NTWK NetSol Technologies Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): November 7, 2023

 

Commission file number: 0-22773

 

NETSOL TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its charter)

 

nevada		95-4627685
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S.Employer NO.)

 

16000 Ventura Blvd, Suite 770

Encino, CA 91436

(Address of principal executive offices) (Zip Code)

 

(818) 222-9195 / (818) 222-9197

(Issuer’s telephone/facsimile numbers, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $.01 par value per share		NTWK		NASDAQ

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On November 7, 2023, NetSol Technologies, Inc. issued a press release announcing results of operations and financial conditions for the quarter ended September 30, 2023. The press release is furnished as Exhibit 99.1 to this Form 8-K.

 

The information in this report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document field under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Exhibits

 

99.1		News Release dated November 7, 2023
104		Cover Page Interactive Data File (embedded within the Inline XBRL document

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		NETSOL TECHNOLOGIES, INC.
Date:	November 7, 2023	/s/ Najeeb Ghauri
		NAJEEB GHAURI
		Chief Executive Officer

 

Date:	November 7, 2023	/s/ Roger Almond
		ROGER ALMOND
		Chief Financial Officer

 

 

Exhibit 99.1

 

NETSOL Technologies Reports Fiscal First Quarter 2024 Results

 

	●	Net Revenue for the Quarter Grew 12% to $14.2 Million
	●	SaaS and Annual recurring Revenues Continue to Grow Year Over Year
	●	Gross Margins Increased to 43% and Company Reports Net Profit

 

Encino, Calif., November 7, 2023 – NETSOL Technologies, Inc. (Nasdaq: NTWK), a global business services and enterprise application solutions provider, reported results for the fiscal first quarter ended September 30, 2023.

 

Fiscal First Quarter 2024 Financial Results

 

Total net revenues for the first quarter of fiscal 2024 increased 12% to $14.2 million, compared with $12.7 million in the prior year period. On a constant currency basis, total net revenues were $14.3 million.

 

	●	License fees were $1.3 million compared with $250,000 in the prior year period. License fees on a constant currency basis were $1.3 million.
	●	Total subscription (SaaS and Cloud) and support revenues were $6.5 million compared with $6.0 million in the prior year period. Total subscription and support revenues on a constant currency basis were $6.5 million.
	●	Total services revenues were $6.4 million, consistent with $6.4 million in the prior year period. Total services revenues on a constant currency basis were $6.5 million.

 

Gross profit for the first quarter of fiscal 2024 was $6.2 million (or 43% of net revenues), compared to $4.3 million (or 33% of net revenues) in the first quarter of fiscal 2023. On a constant currency basis, gross profit for the first quarter of fiscal 2024 was $4.7 million (or 33% of net revenues as measured on a constant currency basis).

 

Operating expenses for the first quarter of fiscal 2024 were $5.8 million (or 41% of sales) compared to $6.1 million (or 48% of sales) for the first quarter of fiscal 2023. On a constant currency basis, operating expenses for the first quarter of fiscal 2023 increased to $6.4 million (or 45% of sales on a constant currency basis).

 

GAAP net income attributable to NETSOL for the first quarter of fiscal 2024 totaled $31,000 or $0.003 per diluted share, compared with GAAP net loss of $(621,000) or a loss of $(0.06) per diluted share in the first quarter of fiscal 2023. Included in GAAP net income attributable to NETSOL was a loss of $(134,000) on foreign exchange currency in the first quarter of fiscal 2024, compared to a gain of approximately $1.3 million in the prior year period. On a constant currency basis, NETSOL realized a loss of $(174,000) on foreign currency transactions.

 

Non-GAAP adjusted EBITDA for the first quarter of fiscal 2024 was $466,000 or $0.04 per diluted share, compared with non-GAAP adjusted EBITDA loss of $28,000 or $(0.002) per diluted share in the first quarter of fiscal 2023 (see note regarding “Use of Non-GAAP Financial Measures,” below for further discussion of this non-GAAP measure).

 

 

Management Commentary

 

NETSOL Co-Founder, Chairman and Chief Executive Officer Najeeb Ghauri stated, “Our first quarter of 2024 was highlighted by increases in total net revenue, improved gross margins, and profitability. This quarter highlights the strength of our business model particularly when we recognize licensing fees, subscription and support revenues, and services revenues. One goal is to drive more consistent license revenue alongside our more predictable subscription and support and services revenues.

 

“We also continue to drive our cost containment initiative so we can reallocate capital to growing our SaaS business and expansion into the United States market. On that front, our focus continues to be staffing our new office in Austin, Texas with the best talent available to address this largely untapped market. Moreover, our white label SaaS-based solution Otoz is now live in 60 MiniAnywhere dealerships across 37 U.S. states, demonstrating the growing demand for SaaS-based solutions in this market. Finally, we continue to evaluate strategic acquisition opportunities throughout North America.

 

“We’re very pleased with our results this quarter, and we believe that our performance reflects the long-term earnings potential for NETSOL as we continue to scale our revenue. We are working diligently to build our pipeline of licensing deals, and along with our expanding SaaS offerings, we believe this will drive improved results and more consistent profitability and cash generation.”

 

Conference Call

 

NETSOL Technologies management will hold a conference call today (November 7, 2023) at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these financial results. A question-and-answer session will follow management’s presentation.

 

U.S. dial-in: 877-407-0789

International dial-in: 201-689-8562

 

Please call the conference telephone number 5-10 minutes prior to the start time or use this link for telephone access to the call via your web browser. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Investor Relations at 818-222-9195.

 

The conference call will also be broadcast live and available for replay here, along with additional replay access being provided through the company information section of NETSOL’s website.

 

A telephone replay of the conference call will be available approximately three hours after the call concludes through Tuesday, November 21, 2023.

 

Toll-free replay number: 844-512-2921

International replay number: 412-317-6671

Replay ID: 13742018

 

About NETSOL Technologies

 

NETSOL Technologies, Inc. (Nasdaq: NTWK) is a worldwide provider of IT and enterprise software solutions primarily serving the global leasing and finance industry. The Company’s suite of applications is backed by 40 years of domain expertise and supported by a committed team in eight strategically located support and delivery centers throughout the world. NFS, LeasePak, LeaseSoft or NFS Ascent^® – help companies transform their Finance and Leasing operations, providing a fully automated asset-based finance solution covering the complete finance and leasing lifecycle.

 

 

Forward-Looking Statements

 

This press release may contain forward-looking statements relating to the development of the Company’s products and services and future operating results, including statements regarding the Company that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words “expects,” “anticipates,” variations of such words, and similar expressions, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Factors that could affect the Company’s actual results include the progress and costs of the development of products and services and the timing of the market acceptance, as well as the delay in recovery or a prolonged economic downturn that effects our Company, our customers and the world economy. 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.

 

Use of Non-GAAP Financial Measures

 

The reconciliation of Adjusted EBITDA to net income, the most comparable financial measure based upon GAAP, as well as a further explanation of adjusted EBITDA, is included in the financial tables in Schedule 4 of this press release.

 

Investor Relations Contact:

 

IMS Investor Relations

netsol@imsinvestorrelations.com

+1 203-972-9200

 

 

NETSOL Technologies, Inc. and Subsidiaries

 

Schedule 1: Consolidated Balance Sheets

 

		As of				As of
		September 30, 2023				June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	16,551,677			$	15,533,254
Accounts receivable, net of allowance of $416,435 and $420,354			6,870,956				11,714,422
Revenues in excess of billings, net of allowance of $116,425 and $1,380,141			13,008,285				12,377,677
Other current assets			2,244,490				1,978,514
Total current assets			38,675,408				41,603,867
Revenues in excess of billings, net - long term			724,875				-
Property and equipment, net			5,770,794				6,161,186
Right of use assets - operating leases			1,359,106				1,151,575
Other assets			32,326				32,327
Intangible assets, net			-				127,931
Goodwill			9,302,524				9,302,524
Total assets		$	55,865,033			$	58,379,410
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	6,802,879			$	6,552,181
Current portion of loans and obligations under finance leases			5,756,553				5,779,510
Current portion of operating lease obligations			538,363				505,237
Unearned revenue			5,170,335				7,932,306
Total current liabilities			18,268,130				20,769,234
Loans and obligations under finance leases; less current maturities			137,847				176,229
Operating lease obligations; less current maturities			795,935				652,194
Total liabilities			19,201,912				21,597,657
Stockholders’ equity:
Preferred stock, $.01 par value; 500,000 shares authorized;			-				-
Common stock, $.01 par value; 14,500,000 shares authorized; 12,311,850 shares issued and 11,372,819 outstanding as of September 30, 2023 12,284,887 shares issued and 11,345,856 outstanding as of June 30, 2023			123,120				122,850
Additional paid-in-capital			128,536,132				128,476,048
Treasury stock (at cost, 939,031 shares as of September 30, 2023 and June 30, 2023)			(3,920,856	)			(3,920,856	)
Accumulated deficit			(44,865,296	)			(44,896,186	)
Other comprehensive loss			(46,411,702	)			(45,975,156	)
Total NetSol stockholders’ equity			33,461,398				33,806,700
Non-controlling interest			3,201,723				2,975,053
Total stockholders’ equity			36,663,121				36,781,753
Total liabilities and stockholders’ equity		$	55,865,033			$	58,379,410

 

 

NETSOL Technologies, Inc. and Subsidiaries

 

Schedule 2: Consolidated Statement of Operations

 

		For the Three Months
		Ended September 30,
		2023				2022
Net Revenues:
License fees		$	1,280,449			$	249,960
Subscription and support			6,512,243				6,016,834
Services			6,449,489				6,439,325
Total net revenues			14,242,181				12,706,119
Cost of revenues			8,080,164				8,454,122
Gross profit			6,162,017				4,251,997
Operating expenses:
Selling, general and administrative			5,432,969				5,678,561
Research and development cost			378,419				469,627
Total operating expenses			5,811,388				6,148,188
Income (loss) from operations			350,629				(1,896,191	)
Other income and (expenses)
Interest expense			(276,017	)			(121,610	)
Interest income			414,718				431,857
Gain (loss) on foreign currency exchange transactions			(134,253	)			1,315,705
Other income (expense)			57,881				25,616
Total other income (expenses)			62,329				1,651,568
Net income (loss) before income taxes			412,958				(244,623	)
Income tax provision			(121,895	)			(193,348	)
Net income (loss)			291,063				(437,971	)
Non-controlling interest			(260,173	)			(182,758	)
Net income (loss) attributable to NetSol		$	30,890			$	(620,729	)
Net income (loss) per share:
Net income (loss) per common share
Basic		$	0.003			$	(0.06	)
Diluted		$	0.003			$	(0.06	)
Weighted average number of shares outstanding
Basic			11,345,856				11,257,539
Diluted			11,345,856				11,257,539

 

 

NETSOL Technologies, Inc. and Subsidiaries

 

Schedule 3: Consolidated Statement of Cash Flows

 

		Ended September 30,
		2023				2022
Cash flows from operating activities:
Net income (loss)		$	291,063			$	(437,971	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			530,786				845,003
Amortization of right of use of assets			-				-
Provision for bad debts			7,880				(47,479	)
Gain on sale of assets			(98	)			(23,296	)
Stock based compensation			60,354				81,834
Changes in operating assets and liabilities:
Accounts receivable			4,608,881				815,132
Revenues in excess of billing			(1,478,386	)			337,996
Other current assets			92,686				(340,390	)
Accounts payable and accrued expenses			341,722				687,453
Unearned revenue			(2,791,269	)			(619,425	)
Net cash provided by operating activities			1,663,619				1,298,857
Cash flows from investing activities:
Purchases of property and equipment			(371,630	)			(1,347,601	)
Sales of property and equipment			1,230				453,607
Net cash used in investing activities			(370,400	)			(893,994	)
Cash flows from financing activities:
Payments on finance lease obligations and loans - net			(44,474	)			(445,737	)
Net cash used in financing activities			(44,474	)			(445,737	)
Effect of exchange rate changes			(230,322	)			(2,999,975	)
Net decrease in cash and cash equivalents			1,018,423				(3,040,849	)
Cash and cash equivalents at beginning of the period			15,533,254				23,963,797
Cash and cash equivalents at end of period		$	16,551,677			$	20,922,948

 

 

NETSOL Technologies, Inc. and Subsidiaries

 

Schedule 4: Reconciliation to GAAP

 

		For the Three Months
		Ended September 30,
		2023				2022
Net Income (loss) attributable to NetSol		$	30,890			$	(620,729	)
Non-controlling interest			260,173				182,758
Income taxes			121,895				193,348
Depreciation and amortization			530,786				845,003
Interest expense			276,017				121,610
Interest (income)			(414,718	)			(431,857	)
EBITDA		$	805,043			$	290,133
Add back:
Non-cash stock-based compensation			60,354				81,834
Adjusted EBITDA, gross		$	865,397			$	371,967
Less non-controlling interest (a)			(399,423	)			(399,535	)
Adjusted EBITDA, net		$	465,974			$	(27,568	)
Weighted Average number of shares outstanding
Basic			11,345,856				11,257,539
Diluted			11,345,856				11,257,539
Basic adjusted EBITDA		$	0.04			$	(0.002	)
Diluted adjusted EBITDA		$	0.04			$	(0.002	)
(a)The reconciliation of adjusted EBITDA of non-controlling interest to net income attributable to non-controlling interest is as follows
Net Income (loss) attributable to non-controlling interest		$	260,173			$	182,758
Income Taxes			36,377				59,910
Depreciation and amortization			141,334				238,333
Interest expense			85,889				37,396
Interest (income)			(128,091	)			(132,489	)
EBITDA		$	395,682			$	385,908
Add back:
Non-cash stock-based compensation			3,741				13,627
Adjusted EBITDA of non-controlling interest		$	399,423			$	399,535

 

 

v3.23.3

Cover	Nov. 07, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 07, 2023
Entity File Number	0-22773
Entity Registrant Name	NETSOL TECHNOLOGIES, INC.
Entity Central Index Key	0001039280
Entity Tax Identification Number	95-4627685
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	16000 Ventura Blvd
Entity Address, Address Line Two	Suite 770
Entity Address, City or Town	Encino
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91436
City Area Code	818
Local Phone Number	222-9195
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $.01 par value per share
Trading Symbol	NTWK
Security Exchange Name	NASDAQ

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