-- Company Generates More Than $12
Million in Cash From Operations for First Six Months --
-- Continues Training and Hiring Push
to Support Growing New Business Pipeline for NFS AscentTM and
Increased Joint Venture Technical Support Requirements --
-- Conference Call Scheduled Today at
9 a.m. ET (6 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 second quarter ended December
31, 2013.
Fiscal 2014 Second Quarter Financial
Results
Total second quarter revenue amounted to $8.7 million, compared
with $11.8 million in the same period last fiscal year, reflecting,
as expected, lower license sales during the transition to NetSol's
next-generation financing and leasing solution, NFS AscentTM.
License revenue for the fiscal 2014 second quarter was $456,000,
versus $3.5 million in the same period last year. Maintenance
revenue for the fiscal 2014 second quarter increased to $2.9
million from $2.7 million last year, reflecting the completion of
certain projects. Service revenue remained consistent at $5.4
million, principally attributable to the first-generation NFS
platform and additional service and change requests from customers.
Service revenue in the second quarter of fiscal 2013 was $5.6
million.
"As we discussed in our outlook last quarter, results for the
second fiscal quarter reflected the anticipated contraction in
license revenue during the transition from our first-generation NFS
product to the next-generation NFS Ascent platform, which we
officially launched in the quarter," said Najeeb Ghauri, CEO. "The
launch of NFS Ascent is progressing, particularly in North America
and Europe where we have developed a strong new business pipeline
with potential new customers and with current customers that we
support in other regions throughout the world.
"As these negotiations progress, we are actively increasing our
bench of talented employees, with more than 100 new employees going
through various stages of training, so that we are ready to move
quickly on additional new deals as they arise," added Ghauri.
Total operating expenses for the fiscal 2014 second quarter
amounted to $4.3 million, versus $3.8 million in the fiscal 2013
second quarter. Operating expenses decreased from $4.9 million in
the first quarter of fiscal 2014.
Operating loss for the second quarter of fiscal 2014 was $1.6
million, compared with operating income of $2.9 million last
year.
Net loss was $1.6 million for the fiscal second quarter, equal
to $0.18 per share, based on 9.1 million weighted average number of
diluted shares outstanding. Net income for the same period last
year was $2.2 million, or $0.28 per diluted share, based on 8.0
million weighted average number of diluted shares outstanding.
For the first half of fiscal 2014, total revenue was $17.8
million, versus $22.9 million for the first six months of fiscal
2013. Net loss for the fiscal 2014 year-to-date period was $2.7
million, or $0.30 per share, compared with net income of $3.2
million, or $0.40 per diluted share, last year.
At December 31, 2013, cash and cash equivalents increased to
$11.6 million from $6.8 million at September 30, 2013, reflecting
improved collections in the quarter. At June 30, 2013, cash and
cash equivalents were $7.9 million. Cash provided by operations for
the first six months of fiscal 2014 was $12.7 million, compared
with $9.4 million for the first six months of fiscal 2013.
"We are well capitalized to manage our milestone product
transition and further build the organization," concluded Ghauri.
"With a robust backlog of services and maintenance revenue, and a
growing new business pipeline for NFS Ascent, as well as expected
additional contributions from our joint-ventures, we are optimistic
about our long-term business prospects moving forward."
|
Fiscal 2014 Second
Quarter Conference Call |
|
|
When: |
Thursday, February 13 |
Time: |
9:00 a.m.
Eastern |
Phone: |
1- 888-549-7880 (domestic) |
|
1- 480-629-9643 (international) |
Conference ID: |
4667450 |
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 December 31, |
As of June 30, |
ASSETS |
2013 |
2013 |
Current assets: |
|
|
Cash and cash equivalents |
$ 11,581,042 |
$ 7,874,318 |
Restricted cash |
2,535,909 |
1,875,237 |
Accounts receivable, net |
16,684,683 |
14,684,212 |
Revenues in excess of billings |
6,271,254 |
15,367,198 |
Other current assets |
2,210,215 |
2,273,314 |
Total current assets |
39,283,103 |
42,074,279 |
Investment under equity method |
378,835 |
545,483 |
Property and equipment, net |
23,577,098 |
20,978,369 |
Intangible assets, net |
29,176,897 |
29,452,654 |
Goodwill |
9,653,330 |
9,653,330 |
Total assets |
$ 102,069,263 |
$ 102,704,115 |
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 5,411,478 |
$ 4,027,147 |
Current portion of loans and obligations
under capitalized leases |
5,535,157 |
5,308,626 |
Unearned revenues |
4,779,494 |
2,446,018 |
Common stock to be issued |
320,338 |
88,325 |
Total current liabilities |
16,046,467 |
11,870,116 |
Long term loans and obligations under
capitalized leases; less current maturities |
1,602,148 |
1,412,212 |
Total liabilities |
17,648,615 |
13,282,328 |
Commitments and
contingencies |
|
|
Stockholders' equity: |
|
|
Common stock, $.01 par value; 15,000,000
shares authorized; 9,063,575 and 8,929,523 issued and
outstanding as of December 31, 2013 and June 30, 2013 |
90,636 |
89,295 |
Additional paid-in-capital |
115,551,344 |
114,292,510 |
Treasury stock |
(415,425) |
(415,425) |
Accumulated deficit |
(26,545,279) |
(23,821,256) |
Stock subscription receivable |
(2,280,488) |
(2,280,488) |
Other comprehensive loss |
(18,295,623) |
(15,714,112) |
Total NetSol stockholders' equity |
68,105,165 |
72,150,524 |
Non-controlling interest |
16,315,483 |
17,271,263 |
Total stockholders'
equity |
84,420,648 |
89,421,787 |
Total liabilities and
stockholders' equity |
$ 102,069,263 |
$ 102,704,115 |
|
|
|
NetSol Technologies,
Inc. and Subsidiaries Consolidated Statement of
Operations |
|
|
|
|
|
|
For the Three
Months |
For the Six
Months |
|
Ended December
31, |
Ended December
31, |
|
2013 |
2012 |
2013 |
2012 |
Net Revenues: |
|
|
|
|
License fees |
455,616 |
3,505,847 |
2,708,183 |
6,747,348 |
Maintenance fees |
2,867,195 |
2,664,813 |
5,247,604 |
4,710,519 |
Services |
5,385,191 |
5,637,009 |
9,809,351 |
11,421,702 |
Total net revenues |
8,708,002 |
11,807,669 |
17,765,138 |
22,879,569 |
Cost of revenues: |
|
|
|
|
Salaries and consultants |
3,247,811 |
2,916,378 |
6,647,642 |
6,276,243 |
Travel |
349,318 |
386,194 |
746,102 |
711,488 |
Repairs and maintenance |
147,464 |
123,722 |
323,285 |
251,719 |
Insurance |
40,642 |
41,007 |
80,196 |
78,726 |
Depreciation and amortization |
1,240,715 |
1,024,007 |
2,287,384 |
1,982,158 |
Other |
886,799 |
557,693 |
1,429,041 |
1,478,671 |
Research and development cost |
55,114 |
33,239 |
113,802 |
59,922 |
Total cost of revenues |
5,967,863 |
5,082,240 |
11,627,452 |
10,838,927 |
Gross profit |
2,740,139 |
6,725,429 |
6,137,686 |
12,040,642 |
Operating expenses: |
|
|
|
|
Selling and marketing |
908,125 |
931,210 |
1,979,537 |
1,694,173 |
Depreciation and amortization |
430,947 |
333,435 |
857,564 |
675,436 |
Salaries and wages |
1,458,343 |
1,192,787 |
2,899,475 |
2,346,660 |
General and administrative |
1,546,266 |
1,348,349 |
3,527,604 |
2,902,779 |
Total operating expenses |
4,343,681 |
3,805,781 |
9,264,180 |
7,619,048 |
Income (loss) from
operations |
(1,603,542) |
2,919,648 |
(3,126,494) |
4,421,594 |
Other income and
(expenses) |
|
|
|
|
Gain (loss) on sale of assets |
(175,237) |
(275) |
(189,032) |
14,021 |
Interest expense |
(45,036) |
(179,932) |
(114,253) |
(472,321) |
Interest income |
39,931 |
31,617 |
72,785 |
55,784 |
Gain on foreign currency exchange
transactions |
96,039 |
504,738 |
1,207,462 |
899,894 |
Share of net income (loss) from equity
investment |
(175,840) |
484,487 |
(166,648) |
484,487 |
Amortization of financing costs |
-- |
(74,384) |
-- |
(442,128) |
Other income (expense) |
(47,858) |
36 |
(47,180) |
4 |
Total other income (expenses) |
(308,001) |
766,287 |
763,134 |
539,741 |
Net income (loss) before income
taxes |
(1,911,543) |
3,685,935 |
(2,363,360) |
4,961,335 |
Income tax benefit
(provision) |
(29,270) |
2,548 |
(40,401) |
(11,448) |
Net income (loss) after
tax |
(1,940,813) |
3,688,483 |
(2,403,761) |
4,949,887 |
Non-controlling
interest |
313,905 |
(1,465,500) |
(320,262) |
(1,797,779) |
Net income (loss) attributable to
NetSol |
(1,626,908) |
2,222,983 |
(2,724,023) |
3,152,108 |
|
|
|
|
|
Other comprehensive income
(loss): |
|
|
|
|
Translation adjustment |
(420,309) |
(1,394,216) |
(3,843,025) |
(2,163,011) |
Comprehensive income
(loss) |
(2,047,217) |
828,767 |
(6,567,048) |
989,097 |
Comprehensive loss attributable to
non-controlling interest |
(40,980) |
(399,096) |
(1,261,514) |
(631,652) |
Comprehensive income (loss)
attributable to NetSol |
(2,006,237) |
1,227,863 |
(5,305,534) |
1,620,749 |
|
|
|
|
|
Net income (loss) per
share: |
|
|
|
|
Basic |
$ (0.18) |
$ 0.28 |
$ (0.30) |
$ 0.41 |
Diluted |
$ (0.18) |
$ 0.28 |
$ (0.30) |
$ 0.40 |
Weighted average number of shares
outstanding |
|
|
|
|
Basic |
9,056,024 |
7,957,521 |
9,006,015 |
7,774,719 |
Diluted |
9,056,024 |
7,968,598 |
9,006,015 |
7,785,796 |
|
|
|
NetSol Technologies,
Inc. and Subsidiaries Consolidated Statement of Cash
Flows |
|
|
|
|
For the Six
Months |
|
Ended December
31, |
|
2013 |
2012 |
Cash flows from operating
activities: |
|
|
Net income (loss) |
$ (2,403,761) |
$ 4,949,887 |
Adjustments to reconcile net (loss)
income to net cash provided by operating activities: |
|
|
Depreciation and amortization |
3,144,948 |
2,657,594 |
Provision for bad debts |
259,306 |
54,889 |
Share of net loss (income) from
investment under equity method |
166,648 |
(484,487) |
(Gain) loss on sale of assets |
189,032 |
(14,021) |
Stock issued for interest on notes
payable |
-- |
211,111 |
Stock issued for services |
640,247 |
29,670 |
Fair market value of warrants and stock
options granted |
158,783 |
320,021 |
Amortization of financing costs |
-- |
442,128 |
Changes in operating assets and
liabilities: |
|
|
Increase in accounts
receivable |
(2,089,498) |
(2,378,873) |
Decrease in revenue in excess of
billing |
8,612,283 |
514,720 |
Decrease in other current
assets |
367,741 |
1,217,728 |
Increase in accounts payable and accrued
expenses |
3,617,465 |
1,908,178 |
Net cash provided by operating
activities |
12,663,194 |
9,428,545 |
Cash flows from investing
activities: |
|
|
Purchases of property and
equipment |
(6,059,596) |
(3,537,918) |
Sales of property and
equipment |
78,678 |
59,350 |
Purchase of non-controlling interest in
subsidiaries |
(17,853) |
(621,563) |
Increase in intangible assets |
(2,312,919) |
(2,132,595) |
Net cash used in investing
activities |
(8,311,690) |
(6,232,726) |
Cash flows from financing
activities: |
|
|
Proceeds from the exercise of stock
options and warrants |
560,500 |
612,650 |
Payment to common shareholders against
fractional shares |
-- |
(194) |
Proceeds from exercise of subsidiary
options |
311,709 |
3,031 |
Restricted cash |
(660,672) |
(2,257,428) |
Dividend paid by subsidiary to Non
controlling interest |
(266,343) |
-- |
Proceeds from bank loans |
1,276,505 |
2,049,698 |
Payments on capital lease obligations and
loans - net |
(781,756) |
(723,936) |
Net cash provided by (used in)
financing activities |
439,943 |
(316,179) |
Effect of exchange rate changes in
cash |
(1,084,723) |
(899,554) |
Net increase in cash and cash
equivalents |
3,706,724 |
1,980,086 |
Cash and cash equivalents, beginning of the
period |
7,874,318 |
7,599,607 |
Cash and cash equivalents, end of
period |
$ 11,581,042 |
$ 9,579,693 |
|
|
|
NetSol Technologies,
Inc. and Subsidiaries Reconciliation to GAAP |
|
|
|
|
|
|
Three Months |
Three Months |
Six Months |
Six Months |
|
Ended |
Ended |
Ended |
Ended |
|
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|
|
|
|
|
Net Income (loss) before preferred
dividend, per GAAP |
$ (1,626,908) |
$ 2,222,983 |
$ (2,724,023) |
$ 3,152,108 |
Income Taxes |
29,270 |
(2,548) |
40,401 |
11,448 |
Depreciation and
amortization |
1,671,662 |
1,357,442 |
3,144,948 |
2,657,594 |
Interest expense |
45,036 |
179,932 |
114,253 |
472,321 |
Interest (income) |
(39,931) |
(31,617) |
(72,785) |
(55,784) |
EBITDA |
$ 79,129 |
$ 3,726,192 |
$ 502,794 |
$ 6,237,687 |
|
|
|
|
|
Weighted Average number of shares
outstanding |
|
|
|
|
Basic |
9,056,024 |
7,957,521 |
9,006,015 |
7,774,719 |
Diluted |
9,089,846 |
7,968,598 |
9,039,838 |
7,785,796 |
|
|
|
|
|
Basic EBITDA |
$ 0.01 |
$ 0.47 |
$ 0.06 |
$ 0.80 |
Diluted EBITDA |
$ 0.01 |
$ 0.47 |
$ 0.06 |
$ 0.80 |
|
|
|
|
|
|
|
|
|
|
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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