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| 8-K - FORM 8-K FILING DOCUMENT - NETSOL TECHNOLOGIES INC | document.htm |
EXHIBIT 99.1
NetSol Technologies Reports Fiscal 2012 First-Quarter Financial Results
Company Announces Share Repurchase Program of Up to 2.5 Million Shares
CALABASAS, Calif., Nov. 8, 2011 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. (Nasdaq:NTWK), a worldwide provider of global IT and enterprise application solutions, today reported financial results for its fiscal 2012 first quarter ended September 30, 2011. The company also announced a share repurchase program of up to 2.5 million shares over a period of six months.
Total revenue was $6.2 million for the first quarter of fiscal 2012, compared with $8.4 million for the same period last year, primarily reflecting a more prolonged sales cycle amid global economic challenges.
License revenue totaled $1.1 million for the fiscal 2012 first quarter, versus $3.5 million for the fiscal 2011 first quarter. Maintenance revenue increased to $2.0 million, from $1.7 million in the prior year period. Services revenue was $3.1 million, compared with $3.3 million for the first quarter of fiscal 2011.
"Macroeconomic uncertainty continued to delay contracts, which affected licensing revenues in the first quarter," said Najeeb Ghauri, chairman and CEO of NetSol. "However, our pipeline remains robust, and a number of new initiatives, including the marketing of smartOCI in the United States and Europe, along with the introduction of our LeasePak-SaaS cloud-based product, are promising additional revenue streams for NetSol."
Operating expenses for the fiscal 2012 first quarter were $3.0 million, compared with $3.2 million for the fiscal 2011 first quarter.
Operating loss for the first quarter of fiscal 2012 was $826,000, compared with operating income of $2.0 million in the first quarter of fiscal 2011.
Net loss for the first quarter of fiscal 2012 was $1.5 million, or $0.03 per share, compared with net income of $1.6 million, or $0.04 per diluted share, in the first quarter of fiscal 2011.
At September 30, 2011, cash, cash equivalents and marketable securities balance (including restricted cash) amounted to $5.8 million. Total number of shares outstanding as of September 30, 2011 was 56.1 million.
Following is a breakdown of recent growth initiatives:
North America
-
Established an e-commerce division, Vroozi Inc., which provides a dedicated sales and delivery channel for NetSol's smartOCI product line. Signed several new customers, including a Fortune 500 aerospace defense contractor and one of the leading chipmakers to implement the software;
- Began dedicated marketing of LeasePak-SaaS, a cloud-delivered leasing and finance solution, which operates under a recurring revenue model;
Asia Pacific
-
Augmented Bangkok and China staff with 10 additional employees to support recent contract wins and to advance the company's regional realignment efforts;
-
Successfully implemented NFS for a large European auto finance captive in India from the Bangkok office;
-
Completed the formation of NetSol's wholly owned foreign subsidiary in China to develop regional business;
- Expanded services in Australia with the introduction of NetSol Innovation services;
Europe
-
Acquired United Kingdom-based Virtual Lease Services, Ltd., together with Investec Asset Finance Plc., broadening NetSol's suite of services to include the asset finance and leasing business process outsourcing industry;
- Expanded marketing of smartOCI throughout Europe with a visible and robust pipeline;
Latin America
- Began initial marketing efforts for the company's NFS solution in Brazil together with joint venture partner Brazilinvest Group.
Share Repurchase Program
NetSol also announced today that its Board of Directors has approved a program authorizing the repurchase of up to 2.5 million shares of the company's common stock over a period of up to six months.
"The decision to implement a stock repurchase plan reflects our continued confidence in NetSol and our belief that the stock price is significantly undervalued given the strength of our pipeline and long-term growth prospects," Ghauri said. "I strongly believe in the power of NetSol's products and the ability of our team to execute across each of our business initiatives, which is reflected by insiders' recent purchases of shares."
Under the stock repurchase program, the company is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws, including Rule 10b-18 promulgated under the Securities Exchange Act of 1934 as amended.
The number of shares repurchased by the company will depend entirely upon the levels of cash available, the attractiveness of alternate investment and business opportunities either at hand or on the horizon, and Management's perception of value relative to market price, as well as other legal and regulatory requirements. The repurchase program does not obligate NetSol to repurchase any dollar amount or number of shares of common stock.
Financial Outlook
NetSol expects sequential revenue growth of 15 to 20 percent between the first and second quarter of fiscal 2012. The company also anticipates improvement in its bottom line for the second quarter and providing quarterly guidance once the global economic environment improves. Historically, the second half of NetSol's fiscal year is stronger than the first half.
Conference Call and Webcast Information
NetSol will host a conference call today, at 9 a.m. EST to review its financial results. To participate in the conference call, please dial (800) 762-8795 (domestic) or (480) 629-9644 (international), password: 4485811.The call is also available through a live, listen-only audio webcast at www.netsoltech.com in the investor relations section. For those who are unable to listen to the live webcast, the call will be archived for 90 days.
Additionally, a telephone playback of the conference call will also be available until 11:59 p.m. EST, Tuesday, November 15, 2011. Listeners should call (800) 406-7325 (domestic) or (303) 590-3030 (international) and use reservation: 4485811.
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.
The NetSol Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9832
Investors can receive news releases and invitations to special events by accessing our online signup form at http://bit.ly/NetSol_Investor_Signup_Form.
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 | ||
| Condensed Consolidated Balance Sheets | ||
| As of September 30, | As of June 30, | |
| ASSETS | 2011 | 2011 |
| Current assets: | ||
| Cash and cash equivalents | $ 3,123,686 | $ 4,172,802 |
| Restricted Cash | 2,700,000 | 5,700,000 |
| Accounts receivable, net | 13,864,226 | 15,062,503 |
| Revenues in excess of billings | 7,038,291 | 7,601,230 |
| Other current assets | 2,081,864 | 2,053,904 |
| Total current assets | 28,808,066 | 34,590,439 |
| Property and equipment, net | 16,469,748 | 16,014,461 |
| Intangibles: | ||
| Product licenses, renewals, enhancements, copyrights, trademarks, and tradenames, net | 26,364,728 | 25,437,479 |
| Customer lists, net | 147,067 | 164,715 |
| Goodwill | 9,439,285 | 9,439,285 |
| Total intangibles | 35,951,080 | 35,041,480 |
| Total assets | $ 81,228,895 | $ 85,646,380 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable and accrued expenses | $ 4,069,230 | $ 4,730,027 |
| Current portion of loans and obligations under capitalized leases | 4,092,747 | 7,062,535 |
| Other payables - acquisitions | 103,226 | 103,226 |
| Unearned revenues | 2,475,387 | 2,653,460 |
| Convertible notes payable , current portion | -- | 2,745,524 |
| Loans payable, bank | 2,269,632 | 2,319,378 |
| Common stock to be issued | 206,625 | 400,700 |
| Total current liabilities | 13,216,848 | 20,014,850 |
| Obligations under capitalized leases, less current maturities | 257,711 | 285,472 |
| Convertible notes payable less current maturities | 3,587,464 | -- |
| Long term loans; less current maturities | 425,556 | 434,884 |
| Total liabilities | 17,487,579 | 20,735,206 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
|
Common stock, $.001 par value; 95,000,000 shares authorized; 56,076,355 & 55,531,855 issued and outstanding as of September 30, 2011 and June 30, 2011 |
56,077 | 55,532 |
| Additional paid-in-capital | 98,844,487 | 97,886,492 |
| Treasury stock | (396,008) | (396,008) |
| Accumulated deficit | (35,589,651) | (34,130,944) |
| Stock subscription receivable | (2,031,210) | (2,198,460) |
| Other comprehensive loss | (9,362,762) | (8,805,922) |
| Total NetSol shareholders' equity | 51,520,932 | 52,410,690 |
| Non-controlling interest | 12,220,383 | 12,500,484 |
| Total stockholders' equity | 63,741,315 | 64,911,174 |
| Total liabilities and stockholders' equity | $ 81,228,895 | $ 85,646,380 |
| NetSol Technologies, Inc. and Subsidiaries | ||
| Condensed Consolidated Statement of Operations | ||
| For the Three Months | ||
| Ended September 30, | ||
| 2011 | 2010 | |
| Net Revenues: | ||
| License fees | $ 1,075,850 | $ 3,477,793 |
| Maintenance fees | 2,037,206 | 1,669,919 |
| Services | 3,115,651 | 3,255,360 |
| Total revenues | 6,228,708 | 8,403,071 |
| Cost of revenues: | ||
| Salaries and consultants | 2,383,411 | 1,986,888 |
| Travel | 285,673 | 231,612 |
| Repairs and maintenance | 74,194 | 57,058 |
| Insurance | 35,868 | 30,992 |
| Depreciation and amortization | 789,105 | 630,941 |
| Other | 516,409 | 243,138 |
| Total cost of revenues | 4,084,660 | 3,180,629 |
| Gross profit | 2,144,048 | 5,222,442 |
| Operating expenses: | ||
| Selling and marketing | 700,281 | 483,970 |
| Depreciation and amortization | 191,674 | 266,443 |
| Bad debt expense | 192,250 | 254,632 |
| Salaries and wages | 806,564 | 920,264 |
| Professional services, including non-cash compensation | 186,749 | 139,085 |
| General and administrative | 892,972 | 1,132,519 |
| Total operating expenses | 2,970,490 | 3,196,913 |
| Income (loss) from operations | (826,442) | 2,025,530 |
| Other income and (expenses) | ||
| Loss on sale of assets | (1,641) | (14,794) |
| Interest expense | (260,207) | (315,644) |
| Interest income | 32,805 | 84,461 |
| Gain (loss) on foreign currency exchange transactions | (120,906) | 1,073,894 |
| Share of net loss from equity investment | (100,000) | (70,438) |
| Beneficial conversion feature | (12,806) | (177,411) |
| Other expense | (7,718) | (55,554) |
| Total other income (expenses) | (470,474) | 524,515 |
| Net income (loss) before income taxes | (1,296,916) | 2,550,045 |
| Income taxes | (24,534) | (8,556) |
| Net income (loss) after tax | (1,321,450) | 2,541,489 |
| Non-controlling interest | (137,258) | (974,508) |
| Net income (loss) attributable to NetSol | (1,458,707) | 1,566,980 |
| Other comprehensive loss: | ||
| Translation adjustment | (974,199) | (475,902) |
| Comprehensive income (loss) | (2,432,907) | 1,091,078 |
| Comprehensive loss attributable to non controlling interest | (417,360) | (206,888) |
| Comprehensive income (loss) attributable to NetSol | $ (2,015,547) | $ 1,297,966 |
| Net income (loss) per share: | ||
| Basic | $ (0.03) | $ 0.04 |
| Diluted | $ (0.03) | $ 0.04 |
| Weighted average number of shares outstanding | ||
| Basic | 55,883,268 | 39,544,096 |
| Diluted | 55,883,268 | 43,251,519 |
| Amounts attributable to NetSol common shareholders | ||
| Net income (loss) | $ (1,458,707) | $ 1,566,980 |
| NetSol Technologies, Inc. and Subsidiaries | ||
| Condensed Statement of Cash Flows | ||
| For the Three Months | ||
| Ended September 30, | ||
| 2011 | 2010 | |
| Cash flows from operating activities: | ||
| Net (loss) income | $ (1,321,451) | $ 2,541,489 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 980,778 | 897,383 |
| Provision for bad debts | 192,250 | 254,632 |
| Share of net loss from investment under equity method | 100,000 | 70,438 |
| Loss on sale of assets | 1,641 | 14,794 |
| Stock issued for interest on notes payable | -- | 14,419 |
| Stock issued for services | 118,300 | 383,950 |
| Fair market value of warrants and stock options granted | 59,852 | 53,594 |
| Beneficial conversion feature | 21,583 | 177,411 |
| Changes in operating assets and liabilities: | ||
| Increase/ decrease in accounts receivable | 1,658,236 | (2,708,406) |
| Increase/ decrease in other current assets | 169,558 | (1,453,577) |
| Increase/ decrease in accounts payable and accrued expenses | (1,096,849) | (359,946) |
| Net cash provided by (used in) operating activities | 883,900 | (113,820) |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (1,427,884) | (682,676) |
| Sales of property and equipment | 2,591 | 4,550 |
| Purchase of non-controlling interest in subsidiary | -- | (180,000) |
| Short-term investments held for sale | -- | (254,632) |
| Investment under equity method | (100,000) | -- |
| Increase in intangible assets | (1,768,681) | (1,574,143) |
| Net cash used in investing activities | (3,293,974) | (2,686,900) |
| Cash flows from financing activities: | ||
| Proceeds from sale of common stock | -- | 2,021,139 |
| Proceeds from the exercise of stock options and warrants | 140,000 | 186,875 |
| Proceeds from convertible notes payable | 4,000,000 | -- |
| Payments on convertible notes payable | (2,758,330) | -- |
| Restricted cash | 3,000,000 | -- |
| Bank overdraft | 40,201 | 90,944 |
| Proceeds from bank loans | 1,731,634 | 1,064,554 |
| Payments on bank loans | 141,852 | (45,427) |
| Payments on capital lease obligations & loans - net | (4,885,224) | (2,365,852) |
| Net cash provided by financing activities | 1,410,133 | 952,233 |
| Effect of exchange rate changes in cash | (49,174) | (72,246) |
| Net increase in cash and cash equivalents | (1,049,115) | (1,920,733) |
| Cash and cash equivalents, beginning of year | 4,172,802 | 4,075,546 |
| Cash and cash equivalents, end of year | $ 3,123,686 | $ 2,154,813 |
| NetSol Technologies, Inc. and Subsidiaries | ||
| Reconciliation to GAAP | ||
| Three Months | Three Months | |
| Ended | Ended | |
| September 30, 2011 | September 30, 2010 | |
| Net Income (loss) before preferred dividend, per GAAP | $ (1,458,708) | $ 1,566,980 |
| Income Taxes | 24,534 | 8,556 |
| Depreciation and amortization | 980,779 | 897,384 |
| Interest expense | 251,430 | 315,644 |
| Interest (income) | (32,805) | (84,461) |
| EBITDA | $ (234,769) | $ 2,704,103 |
| Weighted Average number of shares outstanding | ||
| Basic | 55,883,268 | 39,544,096 |
| Diluted | 55,883,268 | 43,251,519 |
| Basic EBITDA | $ (0.004) | $ 0.07 |
| Diluted EBITDA | $ (0.004) | $ 0.06 |
CONTACT: PondelWilkinson Inc.
Evan Pondel (310) 279-5973
investors@netsoltech.com