Acquires US-Based McCue Systems
CA: NetSol Technologies, Inc. (NASDAQ:NTWK), a developer
of proprietary software applications and provider of information
technology (IT) services, has entered into an agreement
to acquire Burlingame, California-based McCue Systems Inc.,
a leading provider of lease and loan portfolio management
software for banks, leasing companies and manufacturers.
NetSol will acquire 100 percent of McCue Systems for approximately
$8.5 million. Payment will consist of 50 percent cash with
the balance paid through the issuance of NetSol's common
stock carrying Rule 144 restrictions. Management expects
a portion of the monies used for the transaction to be provided
by institutional investors. Under the terms of the agreement,
there is a 50 percent deferred component based on an earn-out
formula over McCue's 2006 and 2007 fiscal years, ending
December 31, 2006 and December 31, 2007, respectively. The
company anticipates paying the balance of the consideration
in two traunches scheduled over the next 24 months.
NetSol has reported six consecutive quarters of revenue
growth and profitability, with net revenue of $9 million
for the first six months of fiscal 2006, an 88 percent increase
over the comparable period. Management has provided revenue
guidance of $19 million to $20 million for fiscal 2006 ending
June 30, 2006. McCue Systems reported revenue of approximately
$5.6 million with net profit of approximately $655,000 for
fiscal 2005 ended December 31, 2005.
"The acquisition of McCue marks another major milestone
in our growth strategy and provides an entrée into
one of the largest markets for information technology solutions
and services within the equipment finance industry,"
said NetSol CEO, Naeem Ghauri.
"During the initial software development project with
McCue," continued Ghauri, "it became apparent
that the company and its management team presented a superior
vehicle to launch a combined product offering with significant
brand awareness within the US equipment leasing industry
and create a company with unparalleled global reach. Working
closely with McCue's management team during our negotiations
and due diligence process confirmed our decision to create
a global company capable of providing customers on every
continent with well-priced, innovative products developed
with the highest quality standards."
"I am excited to have taken part in launching NetSol
into a vibrant and strong US financial market through the
acquisition of McCue Systems," said NetSol Chairman
Najeeb U. Ghauri. "McCue's marquee customer base provides
NetSol with an immediate footprint in the US and their strong
revenue stream will boost our top line growth. Additionally,"
continued Ghauri, "our product development and technology
expertise will be greatly enhanced by McCue's mature delivery
and US support infrastructure. Now NetSol is positioned
to compete with larger, less niche focused software providers
such as Oracle and SAP. We believe this agreement is the
first aggressive step toward considerable growth in the
"We are pleased to join the NetSol family," said
McCue Systems President, CEO, and founder, John McCue. "We
performed our due diligence with a trip to NetSol's technology
campus in Lahore, Pakistan, and a visit to UK-based CQ Systems,
whose acquisition was finalized approximately a year ago.
I was impressed with the quality and professionalism of
the management teams, the successful integration of NetSolCQ,
and the strong infrastructure created by NetSol Technologies.
"This acquisition," continued McCue, "brings
together an ideal combination of products, infrastructure
and intellectual capital at a time in the industry when
companies are searching for a robust, scaleable, global
leasing solution. Today, even with almost two thirds of
all leasing volume originating in the US, customers and
prospects alike seek providers who offer global operations
with localization of support and functionality. With our
flagship solution, LeasePak, serving as the third point
on a triangle which includes the US, Asia Pacific and Europe,
NetSol now provides that global presence. We look forward
to continued success and believe our employees, customers
and investors will be well served by the acquisition."
The terms of the transaction will be disclosed in the Company's
Form 8-K filed with the Securities and Exchange Commission.
Maxim Group, LLC, a full service investment banking firm
headquartered in New York City, provided acquisition negotiation
and advisory services to NetSol.
About McCue Systems
With over 30 years of experience in developing business
solutions for the equipment and vehicle leasing industry,
McCue Systems Inc. is the leading provider of lease/loan
portfolio management software for banks, leasing companies
and manufacturers. Its flagship product, LeasePak, simplifies
lease/loan administration and asset management by accurately
tracking leases, loans and equipment from origination through
end-of-term and disposition.
McCue Systems leads the leasing technology industry in the
development of Web-enabled and Web-based tools to deliver
superior customer service, reduce operating costs, streamline
the lease management lifecycle, and support collaboration
with origination channel and asset partners. Alone in the
industry, McCue Systems offers a Web-based front-end system
that integrates fully with the system's back-office database
By harnessing the most advanced technologies, McCue Systems
can offer the right operating platform for almost any enterprise.
LeasePak can be configured to run on HP-UX, SUN/Solaris
or Linux, as well as for Oracle and Sybase users. And for
unmatched scalability, McCue Systems offers the LeasePak
Bronze, Silver and Gold Editions for systems and portfolios
of virtually all sizes and complexities. McCue Systems'
solutions set the industry standard for reliability, providing
the equipment and vehicle leasing infrastructure at leading
Fortune 500 banks and manufacturers, as well as for the
industry's leading independent lessors, including Cisco,
Hyundai, JP Morgan/Chase, ORIX, and Volkswagen Credit.
The leasing experts at McCue Systems work closely with lessors
to put the company's leasing expertise to work to streamline
lease operations and enhance customer retention at every
stage of the lease lifecycle. For more information, visit
About NetSol Technologies, Inc.
NetSol Technologies is an end-to-end solution provider for
the lease and finance industry. Headquartered in Calabasas,
CA, NetSol Technologies, Inc. operates on a global basis
with locations in the U.S., Europe, East Asia and Asia Pacific.
NetSol helps its clients identify, evaluate and implement
technology solutions to meet their most critical business
challenges and maximize their bottom line. By utilizing
its worldwide resources, NetSol delivers high-quality, cost-effective
IT services ranging from consulting and application development
to systems integration and outsourcing. NetSol's commitment
to quality is demonstrated by its achievement of both ISO
9001 and SEI (Software Engineering Institute) CMM (Capability
Maturity Model) Level 4 assessment. For more information,
visit NetSol Technologies' web site at www.netsoltek.com.