– Company Adding up to 150 Employees to Support
Growth Strategy, Global Launch of NFS Ascent and Backlog –
– Conference Call Scheduled Today at 11 a.m. ET
(8 a.m. PT) –
NetSol Technologies, Inc. (Nasdaq:NTWK), a worldwide provider of
global IT and enterprise application solutions, today reported
financial results for its fiscal 2014 first quarter ended September
30, 2013.
Fiscal 2014 First Quarter Financial Results
Total first quarter revenue amounted to $9.1 million, compared
with $11.1 million in the same period last fiscal year, reflecting
lower license revenue attributable to timing on the closing of
certain new business transactions, as well as the company's
transition to its next-generation financing and leasing solution,
NFS AscentTM.
License revenue for the fiscal 2014 first quarter was $2.3
million, versus $3.2 million in the same period last year.
Maintenance revenue for the fiscal 2014 first quarter increased to
$2.4 million from $2.0 million last fiscal year, reflecting the
completion of NFSTM implementations. Services revenue decreased to
$4.4 million from $5.8 million for the first quarter of fiscal
2013, reflecting fewer license sales in the quarter.
"Results this quarter reflected a slowing of license sales for
the first-generation of NFS, as new clients embrace our new,
next-generation NFS Ascent platform. In the enterprise software
segment, companies typically experience a phase of contraction in
the sales of prior products, while next-generation platforms start
to gain traction," said Najeeb Ghauri, CEO. "We are excited to have
officially introduced our next-generation solution, NFS Ascent,
which we believe will be a game-changer for NetSol, and is the
result of more than four years of development. NFS Ascent
represents the most advanced solution available in the marketplace,
allowing us to leapfrog the competition. Early response from
customers has been outstanding, and we are very confident in our
market opportunity moving forward, with discussions well underway
with potential new global customers, including in North America and
Europe.
"Our current sales backlog includes a significant amount of
services revenue based upon the first-generation platform.
Accordingly, to protect our clients' investments, NetSol will
continue to service and support our first-generation NFS solution
for many years to come. We expect that licensee revenue for the
first-generation NFS platform to continue to contract over the next
two quarters, offset as adoption of NFS Ascent increases, reaching
an inflection point in the second half of the current fiscal year,"
added Ghauri.
Total operating expenses for the fiscal 2014 first quarter
amounted to $4.9 million, versus $3.8 million in the fiscal 2013
first quarter, reflecting the ramp-up of sales and marketing
activities. Operating expenses for the preceding fourth quarter of
fiscal 2013 were $4.7 million.
Operating loss for the first quarter of fiscal 2014 was $1.5
million, compared with operating income of $1.5 million last
year.
Net loss was $1.1 million for the fiscal first quarter, equal to
$0.12 per share, compared with net income of $929,000, or $0.12 per
diluted share, in the comparable period of the prior fiscal year.
This includes a deduction of net income by $634,000 for
non-controlling interest, compared with $332,000 in the comparative
period. Weighted average number of diluted shares outstanding for
the period was 9.0 million shares.
At September 30, 2013, cash and cash equivalents amounted to
$6.8 million, reflecting NetSol's investment in additional
infrastructure to support its expansion strategy.
"The quarter's financial results are not indicative of the
underlying strength of our company or the reputation we have earned
with prestigious global companies," Ghauri said. "The large number
of staff we are adding across the globe demonstrates our confidence
in where we believe the business is headed and our opportunity with
NFS Ascent. NetSol is well capitalized, with great people and
world-class customers as we embark on this milestone transition,"
he added.
2014 First Quarter Highlights:
- Received new orders for NetSol Financial Suite (NFS) solution
from two new customers, representing more than $4 million in
combined license, maintenance and service billings, which included
an agreement with a major China-based auto manufacturer;
- Signed 40 more LeasePak seats to a North America-based
customer;
- Added five new customers for Vroozi's Purchase Manager module;
released a new supplier purchase order pickup module with Vroozi
Purchase Manager; and, introduced a new Vroozi Buy Route
functionality in beta to a global customer;
- Commenced a LeaseSoft upgrade and portal project for a leading
North American and UK leasing company specializing in
broker-introduced entrepreneurial finance; began LeaseSoft
implementation for a leading non-bank lender in Ireland; and
completed delivery of a Web services-based branch integration
project for one the UK's leading sub-prime lenders;
- Developed a business process outsource service to address the
broker market for NetSol Technologies Europe and its jointly-owned
subsidiary, Virtual Lease Services. In collaboration with funders,
the service will form part of the funding approval sanction;
- Signed three new agreements in Saudi Arabia through Atheeb
NetSol, its joint venture company, in the areas of network
security, ISO/standard implementation of cyber security and
consulting for a local group of hospitals, governmental security
department and construction group.
| Fiscal 2014 First Quarter
Conference Call |
| When: |
Friday, November 8 |
| Time: |
11:00 a.m.
Eastern |
| Phone: |
1-877-941-0843
(domestic) |
| |
1-480-629-9722
(international) |
| Conference ID: |
4648218 |
| Webcast: |
http://www.netsoltech.com/us/investors/event-presentation |
| Archived: |
90 days |
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 asset finance and leasing in the
automotive, 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, Sydney and Riyadh.
Follow NetSol Technologies on Twitter at
https://twitter.com/NetSolTech
NetSol Technologies Google+ page at
https://plus.google.com/+netsoltechnologies
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 September 30, |
As of June 30, |
| ASSETS |
2013 |
2013 |
| Current assets: |
|
|
| Cash and cash equivalents |
$ 6,755,950 |
$ 7,874,318 |
| Restricted cash |
2,301,822 |
1,875,237 |
| Accounts receivable,
net |
18,535,948 |
14,684,212 |
| Revenues in excess of
billings |
11,435,167 |
15,367,198 |
| Other current assets |
2,841,126 |
2,273,314 |
| Total current assets |
41,870,013 |
42,074,279 |
| Long term investment |
|
-- |
| Investment under equity method |
554,674 |
545,483 |
| Property and equipment, net |
21,493,298 |
20,978,369 |
| Intangible assets, net |
28,775,799 |
29,452,654 |
| Goodwill |
9,653,330 |
9,653,330 |
| Total
assets |
$ 102,347,114 |
$ 102,704,115 |
| |
|
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| Current liabilities: |
|
|
| Accounts payable and accrued
expenses |
$ 4,498,965 |
$ 3,923,921 |
| Current portion of loans and
obligations under capitalized leases |
3,660,388 |
3,326,465 |
| Other payables -
acquisitions |
103,226 |
103,226 |
| Unearned revenues |
3,987,150 |
2,446,018 |
| Loans payable, bank |
1,874,941 |
1,982,161 |
| Common stock to be issued |
320,338 |
88,325 |
| Total current liabilities |
14,445,008 |
11,870,116 |
| Long term loans and obligations under
capitalized leases; less current maturities |
1,416,791 |
1,412,212 |
| Total
liabilities |
15,861,799 |
13,282,328 |
| Commitments and
contingencies |
|
|
| Stockholders' equity: |
|
|
| Common stock, $.01
par value; 15,000,000 shares
authorized; 8,990,923 and |
|
| 8,929,523 issued and
outstanding as of September 30, 2013 and June 30, 2013 |
89,909 |
89,295 |
| Additional paid-in-capital |
114,914,808 |
114,292,510 |
| Treasury stock |
(415,425) |
(415,425) |
| Accumulated deficit |
(24,918,371) |
(23,821,256) |
| Stock subscription
receivable |
(2,130,488) |
(2,280,488) |
| Other comprehensive loss |
(17,916,294) |
(15,714,112) |
| Total NetSol stockholders'
equity |
69,624,139 |
72,150,524 |
| Non-controlling interest |
16,861,176 |
17,271,263 |
| Total stockholders'
equity |
86,485,315 |
89,421,787 |
| Total liabilities and
stockholders' equity |
$ 102,347,114 |
$ 102,704,115 |
| |
| |
| NetSol Technologies,
Inc. and Subsidiaries |
| Consolidated Statement
of Operations |
| |
|
|
| |
For the Three
Months |
| |
Ended September
30, |
| |
2013 |
2012 |
| Net Revenues: |
|
|
| License fees |
2,252,567 |
3,241,501 |
| Maintenance fees |
2,380,409 |
2,045,706 |
| Services |
4,424,340 |
5,784,693 |
| Total net revenues |
9,057,316 |
11,071,900 |
| Cost of revenues: |
|
|
| Salaries and
consultants |
3,456,604 |
3,385,668 |
| Travel |
396,784 |
325,294 |
| Repairs and
maintenance |
175,821 |
127,997 |
| Insurance |
39,554 |
37,719 |
| Depreciation and
amortization |
1,046,669 |
958,151 |
| Other |
544,337 |
921,858 |
| Total cost of revenues |
5,659,769 |
5,756,687 |
| Gross profit |
3,397,547 |
5,315,213 |
| Operating expenses: |
|
|
| Selling and marketing |
1,071,412 |
762,963 |
| Depreciation and
amortization |
426,617 |
342,001 |
| Bad debt expense |
251,673 |
-- |
| Salaries and wages |
1,441,132 |
1,153,873 |
| Professional services,
including non-cash compensation |
306,663 |
206,502 |
| General and administrative |
1,423,002 |
1,347,928 |
| Total operating expenses |
4,920,499 |
3,813,267 |
| (Loss) income from
operations |
(1,522,952) |
1,501,946 |
| Other income and
(expenses) |
|
|
| (Loss) gain on sale of
assets |
(13,795) |
14,296 |
| Interest expense |
(69,217) |
(292,389) |
| Interest income |
32,854 |
24,167 |
| Gain on foreign currency
exchange transactions |
1,111,423 |
395,156 |
| Share of net income from equity
investment |
9,192 |
-- |
| Amortization of financing
costs |
-- |
(367,744) |
| Other income |
678 |
(32) |
| Total other income
(expenses) |
1,071,135 |
(226,546) |
| Net (loss) income before income
taxes |
(451,817) |
1,275,400 |
| Income taxes |
(11,131) |
(13,996) |
| Net (loss) income after
tax |
(462,948) |
1,261,404 |
| Non-controlling
interest |
(634,167) |
(332,279) |
| Net (loss) income attributable to
NetSol |
(1,097,115) |
929,125 |
| |
|
|
| Other comprehensive
loss: |
|
|
| Translation adjustment |
(3,422,716) |
(768,795) |
| Comprehensive income
(loss) |
(4,519,831) |
160,330 |
| Comprehensive
loss attributable to non-controlling interest |
(1,220,534) |
(232,556) |
| Comprehensive (loss) income
attributable to NetSol |
(3,299,297) |
392,886 |
| |
|
|
| Net (loss) income per
share: |
|
|
| Basic |
$ (0.12) |
$ 0.12 |
| Diluted |
$ (0.12) |
$ 0.12 |
| Weighted average number of shares
outstanding |
|
| Basic |
8,956,007 |
7,591,891 |
| Diluted |
8,956,007 |
7,599,136 |
| |
| |
| NetSol Technologies,
Inc. and Subsidiaries |
| Consolidated Statement
of Cash Flows |
| |
|
|
| |
For the Three
Months |
| |
Ended September
30, |
| |
2013 |
2012 |
| Cash flows from operating
activities: |
|
|
| Net (loss) income |
$ (462,948) |
$ 1,261,404 |
| Adjustments to reconcile net (loss)
income to net cash provided by operating activities: |
|
|
| Depreciation and
amortization |
1,473,286 |
1,300,152 |
| Provision for bad
debts |
251,673 |
-- |
| Share of net (income) loss from
investment under equity method |
(9,192) |
-- |
| (Gain) loss on sale of
assets |
13,795 |
(14,296) |
| Stock issued for interest on
notes payable |
-- |
211,111 |
| Stock issued for
services |
318,857 |
29,670 |
| Fair market value of warrants
and stock options granted |
125,568 |
227,926 |
| Amortization of financing
costs |
-- |
367,744 |
| Changes in operating
assets and liabilities: |
|
|
| Increase in accounts
receivable |
(3,928,230) |
(4,320,159) |
| Decrease in revenue in excess
of billing |
3,565,290 |
1,601,584 |
| (Increase) decrease in other
current assets |
(438,780) |
291,041 |
| Increase in accounts payable
and accrued expenses |
2,014,051 |
1,942,654 |
| Net cash provided by
operating activities |
2,923,370 |
2,898,831 |
| Cash flows from investing
activities: |
|
|
| Purchases of property and
equipment |
(2,691,066) |
(1,457,134) |
| Sales of property and
equipment |
80,287 |
60,501 |
| Increase in intangible
assets |
(1,362,026) |
(1,091,966) |
| Net cash used in investing
activities |
(3,972,805) |
(2,488,599) |
| Cash flows from financing
activities: |
|
|
| Proceeds from the exercise of
stock options and warrants |
560,500 |
252,900 |
| Payment to common shareholders
against fractional shares |
-- |
(194) |
| Proceeds from exercise of
subsidiary options |
176,280 |
-- |
| Restricted cash |
(426,585) |
(1,571,442) |
| Proceeds from bank
loans |
519,040 |
2,651,048 |
| Payments on capital lease
obligations and loans - net |
(198,853) |
(1,160,684) |
| Net cash provided by
financing activities |
630,382 |
171,628 |
| Effect of exchange rate changes in
cash |
(699,315) |
(161,679) |
| Net (decrease) increase in cash and
cash equivalents |
(1,118,368) |
420,181 |
| Cash and cash equivalents, beginning of the
period |
7,874,318 |
7,599,607 |
| Cash and cash equivalents, end of
period |
$ 6,755,950 |
$ 8,019,788 |
| |
| |
| NetSol Technologies,
Inc. and Subsidiaries |
| Reconciliation to
GAAP |
| |
|
|
| |
Three Months |
Three Months |
| |
Ended |
Ended |
| |
September 30, 2013 |
September 30, 2012 |
| |
|
|
| Net Income (loss) before preferred dividend,
per GAAP |
$ (1,097,115) |
$ 929,125 |
| Income Taxes |
11,131 |
13,996 |
| Depreciation and
amortization |
1,473,286 |
1,300,152 |
| Interest expense |
69,217 |
292,389 |
| Interest (income) |
(32,854) |
(24,167) |
| EBITDA |
$ 423,665 |
$ 2,511,495 |
| |
|
|
| Weighted Average number of shares
outstanding |
|
|
| Basic |
8,956,007 |
7,591,891 |
| Diluted |
9,064,123 |
7,599,136 |
| |
|
|
| Basic EBITDA |
$ 0.05 |
$ 0.33 |
| Diluted EBITDA |
$ 0.05 |
$ 0.33 |
Although the net EBITDA income is a non-GAAP measure of
performance, we are providing it because we believe it to be an
important supplemental measure of our performance that is commonly
used by securities analysts, investors, and other interested
parties in the evaluation of companies in our industry. It
should not be considered as an alternative to net income, operating
income or any other financial measures calculated and presented,
nor as an alternative to cash flow from operating activities as a
measure of our liquidity. It may not be indicative of the
Company's historical operating results nor is it intended to be
predictive of potential future results.
| Investor Contacts: |
| |
| PondelWilkinson |
| Roger Pondel | Matt Sheldon |
| investors@netsoltech.com |
| (310) 279-5980 |
| |
| Media Contacts: |
| |
| PondelWilkinson |
| George Medici | gmedici@pondel.com |
| (310) 279-5968 |
| |
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