NetSol Technologies Announces Record Revenue, Return to Annual Profitability for Fiscal 2010

- Fiscal 2010 Revenues were $36.8 million, representing an increase of 39.1% year-over-year

- Fiscal 2010 Net GAAP Income was $1.4 million, up from an $8.1 million GAAP net loss in 2009

- Fiscal 2010 GAAP Earnings per Share were $0.04, up from $0.30 loss in 2009

- EBITDA income per share was $0.18, versus an EBITDA loss per share of $0.09 in 2009

- Gross margin was 62.3% for fiscal 2010, up from 35.0% in fiscal 2009

- Second consecutive quarter of profitability

CALABASAS, Calif., Sept. 8, 2010 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. ("NetSol" or the "Company") (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 its fourth quarter and fiscal year ended June 30, 2010, highlighted by strong revenue growth and a return to annual profitability.

Najeeb Ghauri, NetSol Technologies Chairman and Chief Executive Officer, commented: "We are thrilled with our fourth quarter and fiscal year 2010 performance, highlighted by record revenues and our return to a full year of profitability. The viability of our business model has never been in question, and we have emerged from the market turmoil of the last two years a more efficient and agile company."

Mr. Ghauri continued, "We are especially excited about the recognition we have received from being recently recertified as a CMMI Level 5 firm and from passing the first stage of our ISO/IEC 20000 audit, both of which will serve to improve our long-term credibility in the global IT market and allow us to build greater trust with both potential and existing clients. Demand for enterprise software is expected to increase worldwide as the global economy starts to recover from its downturn and more companies seek to update their technology infrastructure. We will continue to develop our product pipeline, strengthen our operating efficiency, and provide the highest quality of software and support to our clients worldwide. As the key emerging markets for our products and services, such as China, continue to grow and global IT demand picks up, we look forward to another year of improving profitability in fiscal 2011."

Fiscal Year 2010 Financial Results

-- Revenues for the fiscal year ended June 30, 2010 totaled $36.8 million, up from $26.4 million for fiscal year 2009, representing an increase of 39.1%.

-- License fees totaled $14.2 million or 39% of total revenues.

-- Maintenance fees totaled $7.0 million or 19% of total revenues.

-- Service fees totaled $15.6 million or 42% of total revenues.

-- Full year GAAP (Generally Accepted Accounting Principles) net income applicable to common shareholders was $1.4 million, or $0.04 per fully diluted share, compared to a GAAP net loss applicable to common shareholders of $8.1 million, or $0.30 per fully diluted share, in the previous year.

-- Operating income was $9.7 million, up from an operating loss of $6.5 million for fiscal year 2009.

-- Gross margins improved to 62.3%, up from 35.0% in fiscal year 2009.

-- Full year EBITDA was $6.8 million, or $0.18 per diluted share, compared with an EBITDA loss of $2.5 million, or $0.09 per diluted share, in the year-ago period.

Fourth Quarter 2010 Financial Results

-- NetSol reported consolidated revenues of $10.7 million for the fourth quarter of fiscal year 2010, representing a 56.2% increase over $6.9 million in revenues reported for the same period a year ago. Net revenues from license fees increased 262% to $4.6 million, compared to $1.3 million for the fourth quarter of fiscal year 2009.

-- GAAP net income applicable to common shareholders for the fourth quarter of fiscal year 2010 was approximately $1.5 million, or $0.04 per diluted share, compared to a GAAP net loss applicable to common shareholders of $0.9 million, or $0.03 per diluted share, in the same period of fiscal year 2009.

-- Operating income for the fourth quarter of fiscal year 2010 totaled approximately $4.4 million, up from an operating loss of $0.5 million for the same period a year ago.

-- Gross margins improved to 69.6%, compared to 37.2% in the year-ago period.

-- NetSol reported EBITDA of $2.8 million, or $0.07 per diluted share, for the fourth quarter of fiscal year 2010 compared to EBITDA of $0.6 million, or $0.02 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's 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

-- NetSol successfully implemented its complete NetSol Financial Suite ("NFS")(TM) of products for GAC-Sofinco, a joint venture of Chinese vehicle manufacturer Guangzhou Automobile Group Co., Ltd. (GAC) and French finance company Credit Agricole Consumer Finance. The fixed-cost project involved extensive integration with third-party vendors for accounting. The system was signed off and accepted by GAC-Sofinco on May 31, 2010.

-- NetSol's facility in Lahore, Pakistan cleared a Stage-1 audit for ISO/IEC 20000. ISO/IEC 20000 is the first worldwide standard specifically aimed at IT Service Management. It describes an integrated set of management processes for the effective delivery of services to the business and its customers. The Company is now preparing for a Stage 2/final audit to achieve this prestigious certification by December 2010.

-- The Company secured two major projects worth over $3 million to implement its NFS Contract Management System (CMS) with a major international automotive manufacturer's captive finance company in the Asia-Pacific Region. NetSol's NFS solution fully automated the customer's financing business, providing improved operational efficiencies, enhanced contract lifecycle management, increased financial visibility, and quick return on investment.

-- NetSol signed a contract of significant value with Sany Corp. of China, the world's largest concrete equipment manufacturer, to install NetSol's NFS solution to run its newly formed finance company. The complete NFS suite, including Credit Application Processing (CAP), Contract Management System (CMS) and Wholesale Finance System (WFS), was deployed by Sany Corp. across its vast dealer network as well as its business back office centers across China.

-- NetSol formally launched its smartOCI(TM) search engine at SAP's SAPPHIRE(R) NOW conference held on May 16-19, 2010 at the Orange County Convention Center in Orlando, Fla. NetSol's smartOCI(TM) search engine is a Software-as-a-Service (SaaS) product offering that provides corporate buyers and shoppers with a simple and intuitive user interface to search multiple supplier catalogs simultaneously within the SAP SRM application.

-- In June, the Company announced that smartOCI(TM) was certified by SAP for integration with SAP applications. The SAP Integration and Certification Center (SAP ICC) certified that smartOCI(TM) achieved the highest level of certification with the B2B-OCI catalog interface, allowing buying organizations to use smartOCI(TM) to search and exchange catalog content from suppliers worldwide and transfer these purchasing requests to the SAP and SRM back-end systems.

-- North American sales of additional licenses and software upgrades for NetSol's LeasePak solution increased in the fourth quarter of fiscal 2010 and continue to grow in the current quarter.

-- NetSol retained RedChip Companies, Inc., to lead its public and investor relations programs. RedChip has a long history of success in building strong relationships with investors, and NetSol remains confident that they will successfully augment the Company's investor relations and outreach efforts.

First Quarter Fiscal Year 2011 Business Highlights

Developments from the current quarter, ending September 30, 2010, include the following:

-- NetSol announced the successful implementation of its NFS solution by Minsheng Financial Leasing Co., Ltd. ("Minsheng Financial Leasing"), a leading financial leasing company in China. Minsheng Financial Leasing reports that the system's installment, launched in July 2009, has helped it to normalize and standardize its business processes, increase its participation in the financing sphere, and tremendously improve its operational efficiency.

-- NetSol signed a LeaseSoft license upgrade agreement with Singers Healthcare Finance Limited, one of the UK's leading providers of leasing solutions to the healthcare industry.

-- The Company was awarded a software and IT services contract valued at over $1 million with a major U.S. automotive manufacturer's captive finance arm in China.

-- NetSol announced a proposal to transfer ownership of its European and North American wholly owned subsidiaries to NetSol Technologies Ltd. ("NTPK"), the Company's majority-owned subsidiary in Pakistan. If approved, the internal sale of both subsidiaries would increase NetSol's ownership stake in NTPK from 58% to 76% and would consolidate the reporting of NetSol's three subsidiaries as one line item under NTPK. Because the increase in ownership would allow NetSol to recognize a greater portion of NTPK's revenues and earnings as its own, the Company would expect a net accretive effect on its earnings per share.

Fiscal Year 2011 Forward-Looking Guidance

The Company expects revenues in the range of $40 million to $44 million for the fiscal year ending June 30, 2011, representing full-year revenue growth of 8.8% to 19.6% over fiscal year 2010. The Company also projects EPS in the range of $0.15 to $0.20 for fiscal 2011.

Conference Call and Webcast Information

NetSol will host a conference call today, September 8, 2010, at 11:00 a.m. EDT (8:00 a.m. PT) to review the Company's quarterly and year-end financial and operational performance. Najeeb Ghauri, Chairman and Chief Executive Officer of NetSol Technologies, will host the call.

To participate in the call please dial (877) 941-2068, or (480) 629-9712 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. EDT on September 8, 2010, until 11:59 p.m. EDT on September 22, 2010. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the pass code for the replay is 4354355. 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 162 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 http://www.netsoltech.com.

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

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 STATEMENT OF OPERATIONS

                                   For the Quarter Ended          For the Year Ended

                                  June 30,      June 30,
                                    2010          2009      June 30, 2010   June 30, 2009
                                ------------  ------------  -------------  ---------------
  Net Revenues:
    License fees                 $ 4,641,770   $ 1,283,700   $ 14,157,107      $ 4,786,332
    Maintenance fees               1,720,084     1,727,900      7,047,936        6,499,419

    Services                       4,343,206     3,841,580     15,574,853       15,162,426
                                ------------  ------------  -------------  ---------------

       Total revenues             10,705,060     6,853,180
                                ------------  ------------     36,779,897       26,448,177
  Cost of revenues:
    Salaries and consultants       1,990,180     2,135,294      8,164,148        9,787,965
    Travel                           232,283       341,589        843,626        1,334,879
    Repairs and maintenance           76,911        80,051        256,997          370,487
    Insurance                         27,553        39,371        140,496          174,761
    Depreciation and
     amortization                    647,415       598,358      2,298,092        2,214,211

    Other                            279,263     1,107,766      2,163,689        3,316,031
                                ------------  ------------  -------------  ---------------

       Total cost of revenues      3,253,605     4,302,429     13,867,048       17,198,334
                                ------------  ------------  -------------  ---------------
  Gross profit                     7,451,455     2,550,751     22,912,849        9,249,843
  Operating expenses:
    Selling and marketing            550,307       636,374      2,222,841        3,115,883
    Depreciation and
     amortization                    267,907       497,716      1,609,854        1,973,997
    Bad debt expense                 233,200      (26,973)        442,804        2,393,685
    Salaries and wages               802,585       745,859      3,026,275        3,443,390
    Professional services,
     including non-cash
     compensation                    350,647       338,187        900,125        1,215,939
    Lease abandonment charges             --            --        867,583               --

    General and administrative       858,328       896,667      4,115,658        3,590,118
                                ------------  ------------  -------------  ---------------
       Total operating
        expenses                   3,062,974     3,087,830     13,185,141       15,733,012
                                ------------  ------------  -------------  ---------------
  Income (loss) from
   operations                      4,388,481     (537,079)
                                ------------  ------------      9,727,708      (6,483,169)
  Other income and (expenses)
    Gain (loss) on sale of
     assets                         (10,221)      (96,564)      (224,741)        (404,820)
    Interest expense               (314,981)     (327,547)    (1,478,474)      (1,294,293)
    Interest income                   27,096        44,423        261,296          291,030
    Gain on foreign currency
     exchange rates                (257,414)       549,733       (66,919)        2,371,487
    Gain on sale of subsidiary
     shares                               --       351,522             --          351,522
    Share of net income /
     (loss) in associate            (43,510)            --       (67,494)               --
    Beneficial conversion
     feature                       (515,815)      (23,052)    (1,867,787)         (40,277)

    Other income                    (94,426)        21,229         56,571        (931,253)
                                ------------  ------------  -------------  ---------------
       Total other income
        (expenses)               (1,209,271)       519,744    (3,387,548)          343,396
                                ------------  ------------  -------------  ---------------
  Net income (loss) before
   non-controlling interest in
   subsidiary                      3,179,209      (17,335)      6,340,160      (6,139,773)
  Non-controlling interest       (1,657,004)     (843,904)    (4,892,097)      (1,816,143)

  Income taxes                       (5,337)      (11,501)       (53,943)         (91,132)
                                ------------  ------------  -------------  ---------------

  Net income (loss)                1,516,869     (872,740)
                                ------------  ------------      1,394,120      (8,047,048)
  Other comprehensive income
   (loss):

    Translation adjustment         (202,296)     (114,548)    (1,496,689)      (4,151,474)
                                ------------  ------------  -------------  ---------------

  Comprehensive income (loss)    $ 1,314,573   $ (987,288)    $ (102,569)   $ (12,198,522)
                                ============  ============  =============  ===============

  Net income (loss) per share:

    Basic                             $ 0.04      $ (0.03)         $ 0.04         $ (0.30)
                                ============  ============  =============  ===============

    Diluted                          $  0.04      $ (0.03)         $ 0.04         $ (0.30)
                                ============  ============  =============  ===============
  Weighted average number of
   shares outstanding

    Basic                         36,587,938    28,706,163     34,516,428       26,937,500
                                ============  ============  =============  ===============

    Diluted                       39,868,255    28,706,163     37,796,745       26,937,500
                                ============  ============  =============  ===============



           NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS

                                  June 30, 2010  June 30, 2009

              ASSETS
                                  -------------  -------------
  Current assets:
    Cash and cash equivalents       $ 4,075,546    $ 4,403,762
    Restricted Cash                   5,700,000      5,000,000
    Accounts receivable, net of
     allowance for doubtful
     accounts                        12,280,331     11,394,844
    Revenues in excess of
     billings                         9,477,278      5,686,277

    Other current assets              1,821,661      2,307,246
                                  -------------  -------------

       Total current assets          33,354,816
                                  -------------     28,792,129
  Investment in associates              200,506             --
  Property and equipment, net of
   accumulated depreciation           9,472,917      9,186,163
  Other assets, long-term                    --        204,823
  Intangibles:
    Product licenses, renewals,
     enhancements, copyrights,
     trademarks,
    and tradenames, net              19,002,081     13,802,607
    Customer lists, net                 666,575      1,344,019

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

       Total intangibles             29,107,941     24,585,911
                                  -------------  -------------

       Total assets                $ 72,136,180   $ 62,769,026
                                  =============  =============

   LIABILITIES AND STOCKHOLDERS'
              EQUITY
  Current liabilities:
    Accounts payable and accrued
     expenses                       $ 4,890,921    $ 5,106,266
    Due to officers                      10,911             --
    Current portion of loans and
     obligations under
     capitalized leases               7,285,773      6,207,830
    Other payables --
     acquisitions                       103,226        103,226
    Unearned revenues                 2,545,314      3,473,228
    Deferred liability                   47,066             --
    Dividend to preferred
     stockholders payable                    --         44,409
    Convertible notes payable ,
     current portion                  3,017,096

    Loans payable, bank               2,327,476      2,458,757
                                  -------------  -------------

       Total current liabilities     20,227,783     17,393,716
                                  -------------  -------------
  Obligations under capitalized
   leases, less current
   maturities                           204,620      1,090,901
  Convertible notes payable less
   current maturities                 4,066,109      5,809,508
  Long term loans; less current
   maturities                           727,336      1,113,832
  Lease abandonment liability;
   long term                            867,583             --
                                  -------------  -------------

       Total liabilities             26,093,431     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;
    37,103,396; 30,046,987
     issued and outstanding              37,104         30,047
    Additional paid-in-capital       86,002,648     78,198,523
    Treasury stock                    (396,008)      (396,008)
    Accumulated deficit            (39,859,030)   (41,253,152)
    Stock subscription
     receivable                     (2,007,960)      (842,619)
    Common stock to be issued           239,525        220,365

    Other comprehensive loss        (8,396,086)    (6,899,397)
                                  -------------  -------------

                                     35,620,193     30,977,759
                                  -------------  -------------

  Non-controlling interest           10,422,557      6,383,310
                                  -------------  -------------
       Total stockholders'
        equity                       46,042,749     37,361,069
                                  -------------  -------------
       Total liabilities and
        stockholders' equity       $ 72,136,180   $ 62,769,026
                                  =============  =============


                  NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                           STATEMENTS OF CASH FLOWS

                                                        For the year
                                                      Ended June 30,


                                                    2010           2009
                                               -------------  --------------
  Cash flows from operating activities:

    Net income (loss)                            $ 1,394,121   $ (8,047,048)
    Adjustments to reconcile net income
     (loss) to net cash provided by operating
     activities:
    Depreciation and amortization                  3,907,945       4,188,208
    Provision for bad debts                          442,804       2,393,685
    Gain on sale of subsidiary shares in
     Pakistan                                             --       (351,522)
    Loss on transaction of debt                        4,144              --
    Share of net (income)/loss from
     associates                                       67,494              --
    Loss on sale of assets                           224,741         404,820
    Non controlling interest in subsidiary         4,892,097       1,816,143
    Stock issued for notes payable and
     related interest                                 39,960              --
    Stock issued for services                        801,684         346,817
    Fair market value of warrants and stock
     options granted                                 803,508         261,472
    Beneficial conversion feature                  1,867,787          40,277
    Changes in operating assets and
     liabilities:
       Increase/ decrease in accounts
        receivable                               (1,316,995)     (4,679,496)
       Increase/ decrease in other current
        assets                                   (3,701,022)       3,740,567
       Increase/ decrease in long-term assets             --          43,889
       Increase/ decrease in accounts payable
        and accrued expenses                       (758,557)       1,073,775
                                               -------------  --------------
    Net cash provided by operating activities      8,669,711       1,231,588
  Cash flows from investing activities:
    Purchases of property and equipment          (2,986,495)     (2,093,618)
    Sales of property and equipment                  641,484          65,096
    Payments of acquisition payable                       --       (742,989)
    Investment in associate under equity
     method                                        (268,000)              --
    Investment in subsidiary                              --              --

    Increase in intangible assets                (7,603,779)     (6,662,774)
                                               -------------  --------------
    Net cash used in investing activities       (10,216,790)     (9,434,284)
  Cash flows from financing activities:
    Proceeds from sale of common stock               854,509         712,770
    Proceeds from the exercise of stock
     options and warrants                             71,250         563,929
    Purchase of subsidiary stock in Pakistan              --       (281,347)
    Proceeds from sale of subsidiary stock                --         558,535
    Purchase of treasury stock                            --       (360,328)
    Proceeds from convertible notes payable        3,500,000       6,000,000
    Redemption of preferred stock                (1,920,000)              --
    Restricted cash                                (700,000)     (5,000,000)
    Dividend Paid                                   (43,828)        (33,508)
    Bank overdraft                                   (7,008)         159,551
    Proceeds from bank loans                       4,540,971       3,843,541
    Payments on bank loans                         (258,358)         947,870
    Payments on capital lease obligations &
     loans - net                                 (4,328,700)       (539,497)
                                               -------------  --------------

    Net cash provided by financing activities      1,708,837       6,571,516
                                               -------------  --------------

  Effect of exchange rate changes in cash          (489,973)       (240,296)
                                               -------------  --------------

  Net increase in cash and cash equivalents        (328,215)     (1,871,477)
                                               -------------  --------------
  Cash and cash equivalents, beginning of
   year                                            4,403,762       6,275,238
                                               -------------  --------------

  Cash and cash equivalents, end of year         $ 4,075,546     $ 4,403,762
                                               =============  ==============



                     NETSOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                               RECONCILIATION TO GAAP


                                       Three Months
                         Three Months                    Year
                            Ended         Ended         Ended           Year
                           June 30,      June 30,      June 30,         Ended
                             2010          2009          2010       June 30, 2009
                         ------------  ------------  ------------  ---------------

  Net Income (loss)
   before preferred
  dividend, per GAAP      $ 1,516,869   $ (872,740)   $ 1,394,121   $  (8,047,048)
    Income Taxes                5,337        11,501        53,943           91,132
    Depreciation and
     amortization             915,322     1,096,074     3,907,946        4,188,208
    Interest expense          314,981       327,547     1,478,474        1,294,293


                         ------------  ------------  ------------  ---------------

  EBITDA                  $ 2,752,509    $  562,382   $ 6,834,483    $ (2,473,415)
                         ============  ============  ============  ===============

  Weighted Average
   number of shares
  outstanding
  Basic                    36,390,648    28,706,163    34,516,428       26,937,500

  Diluted                  39,670,965    28,799,749    37,796,745       27,031,087
                         ------------  ------------  ------------  ---------------


  Basic EBITDA                 $ 0.08        $ 0.02        $ 0.20        $  (0.09)
                         ============  ============  ============  ===============

  Diluted EBITDA               $ 0.07        $ 0.02        $ 0.18         $ (0.09)
                         ============  ============  ============  ===============
CONTACT:  RedChip Companies, Inc.
          Investor Relations Contact:
          Jon Cunningham
          800-733-2447, Ext. 107
          407-644-4256, Ext. 107
          [email protected]
          http://www.redchip.com