Proceeds from sale of common stock
   
1,500,000
   
1,030,093
 
Proceeds from the exercise of stock options and warrants
   
3,282,827
   
1,008,250
 
Proceeds from sale of subsidiary stock
   
1,765,615
   
-
 
Finance costs incurred for sale of common stock
   
(10,000
)
  
-
 
Purchase of treasury stock
   
(25,486
)
  
-
 
Reduction of restricted cash
   
-
   
4,533,555
 
Proceeds from loans from officers
   
-
   
165,000
 
Proceeds from bank loans
   
5,441,870
   
-
 
Payments on bank loans
   
(99,936
)
  
-
 
Payments on capital lease obligations & loans - net
   
(3,409,496
)
  
2,359,017
 
Net cash provided by financing activities
   
8,445,394
   
9,095,915
 
Effect of exchange rate changes in cash
   
90,597
   
106,285
 
Net increase in cash and cash equivalents
   
2,265,074
   
1,516,396
 
Cash and cash equivalents, beginning of year
   
4,010,164
   
2,493,768
 
Cash and cash equivalents, end of year
 
$
6,275,238
  
$
4,010,164
  


NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION TO GAAP
(UNAUDITED)

   
For the Three
 
For the Year
 
   
Months Ended
 
Ended
 
   
June 30, 2008
  
June 30, 2008
  
           
Net income per GAAP (applicable to common shareholders)
 
$
2,059,908
  
$
7,222,049
  
Income taxes  
    
75,710
   
121,982
 
Depreciaiton and amortization  
    
1,068,487
   
3,354,472
 
Interest expense  
    
82,043
   
626,640
 
 EBITDA income
 
$
3,286,148
  
$
11,325,143
  
               
               
Weighted average number of shares outstanding
              
Basic 
    
25,425,042
   
24,118,538
 
Diluted  
    
27,303,554
   
25,997,049
 
                    
Basic EBITDA EPS
 
$
0.13
  
$
0.47
  
Diluted EBITDA EPS
 
$
0.12
  
$
0.44