NetSol Technologies Announces Third Quarter Fiscal Year 2010 Financial Results, Highlighted by a 78% Increase in Sales, Improved Margins and a Return to Profitability

CALABASAS, Calif., May 12, 2010 (GLOBE NEWSWIRE) -- 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 its consolidated financial results for the third quarter ended March 31, 2010 highlighted by an impressive increase in sales and a return to profitability.

Third Quarter Fiscal Year 2010 Consolidated Financial Highlights

  --  Revenues for the fiscal year 2010 third quarter totaled $8.9 million, up
      from $5 million for the same period year-over-year, representing an
      increase of $3.9 million, or 77.8%.

  --  Net income per share totaled $0.02 versus a loss ($0.19) for the same
      period a year ago.

  --  Net revenues from license fees totaled $3.64 million, an increase of
      1,022% versus the same period a year ago.

  --  100% sequential growth in the core NetSol Financial Suite(TM) license
      sales.

  --  Gross margin increased to 61.3% compared to 10.7% in the same period a
      year ago.

  --  Operating income increased to $2.58 million as compared to an operating
      loss of $4.26 million in the same period a year ago.

  --  EBITDA totaled $1.9 million or $0.05 per diluted share, versus an EBITDA
      loss of $3.5 million, or a loss of ($0.13) per diluted share, in the
      year-ago period.

  --  The Company reiterates previous guidance for fiscal year 2010 projecting
      revenues in the range of $33.0 million and $35.0 million, representing
      full-year revenue growth of between 25% and 32% over fiscal year 2009.
      The Company projects a return to GAAP net income for fiscal year 2010,
      versus a GAAP net loss of $0.30 per diluted share for fiscal year 2009.
      License revenues for fiscal year 2010 are projected to increase more
      than 100% over fiscal year 2009.

Nine-Months Ended March 31, 2010

  --  Revenues for the nine months ended March 31, 2010 totaled $26.1 million
      up from $19.6 million for the same period year-over-year representing an
      increase of $6.5 million or 33%.

  --  Net revenues from license fees totaled $9.52 million, up from $3.50
      million for the same period year-over-year, representing an increase of
      $6.01 million, or 171.6%.

  --  Gross margin increased to 59.3% compared to 34.1% in the same period a
      year ago.

  --  Operating income increased to $5.42 million as compared to an operating
      loss of $5.95 million in the same period a year ago.

  --  EBITDA totaled $4.07 million, or $0.12 per diluted share, versus an
      EBITDA loss of $3.04 million, or a loss of ($0.11) per diluted share, in
      the same period a year-ago.

Najeeb Ghauri, NetSol Technologies chairman and chief executive officer, commented: "We are very pleased with our performance in the third fiscal quarter, highlighted by a 78% increase in our sales versus the same period a year ago and a return to quarterly profitability for the first time in six quarters. It is our aim to finish the year completely profitable on the fiscal year analysis. Our financial results continue to deliver material improvements in every major metric of financial health, and we are optimistic about future outlook. Our efforts to invest in our core NetSol Financial Suite (NFS)(TM) throughout the global economic downturn has well positioned the company to leverage the upturn in customer activity that we continue to see, particularly in China and APAC region in general. We enter the end of our fiscal year 2010 with the most positive momentum in the company's recent history and we see increased interest among our major customers as well as new potential partners in the sector. Additionally, we see excellent opportunities for collaboration and strategic initiatives as we head to the conclusion of the fiscal year 2010."

BUSINESS HIGHLIGHTS

  --  NetSol Technologies North America announced the formal launch of
      smartOCI(TM), a SAP-Compatible Multiple-Catalog Search Engine. The
      launch will be on May 17, 2010, at the SAP SAPPHIRE Conference in
      Orlando, Florida, targeting approximately 1,000 SAP SRM platform
      customers. smartOCI(TM) will be sold on subscription basis with the
      software delivered as a Software as a Service (SaaS) model.

  --  NetSol Technologies and Atheeb Group formally launched Atheeb NetSol
      Limited, a new entity joint venture in the Kingdom of Saudi Arabia. The
      Atheeb NetSol limited joint venture is focused on market development
      opportunities around penetrating the software engineering arena in key
      business sectors such as telecommunications, defense, public sectors and
      finance, among others.

  --  NetSol Technologies signed a new agreement with a Chinese finance
      company that has a major European bank and a multi-billion dollar
      Chinese financial services group as partners. The client selected
      NetSol's NFS BI Module, a unique end-to-end Business Intelligence
      offering.

  --  A FORTUNE 50 client upgraded the NetSol Technologies LeasePak License.
      The highly scalable LeasePak solution offers North American clients the
      ability to scale from a core platform via modular components.

  --  NetSol Technologies Thailand won a major contract for the NetSol
      Financial Suite(TM).

  --  NetSol Technologies, Ltd. Pakistan has parlayed its reputation as a
      quality IT company into participation in three new pre-qualified bids in
      the public sector.

  --  NetSol Technologies North America downsized its office space from
      Emeryville to Alameda in California, saving an estimated $5.0 million
      over the next five years.

Conference Call and Webcast Information

NetSol will host a conference call today, May 12, 2010, 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.

To participate in the call please dial (877) 941-1429, or (480) 629-9666 for international calls, approximately 10 minutes prior to the scheduled start time. Interested parties can also listen via a live Internet webcast, which can be found at the Company's website at http://www.netsoltech.com.

A replay of the call will be available for two weeks from 2:00 p.m. May 12, 2010, EDT until 11:59 p.m. EDT on May 26, 2010. The number for the replay is (800) 406-7325, or (303) 590-3030 for international calls; the pass code for the replay is 4294953. In addition, a recording of the call will be available via the Company's website at http://www.netsoltech.com for one year.

About NetSol Technologies, Inc.

NetSol Technologies, Inc. (Nasdaq:NTWK) (Nasdaq Dubai:NTWK) is a worldwide provider of global IT and enterprise application solutions. Since its inception in 1995, NetSol has used its BestShoring(TM) 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, SAP consulting and services, custom development, systems integration, and technical services for the global Financial, Leasing, 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 Calabasas, California, NetSol Technologies has operations and offices in Alameda, Adelaide, Bangkok, Beijing, Karachi, Lahore, London, and Riyadh.

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

The NetSol Technologies, Inc. logo is available at https://www.globenewswire.com/newsroom/prs/?pkgid=7396

Use of EBITDA

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.

NetSol Technologies, Inc. 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 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.

                  NetSol Technologies, Inc. and
             Subsidiaries Consolidated Balance Sheets

                                    As of March    As of June
                                      31, 2010       30, 2009


               ASSETS               Un-audited
                                   -------------  -------------
  Current assets:
   Cash and cash equivalents         $ 4,275,443    $ 4,403,762
   Restricted Cash                     5,000,000      5,000,000
   Accounts receivable, net of
    allowance for doubtful
    accounts                          13,682,521     11,394,844
   Revenues in excess of billings      8,497,742      5,686,277

   Other current assets                2,496,949      2,307,246
                                   -------------  -------------
     Total current assets             33,952,656     28,792,129
  Investment in associates               244,016             --
  Property and equipment, net of
   accumulated depreciation            8,457,622      9,186,163
  Other assets, long-term                     --        204,823
  Intangibles:
   Product licenses, renewals,
    enhancements, copyrights,
   trademarks, and tradenames,
    net                               16,492,134     13,802,607
   Customer lists, net                   792,040      1,344,019

   Goodwill                            9,439,285      9,439,285
                                   -------------  -------------

     Total intangibles                26,723,459     24,585,911
                                   -------------  -------------

     Total assets                   $ 69,377,753   $ 62,769,026
                                   =============  =============

   LIABILITIES AND STOCKHOLDERS'
               EQUITY
  Current liabilities:
   Accounts payable and accrued
    expenses                         $ 4,642,835    $ 5,106,266
   Due to officers                        13,911             --
   Current portion of loans and
    obligations under capitalized
    leases                             7,134,527      6,207,830
   Other payables - acquisitions         103,226        103,226
   Unearned revenues                   3,449,817      3,473,228
   Dividend to preferred
    stockholders payable                      --         44,409
   Convertible notes payable ,
    current portion                    2,983,366             --

   Loans payable, bank                 2,363,507      2,458,757
                                   -------------  -------------
     Total current liabilities        20,691,189     17,393,716
  Obligations under capitalized
   leases, less current
   maturities                            368,709      1,090,901
  Convertible notes payable less
   current maturities                  4,084,024      5,809,508
  Long term loans; less current
   maturities                            886,316      1,113,832
  Lease abandonment liability;
   long term                             867,583             --
                                   -------------  -------------
     Total liabilities                26,897,820     25,407,957
  Commitments and contingencies               --             --

  Stockholders' equity:
   Preferred stock, 5,000,000
    shares authorized;
    Nil; 1,920 issued and
     outstanding                              --      1,920,000
   Common stock, $.001 par value;
    95,000,000 shares authorized;
    35,961,883; 30,046,987 issued
    and outstanding                       35,962         30,047
   Additional paid-in-capital         85,203,134     78,198,523
   Treasury stock                      (396,008)      (396,008)
   Accumulated deficit              (41,351,411)   (41,253,152)
   Stock subscription receivable     (2,107,960)      (842,619)
   Common stock to be issued             251,450        220,365
   Other comprehensive loss          (8,193,790)    (6,899,397)

   Non-controlling interest            9,038,556      6,383,310
                                   -------------  -------------

     Total stockholders' equity       42,479,932     37,361,069
                                   -------------  -------------
     Total liabilities and
      stockholders' equity          $ 69,377,753   $ 62,769,026
                                   =============  =============

                           NetSol Technologies, Inc. and Subsidiaries
                             Consolidated Statements of Operations

                                     For the Three Months            For the Nine Months
                                        Ended March 31,                Ended March 31,

                                     2010           2009            2010            2009
                                 ------------  --------------  --------------  ---------------
  Net Revenues:
   License fees                   $ 3,644,809       $ 324,845     $ 9,515,338      $ 3,502,632
   Maintenance fees                 1,739,799       1,664,492       5,327,852        4,771,519

   Services                         3,548,348       3,033,684      11,231,648       11,320,846
                                 ------------  --------------  --------------  ---------------
     Total revenues                 8,932,956       5,023,021      26,074,837       19,594,997
  Cost of revenues:
   Salaries and consultants         2,154,369       2,629,081       6,173,967        7,652,671
   Travel                             222,136         280,390         611,343          993,290
   Repairs and maintenance             43,364          81,536         180,086          290,436
   Insurance                           40,235          43,478         112,943          135,390
   Depreciation and
    amortization                      578,904         532,099       1,650,676        1,615,853

   Other                              416,931         917,051       1,884,426        2,208,265
                                 ------------  --------------  --------------  ---------------

     Total cost of revenues         3,455,939       4,483,635      10,613,442       12,895,905
                                 ------------  --------------  --------------  ---------------
  Gross profit                      5,477,017         539,386      15,461,395        6,699,092
  Operating expenses:
   Selling and marketing              651,485         629,145       1,671,866        2,479,509
   Depreciation and
    amortization                      411,563         501,239       1,341,947        1,476,281
   Bad debt expense                   (3,236)       1,772,188         209,604        2,420,658
   Salaries and wages                 746,095         773,757       2,214,760        2,697,531
   Professional services,
    including non-cash
    compensation                      242,177         257,926         549,078          877,752
   Lease abandonment charges        (208,764)              --         867,583               --

   General and administrative       1,056,718         862,623       3,188,901        2,693,451
                                 ------------  --------------  --------------  ---------------

     Total operating expenses       2,896,038       4,796,878      10,043,739       12,645,182
                                 ------------  --------------  --------------  ---------------
  Income (loss) from operations     2,580,979     (4,257,492)       5,417,656      (5,946,090)
  Other income and (expenses)
   Gain (loss) on sale of
    assets                          (125,419)       (127,558)       (214,520)        (308,256)
   Interest expense                 (312,671)       (466,276)     (1,153,557)        (966,746)
   Interest income                     82,637         177,771         234,200          246,607
   Gain on foreign currency
    exchange rates                  (190,082)           8,902         190,495        1,821,754
   Share of net income / (loss)
    in associate                     (23,984)              --        (23,984)               --
   Beneficial conversion
    feature                         (458,758)        (17,225)     (1,351,972)         (17,225)

   Other income                       144,609       (984,622)          62,634        (952,482)
                                 ------------  --------------  --------------  ---------------
     Total other income
      (expenses)                    (883,667)     (1,409,008)     (2,256,704)        (176,348)
                                 ------------  --------------  --------------  ---------------
  Net income (loss) before
   non-controlling interest in
   subsidiary                       1,697,312     (5,666,500)       3,160,952      (6,122,438)
  Non-controlling interest        (1,097,201)         689,584     (3,235,093)        (972,238)

  Income taxes                       (11,064)        (21,594)        (48,607)         (79,631)
                                 ------------  --------------  --------------  ---------------
  Net income (loss)                   589,047     (4,998,510)       (122,748)      (7,174,308)
  Dividend required for
   preferred stockholders                  --        (33,140)              --        (100,892)
                                 ------------  --------------  --------------  ---------------
  Net income (loss) applicable
   to common shareholders             589,047     (5,031,650)       (122,748)      (7,275,200)
  Other comprehensive income
   (loss):

   Translation adjustment           (439,688)       (179,358)     (1,294,393)      (4,036,926)
                                 ------------  --------------  --------------  ---------------

  Comprehensive income (loss)       $ 149,359   $ (5,211,008)   $ (1,417,141)   $ (11,312,126)
                                 ============  ==============  ==============  ===============

  Net income (loss) per share:

   Basic                               $ 0.02        $ (0.19)       $ (0.004)         $ (0.27)
                                 ============  ==============  ==============  ===============

   Diluted                             $ 0.02        $ (0.19)       $ (0.004)         $ (0.27)
                                 ============  ==============  ==============  ===============
  Weighted average number of shares
   outstanding

   Basic                           35,636,259      26,601,587      33,893,968       26,350,098
                                 ============  ==============  ==============  ===============

   Diluted                         36,988,542      26,601,587      33,893,968       26,350,098
                                 ============  ==============  ==============  ===============

                  NetSol Technologies, Inc. and Subsidiaries
                       Consolidated Cash Flow Statements

                                                     For the Nine Months
                                                       Ended March 31,

                                                    2010           2009
                                                ------------  --------------
  Cash flows from operating activities:
   Net income (loss)                             $ (122,748)   $ (7,174,308)
   Adjustments to reconcile net income (loss)
    to net cash provided by operating
    activities:
   Depreciation and amortization                   2,992,624       3,092,134
   Provision for bad debts                           209,604       2,420,658
   Gain on sale of subsidiary shares in
    Pakistan                                              --         308,256
   Loss on foreign currency exchange rates            25,900              --
   Share of net (income)/loss from associates         23,984              --
   Loss on sale of assets                            214,520              --
   Non controlling interest in subsidiary          3,235,093         972,238
   Stock issued for notes payable and related
    interest                                          30,207              --
   Stock issued for services                         572,184         227,516
   Fair market value of warrants and stock
    options granted                                  791,530         147,639
   Beneficial conversion feature                   1,351,972          17,225
   Changes in operating assets and
    liabilities:
     Increase/ decrease in accounts receivable   (2,658,139)     (3,934,511)
     Increase/ decrease in other current
      assets                                     (2,703,402)       3,175,947
     Increase/ decrease in accounts payable
      and accrued expenses                          (52,914)         588,689
                                                ------------  --------------
   Net cash provided by operating activities       3,910,415       (158,517)
  Cash flows from investing activities:
   Purchases of property and equipment           (1,458,050)     (1,501,508)
   Sales of property and equipment                   232,783          13,376
   Payments of acquisition payable                        --       (742,989)
   Purchase of treasury stock                             --       (360,328)
   Investment in associate                         (268,000)              --
   Short-term investments held for sale                   --              --

   Increase in intangible assets                 (4,562,044)     (5,281,642)
                                                ------------  --------------
   Net cash used in investing activities         (6,055,311)     (7,873,091)
  Cash flows from financing activities:
   Proceeds from sale of common stock                754,509         146,652
   Proceeds from the exercise of stock options
    and warrants                                      33,750         526,569
   Purchase of subsidary stock in Pakistan                --       (250,000)
   Finance costs incurred for sale of common
    stock
   Proceeds from convertible notes payable         3,500,000       6,000,000
   Redemption of preferred stock                 (1,920,000)              --
   Restricted cash                                        --     (5,000,000)
   Dividend Paid                                    (43,988)        (33,876)
   Bank overdraft                                  (176,377)         161,134
   Proceeds from bank loans                        4,320,534       3,843,541
   Payments on bank loans                          (484,507)       (235,486)
   Payments on capital lease obligations &
    loans - net                                  (3,664,176)       (467,397)
                                                ------------  --------------
   Net cash provided by financing activities       2,319,746       4,691,137

  Effect of exchange rate changes in cash          (303,170)       (453,178)
                                                ------------  --------------
  Net increase in cash and cash equivalents        (128,319)     (3,793,649)

  Cash and cash equivalents, beginning of year     4,403,762       6,275,238
                                                ------------  --------------

  Cash and cash equivalents, end of year         $ 4,275,443     $ 2,481,591
                                                ============  ==============

CONTACT:  RedChip Companies, Inc.
          Investor Relations Contact:
          Chris Schilling
          800-733-2447, Ext. 131
          407-644-4256, Ext. 131
          info@redchip.com
          http://www.redchip.com