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NetSol Technologies Reports Record Fiscal Fourth Quarter And Year-End Results

Net revenue for fiscal 2012 increased to a record $39.8 million from $36.5 million last fiscal year.

License revenue rose to $13.4 million from $11.3 million in fiscal 2011. Maintenance revenue in fiscal 2012 was $7.9 million, compared with $7.5 million last fiscal year. Services revenue increased to $18.5 million from $17.8 million for the fourth quarter of fiscal 2011.

Gross margin for the 2012 fiscal year was 54%, compared with 59% last year, as a result of the challenging period in the first half of the year, and the company's move to expand service and delivery capability into Thailand, and increase staffing levels in China to capture market demand. Total operating expenses were $14.2 million for fiscal 2012, compared with $11.6 million in fiscal 2011. Operating income for fiscal 2012 was $7.3 million, compared with $10.2 million in fiscal 2011.

Net income was $2.4 million for fiscal 2012, equal to $0.39 per diluted share, compared with $5.7 million, or $1.16 per diluted share, in fiscal 2011.  Weighted average number of diluted shares outstanding for the year was 6.2 million, compared with 5.0 million shares in fiscal 2011. 

Business and Financial Outlook

The company maintains its financial guidance provided in mid-August, anticipating a steady base of continuing recurring revenue, strong demand for the core NFS solution, particularly in the APAC region, and the successful progression of current projects underway, among other ongoing initiatives.  

NetSol anticipates 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 2012 Fourth Quarter Conference Call

When: Tuesday, September 4
Time: 11:00 a.m. Eastern
Phone: 1-877-941-0844 (domestic)
  1-480-629-9835 (international)
Passcode: 4560495
Webcast: http://www.netsoltech.com/IR/event-presentation.php
Archived: 90 days

A telephone playback of the conference call will also be available until, Tuesday, September 11, 2012. Listeners should call (800) 406-7325 (domestic) or (303) 590-3030 (international) and use reservation 4560495 to access the playback.

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://bit.ly/NetSol_Investor_Signup_Form .

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.

(Tables Follow)

NetSol Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
     
   As of June 30,  As of June 30,
  ASSETS  2012  2011
Current assets:    
Cash and cash equivalents  $ 7,599,607  $ 4,172,802
Restricted cash  141,231  5,700,000
Accounts receivable, net  13,757,637  15,062,502
Revenues in excess of billings  12,131,329  7,601,230
Other current assets  2,648,302  2,053,904
Total current assets  36,278,106  34,590,438
Property and equipment, net  16,912,795  16,014,461
     
Intangible assets, net  28,502,983  25,602,195
Goodwill  9,653,330  9,439,285
Total intangibles  38,156,313  35,041,480
Total assets  $  91,347,214  $ 85,646,379
     
  LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable and accrued expenses  $ 3,869,355  $ 4,730,027
Current portion of loans and obligations under capitalized leases  1,896,238  7,062,535
Other payables - acquisitions  103,226  103,226
Unearned revenues  2,704,661  2,653,460
Convertible notes payable , current portion  2,809,093  2,745,524
Loans payable, bank  2,116,402  2,319,377
Common stock to be issued  105,575  400,700
Total current liabilities  13,604,550  20,014,849
Obligations under capitalized leases, less current maturities  260,107  285,472
Convertible notes payable less current maturities  936,364  --
Long term loans; less current maturities  1,551,541  434,884
Total liabilities  16,352,562  20,735,205
Commitments and contingencies    
Stockholders' equity:    
Common stock, $.01 par value; 9,500,000 shares authorized; 7,513,745    
& 5,553,186 issued and outstanding as of June 30, 2012 and 2011   75,137  55,532
Additional paid-in-capital  106,101,165  97,886,492
Treasury stock  (415,425)  (396,008)
Accumulated deficit  (31,684,399)  (34,130,944)
Stock subscription receivable  (2,119,488)  (2,198,460)
Other comprehensive loss  (12,361,759)  (8,805,922)
Total NetSol shareholders' equity   59,595,231  52,410,690
Non-controlling interest  15,399,421  12,500,484
Total stockholders' equity  74,994,652  64,911,174
Total liabilities and stockholders' equity  $ 91,347,214  $ 85,646,379
 
 
NetSol Technologies, Inc. and Subsidiaries
Consolidated Statement of Operations
     
   For the Year
   Ended June 30,
     
  2012 2011
Net Revenues:    
License fees  13,369,701  11,284,472
Maintenance fees  7,866,930  7,488,387
Services  18,538,893  17,774,714
Total net revenues  39,775,524  36,547,574
Cost of revenues:    
Salaries and consultants  10,236,109  8,716,495
Travel  1,273,259  1,044,767
Repairs and maintenance  373,359  307,115
Insurance   145,351  126,584
Depreciation and amortization  3,528,229  3,108,286
Other  2,721,716  1,500,880
Total cost of revenues  18,278,023  14,804,126
Gross profit   21,497,501  21,743,448
Operating expenses:    
Selling and marketing  3,130,379  3,016,402
Depreciation and amortization  1,113,758  1,180,226
Bad debt expense  124,291   367,064
Salaries and wages  4,191,593  3,347,896
Professional services, including non-cash compensation  993,058  806,212
Lease abandonment charges  --  (858,969)
General and administrative  4,679,840  3,719,797
Total operating expenses  14,232,919  11,578,627
Income from operations  7,264,582  10,164,820
Other income and (expenses)    
Loss on sale of assets  (18,979)  (21,461)
Interest expense  (823,684)  (863,707)
Interest income  82,039  154,856
Gain on foreign currency exchange transactions  404,708  1,115,647
Share of net loss from equity investment  (300,000)  (220,506)
Beneficial conversion feature  (179,576)  (453,989)
Other income (expense)  275,565  (52,149)
Total other income (expenses)  (559,927)  (341,309)
Net income before income taxes  6,704,655  9,823,511
Income taxes  (55,384)  (120,542)
Net income after tax  6,649,271  9,702,970
Non-controlling interest  (4,202,726)  (3,974,882)
Net income attibutable to NetSol  2,446,545  5,728,088
     
Other comprehensive income (loss):    
Translation adjustment   (5,308,958)  293,766
Comprehensive income (loss)  (2,862,414)  6,021,853
Comprehensive loss attributable to non controlling interest  (1,753,122)  (116,071)
Comprehensive income (loss) attributable to NetSol  (1,109,292)  6,137,924
     
Net income per share:    
Basic  $ 0.39  $ 1.18
Diluted  $ 0.39  $ 1.16
Weighted average number of shares outstanding    
Basic  6,217,842  4,854,320
Diluted  6,244,185  4,956,819
     
Amounts attributable to NetSol common shareholders  $ 2,446,545  $ 5,728,088
 
 
NetSol Technologies, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
     
   For the Year
   Ended June 30,
  2012 2011
 Cash flows from operating activities:    
 Net income  $ 6,649,271  $ 9,702,970
 Adjustments to reconcile net income    
 to net cash provided by operating activities:    
 Depreciation and amortization   4,641,987  4,288,512
 Provision for bad debts  192,250  367,064
 Gain on settlement of finance lease  (110,990)  --
 Share of net loss from investment under equity method  300,000  220,506
 Loss on sale of assets  18,979  21,462
 Gain on settlement of lease abandonment provision  --  (858,969)
 Stock issued for interest on notes payable  --  191,808
 Stock issued for services  216,446  886,218
 Fair market value of warrants and stock options granted  453,100  459,174
 Beneficial conversion feature  179,577  453,989
 Changes in operating assets and liabilities:    
 Decrease (increase) in accounts receivable  1,774,837  (3,422,252)
 (Increase) decrease in accounts receivable  (5,124,497)  1,987,996
 Decrease in accounts payable and accrued expenses  (1,078,245)  (376,287)
 Net cash provided by operating activities  8,112,715  13,922,191
 Cash flows from investing activities:    
 Purchases of property and equipment  (4,912,322)  (9,085,148)
 Sales of property and equipment  44,690  313,935
 Purchase of treasury stock  (19,417)  --
 Purchase of non-controlling interest in subsidiary  --  (671,460)
 Short-term investments held for sale   --  (256,522)
 Investment under equity method  (100,000)  --
 Acquisition, net of cash acquired  (253,192)  --
 Increase in intangible assets   (6,167,105)  (8,096,401)
 Net cash used in investing activities  (11,407,346)  (17,795,596)
 Cash flows from financing activities:    
 Proceeds from sale of common stock  5,743,300  4,099,250
 Proceeds from the exercise of stock options and warrants  728,500  1,615,050
 Proceeds from convertible notes payable  4,000,000  --
 Payments on convertible notes payable  (2,758,330)  --
 Restricted cash  5,558,769  --
 Dividend Paid   (341,657)  (1,291,313)
 Bank overdraft  59,913  39,026
 Proceeds from bank loans  4,190,395  2,969,146
 Payments on bank loans  --  (46,033)
 Payments on capital lease obligations & loans - net  (8,089,139)  (3,118,344)
 Net cash provided by financing activities  9,091,751  4,266,782
 Effect of exchange rate changes in cash  (2,370,315)  (296,121)
 Net increase in cash and cash equivalents  3,426,805   97,256
 Cash and cash equivalents, beginning of year  4,172,803  4,075,546
 Cash and cash equivalents, end of year  $ 7,599,608  $ 4,172,802
 
 
NetSol Technologies, Inc. and Subsidiaries
Reconciliation to GAAP
     
  Fiscal Year Fiscal Year
  ended ended
  June 30, 2012 June 30, 2011
     
 Net Income (loss) before preferred dividend, per GAAP  $ 2,446,545  $ 5,728,088
 Income Taxes  55,384  120,542
 Depreciation and amortization  4,641,987  4,288,512
 Interest expense   823,684  863,707
 Interest (income)  (82,039)  (154,856)
 EBITDA  $ 7,885,561  $ 10,845,992
     
 Weighted Average number of shares outstanding    
 Basic  6,217,842  4,854,320
 Diluted  6,244,185  4,956,819
     
 Basic EBITDA  $ 1.27  $ 2.23
 Diluted EBITDA  $ 1.26  $ 2.19
   
   
Contacts: PondelWilkinson Inc.
  Matt Sheldon | Roger Pondel
  (310) 279-5980
  investors@netsoltech.com

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