Report on Software and Computer services Sector

NetSol Technologies, Inc.

Osama Ahmed Contact # +92-3344190827 Email. Bhatti.osama@gmail.com

Software and computer services

Table of Contents
Netsol Technologies Introduction. Bussiness Services.. Listed at SECP Netsol Technologies IPO.. Board of Directors. Meeting on 13-Apr-2010.. Preferred stock .. Performance evaluation.. Market review. Fundamental Analysis Investment Conclusion.

Software and computer services

Software and Computer Services

Software and computer services sector has only on company NETSOL Technologies. Now the whole preview of netsol technology is following.

Netsol Technologies
Introduction
NTWK had its beginnings in Mirage Holdings, Inc. (MGHI), a small clothing business 50%-owned by Aiesha Ghauri, the wife of NTWKs current Chairman and CEO, and founder of Mirage Holdings, Najeeb Ghauri. In late 1995, Najeebs brothers - Salim and Naeem Ghauri - both of whom possessed computer Science degrees and significant experience in managing software development projects, founded Network

NetSol Technologies, Inc. was founded in the year 1995 by three brothers; Salim Ghauri, Najeeb Ghauri, and Naeem Ghauri, each of whom was an accomplished professional in his own right. Having started with humble beginnings in the city of Lahore, NetSol soon grew to a sizable business having operations in Australia, China, Pakistan, Thailand, UK, and a headquarters in California, USA. In 1996 NetSol got its big break, when it was awarded a major offshore contract with Mercedes Benz Thailand, many more such contracts were to follow. Focusing on quality NetSol went on to attain the ISO 9001 and ISO 27001 certifications in 1998 and 2008 respectively, and in 2006 it achieved CMMI Level 5 certification, a distinction shared by fewer than 100 companies worldwide. NetSol was also the first US Company to dual list on both the NASDAQ Capital Market and the Dubai International Financial Exchange DIFX, which became NASDAQ Dubai in 2008. He has been twice nominated in the United States for the Ernst & Young Entrepreneur of the Year, once in 2001 and again in 2008. The Company is engaged in the development and sale of computer software and its related services. Its 50.52% owned subsidiary, NetSol Innovation (Pvt) Limited, is engaged in providing online software development services. The Company's services include systems integration, technology outsourcing, business process outsourcing (BPO) - accounting outsourcing, customized application development, IT consultancy and Business Process Reengineering (BPR), information security, business intelligence, software process improvement and quality engineering, products-based solutions, and defense solutions. The Company operates in the leasing and assets hire/purchase management vertical through its Lease Soft suite of applications. Lease Soft is an end-to-end automated solution for asset-based leasing and finance industry. Lease Soft covers sectors, such as asset finance, consumer finance, loan finance and motor finance.

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Where we operate
Today NetSol Technologies has offices in the USA, UK, Pakistan, China, Australia and Thailand and is at the development forefront of leasing software solutions, embracing new technologies and building on its world class suite of applications - NetSol Financial Suite.

Who are our customers

NetSols list of clients encompasses blue-chip companies, the non-profit sector, technology and telecommunications, and financial institutions including Fortune 500 manufacturers, global automakers, financial institutions, utilities, technology providers, and government agencies.

Business Services

Server Sales & Rollout Workstation Sales & Rollout Virus and Spyware Removal Microsoft Exchange Server Web Server Configuration Microsoft IIS Router/Lease Line Firewall Implementation VPN Implementation Backup Systems Maintenance Programs Hardware Sales

Residential Services

Virus Detection/Removal Spyware Removal Internet Connection Sharing System Clean up Software Installation Recovery of Lost Data Remote Access Setup Home Networking Email Problems Computer Upgrades Printer Setup and Sharing Home Systems

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When be the part of SECP

Netsol technologies was approved by Securities and Exchange Commission of Pakistan (SECP) to list its securities on the Karachi Stock Exchange (Guarantee) Limited (KSE). This was the final regulatory approval required. Procedural formalities was commence on July 10, 2005, and will be completed by July 19, 2005. It is anticipated that the offering will be oversubscribed and in such an event, the KSE rules require shares be allotted to successful applicant. NetSol Technologies is committed to keeping its shareholders informed of all developments of the IPO process and will disseminate a public announcement with the stock symbol, number of shares issued and effective date of trading as soon as it is available. The standard IPO on the KSE is traditionally priced at Rs.10, but AKD has priced NetSols IPO at Rs. 25, a 150 percent premium

NetSol Technologies IPO in 1998

He also spearheaded the successful listing of NetSol (NTWK) on the Nasdaq Capital Market (formerly known as Nasdaq Small Cap) in December 1999. At the time of its IPO, NetSol was the first IT company originated from Pakistan to be listed on Nasdaq. NetSol grew from just five people to almost 1000 in 2009 and grew from $100K revenue in 1998 to $37MN in 2008. Today, NetSol has nearly 200 customers worldwide and offices in six countries.

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Board of directors
13-Apr-2010 On April 12, 2010, NetSol Technologies, Inc. (the "Company") convened its annual meeting of shareholders. The following persons were elected directors of the Company to hold office until the next Annual General Meeting of the Shareholders. A total of 28,430,492 shares were cast. The following sets forth the tabulation of the shares voted for each director:
Director Voted Najeeb Ghauri Naeem Ghauri Salim Ghauri Shahid Burki Eugen Beckert Mark Caton Alexander Shakow For 18,382,750 18,413,010 18,415,832 18,408,802 18,416,222 18,402,131 18,414,071 Withhold Broker Non-Votes % of Total 718,483 688,223 685,401 692,431 685,011 699,102 687,162 9,329,259 9,329,259 9,329,259 9,329,259 9,329,259 9,329,259 9,329,259 64.65% 64.76% 64.77% 64.75% 64.77% 64.72% 64.76%

2. Ratification of Appointment of Auditors Kabani & Company Inc. was appointed as Auditors for the Company for the fiscal year ended June 30, 2010.

Purpose of Meeting
The meeting was also called for the purpose of approving an issuance of shares of common stock and shares of common stock underlying warrants all issued as part of a financing which closed in June 2007. Approval of this proposal requires the approval of a majority of the voting power of the outstanding shares present and entitled to vote on this matter. Therefore, abstentions and broker non-votes have the same effect as votes against such proposals. As of the time of the meeting, approximately 48% of the votes cast had been cast in favor of the proposal, with a substantial number of broker non-votes and other shares not represented in the voting. After considering the importance of the matter, the number of votes not cast and the fact that shareholders represented at the meeting were so closely divided on the proposal, shareholders present at the meeting approved a motion presented by management to adjourn and reconvene the meeting to allow additional time to solicit proxies from those shareholders who had not voted on the proposal.

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PREFERRED STOCK
On October 30, 2006, the convertible notes payable were converted into 5,500 shares of Series A 7% Cumulative Convertible Preferred Stock. The preferred shares are valued at $1,000 per share or $5,500,000. The preferred shares are convertible into common stock at a rate of $1.65 per common share. The total shares of common stock that can be issued under these Series A Preferred Stock is 3,333,333. On January 19, 2007, the Form S-3 statement to register the underlying common stock and related dividends became effective. As of June 30, 2008 and 2007, 2,210 and 1,370 of the preferred shares had been converted into 1,339,392 and 830,302 shares of the Companys common stock, respectively. As of June 30, 2008 and 2007, there were 1,920 and 4,130 shares of preferred stock outstanding. The Series A Convertible Preferred Stock carries certain liquidation and preferential rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, before any distribution of assets of the Corporation can be made to or set apart for the holders of Common Stock, the holders of Convertible Preferred Stock shall be entitled to receive payment out of such assets of the Corporation in an amount equal to $1,000 per share of Convertible Preferred Stock then outstanding, plus any accumulated and unpaid dividends thereon (whether or not earned or declared) on the Convertible Preferred Stock. In addition, the Convertible Preferred Stock ranks senior to all classes and series of Common Stock and existing preferred stock and to each other class or series of preferred stock established hereafter by the Board of Directors of the Corporation, with respect to dividend rights, redemption rights, rights on liquidation, winding-up and dissolution and all other rights in any manner, whether voluntary or involuntary.

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Total Shares outstanding are owned by the following

% of Shares Held by All Insider and 5% Owners: % of Shares Held by Institutional & Mutual Fund Owners: % of Float Held by Institutional & Mutual Fund Owners: Number of Institutions Holding Shares: 14% 16% 18% 14

Major Direct Holders Holder NAJEEB GHAURI

NAEEM GHAURI SALIM GHAURI EUGEN BECKERT SHAHID BURKI

Shares 1,728,546 1,148,151 1,086,425 118,900 89,000

Reported Dec 10, 2010 Dec 10, 2010 May 14, 2010 Feb 23, 2010 Feb 23, 2010

Top Institutional Holders

Holder Newland Capital Management LLC BlackRock Institutional Trust Company, N.A. FIRST WILSHIRE SECURITIES MANAGEMENT INC RENAISSANCE TECHNOLOGIES, LLC CALPERS (CALIFORNIA-PUBLIC EMPLOYEES RETIREMENT SYSTEM) GEODE CAPITAL MANAGEMENT, LLC Great Oaks Capital Management, LLC Technical Financial Services LLC NORTHERN TRUST CORPORATION VANGUARD GROUP, INC. (THE) Shares 3,093,599 1,010,960 833,807 276,700 79,300 74,179 74,100 60,100 46,062 44,930 % Out 6.32 2.06 1.70 0.57 0.16 0.15 0.15 0.12 0.09 0.09 Value* 4,980,694 1,627,645 1,342,429 445,487 127,673 119,428 119,301 96,761 74,159 72,337 Reported Sep 30, 2010 Sep 30, 2010 Sep 30, 2010 Sep 30, 2010 Sep 30, 2010 Sep 30, 2010 Sep 30, 2010 Sep 30, 2010 Sep 30, 2010 Sep 30, 2010

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Top Mutual Fund Holders

Holder SPARTAN EXTENDED MARKET INDEX FUND VANGUARD EXTENDED MARKET INDEX FUND SPARTAN TOTAL MARKET INDEX FUND Shares 74,159 44,930 20 % Out 0.15 0.09 0.00 Value* 134,227 72,337 36 Reported Oct 31, 2010 Sep 30, 2010 Oct 31, 2010

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Performance Evaluation
Division of this evaluation will be on basis of market analysis and fundamental analysis performance evaluation.

Market review
Market price of the netsole technologies 1.96$ on the date 27 December 2010.

As fluctuation shows in the graph the market price of previous three months. Starts from the 9/27/10 with share price about more then 1.5 Dollars and now at 1.96 Dollars 12/3/2010.

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These are the key stats of the company

Market cap of 78.81 million company is on its great position EPS .04 dollar per share and price earning ratio of 21.78 is tremendous thing to be the part of KSE 100 Index.

Now the fundamental analysis in charts of netsol Technology is following.

1. Price to sales ratio

Price to sales ratio for March was .94 and for June 2010 was .74. Means declining trend. It was the graph starts from June 2001 to June 2010. In these years peak price to sales ratio was in December 2003 4.24. The price to sales ratio (PS ratio) is calculated by dividing stock price by the revenue per share. It is most useful for comparing companies within a sector or industry because "normal" values for this ratio vary from industry to industry. In general, low price to sales ratios are more appealing because they suggest that a company is undervalued.

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2. Price earning Ratio

Price earning ratio for 12/28/2010 was 21.78 and in September 2010 it was 17.89 and in June 2010 it was 18.25 and it was peak in June 2005 about 62.67. The price to earnings ratio (PE Ratio) is the measure of the share price relative to the annual net income earned by the firm per share. PE ratio shows current investor demand for a company share. A high PE ratio generally indicates increased demand because investors anticipate earnings growth in the future. The PE ratio has units of years, which can be interpreted as the number of years of earnings to pay back purchase price.

3. Cash on hand

In 2010 June 9.77 Million and in March 2010 it was 9.27 Million. And in December 2009 it was 10.21Million. It was peak in December 2008 10.51 Million during previous ten years from 2000.

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Cash on hand is cash or cash equivalents that a company possesses at any given time. Examples of cash equivalents are: money market accounts, treasury bills, and short term government bonds. Cash and cash equivalents are a business' most liquid assets. Cash on hand results from a positive cash flow statement. Investors look at cash on hand as a reflection of a company's solvency and liquidity.

4. Profit Margin

Profit margin ratio was 14.17% June 2010 and was 6.59% in March 2010. Profit margin represents the percentage of revenue that a company keeps as profit after accounting for fixed and variable costs. It is calculated by dividing net income by revenue. The profit margin is mainly used for internal comparisons, because acceptable profit margins vary between industries. In general, narrow profit margins indicate increased volatility. For companies with significant fixed costs, wide profit margins reduce the risk that a decline in sales will cause a net profit loss. For example, if a company has a profit margin of 43%, the company keeps $.43 of each dollar of revenue.

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5. Earning per share

In June and September 2010 its EPS was .04 Dollars and it was .02 Dollars in March 2010. Earnings per share (EPS) the amount of income that "belongs" to each share of common stock. An important tool for investors, EPS is often used in determining the value of a stock. The average number of shares outstanding (the denominator of the EPS formula) is usually calculated by averaging the number of shares at the beginning of the earning period and the number of shares at the end of the period. For example, if a company earned $1 million in 2009 and had 900,000 shares at the beginning of 2009 and 1.1 million shares at the end of 2009, the 2009 EPS would be $1 million/[(.9 million shares + 1.1 million shares)/2] = $1/share.

6. Market Cap

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Market CAP in 27/12/2010 was 78.81 Million. In September 2010 it was 64.74 Million, 26.48 Million in June 2010 and in March 2010 it was 30.89 Million. It is now its peak as compare to its previous ten years. Market Capitalization (Market Cap) is a measurement of business value based on share price and number of shares outstanding. It generally represents the market's view of a company's stock value and is a determining factor in stock valuation. For example, if a company has 1.5 million shares outstanding at a share price of $25, its market cap is $37.5 million (1.5 million x $25). Companies can be categorized based upon the size of their market capitalization. There are five basic groups: mega-cap (market cap over $200B), large-cap ($10B $200B), mid-cap ($2B$10B), small-cap ($300M$2B), and micro-cap ($50M-$300M). Market cap is not always an accurate indication of value because it does not account for debt and other factors.

7. Revenue

Its revenue on June 2010 was 10.71 Million and it was 8.93 Million in March. And now it is on its peak as compare to its previous ten years. Income that a company gains from business activities, calculated before any expenses are subtracted. Includes all sales and other increases in owner's equity.

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8. Gross profit Margin

In June 2010 its G.P.M was 69.45% and it was 61.38 in march. and it was on its peak now.
Gross profit margin is the difference between sales and the cost of goods sold divided by revenue. It expresses the relationship between gross profit (sales - cost of goods sold) and sales revenue. More specifically, gross profit margin represents the percentage of each dollar of a company's revenue that is available to cover fixed costs after paying for the goods or services that were sold. If a company produces widgets and earns $32 million in sales but pays $24 million for the items sold, then the company's gross profit margin would be ($32m $24m)/$32m = %25.

9. EPS Growth

On September 2010 its EPS Growth was 500% on June 2010 it was 233.33% and on March 2010 it was 110.53%.

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EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. If a company has an EPS of $5.00 in 2008 and EPS of $6.00 in 2009, the company has an EPS growth rate of $6.00/$5.00 - 1 = 20% during fiscal year 2009.

10.

Price to book value

On June 2010 it was .58, on March 2010 it was .73 and it was on its peak on March 2004 2.92. The price to book value is a financial ratio used to compare a company's book value to its current market price. Book value is an accounting term denoting the portion of the company held by the shareholders at accounting value (not market value). In other words, book value is the company's total tangible assets less its total liabilities. In theory, if you purchased stock with a price to book value less than 1 and the company immediately went bankrupt, you would gain money on your investment. In reality, this may not be true since there are times when liquidation value, or the price at which a company's assets can be sold, is less than the book value of those assets.

11.

Current Ratio

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On June 2010 its Current Ratio was 1.65 and on March 2010 it was 1.64. On march 2008 it was on its peak 3.06. The current ratio measures a company's ability to pay short-term debts and other current liabilities (financial obligations lasting less than one year) by comparing current assets to current liabilities. Current assets are cash and any assets expected to be converted into cash within the next year. The ratio illustrates a company's ability to remain solvent. A current ratio of 1 means that book value of current assets is exactly the same as book value of current liabilities.

12.

Total Assets

On September 2010 its Total Assets was39.76 on June it was 72.13 on March 69.37. On June it was on its peak as compare to previous 10 years.
The sum of all current and long-term assets held by a company. An asset is any item with economic value that is held by a company.

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INVESTMENT CONCLUSION
We believe that NTWK merits a Strong Buy recommendation. Not only is it grossly undervalued according to most metrics, but there are a variety of plausible scenarios that would result in the Company surpassing expectations by an enormous margin. Especially compelling evidence of the Companys value was provided on May 14 when the Ghauris collectively purchased 1,034,383 shares of NTWK stock for 87 cents each through a private transaction, Najeeb buying 375,000, Salim 350,000, and Naeem 309,383. Not only is this a solid showing of confidence in the Company being exhibited by those who know it best, but it is also confirmation of the alignment between management and shareholder interests.

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