UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 12, 2015
Commission
file number: 0-22773
NETSOL
TECHNOLOGIES, INC.
(Exact
name of small business issuer as specified in its charter)
NEVADA |
|
95-4627685 |
(State or other
Jurisdiction of |
|
(I.R.S. Employer
NO.) |
Incorporation
or Organization) |
|
|
24025
Park Sorrento, Suite 410, Calabasas, CA 91302
(Address
of principal executive offices) (Zip Code)
(818)
222-9195 / (818) 222-9197
(Issuer’s
telephone/facsimile numbers, including area code)
Item
2.02 Results of Operations and Financial Condition.
On
November 12, 2015, NetSol Technologies, Inc. issued a press release announcing results of operations and financial conditions
for the quarter ended September 30, 2015. The press release is furnished as Exhibit 99.1 to this Form 8-K.
The
information in this report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not
be incorporated by reference into any registration statement or other document field under the Securities Act of 1933, as amended,
or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Exhibits
99.1 |
News
Release dated November 12, 2015 |
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
NETSOL TECHNOLOGIES, INC. |
|
|
Date: November 12, 2015 |
/s/ Najeeb Ghauri |
|
NAJEEB GHAURI |
|
Chief Executive Officer |
|
|
Date: November 12, 2015 |
/s/Roger Almond |
|
Roger Almond |
|
Chief Financial Officer |
|
|
|
|
|
|
Investor Contacts: |
|
|
|
PondelWilkinson |
|
Roger Pondel | Matt Sheldon |
|
|
investors@netsoltech.com |
|
|
(310) 279-5980 |
Media
Contacts:
PondelWilkinson
George
Medici | gmedici@pondel.com
(310)
279-5968
NETSOL
TECHNOLOGIES REPORTS FISCAL 2016 FIRST-QUARTER Results
Total
Revenue for the 2016 First Quarter Rose 30% to $13.3 Million
2016
First Quarter EBITDA more than Doubles to $1.4 Million, or $0.14 per Adjusted Diluted Share;
GAAP Loss Narrows to $0.04 per share
from a loss of $0.20 per share in Fiscal 2015 First Quarter
Conference
Call Scheduled Today at 11:30 a.m. ET (8:30 a.m. PT)
CALABASAS,
Calif. – November 12, 2015 – NetSol Technologies, Inc. (Nasdaq: NTWK), a global business services and enterprise
application solutions provider, today reported non-GAAP adjusted diluted earnings per share for the first fiscal quarter ended
September 30, 2015 of $0.14 on total revenue of $13.3 million, compared with $0.07 on total revenue of $10.2 million in same quarter
last year. GAAP net loss narrowed to $411,000, or $0.04 per share, compared with a net loss of $1.8 million, or $0.20 per share,
in the comparable period last year.
The
reconciliation of adjusted EBITDA to net income, the most comparable financial measure based upon GAAP, as well as a further explanation
of adjusted EBITDA, is included in the financial tables at the end of this press release.
“We
are off to a very strong start for the fiscal year, building upon a base of revenue in what is typically our slowest quarter of
the year,” said Najeeb Ghauri, CEO of NetSol. “New wins in China, additional requests and increased utilization by
current customers, growth in our joint-venture with the Innovation Group, and continued delivery of multiple contracts fueled
our results in the quarter.
“Given
the strength of our global new business pipeline, we expect our growth trajectory to continue, and to further accelerate once
some of the new NFS Ascent contracts are executed in APAC and Europe,” added Ghauri.
Fiscal
2016 First-Quarter Financial Results
The
following comparison refers to results for the fiscal 2016 first quarter versus the fiscal 2015 first quarter.
Total
net revenues rose 30% to $13.3 million from $10.2 million last year, led by strength in total services revenue.
|
● |
License fees were
$1.2 million compared with $1.6 million; |
|
|
|
|
● |
Total maintenance
fees, which includes related-party (joint-venture) maintenance fees, increased to $3.2 million from $2.8 million last year; |
|
|
|
|
● |
Total services
revenue, which includes related-party (joint-venture) services revenue increased to $8.9 million from $5.8 million last year |
Following
is additional detail for the quarter:
|
● |
As
a percentage of total revenue, total cost of revenue for the first quarter of 2016 decreased to 59% from 69% of total revenues
for the same period last year; |
|
|
|
|
● |
Gross
profit rose to $5.4 million from $3.2 million last year; |
|
|
|
|
● |
Operational
expenses were nearly flat year-over-year, with an increase in selling and marketing expenses related to new business efforts,
offset by a decrease in general and administrative expenses as a result of cost rationalization initiatives. |
At
September 30, 2015, cash and cash equivalents were $10.1 million, versus $14.2 million at June 30, 2015. Accounts receivable and
accounts receivable, net-related party combined were $11.9 million, up from $10 million, for the same period last year. The quality
of receivables remains strong.
Fiscal
2016 First Quarter Conference Call
When: |
Thursday, November
12, 2015 |
|
|
Time: |
11:30 a.m.
Eastern Time |
|
|
Phone: |
1-888-359-3627
(domestic) |
|
1-719-325-2144
(international) |
A
live webcast will be available online within the investor relations section of NetSol’s website at http://www.netsoltech.com.
A replay of the webcast will be available one hour following the conclusion of the live call, and will be archived for 90 days.
To
sign up to receive news alerts and regulatory filing notifications, please visit http://ir.netsoltech.com/email-alerts.
About
NetSol Technologies
NetSol
Technologies, Inc. (Nasdaq: NTWK) is a worldwide provider of IT and enterprise software solutions primarily serving the global
leasing and financing industry. The Company’s suite of applications are backed by 40 years of domain expertise and supported
by a committed team of more than 1000 professionals placed in eight strategically located support and delivery centers throughout
the world.
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 | | |
As of | |
| |
September
30, 2015 | | |
June
30, 2015 | |
ASSETS | |
| | |
| |
Current assets: | |
| | | |
| | |
Cash
and cash equivalents | |
$ | 10,075,324 | | |
$ | 14,168,957 | |
Restricted cash | |
| 90,000 | | |
| 90,000 | |
Accounts receivable,
net of allowance of 518,657 and 524,565 | |
| 7,485,807 | | |
| 6,480,344 | |
Accounts receivable,
net - related party | |
| 4,409,186 | | |
| 3,491,899 | |
Revenues in excess
of billings | |
| 6,560,754 | | |
| 5,267,275 | |
Other current assets | |
| 2,279,083 | | |
| 2,012,190 | |
Total current assets | |
| 30,900,154 | | |
| 31,510,665 | |
Property and equipment, net | |
| 24,053,908 | | |
| 25,119,634 | |
Intangible assets, net | |
| 21,837,105 | | |
| 22,815,467 | |
Goodwill | |
| 9,516,568 | | |
| 9,516,568 | |
Total assets | |
$ | 86,307,735 | | |
$ | 88,962,334 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable
and accrued expenses | |
$ | 5,030,352 | | |
$ | 5,952,561 | |
Current portion
of loans and obligations under capitalized leases | |
| 4,241,836 | | |
| 3,896,353 | |
Unearned revenues | |
| 4,302,524 | | |
| 4,897,327 | |
Common stock to
be issued | |
| 88,324 | | |
| 88,324 | |
Total current liabilities | |
| 13,663,036 | | |
| 14,834,565 | |
Long term loans and obligations under
capitalized leases; less current maturities | |
| 329,834 | | |
| 487,492 | |
Total liabilities | |
| 13,992,870 | | |
| 15,322,057 | |
Commitments and contingencies | |
| | | |
| | |
Stockholders' equity: | |
| | | |
| | |
Preferred stock, $.01 par value; 500,000
shares authorized; | |
| - | | |
| - | |
Common stock, $.01 par value; 14,500,000
shares authorized;10,322,826 shares issued and 10,295,547 outstanding as of September 30, 2015 and 10,307,826 shares issued
and 10,280,547 outstanding as of June 30, 2015 | |
| 103,228 | | |
| 103,078 | |
Additional paid-in-capital | |
| 119,287,407 | | |
| 119,209,807 | |
Treasury stock (27,279 shares) | |
| (415,425 | ) | |
| (415,425 | ) |
Accumulated deficit | |
| (41,137,149 | ) | |
| (40,726,121 | ) |
Stock subscription
receivable | |
| (1,139,672 | ) | |
| (1,204,603 | ) |
Other comprehensive
loss | |
| (18,130,300 | ) | |
| (17,167,100 | ) |
Total NetSol stockholders'
equity | |
| 58,568,089 | | |
| 59,799,636 | |
Non-controlling interest | |
| 13,746,776 | | |
| 13,840,641 | |
Total stockholders'
equity | |
| 72,314,865 | | |
| 73,640,277 | |
Total liabilities
and stockholders' equity | |
$ | 86,307,735 | | |
$ | 88,962,334 | |
NetSol
Technologies, Inc. and Subsidiaries
Consolidated
Statement of Operations
| |
For the Three Months | |
| |
Ended
September 30, | |
| |
2015 | | |
2014 | |
Net Revenues: | |
| | | |
| | |
License
fees | |
$ | 1,193,354 | | |
$ | 1,584,553 | |
Maintenance fees | |
| 3,012,238 | | |
| 2,708,528 | |
Services | |
| 6,753,873 | | |
| 4,249,080 | |
Maintenance fees
- related party | |
| 158,231 | | |
| 140,113 | |
Services - related
party | |
| 2,187,408 | | |
| 1,544,877 | |
Total net revenues | |
| 13,305,104 | | |
| 10,227,151 | |
| |
| | | |
| | |
Cost of revenues: | |
| | | |
| | |
Salaries and consultants | |
| 4,999,890 | | |
| 4,116,217 | |
Travel | |
| 481,453 | | |
| 421,871 | |
Depreciation and
amortization | |
| 1,474,235 | | |
| 1,801,567 | |
Other | |
| 938,797 | | |
| 674,863 | |
Total cost of revenues | |
| 7,894,375 | | |
| 7,014,518 | |
| |
| | | |
| | |
Gross profit | |
| 5,410,729 | | |
| 3,212,633 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Selling and marketing | |
| 1,698,404 | | |
| 1,132,360 | |
Depreciation and
amortization | |
| 291,172 | | |
| 580,773 | |
General and administrative | |
| 3,366,047 | | |
| 3,675,755 | |
Research and development
cost | |
| 112,070 | | |
| 66,265 | |
Total operating
expenses | |
| 5,467,693 | | |
| 5,455,153 | |
| |
| | | |
| | |
Loss from operations | |
| (56,964 | ) | |
| (2,242,520 | ) |
| |
| | | |
| | |
Other income and (expenses) | |
| | | |
| | |
Loss on sale of
assets | |
| (11,873 | ) | |
| (11,052 | ) |
Interest expense | |
| (68,173 | ) | |
| (73,093 | ) |
Interest income | |
| 52,112 | | |
| 57,919 | |
Gain (loss) on foreign
currency exchange transactions | |
| (113,719 | ) | |
| 79,220 | |
Other income | |
| 54,314 | | |
| 379 | |
Total other income
(expenses) | |
| (87,339 | ) | |
| 53,373 | |
| |
| | | |
| | |
Net loss before income taxes | |
| (144,303 | ) | |
| (2,189,147 | ) |
Income tax provision | |
| (75,223 | ) | |
| (40,076 | ) |
Net loss | |
| (219,526 | ) | |
| (2,229,223 | ) |
Non-controlling interest | |
| (191,502 | ) | |
| 391,197 | |
Net loss attributable
to NetSol | |
$ | (411,028 | ) | |
$ | (1,838,026 | ) |
| |
| | | |
| | |
Amount attributable to NetSol common
shareholders: | |
| | | |
| | |
Loss from continuing operations | |
$ | (411,028 | ) | |
$ | (1,838,026 | ) |
Income from discontinued operations | |
| - | | |
| - | |
Net loss | |
$ | (411,028 | ) | |
$ | (1,838,026 | ) |
| |
| | | |
| | |
Net loss per share: | |
| | | |
| | |
Net loss per common share | |
| | | |
| | |
Basic | |
$ | (0.04 | ) | |
$ | (0.20 | ) |
Diluted | |
$ | (0.04 | ) | |
$ | (0.20 | ) |
| |
| | | |
| | |
Weighted average number of shares outstanding | |
| | | |
| | |
Basic | |
| 10,281,335 | | |
| 9,213,324 | |
Diluted | |
| 10,281,335 | | |
| 9,213,324 | |
NetSol
Technologies, Inc. and Subsidiaries
Consolidated
Statement of Cash Flows
| |
For the Three Months | |
| |
Ended
September 30, | |
| |
2015 | | |
2014 | |
Cash flows from operating activities:
| |
| | | |
| | |
Net
loss | |
$ | (219,526 | ) | |
$ | (2,229,223 | ) |
Adjustments to reconcile
net loss to net cash used in operating activities: | |
| | | |
| | |
Depreciation and
amortization | |
| 1,765,407 | | |
| 2,382,340 | |
Provision for bad
debts | |
| 36,780 | | |
| - | |
Loss on sale of
assets | |
| 11,873 | | |
| 11,052 | |
Stock issued for
services | |
| 77,750 | | |
| 290,162 | |
Fair market value
of warrants and stock options granted | |
| - | | |
| 155,622 | |
Changes in operating
assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (1,268,570 | ) | |
| (5,723,728 | ) |
Accounts receivable
- related party | |
| (975,266 | ) | |
| (495,357 | ) |
Revenues in excess
of billing | |
| (912,509 | ) | |
| 133,763 | |
Other current assets | |
| (322,533 | ) | |
| 479,340 | |
Accounts payable
and accrued expenses | |
| (833,638 | ) | |
| (326,226 | ) |
Unearned
revenue | |
| (538,259 | ) | |
| 4,841,230 | |
Net cash used in
operating activities | |
| (3,178,491 | ) | |
| (481,025 | ) |
| |
| | | |
| | |
Cash flows from investing activities:
| |
| | | |
| | |
Purchases of property
and equipment | |
| (625,794 | ) | |
| (1,031,128 | ) |
Sales of property
and equipment | |
| 180,258 | | |
| 90,841 | |
Net cash used in
investing activities | |
| (445,536 | ) | |
| (940,287 | ) |
| |
| | | |
| | |
Cash flows from financing activities:
| |
| | | |
| | |
Proceeds from sale
of common stock | |
| - | | |
| 850,000 | |
Proceeds from stock
subscription receivable | |
| 64,931 | | |
| - | |
Restricted cash | |
| - | | |
| 2,438,844 | |
Proceeds from bank
loans | |
| 437,070 | | |
| 109,211 | |
Payments
on capital lease obligations and loans - net | |
| (174,385 | ) | |
| (2,591,334 | ) |
Net cash provided
by financing activities | |
| 327,616 | | |
| 806,721 | |
Effect of exchange
rate changes | |
| (797,222 | ) | |
| (465,548 | ) |
Net decrease in cash and cash equivalents
| |
| (4,093,633 | ) | |
| (1,080,139 | ) |
Cash and cash equivalents, beginning
of the period | |
| 14,168,957 | | |
| 11,462,695 | |
Cash and cash equivalents, end of period
| |
$ | 10,075,324 | | |
$ | 10,382,556 | |
NetSol
Technologies, Inc. and Subsidiaries
Reconciliation
to GAAP
| |
Three Months | | |
Three Months | |
| |
Ended | | |
Ended | |
| |
September
30, 2015 | | |
September
30, 2014 | |
| |
| | |
| |
Net Income (loss) before
preferred dividend, per GAAP | |
$ | (411,028 | ) | |
$ | (1,838,026 | ) |
Income Taxes | |
| 75,223 | | |
| 40,076 | |
Depreciation and
amortization | |
| 1,765,407 | | |
| 2,382,340 | |
Interest expense | |
| 68,173 | | |
| 73,093 | |
Interest
(income) | |
| (52,112 | ) | |
| (57,919 | ) |
EBITDA | |
$ | 1,445,663 | | |
$ | 599,564 | |
| |
| | | |
| | |
Weighted Average number of shares outstanding | |
| | | |
| | |
Basic | |
| 10,281,335 | | |
| 9,213,324 | |
Diluted | |
| 10,392,669 | | |
| 9,213,324 | |
| |
| | | |
| | |
Basic EBITDA | |
$ | 0.14 | | |
$ | 0.07 | |
Diluted EBITDA | |
$ | 0.14 | | |
$ | 0.07 | |
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.
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