NetSol Technologies Reports Fourth Quarter and Fiscal Year 2009 Financial Results

Fourth Quarter Revenue of $6.9 Million Reflects 36% Sequential Revenue Growth; Higher Sales and a Significant Reduction in Operating Expense Drive Improvements in Reducing Sequential Quarterly GAAP Net Loss and Returning to EBITDA Profitability

EMERYVILLE, CA -- (MARKET WIRE) -- 09/15/09 -- NetSol Technologies, Inc. "NetSol" (NASDAQ: NTWK) (NASDAQ DUBAI: NTWK), a U.S. corporation providing global business services and enterprise application solutions to private and public sector organizations worldwide, today announced fourth quarter financial results for fiscal year 2009, for the period ended June 30, 2009.

Fiscal Year 2009 Results

-- Revenues totaled $26.4 million, down 28% year-over-year

   -- Service fees totaled $15.2 million

   -- Maintenance fees totaled $6.5 million

   -- License fees totaled $4.8 million

-- Full year GAAP net loss applicable to common shareholders of $8.2
   million, or a loss of $0.30 per fully diluted share, compared to GAAP
   net income applicable to common shareholders of $4.8 million, or $0.19
   per fully diluted share, in the year ago period

-- Full year EBITDA loss of $2.5 million, or EBITDA loss of $0.09 per
   diluted share, versus EBITDA of $9.1 million, or $0.35 per diluted
   share, in the year ago period

Najeeb Ghauri, NetSol Technologies chairman and chief executive officer, commented, "NetSol's fiscal fourth quarter revenues exceeded the high end of our sequential growth range projection, rising 36%, driven by increased license and IT services sales. While our full year results reflect the challenges of the global economic downturn compared to a 2008 period which was the strongest in the company's history, NetSol's fiscal fourth quarter results provide clear evidence that our NetSol Financial Suite(TM) and global BestShoring® IT service offerings are gaining fresh momentum. The success of our comprehensive cost efficiency measures yielded an impressive 23% reduction in fiscal fourth quarter operating expenses as compared to the year ago period. Our more efficient operating expense base, combined with our renewed sequential revenue growth, drove material improvements in reducing the company's sequential quarterly GAAP net loss as well as supported an important return to quarterly EBITDA profitability.

"I am pleased to report we enter our fiscal year 2010 with a significantly stronger pipeline, and are also seeing excellent new opportunities in the government and defense sectors. Looking ahead to fiscal 2010, we anticipate stronger full year results in terms of top and bottom line performance. If we couple our more efficient global operating structure with the fresh momentum on the sales side, we currently forecast a quarterly GAAP breakeven revenue run rate of approximately $8.0 million, and $6.5 million on a cash basis," concluded Mr. Ghauri.

NetSol reported consolidated revenues of $6.9 million for the fourth quarter of fiscal year 2009, representing a 35% decline as compared to the $10.5 million in revenues reported for the same period a year ago.

U.S. GAAP (Generally Accepted Accounting Principles) net loss applicable to common shareholders for the fourth quarter of fiscal year 2009 was approximately $0.9 million, or a loss of $0.03 per diluted share, which compares to GAAP net income applicable to common shareholders of $1.3 million, or $0.05 per diluted share, in the same period of fiscal year 2008.

NetSol reported EBITDA of $0.6 million, or $0.02 per diluted share, for the fourth quarter of fiscal year 2009 compared to EBITDA of $2.6 million, or $0.09 per diluted share, in the year ago period.

EBITDA is defined as earnings before interest, taxes, depreciation and amortization. The Company uses EBITDA as a measure of the Company's operating trends. Investors are cautioned that EBITDA is not a measure of liquidity or of financial performance under Generally Accepted Accounting Principles (GAAP). The EBITDA numbers presented may not be comparable to similarly titled measures reported by other companies. EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Consistent with the SEC Regulation G, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, and this reconciliation is located under the financial table heading "Reconciliation to GAAP."

Fourth Quarter Business Highlights

--  Signed a significant new NetSol Financial Suite(TM) contract with
    Minsheng Financial Leasing Company to deploy NetSol's industry leading
    leasing suite

--  Secured a new licensing agreement with a major Chinese captive finance
    company to implement the NetSol Financial Suite(TM) (NetSol Financial
    Suite(TM)), including NetSol's flagship LeaseSoft solution

--  Major international automotive manufacturer signs LeaseSoft license
    contract for captive finance in China

--  Secured new European customer contract to implement Wholesale Finance
    System for a Netherlands based finance company

--  NetSol Technologies Europe wins a new contract to deploy its LeaseSoft
    suite at United Kingdom based nationwide loan company

--  NetSol and Atheeb Group form Atheeb NetSol Limited, a software
    engineering and joint venture company focused on Saudi Arabia, GCC, and The
    Middle East

--  NetSol and Grupo Karims form NetSol GK Latin America, an IT services
    and software development joint venture serving the Americas

--  Announced new Neptune Software plc partnership, as well as first joint
    customer win, extending the reach of the NetSol Financial Suite (NetSol
    Financial Suite(TM)) and LeaseSoft Evolve product in Africa, as leasing is
    rapidly expanding as a financing solution across the continent

--  Launched beta version of smartOCI, an SAP compatible multiple catalog
    search engine

--  Subsequent to the quarter end, NetSol teamed with a top 5 U.S. defense
    contractor with a joint bid submitted for a significant multi-million
    dollar military contract in Pakistan
    

Conference Call & Webcast Information

Following the distribution of the fiscal fourth quarter and full year 2009 financial results, NetSol will host a conference call today at 11:00 a.m. ET (8:00 a.m. PT) to review the quarterly financial and operational performance. Najeeb Ghauri, NetSol Technologies chairman and chief executive officer, will host the call, which will be webcast live. The webcast and a supporting slide presentation will be made available on the investor relations section of the NetSol corporate website at www.netsoltech.com. Telephone access to the conference call will be available in North America by dialing +1 (877) 407-0782 or internationally by dialing +1 (201) 689-8567.

An audio replay of the conference call will be available approximately two hours following the conclusion of the call and for the following 30 day period. To access the replay in North America, dial +1 (877) 660-6853 or, when calling internationally, dial +1 (201) 612-7415, using replay account code # 286 and conference ID # 331287. An archived replay of the conference webcast will also be available on the investor relations section of the NetSol corporate website at www.netsoltech.com.

About NetSol Technologies, Inc.

NetSol Technologies, Inc. (NASDAQ: NTWK) (NASDAQ DUBAI: NTWK) is a worldwide provider of global business services and enterprise application solutions. Since its inception in 1995, NetSol has used its BestShoring® practices and highly experienced resources in analysis, development, quality assurance, and implementation to deliver high-quality, cost-effective solutions. Specialized by industry, these product and services offerings include credit and finance portfolio management systems, hospital/healthcare information management systems (HIMS), SAP consulting and services, custom development, systems integration, and technical services for the global Financial, Healthcare, Insurance, Energy, and Technology markets. NetSol's commitment to quality is demonstrated by its achievement of the ISO 9001, ISO 27001, and SEI (Software Engineering Institute) CMMI (Capability Maturity Model) Maturity Level 5 assessments, a distinction shared by fewer than 100 companies worldwide. NetSol Technologies' clients include Fortune 500 manufacturers, global automakers, financial institutions, utilities, technology providers, and government agencies. Headquartered in Emeryville, California, NetSol Technologies has operations and offices in Adelaide, Bangkok, Beijing, Lahore, London, and San Pedro Sula.

To learn more about NetSol Technologies, Inc., visit www.netsoltech.com

To join the NetSol Technologies, Inc. email communications list, visit: http://www.b2i.us/irpass.asp?BzID=897&to=ea&s=0

NetSol Technologies, Inc. Forward-looking Statement

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
                               (Unaudited)

                    For the quarter ended           For the Year ened
                June 30, 2009  June 30, 2008  June 30, 2009  June 30, 2008
                -------------  -------------  -------------  -------------
Net Revenues:
  License fees  $   1,283,700  $   4,915,813  $   4,786,332  $  12,685,039
  Maintenance
   fees             1,727,900      1,749,871      6,499,419      6,306,321
  Services          3,841,580      3,849,971     15,162,426     17,650,815
                -------------  -------------  -------------  -------------
    Total
     revenues       6,853,180     10,515,655     26,448,177     36,642,175
Cost of
 revenues
  Salaries and
   consultants      2,135,294      2,728,921      9,787,965     10,071,664
  Travel              341,589        746,745      1,334,879      1,719,743
  Repairs and
   maintenance         80,051         72,692        370,487        405,140
  Insurance            39,371         85,283        174,761        239,043
  Depreciation
   and
   amortization       598,358        551,166      2,214,211      1,398,454
  Other             1,107,766        548,587      3,316,031      1,890,100
                -------------  -------------  -------------  -------------
    Total cost
     of
     sales          4,302,429      4,733,394     17,198,334     15,724,144
                -------------  -------------  -------------  -------------
Gross profit        2,550,751      5,782,261      9,249,843     20,918,031
Operating
 expenses:
  Selling and
   marketing          636,374        904,562      3,115,883      3,722,470
  Depreciation
   and
   amortization       497,716        517,321      1,973,997      1,939,502
  Bad debt
   expense            (26,973)        55,016      2,393,685         58,293
  Salaries and
   wages              745,859        945,402      3,443,390      3,703,836
  Professional
   services,
   including
   non-cash
   compensation       338,187        413,490      1,215,939        837,598
  General and
   adminstrative      896,667      1,170,091      3,590,118      3,447,113
                -------------  -------------  -------------  -------------
    Total
     operating
     expenses       3,087,830      4,005,882     15,733,012     13,708,812
                -------------  -------------  -------------  -------------
Income from
 operations          (537,079)     1,776,379     (6,483,169)     7,209,219
Other income
 and
 (expenses):
  Loss on sale
   of assets          (96,564)        (2,440)      (404,820)       (35,484)
  Beneficial
   conversion
   feature            (23,052)             -        (40,277)             -
  Loss on
   extinguishment
   of debt                  -              -     (1,000,000)             -
  Interest
   expense           (327,547)       (82,043)    (1,294,293)      (626,708)
  Interest
   income              44,423         35,234        291,030        195,103
  Gain on sale
   of
   subsidiary
   shares             351,522              -        351,522      1,240,808
  Gain on
   foreign
   currency
   exchange
   rates              549,733      1,430,669      2,371,487      2,020,839
  Other income
   and
   (expenses)          21,229         29,600         68,747        148,544
                -------------  -------------  -------------  -------------
    Total other
     income
     (expenses)       519,744      1,411,020        343,396      2,943,102
                -------------  -------------  -------------  -------------
Net income
 (loss) before
 minority
 interest in
 subsidiary           (17,335)     3,187,399     (6,139,773)    10,152,321
Minority
 interest in
 subsidiary          (843,904)    (1,749,625)    (1,816,143)    (5,038,115)
Income taxes          (11,501)       (75,710)       (91,132)      (121,982)
                -------------  -------------  -------------  -------------
Net income
 (loss)              (872,740)     1,362,064     (8,047,048)     4,992,224
Dividend
 required for
 preferred
 stockholders         (33,508)       (33,508)      (134,400)      (178,541)
                -------------  -------------  -------------  -------------
Net income
 (loss)
 applicable to
 common
 shareholders        (906,248)     1,328,556     (8,181,448)     4,813,683
Other
 comprehensive
 loss:
  Translation
   adjustment        (114,548)    (1,329,381)    (4,151,474)    (2,394,994)
                -------------  -------------  -------------  -------------
Comprehensive
 income (loss)  $  (1,020,796) $        (825) $ (12,332,922) $   2,418,689
                =============  =============  =============  =============
Net income
 (loss) per
 share:
  Basic         $       (0.03) $        0.05  $       (0.30) $        0.20
                =============  =============  =============  =============
  Diluted       $       (0.03) $        0.05  $       (0.30) $        0.19
                =============  =============  =============  =============
Weighted
 average number
 of shares
 outstanding
  Basic            28,706,163     25,425,042     26,937,500     24,118,538
  Diluted          28,706,163     27,303,554     26,937,500     25,997,049







                NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS


                                            As of June 30,  As of June 30,
                                                 2009            2008
                                                               Restated
                                            --------------  --------------
                   ASSETS
Current assets:
  Cash and cash equivalents                 $    4,403,762  $    6,275,238
  Restricted Cash                                5,000,000               -
  Accounts receivable, net of allowance for
   doubtful accounts of $2,504,714 and
   $108,538 for 2009 and 2008 respectively      11,394,844      10,988,888
  Revenues in excess of billings                 5,686,277      11,053,042
  Other current assets                           2,307,246       2,406,407
                                            --------------  --------------
    Total current assets                        28,792,129      30,723,575
Property and equipment, net of accumulated
 depreciation                                    9,186,163       9,176,780
Other assets, long-term                            204,823       1,866,437
Intangibles:
  Product licenses, renewals, enhancements,
   copyrights, trademarks, and tradenames,
   net                                          13,802,607      10,837,856
  Customer lists, net                            1,344,019       1,732,761
  Goodwill                                       9,439,285       9,439,285
                                            --------------  --------------
    Total intangibles                           24,585,911      22,009,902
                                            --------------  --------------
    Total assets                            $   62,769,026  $   63,776,694
                                            ==============  ==============

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses     $    5,106,266  $    4,116,659
  Current portion of loans and obligations
   under capitalized leases                      6,207,830       2,280,110
  Other payables - acquisitions                    103,226         846,215
  Unearned revenues                              3,473,228       3,293,728
  Due to officers                                        -         184,173
  Dividend to preferred stockholders
   payable                                          44,409          33,508
  Loans payable, bank                            2,458,757       2,932,551
                                            --------------  --------------
    Total current liabilities                   17,393,716      13,686,944
Obligations under capitalized leases, less
 current maturities                              1,090,901         332,307
Convertible Notes Payable                        5,809,508               -
Long-term loans; less current maturities         1,113,832         411,608
                                            --------------  --------------
    Total liabilities                           25,407,957      14,430,859
Minority interest                                6,383,310       7,857,969
Commitments and contingencies                            -               -

Stockholders' equity:
  Preferred stock, 5,000,000 shares
   authorized; 1,920 issued and outstanding      1,920,000       1,920,000
  Common stock, $.001 par value; 95,000,000
   shares authorized; 30,046,987;
   25,545,482 issued and outstanding                30,047          25,545
  Additional paid-in-capital                    78,198,523      74,950,286
  Treasury stock                                  (396,008)        (35,681)
  Accumulated deficit                          (41,253,152)    (33,071,702)
  Stock subscription receivable                   (842,619)       (600,907)
  Common stock to be issued                        220,365       1,048,249
  Other comprehensive loss                      (6,899,397)     (2,747,924)
                                            --------------  --------------
    Total stockholders' equity                  30,977,759      41,487,866
                                            --------------  --------------
    Total liabilities and stockholders'
     equity                                 $   62,769,026  $   63,776,694
                                            ==============  ==============








                NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                         STATEMENTS OF CASH FLOWS
                                (Unaudited)


                                                      For the Years
                                                      Ended June 30,
                                                    2009          2008
                                                                Restated
                                                ------------  ------------
 Cash flows from operating activities:
    Net income (loss)                           $ (8,047,048) $  4,992,224
    Adjustments to reconcile net income (loss)
     to net cash provided by (used in)
     operating activities:
    Depreciation and amortization                  4,188,208     3,337,956
    Bad debt expense                               2,393,685        58,293
    Loss on sale of assets                           404,820        35,484
    Gain on sale of subsidiary shares in
     Pakistan                                       (351,522)   (1,240,808)
    Minority interest in subsidiary                1,816,143     5,038,115
    Stock issued for services                        346,817       167,926
    Fair market value of warrants and stock
     options granted                                 261,472        24,320
    Beneficial conversion feature                     40,277             -
    Changes in operating assets and
     liabilities:
      Increase in accounts receivable             (4,679,496)   (4,123,995)
      Decrease in other current assets             3,740,567    (4,980,504)
      Decrease in long-term assets                    43,889       229,622
      Increase in accounts payable and accrued
       expenses                                    1,073,775       233,408
                                                ------------  ------------
    Net cash provided by/(used in) operating
     activities                                    1,231,588     3,772,041
 Cash flows from investing activities:
    Purchases of property and equipment           (2,093,618)   (4,435,755)
    Sales of property and equipment                   65,096        15,838
    Payments of acquisition payable                 (742,989)     (879,007)
    Increase in intangible assets                 (6,662,774)   (4,829,369)
                                                ------------  ------------
    Net cash used in investing activities         (9,434,284)  (10,128,293)
 Cash flows from financing activities:
    Proceeds from sale of common stock               712,770     1,500,000
    Proceeds from the exercise of stock options
     and warrants                                    563,929     3,282,827
    Purchase of subsidary stock in Pakistan         (281,347)            -
    Proceeds from sale of subsidiary stock           558,535     1,765,615
    Finance costs incurred for sale of common
     stock                                                 -       (10,000)
    Purchase of treasury stock                      (360,328)      (25,486)
    Restricted cash                               (5,000,000)            -
    Proceeds from convertible notes payable        6,000,000             -
    Dividend Paid to Preferred Shareholders          (33,508)            -
    Bank overdraft                                   159,551        85,335
    Proceeds from bank loans                       3,843,541     5,441,870
    Payments on bank loans                           947,870       (99,936)
    Payments on capital lease obligations &
     loans - net                                    (539,497)   (3,409,496)
                                                ------------  ------------
    Net cash provided by financing activities      6,571,516     8,530,729
 Effect of exchange rate changes in cash            (240,296)       90,597
                                                ------------  ------------
 Net increase in cash and cash equivalents        (1,871,477)    2,265,074
 Cash and cash equivalents, beginning of year      6,275,238     4,010,164
                                                ------------  ------------
 Cash and cash equivalents, end of year         $  4,403,762  $  6,275,238
                                                ============  ============







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


                  Three Months   Three Months   Fiscal Year   Fiscal Year
                      Ended          Ended         Ended          Ended
                  June 30, 2009  June 30, 2008 June 30, 2009  June 30, 2008
                  -------------  ------------- -------------  -------------

 Net Income
  (loss) before
  preferred
  dividend, per
  GAAP            $    (872,740) $   1,362,064 $  (8,047,048) $   4,992,224
   Income Taxes          11,501         75,710        91,132        121,982
   Depreciation
    and
    amortization      1,096,074      1,068,487     4,188,208      3,337,956
   Interest
    expense             327,547         82,043     1,294,293        626,708

                  -------------  ------------- -------------  -------------
 EBITDA (loss)    $     562,382  $   2,588,304 $  (2,473,415) $   9,078,870
                  =============  ============= =============  =============

 Weighted Average
  number of
  shares
  outstanding
 Basic               28,706,163     25,425,042    26,937,500     24,118,538
 Diluted             28,706,163     27,303,554    26,937,500     25,997,049
                  -------------  ------------- -------------  -------------

 Basic EBITDA EPS $        0.02  $        0.10 $       (0.09) $        0.38
                  =============  ============= =============  =============
 Diluted EBITDA
  EPS             $        0.02  $        0.09 $       (0.09) $        0.35
                  =============  ============= =============  =============

Contact - Investor Relations:
Christopher Chu
Grayling
Phone: +1 646-284-9426
Email: [email protected]