Good day, ladies and gentlemen, and welcome to the NetSol Technologies Reports 2013 Third Quarter Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, May 9, 2013. I would now like to turn the conference over to NetSol Technologies Chairman and CEO, Najeeb Ghauri. Please go ahead, sir.

This is Patti McGlasson, General Counsel of the company and good morning, everyone, and thank you for joining us today to discuss NetSol Technologies' Fiscal 2013 Third Quarter Results. On the call today, as mentioned, are Najeeb Ghauri, Chairman and Chief Executive Officer; Boo-Ali Siddiqui, Chief Financial Officer; Naeem Ghauri, President, Global Sales and CEO of NetSol Europe and Vroozi; and Shaz Khan, COO and Cofounder of Vroozi. Following a review of the company's business highlights, financial results and discussion of the company's strategy, we will open up the call for questions. First, some housekeeping issues before we start. Earlier today, NetSol issued a news release announcing the company's financial results for the third quarter of 2013. If you have not received this news release, if you would like to be added to NetSol's e-mail list to receive company information directly or if you would like to change your contact information, please contact NetSol Investor Relations at investors@netsoltech.com. In addition, I'd like to remind everyone that today's call is being webcast at www.netsoltech.com. Following the conclusion of the call, the webcast may be accessed on the NetSol website where it will be archived for 90 days. Please note that all of the information discussed on today's call is covered under the Safe Harbor Provisions of the Private Securities Litigation Reform Act. The company's discussion may include forward-looking information reflecting management's current forecast of certain aspects of the company's future and our actual results could differ materially from those stated or implied. These forward-looking statements are qualified by the cautionary statements contained in NetSol's press releases and SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. I would also like to point out that NetSol will be discussing certain non-GAAP measures and the release issued earlier today contains a reconciliation of these non-GAAP financial results to the most comparable GAAP measures. With that said, let me now turn the call over to Najeeb Ghauri. Najeeb?

Thank you, Patti, and good morning. And thank you all for joining us today. We are very pleased to once again report a record quarterly results, having now reported our fourth consecutive strong quarter. From more than a year, I have consistently discussed a shift in momentum across the business with demand continuing to grow for our world-class end-to-end software solution for leasing and finance business operations, the steps that we have taken to grow NetSol's top line and capture increasing market share are working. Today, we are also announcing an increase in our top line guidance, which we will discuss later in the call. But first, I must commend my entire team across the world for their hard work. I truly believe we are one of the best talented group of developers and programmers who are working tirelessly to accomplish projects with the highest level of professionalism and integrity, our standout differentiators are the global footprint and the fact that NetSol has a 100% delivery and implementation record with Fortune 500 companies worldwide. Our talented employees are the key to our success and we are rapidly building out our presence in additional offices and personnel. NetSol is moving full speed ahead in an impressive growth trajectory. In Asia Pacific, we have a robust footprint offering customers an unparalleled level of on-the-ground support. We continued our expansion in the quarter, opening a new office in Sydney, Australia and bolstering our facilities in Thailand and Pakistan to capture their market opportunity. We're looking to not only replicate the success we have had in cornering the market in China and we just completed 2 more NFS implementations, but also building up on our progress throughout Asia Pacific region, a region that is ripe for our solution. For example, we have been continuously…

Thank you, Najeeb. The last 4 quarters have been consecutive highs with respect to the top line, recording $50.02 million over the last trailing 12 months. Indeed, we are well on our way to achieving our growth objectives for the year. For the first quarter of fiscal 2013, total revenue advanced 21% to $12.8 million from 6 -- $10.6 million in the comparable period last year. License revenue increased 61% from -- to $4.8 million from $3 million in the last year's third quarter, stemming from the addition of 3 new NFS customers that represent more than $6 million in combined license, maintenance and service billings. Maintenance revenue grew 36% to $2.5 million from $1.8 million in the same period of last fiscal year. However, on a sequential basis, maintenance revenue was slightly down from $2.7 million primarily as a result of the timing of recognition of some first quarter contracts that were closed and booked in the second quarter. Moving forward, we expect the same level of maintenance revenue at the third quarter to continue until maintenance starts from new projects being delivered. Third quarter services revenue remain solid at $5.5 million, slightly down from $5.8 million a year ago. Service revenue remains strong as a result of customization and enhancement projects for the company's NFS solution primarily with Asia-based clients. We expect continued strength in services revenue and over time, the mix to incrementally improve as we add additional revenue from our virtual leasing services subsidiary and over the longer term, more revenue from our Software-as-a-Service offerings. Gross margin for fiscal third quarter was 51% compared with 54% as reported in the comparable year last year. With the decrease primarily attributable to an increase in programmers and increase in depreciation and amortization expense and provision of some third-party…

Thank you, Boo-Ali. So our results overall demonstrate that our core NFS solution continues to effectively address our customers' needs. As such, we are continuing to gain market share in Asia Pacific but the other factor is growing and consumer habits are shifting more and more towards leasing and financing. I'm really excited about the opportunity ahead of our core business and opportunity to add incremental revenue through our subsidiaries and joint venture partners. Now I'd like to transition to our Vroozi division, which was formed to help companies of all sizes and industries transform the supply chain operations. Vroozi is an important e-Procurement technology platform, with a clear distinction in the marketplace and a growing market opportunity. To help drive adoption, we recently launched the platform as a complete SaaS offering, a true 100% cloud solution. Our solution is truly unique in the marketplace, and we are moving forward with steps to increase adoption. I would like to now turn the call to Shaz Khan, COO and cofounder of Vroozi, to provide an update. Go ahead, Shaz.

Thank you, Najeeb and good morning, everyone. Vroozi truly represents a unique offering in the procurement marketplace and with the consumer-like interface and easy-to-use web-based content management platform that is truly plug-and-play and more importantly, requires no upfront implementation fee. Response to our technology platform has been quite strong and uptake within our current customer base has now reached 25,000 users globally. However, we recognize the size of our sales organization has limited our sales growth. Strategically, we have focused on developing channel relationships, including just recently with the NetSol North America sales team. With strong customer relationships across the world, NetSol's 170-plus customers provide a ready opportunity for Vroozi, and we are moving forward to capture this cross-selling opportunity. In addition to increasing adoption, we are also busy launching additional products within the Vroozi platform to ensure we have a solution that handles the entire procurement life cycle for any size organization. Today, we have released the Vroozi purchase manager, which allows companies of any size to create purchase requests, gain approval before purchasing and achieve social responsibility initiatives through the Vroozi platform, all in the cloud. At any given time of the month, managers will have visibility into their office spend. Of note, we have had discussions with all of our existing clients on this new product and a number of them have already expressed interest in adopting the platform. We look forward to updating you on our progress. To learn more about the Vroozi purchasing platform, I encourage all to visit our website at www.vroozi.com to see if this technology might be something your company could benefit from. We are all very excited about the road ahead, and are strictly focused on execution and growth. With that, I would now like to turn the call back over to Najeeb. Najeeb?

Thank you, Shaz. We continue to believe in Vroozi's value proposition and look forward to updating you on the progress. The good news is that we continue to achieve record results, particularly with the strength of our core NFS solution, our new business pipeline is stronger than ever and we're closing new deals and obtaining requests for additional products and services from our existing customer base. We're focused on growing our top line, capturing market share as industry conditions remain strong and becoming recognized as the undisputed global market leader in our space. Whether you're new to NetSol or have been with us for a while, I'd like to thank you for your continued support. We all have an invested stake in this company and our priority is to continue to enhance NetSol's long-term value. With that, I'd like to open the call up for questions. Operator, please.

[Operator Instructions] And our first question comes from the line of Greg Garner with Singular Research.

First question. About the North America order that you mentioned, it was Mexico installed. Is that -- is that an order -- I wasn't certain if that was something that was booked in the first quarter or is that something to be implemented, I mean, in the third quarter, is that something implemented in the current quarter?

Yes, thanks for your question, Greg. That agreement was signed in the third quarter, which we were just talking about. And we start to recognize in that quarter that really means that we recognized, I believe, half of the present value and then the balance will be recognized in the coming quarters. Maybe Naeem or Boo-Ali can give better color on that. But we have a lot more to recognize in that particular contract and it is a sizable value. And as I mentioned, Greg, this is the biggest yet in the in the U.S. for us, and this really shows newer and bigger opportunity not just within the same new company but also it shows that NFS is now getting more traction in the U.S. than before.

Okay. And can you give me a sense for the overall view on the NFS pipeline or inquiry level, or the interest level in the U.S. and also perhaps in Asia just to get a sense for how that may be. Is it ebbing and flowing a little bit or is it improving or are certain areas better or worse than others? Can you give us any color on that?

Yes, sure. I'll have Naeem Ghauri, who's the head of sales. He has everything on his fingertips. Naeem, you want to answer that, please?

Yes, Greg. Well, actually from this last quarter, when we signed the U.S. deal, our traction is sort of from North America, which was slow before through -- now strong. Asia Pacific has been strong through this fiscal, and the numbers you're seeing now, these are record quarters and they're one quarter after the other. So essentially, what we're seeing is that, that traction converting to revenue. And so next quarter coming, again, looking to be strong and that's why we reiterated and tweaked the guidance a little bit. So actually, it is quite consistent and the growth is quite visible. The pipeline continues to be strong. So it's a question of now is -- can we continue to deliver and which we are and NetSol helps us to recognize revenue. So really, going forward, you will see the same -- the next 3 to 4 quarters same kind of growth pattern as we've had in the last 9 months.

Okay. So you're not feeling any of the effects of what we see sometimes in the news about China's growth slowing down. That's not really affecting your business. You're not seeing any of that as what...

Yes, the good news is, Greg, that we, like maybe 3 years ago, China was our only biggest market or big market in Asia. But now, we're actually tracking really well in, for example, Australia. Again, this quarter, you'll get a few interesting news on what's happening there. And then Indonesia, Thailand. So we have de-risked China to a great extent by better coverage and the rest of Asia, Australia, Pacific. So the slowdown in China is not really affecting us in any way whatsoever. In fact, we continue to grow in Asia.

Okay. An income statement item here. In your COGS, the other line has increased quite a bit. I'm just wondering what that -- without seeing the Q yet, if you can explain what that is. And I also just wanted to talk about the increase in sales force and the expense there, and timeframe for productivity. So those kind of expense items.

Yes, let me ask Boo-Ali to answer. I don't know what it is but Boo-Ali will explain the other items, probably do with hardware for the third-party, right?

Yes. The increase in other earning cost, revenue is mainly due to provision of some third-party hardware and software, which is not our working business. Total value, approximately -- the additional value which we provided is approximately $7,000, which we had to take expense in this quarter, which we don't think that is often [indiscernible] and will not repeat in the next few quarters.

These are nonrecurring expense, right? It's a onetime only. And also, when you talked about further on the cost of our COGS, I think, Greg, the way to look at it, gentlemen, is that we are a growth company and we said that a few times in the script today. Mainly the same perspective that we are growing quite impressively, and we want to capture all the opportunities whether it's in Asia Pacific and now in the U.S. And for that, we are busy in hiring new talents because the last thing -- you want to be part in this, that we have projects, for example, the project in the U.S. company, in Mexico, it's size can be bigger than what we have signed right now. And the company had to be ready to deploy a number of programmers and developers on the site in Mexico to support the ongoing implementation in services. So likewise, there's many other deals in the pipeline like in Asia. Naeem has a lot of deals happening in, perhaps, 10 countries in that region. So we're very busy. We want to not be caught in a jam. You have a bigger contract, but you don't have infrastructure. So we try not to be in that position. And for that reason, there is some buildup cost there and hopefully, we'll try to streamline further to improve more on the productivity and more efficiency.

So we're talking about increase of salespeople and also implementation engineer, like software engineering people? Is that right?

Yes, that is true. Because if you look at just the U.S. alone, and I mentioned that quite -- I'm very optimistic and bullish about the North America, where we are streamlining, doing some high-quality sales professionals, some within the group, some from outside because we are now seeing the traction that we were not seeing, let's say, a year ago.

[Operator Instructions] And our next question comes from the line of Mike Vermut from Newland Capital.

A couple of quick questions for you. Just following up on the cost, I believe in the first quarter that a similar situation hit you with an increase in programmers. And then the following quarter, we saw the pretty quick margin expansion. Should we expect this similar type move that these are not just one-time in nature but that you should see the productivity start to kick through in the next few quarters and that the margins should ratchet back up?

Go ahead, Naeem.

Yes. Mike, what you see is a situation where -- when we win an order -- we already anticipate that order. So ahead of that, we ramp up, okay? And we only ramp up when we are like 90% plus certain that this is coming along. So we have to manage a very, very lean and mean bench. So you don't want to have too many people on the bench. But at the same time, you want to be resourcing ahead of an extra order. Because typically, our clients want us to start straight away. So as the sales are growing, and these are double-digit numbers in terms of growth, we have to manage our resources really, really carefully. And we want to make sure that if we have a big win, then we can deliver and recognize that revenue. So what you've seen in additional cost, this quarter will have an immediate dividend paid in the last quarter. So the last quarter, if we follow the trend, you'll see these people that we hired start to be productive and deliver more of the software that we contracted for, and so therefore, more revenue comes in but the cost sort of stays more or less the same, yes, to the margins. So we get like 2 quarters of maybe cost and 2 quarters of better margin, and it evens out over the year.

Great. And it's sort of a step-function higher on margins?

Yes, absolutely. We sort of build and then we recognize. We build the supply side, and then as the demands come in, we deliver and then we recognize the revenue. So sort of there's a 3-month time lag. And I think this is where we are very excited about the final quarter and we improved the guidance a little bit. So we're very confident that these hiring and these people, who are delivering now, actually will convert to revenue in the last quarter.

Right. And therefore, I know you raised the revenue guidance going forward. But I assume that should translate into margin improvement as you brought on these programmers in the third quarter and the additional expenses as well.

Yes. That's correct as a CFO. But my point of -- my perspective is that I am from the sales side, not incurring additional cost in terms of hiring we have done for the year, for the fiscal. And we've got the results for the fiscal. So delivery side, we know the hirings are more or less done. So for the next quarter really there's not going to be any major new additional recurring cost in terms of overhead.

I want to add one more comment, Mike. Look, for the management, every quarter is equally important in terms of earnings. Of course, fourth quarter is obviously the one we have to -- there is a maximum, the best results because we have to not only beat our own estimate, but try to beat estimate in the market. So rest assured, find the rule [ph], do our best to focus on highest productivity. Like Naeem, said that we've done pretty much the hiring until the Q3 and the benefit will come in Q4. And of course, on the big projects, quite a few of them in the pipeline, some of them have realized, some of them hopefully will realize in the Q4. So I think it's a nice balance we have to do with our finance group and sales group. So rest assured, we will do whatever it takes to do much better in the margins. And now we don't think much more hiring to be done in this quarter.

Najeeb, I just forgot to mention one point. Mike, the one thing we -- I don't know, nobody's asked the question. But anyway, I'll bring it up. See the size of typical project has grown many folds now. So when we are deploying a team, so these projects are now exceeding $4 million, $5 million a project, as opposed to an average was maybe $2 million. So we had twice to 3x the size. So the team deployment itself is quite a bigger team. So in the past, it used to take 20, 30 guys. Now it could take 40, 50 guys. So really the whole paradigm has shifted in terms of our cost. And what we sell at and the size of a project is a major shift to the larger ticket, bigger projects. This is basically a game changer for the company because that's what really brings the economies of scale. And so you don't incur double the cost for double the size of the project. You can capitalize on your licensing term better and you can actually get 2x the bang for the buck in terms of the number of people you hire. So I think that's the really exciting bit about the company that 3, 4 years ago, we were very excited about a $2 million project. Now we are looking at several projects which are $10 million or more. So those projects, as they come in, it just changes the total dynamics of the company.

Right. So that was my next question, you kind of led into there. So I was looking at the size of the contracts. How many -- what your, I guess, quoting activity looks like, what's in there? And then regionally, when -- I know you had the addition from the Saudi, I guess, contract last quarter. How should we look at that going forward? Is that going to be -- start to become more recurring in nature quarter-to-quarter? Or is it always going to be lumpy? And what is the quoting activity look like there?

Well, let me -- Naeem, let me...

I'll pick up the NFS side, then you can take the... .

Okay. Go ahead.

On the NFS side, Mike, it's very clear that for us, the core business remains NFS, okay? So all the excitement and all the numbers and the guidance you hear does not factor in anything Atheeb, right? So our growth, first, are coming from bigger projects for bigger clients within NFS. So really that's the real story. Now Atheeb, Najeeb will tell you more. But that is more sporadic, and as you used the word lumpy. And it just surprises you sometimes that you get some of that business in. But really we're focusing on NFS.

But should we be expecting anything from Atheeb in the near future?

Let me comment. Mike, a very good question. Yes, we had a $0.06 bump in the Q2. But I think the way Atheeb is going, we've only invested $400,000 in 4 years in the relationship. And as a result, we have seen too many things happening. We just had a board meeting in New York 10 days ago with Atheeb Group. I believe this is a joint venture in a market, which is extremely upbeat on spending on many, many sectors. And with another view of build our name with Atheeb in Saudi Arabia, we're getting lot of RFIs and projects that we are bidding in. So these are long-term things, Mike. We're not pushing NFS in that market because that is not -- that is one market that is not ready for NFS, as a leading solution. It needs IT projects, integration, services consulting and so forth. So I think yes, there will be some sporadic -- but it will build up each quarter-after-quarter in a way that you can predict the numbers. Right now, I'm just watching and working with them very closely and hope we can close some bigger contracts in the coming quarters.

Great. And then last one quick question to ask for you. A lot of the contracts you've announced in the past have been related, I guess, to the auto sector. When you're looking at quoting activity now, and I know you've announced a few that are outside into equipment financing and it's such a broader market, how do you look at that now with what you're quoting on? How much is into auto? How much is into equipment? How much is moving into other sectors?

Okay. Shall I, Najeeb, pick this up?

Yes, go ahead.

Okay. So Mike, I think our auto segment is also a little bit misunderstood. So it's quite a broad segment. So from just a passenger vehicle, a normal 4-door car, we go into pickup trucks and we're going into buses and we're going to do large trucks. And then you have on the other side of the spectrum, you have motorbikes, 2-wheelers, okay? So the product, NFS.com [ph], is so flexible that it can capture the entire spectrum of an auto type of business. So from a 2-wheeler to a big juggernaut truck, okay? So that's the one segment. And so we play in that field from the top to the bottom. Then the equipment sector. So we've had at least 2 wins in this fiscal year, which are nonauto-related, okay? They are typical finance companies that are doing big-ticket, nonauto kind of factory equipment plant. They could be doing ships, they could be doing airplane financing. So certainly that is quite a big growth area that we that we expect for us to diversify into as we grow as a company. And the size of those contracts also sequentially gets bigger and bigger. So I believe that we play in both the markets and there's growth opportunity in either segment.

Excellent. I appreciate it. And then last and I'll leave you there. When you gave, I guess, a year ago a couple of presentations, you gave that $100 million goal in the next couple of years. Do you feel more confident about that right now looking at the quoting activity, the pipeline?

We're halfway there, right? We're almost halfway there. So when we gave that number, I think we're sitting at maybe $30 million or something. So we hit -- we're hopefully going to hit $50 million. I personally believe this from a salesman's hat, this is a number which is I'm going for, right? And this is my target. I believe we're looking at 24 to 36 months to get there. So question is can we resource the teams? Can we get them ready? Can we deliver? And at times, sometimes the bigger challenge is to recruiting the best talent, it's not so much the sales side. Because the demand, to be honest with you, Mike, we cannot keep up with it. We are certainly at a point where we're hitting a situation, where we're saying, "Okay, I mean, let's get the people in to deliver all the stuff that's coming through the door, right?" So that's a great place to be in. And that's where we are today.

And our next question comes from the line of Howard Halpern from Taglich brothers.

In terms of, I guess, your move to Australia, are we looking really at equipment leasing side that you're seeing great opportunities in there?

Howard, Naeem will answer that.

Yes, we see 2 things happening in Australia. One, there are banks who are looking to replace all legacy systems. And these banks are typically nonauto financiers. They'll finance anything from a PC, desktop to a large plant or a ship. So that's certainly happening. But the bigger push is still auto in Australia for us. So we've had some -- a couple of very exciting things happen, which will be coming out of the news going forward. But that's mainly in the auto sector. And the equipment sector is sort of a bit slower, but it's still quite active.

Okay. In terms of, I guess, Vroozi. For those 25,000 users, how many customers or clients do you use -- that have those [indiscernible]?

Yes. Shaz, you want to answer that?

Spanned over 12 clients.

Okay. And in terms of the number of users, how has that grown over the past 2 quarters?

Well, it's just been a slight uptick. We've had 2 deals and 2 implementations that have gone live globally. Over the last 2 quarters, we've seen an increase in about 3,000 users. And a large part of that is due to the R&D efforts that we're putting into expanding our platform. If you go to our website, Howard, and go to vroozi.com, you'll see now the new platform that opens up the door for any sized company across any vertical to transform their procurement or paper-based purchasing process to completely online. And so we're building now an ecosystem of users that is going to have tremendous growth potential and monetization opportunities.

When you start marketing this or have start marketing this to the existing NetSol customer base and if they use the SaaS entry point, could we see a really rapid uptick in clients and users over the next 12 months?

We see every NetSol customer as a potential client. And we have already started making inroads with those clients.

And our next question comes from the line of Amir Qureshi from EMP.

I noticed that certainly I think the top line was very good. You talked a little bit about why maybe the bottom line wasn't better. And I think one thing you haven't talked about, which I saw, there's a fairly big translation adjustment that takes away almost, after minority interest I think, about $900,000 from the bottom line. And so it would be helpful in understanding where that comes from because I'm assuming it comes from the Pakistan valuations and stuff. But I think that's one thing that's hard for us to understand and to anticipate how that's going to end up. So can you give us a little color on that? And is this due -- and does it -- should we expect this to happen if, for example, there's a decrease in the Pakistan rupee versus the dollar? Or just sort of just -- I mean, you've talked about this in the past. But a little more color on what drives that number would be helpful.

What are you looking at, Shabu? Are you looking at $97,000 in the Q3 number or --

I'm looking at what I thought -- maybe I'm looking at the wrong thing. But I thought that you had a translation adjustment of something like $1 million or so.

That can be true. But Boo-Ali, do you want to -- I think you're looking at a different line. It's actually $97,000 in this quarter only, right? Is that true, Boo-Ali? Boo-Ali, are you there? Yes, it is $97,000, Shabu.

I'm sorry, he has already dropped off, sir. And our next question comes from the line of Gavin Ritchey from Rockwood Investment Partners.

What was the headcount at quarter end?

We have just about over 1,000 worldwide.

Just over 1,000?

Yes.

And then the 3 new contracts that were signed in the quarter, when will revenue begin being recognized for this?

Some of it is already recognized this quarter. Naeem, you want to elaborate further?

Yes. What happens is when you sign, there's only a very small amount of revenue that we can pick up at that time, which is normally the license. If we do an installation of the core product, we can pick up a bit of a license. But the main license revenue and services revenue comes a little bit later. So I'd say that the contracts we signed, we might have picked up maybe 1/3 or less and the rest will come over the next couple of quarters.

Okay. And the NFS contract in the U.S. that somebody mentioned earlier, is that the same -- is that one and the same with the contract with a Mexican subsidiary? Is that the same contract that we're talking about?

Yes. That was the Mexican subsidiary of a U.S. company. Yes.

And we have a follow-up question from the line of Amir Qureshi from EMP.

So my other question was can you guys give us an update on the NextGen NFS and how that's going and just how customer reaction to that?

I was waiting for that. Shabu, that actually is a live product now in terms of we selling it. And we are in the process of 2 live implementations as we speak. So we signed 2 clients. We haven't made the announcements yet. We were waiting for a more opportune time. But we are going to make a major announcement once we are live with those projects because [indiscernible] pilot projects at the moment. So emphasis is more on getting them live, and then we have more referenceable sites that we can use for further sales. So really that for us is a big win to be able to get into a live implementation of the NextGen. And we have 2 of them going on at the moment as we speak.

Great. My other question, just can you give us an update on your ownership of the Pakistani subsidiary and where that is at the moment?

Yes. We are about 65.5% as of today. So we basically jumped from 60% in about the last 2 quarters. But now it's about 65.5%.

And we have a follow-up question from the line of Mike Vermut from Newland Capital.

A couple of -- 2 quick questions again. Yes, you mentioned a couple of large projects that, I guess, you're quoting or you're working on. You said $10 million-ish in value. Can you just discuss what those are, what areas those are in, probabilities? Because that just takes the company to another level.

I'll have to ask my counsel on this, whether I can say anymore than I have said. Patti?

I'm sorry. You can go ahead and answer where you think it's appropriate.

Well, Mike, one of them is actually done in terms of we started implementation. We are in the process of finalizing just some very, very finer points in the contract. But typically, what happens is we start to work ahead of the contract signing because we need to do a lot of prep, groundwork, getting teams deployed. So there's 1 particular project, which is probably our biggest project in our history, which we are just starting to ramp up the people for, and this is in Asia. And it's for an NFS core platform. And it is for a very, very large Japanese -- in the top 3 Japanese manufacturing facilities [indiscernible]

Yes. I think that's done. We'll let you know when things can be announced.

That was helpful. Because we've never seen them. We've always heard about these larger contracts, and we've never actually seen them announced.

Well, Mike, I think you've heard about the U.S. thing. Look, for U.S., there's a turnaround. And when they said in the past that we can 25%, 30% in the U.S. revenue, it is already happening. So what Naeem was talking about, these are fairly large deals that either some are to legally close to start the project or some are still in the state that we believe that whether it's this quarter or the Q1 next fiscal, we can realize results. And so one of the things you see, the expenses again, Mike, to do with these projects on the new development programmers, exactly that when we don't want to miss the boat by not having the right skill set in the company. But that costs money.

Excellent. And then I guess -- and then following up on that again, where do you think you can take margins on the company?

I would love to see, Mike, over 50% on the gross profit margin. And I think like Naeem said, they will be economies of scale and a much better productivity because what happens is when you start to multiply the license sales, then you don't add dollars and dollars [ph] of cost. It's a cost incremental to be a lot less than what you book as a revenue. So our feeling is based on some calculation that as you ramp up more revenue, the cost per employee will go down and the revenue per employee will go up. And that we believe and pretty confident when we start hitting $60 million, $70 million revenue, then you'll see, I believe, a much better both gross margin, operating and net income margins.

And we have a follow-up question from the line of Gavin Ritchey from Rockwood Investment Partners.

What was the source of the restricted cash in the quarter?

This is our guideline against our own CD [ph] with a local bank in the U.S.

And I'm showing no further questions at this time. Mr. Ghauri, please continue.

Thank you, everyone. I appreciate your time and your question. And we look forward to see you again at the year-end fiscal 2013. Thank you very much, and have a good day.

And ladies and gentlemen, this concludes the conference for today. We thank you for your participation. You may now disconnect.