NetSol Technologies Reports Third Quarter Fiscal Year 2007 Financial Results

Revenues Increased 51% Year/Year to $7.6 million; Operating Income Improved to $511,405; EBITDA Was $675,639, or $0.04 per Share

CALABASAS, CA -- (MARKET WIRE) -- 05/08/07 -- NetSol Technologies, Inc. ("NetSol") (NASDAQ: NTWK), a multinational provider of enterprise software and IT services to the financial services industry, today announced financial results for the third quarter of fiscal year 2007, ending March 31, 2007.

Third Quarter FY 2007 Consolidated Financial Highlights

--  Revenues increased 51% to $7.6 million
    --  License fees increased 43% to $2.6 million
    --  Maintenance fees improved 115%, rising to $1.3 million
    --  Services increased 41% to $3.7 million
--  Operating income improved to $511,405
--  GAAP EPS was ($0.01)
--  EBITDA was $675,639, or $0.04 per basic and diluted share
--  Cash and cash equivalents improved to ~$3.4 million

NetSol Technologies, Inc. reported consolidated revenues of $7.6 million for the third quarter of fiscal year 2007, a 51% increase compared to the $5.0 million in revenues reported for the same period in fiscal year 2006. Consolidated gross profit for the third quarter was approximately $3.7 million, or 48%.

Net loss for the third quarter of fiscal year 2007 was $323 thousand, or a loss of $0.01 per basic and diluted earnings per share, which compares to net income of $21 thousand, or $0.00 per basic and diluted earnings per share, reported in the third quarter of fiscal year 2006. EBITDA for the third quarter was $676 thousand, or $0.04 per basic and diluted share.

NetSol ended the third quarter of fiscal year 2007 with approximately 3.4 million dollars in cash and cash equivalents.

"LeaseSoft, NetSol's flagship vehicle portfolio management system, is clearly gaining market share, as evidenced by license fees growing 43%, maintenance fees improving 115% and service revenues rising 41% in the third quarter," remarked Najeeb Ghauri, chairman and CEO. "Once again, the Asia-Pacific ('APAC') division led the charge with the signing of several significant new multi-million dollar contracts for LeaseSoft with global, blue chip brand names in the captive finance sector. In addition, the APAC division continued to expand its e-Government work in Pakistan, as evidenced by the award of a new public sector project. Furthermore, the integration of our new businesses continues to progress well, with the offshore team in Lahore dedicated to North American and EMEA projects growing from nine to 25 developers."

Mr. Ghauri concluded, "The recent stream of contract wins demonstrates that NetSol is generating interest and demand for its products and services in its core target vertical, captive finance. In addition, we are successfully penetrating new vertical markets, such as e-Government and Fleet Management. I am extremely pleased that we delivered a strong quarter of financial results, and I am looking forward to a very good finish to this fiscal year with strength continuing into fiscal 2008."

Third Quarter Business Highlights

Asia-Pacific (APAC) Division

--  Signed several new multi-million dollar contracts for LeaseSoft with
    global, blue chip brand names in the captive finance sector;
--  Awarded new public sector project, demonstrating further penetration
    of the local Pakistan, e-Government market; and
--  Insurance outsourcing venture with The Innovation Group UK (TiG) is
    growing steadily, having registered more than 30% growth during the third
    quarter.
    

Europe/Middle East/Africa (EMEA) Division

--  Awarded contract from leading European bank to design a new business
    partner portal for its insurance premium finance division;
--  Signed Memorandum of Understanding (MOU), valued in excess of $1
    million, with major financial services operation in the Middle East to
    jointly establish an application hosting facility to support retail
    finance operations for vehicle distributors throughout the Gulf region;
    and
--  Delivered LeaseSoft Decision Engine to the leasing operation of an
    international bank to provide for automatic underwriting decisions in
    their high volume small/middle ticket business;
    --  Latest software delivery completes major phase of systems
        development for the Bank, creating straight-through processing
        from introducer to funder.

North America Division

--  Integration remains on track and is progressing well -- with continued
    success in the leveraging of offshore resources, improved internal
    resource utilization and effective marketing efforts;
    --  Added three seasoned sales professionals to the team, each of whom
        is building an active pipeline of business;
--  Successfully continued selling of IT services and software license
    upgrades to US clients; and
--  Identified key prospects for cross-selling product and IT services
    opportunities.

First Nine Months of FY 2007 Consolidated Financial Highlights

--  Revenues for the first nine months increased 47% to $20.7 million
    --  License fees improved 73% to $6.9 million
    --  Maintenance fees increased nearly 134% to $3.9 million
    --  Service fees increased 18% to 8.4 million
--  GAAP EPS was ($0.35) due to one-time, non-cash charge of $5.0 million
    relating to the financing for the acquisition of McCue Systems
--  EBITDA for the first nine months was approximately $1.6 million, or
    $0.09 per basic and diluted share, excluding the one-time non-cash
    charge
--  Pro Forma EPS of ($0.07), excluding the one-time non-cash charge

NetSol Technologies, Inc. reported consolidated revenues of $20.7 million for the first nine months of fiscal year 2007, a 47% increase compared to the $14.0 million in revenues reported for the same period in fiscal year 2006. Consolidated gross profit for the first nine months was $10.3 million, or 50%.

Net loss for the first nine months of fiscal year 2007 was approximately $6.3 million, or a loss of $0.35 per basic and diluted earning per share, which compares to net income of $350 thousand, or $0.02 per basic and diluted earnings per share in the same period of fiscal year 2006. During the second quarter of this fiscal year, NetSol recorded a one-time, non-cash charge of $5.0 million relating to the financing for the acquisition of McCue Systems in June 2006. Excluding this one-time charge, NetSol would have reported EBITDA of approximately $1.6 million, or $0.09 per basic and diluted share, and a net loss of approximately $1.2 million, or a loss of $0.07 per basic and diluted share, for the first nine months of fiscal year 2007.

Conference Call Information

NetSol Technologies will host a conference call at 11:00 a.m. ET (8:00 a.m. PT) today to review these results. The call will be web cast live and may be accessed via http://www.vcall.com/IC/CEPage.asp?ID=116681. Investors may also dial +1 (877) 407-8033 (U.S.) or +1 (201) 689-8033 (international), noting conference ID # 241078.

An audio replay of the conference call will be available approximately one hour following the conclusion of the call through 11:00 a.m. ET on May 15, 2007. To access the replay, dial +1 (877) 660-6853 (US) or +1 (201) 612-7415 (international), conference ID # 241078. An archived replay of the conference web cast also will be available on the NetSol Technologies web site at http://www.netsoltek.com/investors/frame.html.

This quarter, NetSol also has prepared a PowerPoint presentation to accompany its conference call remarks. The presentation may be found on the main page of the Investor Relations section of the NetSol web site: www.netsoltek.com/investors.

About NetSol Technologies

NetSol Technologies is a multinational provider of enterprise software and IT services to the financial services industry. NetSol helps clients to identify, evaluate and implement technology solutions to meet their strategic business challenges and maximize their bottom line. By utilizing its worldwide resources, NetSol delivers high-quality, cost-effective equipment and vehicle finance portfolio management solutions. The Company also delivers managed IT services ranging from consulting and application development to systems integration and development outsourcing. NetSol's commitment to quality is demonstrated by its achievement of both ISO 9001 and SEI (Software Engineering Institute) CMMi (Capability Maturity Model) Level 5 assessment, a distinction shared by only 94 companies worldwide. The Company's clients include global automakers, financial institutions, technology companies and governmental agencies. NetSol's largest customer, DaimlerChrysler Services, ranks the Company as a preferred vendor in 40+ countries. Headquartered in Calabasas, CA, NetSol Technologies also has operations and/or offices in London, San Francisco, Adelaide, Beijing, Lahore and Karachi, Pakistan. To learn more about NetSol Technologies, visit the Company's web site at www.netsoltek.com. Click here to join the NetSol Technologies, Inc. email distribution list: http://www.b2i.us/irpass.asp?BzID=897&to=ea&s=0.

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 "believe," "expect," "anticipate," "intend," variations of such words, and similar expressions, identify forward-looking statements, 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.

                  NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENT OF OPERATIONS - MARCH 31, 2007
                                 (UNAUDITED)

                       For the Three Months         For the Nine Months
                          Ended March 31,             Ended March 31,
                        2007          2006          2007          2006
                    ------------  ------------  ------------  ------------
Revenues:
  Licence fees      $  2,554,289  $  1,790,149  $  6,851,496  $  3,952,387
  Maintenance fees     1,335,893       621,305     3,990,096     1,708,538
  Services             3,725,784     2,634,373     9,864,055     8,379,260
                    ------------  ------------  ------------  ------------
     Total revenues    7,615,966     5,045,827    20,705,647    14,040,185
Cost of revenues
  Salaries and
   consultants         2,234,809     1,610,798     6,608,606     4,097,615
  Travel                 447,288       188,833     1,195,315       428,803
  Communication           32,836        30,860       113,836        83,369
  Depreciation and
   amortization          241,021       216,361       592,265       494,014
  Other                  966,314       271,677     1,898,657       859,112
                    ------------  ------------  ------------  ------------
     Total cost of
      sales            3,922,268     2,318,529    10,408,679     5,962,913
                    ------------  ------------  ------------  ------------
Gross profit           3,693,698     2,727,298    10,296,968     8,077,272
Operating expenses:
  Selling and
   marketing             613,760       444,472     1,545,503     1,190,906
  Depreciation and
   amortization          522,185       594,385     1,491,052     1,711,771
  Bad debt expense          (231)       19,561       117,267        27,289
  Salaries and
   wages               1,090,307       597,636     3,361,758     1,686,726
  Professional
   services,
   including
   non-cash
   compensation          254,359       126,806       774,203       365,152
  General and
   adminstrative         701,913       675,339     2,249,732     1,866,838
                    ------------  ------------  ------------  ------------
     Total operating
      expenses         3,182,293     2,458,199     9,539,515     6,848,682
                    ------------  ------------  ------------  ------------
Income from
 operations              511,405       269,099       757,453     1,228,590
Other income and
 (expenses):
  Gain (loss) on
   sale of assets         (6,729)      (38,624)      (19,067)      (34,014)
  Beneficial
   conversion
   feature                     -        (2,628)   (2,208,334)      (14,389)
  Amortization of
   debt discount
   and capitalized
   cost of debt                -             -    (2,803,691)            -
  Liquidation
   damages               (47,057)            -      (180,890)            -
  Fair market value
   of warrants
   issued                (33,987)      (12,016)      (33,987)      (21,505)
  Gain on
   forgiveness of
   debt                        -         1,318             -         8,294
  Interest expense       (83,819)      (75,015)     (543,342)     (240,900)
  Interest income         46,867        93,376       265,916       272,417
  Other income and
   (expenses)             10,081        (2,484)       88,935       (57,129)
  Income taxes           (57,655)      (24,080)     (126,620)      (90,891)
                    ------------  ------------  ------------  ------------
    Total other
     expenses           (172,299)      (60,153)   (5,561,080)     (178,117)
                    ------------  ------------  ------------  ------------
Net income (loss)
 before minority
 interest in
 subsidiary              339,106       208,946    (4,803,627)    1,050,473
Minority interest
 in subsidiary          (568,237)     (187,127)   (1,374,081)     (699,872)
                    ------------  ------------  ------------  ------------
Net income (loss)       (229,131)       21,819    (6,177,708)      350,601
Dividend required
 for preferred
 stockholders            (94,088)            -      (159,686)            -
                    ------------  ------------  ------------  ------------
Net income (loss)
 applicable to
 common
 shareholders           (323,219)       21,819    (6,337,394)      350,601
Other comprehensive
 gain:
  Translation
   adjustment             81,564      (115,740)      203,343       201,100
                    ------------  ------------  ------------  ------------
Comprehensive
 income (loss)      $   (241,655) $    (93,921) $ (6,134,051) $    551,701
                    ============  ============  ============  ============

Net income (loss)
 per share:
  Basic             $      (0.01) $       0.00  $      (0.35) $       0.02
                    ============  ============  ============  ============
  Diluted           $      (0.01) $       0.00  $      (0.35) $       0.02
                    ============  ============  ============  ============
Weighted average
 number of shares
 outstanding
  Basic               18,388,626    14,852,941    17,685,660    14,267,690
  Diluted             18,388,626    15,278,168    17,685,660    14,692,917



               NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
               CONSOLIDATED BALANCE SHEET - MARCH 31, 2007
                           (UNAUDITED)

                               ASSETS
Current assets:
  Cash and cash equivalents                  $   3,382,970
  Accounts receivable, net of allowance for
   doubtful accounts of $106,090                 8,054,782
  Revenues in excess of billings                 7,368,794
  Other current assets                           2,588,747
                                             -------------
     Total current assets                                        21,395,293
Property and equipment, net of accumulated
 depreciation                                                     6,811,887
Intangibles:
  Product licenses, renewals, enhancements,
   copyrights, trademarks, and tradenames,
   net
                                                 6,692,302
  Customer lists, net                            2,601,066
  Goodwill                                       6,092,906
                                             -------------
     Total intangibles                                           15,386,274
                                                             --------------
     Total assets                                            $   43,593,454
                                                             ==============

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses      $   4,219,078
  Current portion of notes and obligations
   under capitalized leases                        865,554
  Other payables - acquisitions                     58,451
  Billings in excess of revenues                 3,471,434
  Due to officers                                  232,165
  Dividend to preferred stockholders payable        94,088
  Loans payable, bank                            1,562,189
                                             -------------
     Total current liabilities                                   10,502,959
Obligations under capitalized leases, less
 current maturities                                                 224,799
                                                             --------------
     Total liabilities                                           10,727,758
Minority interest                                                 2,991,127
Commitments and contingencies                                             -

Stockholders' equity:
  Preferred stock,  5,000,000 shares
   authorized; 5,025 issued and outstanding      5,025,000
  Common stock, $.001 par value; 45,000,000
   shares authorized; 18,809,914 issued and
   outstanding                                      18,810
  Additional paid-in-capital                    63,602,452
  Treasury stock                                   (10,194)
  Accumulated deficit                          (38,009,435)
  Stock subscription receivable                   (736,657)
  Common stock to be issued                        200,910
  Other comprehensive loss                        (216,317)
                                             -------------
     Total stockholders' equity                                  29,874,569
                                                             --------------
     Total liabilities and stockholders'
      equity                                                 $   43,593,454
                                                             ==============



            NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      RECONCILIATION TO GAAP
                           (UNAUDITED)

                                    Nine Months
                                        Ended
                                      March 31,
                                        2007
                                    ------------

Net loss per GAAP                   $ (6,177,708)
  One-time, non-cash expenses:
    Beneficial conversion feature      2,208,334
    Amortization of debt discount and
     capitalized cost of debt          2,803,691
                                    ------------
                                       5,012,025

                                    ------------
Pro-forma loss                      $ (1,165,683)
                                    ============

Weighted average number of shares
 outstanding
  Basic and diluted                   17,685,660

                                    ------------
Pro-forma EPS                       $      (0.07)
                                    ============



EBITDA - GAAP                         (3,424,338)
  One-time, non-cash expenses:
    Beneficial conversion feature      2,208,334
    Amortization of debt discount and
     capitalized cost of debt          2,803,691
                                    ------------
                                       5,012,025

                                    ------------
Pro-forma EBITDA                    $  1,587,687
                                    ============

Weighted average number of shares
 outstanding
  Basic and diluted                   17,685,660

                                    ------------
Pro-forma EBITDA EPS                $       0.09
                                    ============

Contacts:
NetSol Technologies, Inc.
Tina Gilger
Chief Financial Officer
Tel: +1 818-222-9195, x112

Investor Relations
Christopher Chu
The Global Consulting Group
Tel:   +1-646-284-9426
Email: cchu@hfgcg.com