UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1
FORM 10-QSB/A
(Mark One)
(X) Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 2000
( ) Transition Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file number: 000-22773
NETSOL INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 95-4627685
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
24025 Park Sorrento, Suite 220, Calabasas, CA 91302
(Address of principal executive offices) (Zip Code)
(818) 222-9195 / (818)222-9197
(Issuer's telephone/facsimile numbers, including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
------- -------
The issuer had 11,125,633 shares of its $.001 par value Common Stock
issued and outstanding as of January 3, 2001.
Transitional Small Business Disclosure Format (check one)
Yes No X
------- -------
Page 1
NETSOL INTERNATIONAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of September 30, 2000
Comparative Unaudited Consolidated Statements of
Operations for the Three Months Ended September
30, 2000 and 1999
Comparative Unaudited Consolidated Statements of
Cash Flow for the Three Months Ended September 30,
2000 and 1999
Notes to the Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
Page 2
NETSOL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
ASSETS
CURRENT ASSETS:
Cash $ 3,075,337
Accounts receivable, net of allowance of
$30,000 3,776,402
Other current assets 365,416
------------
Total current assets 7,217,155
------------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of $ 463,569 3,088,563
------------
OTHER ASSETS 1,736,141
------------
INTANGIBLES:
Product licenses, renewals, enhancements, copyrights,
Trademarks and tradenames, net 4,579,555
Customer lists,net 2,457,112
Goodwill,net 6,785,866
------------
Total intangibles, net 13,822,533
------------
$ 25,864,392
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,940,102
Note payable, bank 250,000
Loan payable, stockholder 504,512
Current maturities of obligations under capital lease 73,722
------------
Total current liabilities 2,768,336
------------
DEFERRED TAX LIABILITY 2,800,000
------------
OBLIGATIONS UNDER CAPITALIZED LEASES, less current maturities 471,343
------------
8% CONVERTIBLE NOTE PAYABLE 100,000
------------
STOCKHOLDERS' EQUITY:
Common stock; $.001 par value, 25,000,000 shares authorized,
11,003,791 shares issued and outstanding 11,004
Stock subscriptions receivable (68,650)
Additional paid-in capital 27,095,513
Other comprehensive income (386,118)
Accumulated deficit (6,927,036)
------------
Total stockholders' equity 19,724,713
------------
$ 25,864,392
============
See notes to consolidated financial statements.
Page 3
NETSOL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months Three months
ended ended
September 30, September 30,
2000 1999 *
------ ------
NET REVENUES $ 2,117,906 $ 1,394,544
COST OF REVENUES 910,468 556,539
----------------- -----------------
GROSS PROFIT 1,207,438 838,005
OPERATING EXPENSES:
Selling and marketing 222,317 195,963
Depreciation and amortization 333,789 210,500
Salaries and wages 211,313 294,128
Professional services 635,240 674,814
General and administrative 556,039 299,809
---------------- -----------------
Total operating expenses 1,958,698 1,675,214
---------------- -----------------
OTHER INCOME/(EXPENSE) 43,167 -
----------------- -----------------
NET LOSS $ (708,093) $(837,209)
================= =================
NET LOSS PER SHARE -
Basic and diluted ($0.06) ($0.10)
================= =================
WEIGHTED AVERAGE SHARES OUTSTANDING -
Basic and diluted 10,971,099 8,620,936
================= =================
* Restated for business combinations accounted for under the Pooling of Interest
method
See notes to consolidated financial statements.
Page 4
NETSOL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Three months Three months
ended ended
September 30, September 30,
2000 1999 *
-------- --------
CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net loss $ (708,093) $ (837,209)
----------- -----------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING
ACTIVITIES:
Depreciation and amortization 333,789 210,500
Non-cash compensation expense - 75,000
Bad debt expense 30,000 -
Foreign currency translation (408,965) -
CHANGES IN ASSETS AND LIABILITIES:
(INCREASE) DECREASE IN ASSETS:
Accounts receivable (1,038,366) (673,257)
Other current assets 272,837 (264,323)
Other assets (417,379) (143,357)
INCREASE (DECREASE) IN LIABILITIES -
accounts payable and accrued expenses (132,874) 1,004,646
----------- -----------
Total adjustments (1,360,958) 209,209
----------- -----------
NET CASH USED FOR OPERATING ACTIVITIES (2,069,051) (628,000)
----------- -----------
CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Proceeds from certificate of deposit 1,000,000 -
Purchase of property, plant and equipment (526,620) (157,533)
----------- -----------
NET CASH USED FOR INVESTING ACTIVITIES 473,380 (157,533)
----------- -----------
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Issuance of common stock and warrants, net 1,007,000 990,004
Proceeds from (payments on) notes and loans payable,net 175,000 -
Payments on loan payable, related party 504,512 (44,750)
Exercise of stock options 29,000 100,000
Payments on capital lease obligations (25,550) (4,785)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,689,962 1,040,469
----------- -----------
NET INCREASE (DECREASE) IN CASH 94,921 254,936
CASH AND EQUIVALENTS, beginning of period 2,981,046 85,585
----------- -----------
CASH AND EQUIVALENTS, end of period $ 3,075,337 $ 340,521
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 31,643 $ 4,500
=========== ===========
Income taxes paid $ - $ -
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of 405,000 shares of common
stock per stock purchase agreements $ - $ 1,453,698
=========== ===========
Issuance of common stock
shares for services rendered $ - $ 75,000
----------- -----------
* Restated for business combinations accounted for under the Pooling of Interest
method
See notes to consolidated financial statements.
Page 5
NETSOL INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries, Network
Solutions PVT, Ltd., NetSol UK, Ltd., Network Solutions Group Ltd. And
subsidiaries, NetSol Abraxas Australia Pty Ltd., NetSol Connect PVT, Ltd.,
NetSol eR, Inc., Supernet AG and NetSol USA. All material intercompany accounts
have been eliminated in consolidation.
BUSINESS ACTIVITY: The Company designs, develops, markets, and exports
proprietary software products to customers in the automobile finance and leasing
industry worldwide. The Company also provides consulting services in exchange
for fees from customers.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
BASIS OF PRESENTATION: The consolidated condensed interim financial statements
included herein have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
consolidated condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-KSB for the year ended June 30, 2000. The Company follows the same
accounting policies in preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
FOREIGN CURRENCY: The accounts of Network Solutions Group Ltd. and Subsidiaries
and NetSol UK, Limited use the British Pounds, Network Solutions PK, Ltd. and
NetSol Connect PVT, Ltd. use Pakistan Rupees, NetSol Abraxas Australia Pty, Ltd.
uses the Australian dollar, Supernet AG uses the German Mark, NetSol
International, Inc. and subsidiaries NetSol USA, Inc. and NetSol eR, Inc. use
the U.S. dollars as the functional currencies. Assets and liabilities are
translated at the exchange rate on the balance sheet date, and operating results
are translated at the average exchange rate throughout the period. Translation
losses of $386,111 at September 30, 2000 are classified as an item of other
comprehensive income in the stockholders' equity section of the consolidated
balance sheet.
PRIVATE PLACEMENT: The Company sold 63,666 shares of its restricted common stock
in the amount of $955,000 through a private placement offering during the
quarter ended September 30, 2000 pursuant to Rule 506 of Regulation D of the
Securities and Exchange Act of 1933.
NOTE PAYABLE: Effective September 28, 2000, NetSol eR, a subsidiary of the
Company, entered into a promissory note agreement with City National Bank in the
amount of $250,000. Interest is stated at 7.40%, and all outstanding principle
balance and accrued interest payments are due on November 27, 2000. The Company
has acted as a guarantor on the note.
LOAN PAYABLE, STOCKHOLDER: A principal stockholder of the Company advanced funds
for working capital during the quarter ended September 30, 2000. The loan is due
on September 30, 2001. The loan bears no interest as the Stockholder has waived
any interest payments.
INTANGIBLES ASSETS: Accumulated depreciation at September 30, 2000 was $540,444
for products licenses, renewals, enhancements, copyrights, trademarks and
tradenames, $252,465 for customer lists and $849,425 for goodwill.
BUSINESS COMBINATIONS ACCOUNTED FOR UNDER THE POOOLING OF INTEREST METHOD:
ABRAXAS AUSTRALIA PTY, LIMITED
On January 3, 2000, the Company issued 150,000 restricted common shares in
exchange for 100% of the outstanding capital stock of Abraxas Australia Pty,
Limited,
Page 6
an Australian Company. This business combination was accounted for using the
pooling of interest method of accounting under APB Opinion No. 16, and
accordingly, the accompanying financial statements have been restated to show
the results of operations as if the combination had occurred at the beginning of
all periods presented.
SUPERNET AKTIENGESELLSCHAFT
On May 2, 2000, the Company issued 425,600 restricted common shares in exchange
for 100% of the outstanding capital stock of Supernet Aktiengesellschaft, a
German Company. This business combination was accounted for using the pooling of
interest method of accounting under APB Opinion No. 16, and accordingly, the
accompanying financial statements have been restated to show the results of
operations as if the combination had occurred at the beginning of all periods
presented.
OTHER EVENTS: Effective October 1, 2000, the Company entered into a rental lease
agreement to occupy office space. Pursuant to this agreement, the Company will
pay rent of approximately $12,500 per month through July 31, 2007. The Company
was required to secure an Irrevocable Stand-By Letter of Credit for the benefit
of the Landlord in the amount of $250,000, which is included in other assets on
the accompanying balance sheet. In the event the Company fails to renew the
Letter of Credit as set forth in the Letter of Credit Agreement, the Landlord
shall be entitled to draw on the Letter of Credit in full. The renewal of each
annual Letter of Credit will be reduced by $35,714 per annum.
During September 2000, the Company opened a certificate of deposit with Merrill
Lynch Bank USA in the amount of $500,000, as security for an Irrevocable Standby
Letter of Credit for the benefit of one of its customers. This letter of credit
expires by December 31, 2003 and is included in other assets on the accompanying
balance sheet.
Page 7
PART I - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
NetSol International, Inc. ("NetSol" or the "Company") is in the
business of information technology ("I/T") services. The Company has helped
clients use I/T more efficiently in order to improve their operations and
profitability and to achieve business results. Network Solutions Pvt. Ltd.
("NetSol PK") develops the majority of the software for the Company. NetSol PK
was the first company in Pakistan to achieve the ISO 9001 accreditation. The
Company is in the process of attaining SEI CMM Level 3 accreditation. This is
one of the highest levels of recognition for quality and best practices a
software house can achieve.
The Company offers a broad array of professional services to clients in the
global commercial markets and specializes in the application of advanced and
complex I/T to achieve its customers' strategic objectives. Its service
offerings include outsourcing, systems integration, and I/T and management
consulting and other professional services, including e-business solutions.
Outsourcing involves operating all or a portion of a customer's technology
infrastructure, including systems analysis, applications development, network
operations, desktop computing and data center management.
Systems integration encompasses designing, developing, implementing and
integrating complete information systems.
I/T and management consulting services include advising clients on the strategic
acquisition and utilization of I/T and on business strategy, operations, change
management and business process reengineering.
The Company also develops sophisticated software systems for the lease and
finance industry. NetSol has developed a fully integrated leasing and finance
package, which is a series of five products that can be marketed in an
integrated system. These products are ePOS, PMS, SMS, CMS, and WFS. These five
applications form the full suite of asset based lending Enterprise Resource
Planning applications. These applications can run almost the entire operations
of a captive leasing company.
NetSol ePOS is a browser-based Point of Sale system that is used by the
dealership and other outlets. ePOS users create quotations and financing
applications for the customers using predefined Financial Products. The proposal
is submitted to Back Office (PMS) for approval. After analysis, the proposal is
sent back to ePOS system with a final decision.
Proposal Management System (PMS) provides Finance/Leasing Companies with the
ability to quickly assess the worthiness of an applicant applying for a loan or
a lease. The System is equipped with strong workflow management, integrated link
to Credit Rating Agencies, automated point scoring strategy for automatic
approval/rejection/referral, can be customized to link to any Point of Sale
System, ability to integrate any vehicle data provider such as Glass's Guide in
Europe and Australia.
The NetSol Wholesale Finance System (WFS) is developed to automate and manage
the Whole Sale Finance (Floor Plan) activities of a Finance Company. The design
of the system is based on the concept of One Loan One Asset to facilitate Asset
Tracking and Costing of an asset. The system covers from Credit Limit Request,
Payment of Loan, Billing, and Settlement, Auditing of Stocks, Dealer Information
and ultimately the pay-off functions.
Page 8
Settlement Management System (SMS) verifies the signed document sent by the
dealer/broker/third party against the information stored in the Proposal
Management System database. Settlement Management System verifies all
calculations before loading the contract into the Contract Management System.
Other main features are collection of first rental, disbursement of funds to
dealers, Insurance Company and other third parties. Workflow software is part of
Settlement Management System and it enables the users of Settlement Management
System to communicate with Proposal Management workflow or within its own
workgroup.
The Contract Management System (CMS) manages lease contracts for financing of
vehicles from inception till completion. The leasing company is able to
establish, maintain and terminate such financial contracts. Contracts may
include added value services such as vehicle maintenance and/or insurance
premiums. It furthermore incorporates functional extensions such as litigation,
remarketing of vehicles, securitization of a portfolio and post dated check
management.
These are traditionally complex business applications and require a great deal
of industry experience both in the development as well as implementation stages.
NetSol, over the years, has developed core competencies in the asset based
lending software space. These are extremely sought after skills shared in a team
of approximately 30 business consultants. NetSol is able to demand a premium for
these consultants and leverages this competency when bidding for new business.
Typically, the sales cycle for these products is anywhere between six to twelve
months and NetSol derives its income both from selling the license to use the
products as well as customization. License fees can vary between $75,000 to up
to $1,000,000 per license depending upon the size of the customer and the
complexity of the customization. The revenue for the license and the
customization flows in several phases and could take from six months to two
years before it is fully recognized as income.
MARKETING AND SELLING
The objective of the Company's marketing program is to create and sustain
preference and loyalty for NetSol as a leading e-services consulting and
software solutions provider. Marketing is performed at the corporate and
business unit levels. The corporate marketing department has overall
responsibility for communications, advertising, public relations and our website
and also engineers and oversees central marketing and communications programs
for use by each of our business units.
Our dedicated marketing personnel within the business units undertake a variety
of marketing activities, including sponsoring focused client events to
demonstrate our skills and products, sponsoring and participating in targeted
conferences and holding private briefings with individual companies. We believe
that the industry focus of our sales professionals and our business unit
marketing personnel enhances their knowledge and expertise in these industries
and will generate additional client engagements.
In March 2000, the Company entered into a Software Distribution Agreement with
CFS Group PLC ("CFS") whereby the Company granted CFS the exclusive right to
market and sublicense certain software products of NetSol. The term of this
agreement is for three years. This agreement provided the Company with the
opportunity to expand its marketing efforts by offering its products to
customers of CFS and others in need of lease and finance software. CFS will pay
a minimum of $1.2 million regardless of the amount of actual sales achieved. The
minimum guarantee is for the period beginning March 15, 2000 and ending twelve
months after the time NetSol delivers and CFS accepts the US version of the
products.
The Company generally enters into written commitment letters with clients at or
around the time it commences work on a project. These commitment letters
typically contemplate that NetSol and the client will subsequently enter into a
more detailed agreement, although the client's obligations under the commitment
letter is not conditioned upon the execution of the later agreement. These
Page 9
written commitments and subsequent agreements contain varying terms and
conditions and the Company does not generally believe it is appropriate to
characterize them as consisting of backlog. In addition, because these written
commitments and agreements often provide that the arrangement can be terminated
with limited advance notice or penalty, the Company does not believe the
projects in process at any one time are a reliable indicator or measure of
expected future revenues.
NetSol provides its services primarily to clients in global commercial
industries. In the global commercial area, the Company's service offerings are
marketed to clients in a wide array of industries including schools; automotive;
chemical; tiles/ceramics; Internet marketing; software; banks and financial
services.
Geographically, NetSol continues to have operations throughout North America,
Europe and Asia Pacific region.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2000 as compared to the Three Months Ended
September 30, 1999 (restated).
Net sales of $2,117,906 for the first quarter of fiscal 2000, which ended
September 30, 2000, were more than 50% greater than the sales of the same
quarter for the previous year of $1,394,544 (restated). The significant sales
increase is attributable largely to positive upward trends in most of the
subsidiaries. Due to the maturity of the lease and finance products, The Company
is positioning itself to market these licenses to the North American and other
global markets. The Company anticipates the growth pattern seen thus far in
fiscal 2001 for NetSol PK to continue to grow steadily in the remainder of this
fiscal year due to product maturity and market demand with several existing
customers, among them CFS, Daimler-Chrysler and other leasing and finance
companies.
The gross profit was $1,207,438 in the quarter ending September 30, 2000 in
comparison with $838,005 (restated) for the same quarter the previous year. Cost
of sale for the quarter ending September 30, 2000 was $910,468 in comparison
with $556,539 (restated) for the same quarter in the previous year. The Company
is continuing to negotiate better pricing on its new agreements which provides
for higher margins.
Operating expenses were $1,958,698 for the quarter ending September 30, 2000.
This compares with $1,675,214 (restated) for the quarter ending September 30,
1999. The increase in the current fiscal year is attributable to the
amortization of goodwill and other intangible assets. Depreciation and
amortization expense increased to $333,789 for the quarter ended September 30,
200 as compared to $210,500 for the quarter ended September 30, 1999. General
and administrative costs increased to $556,039 for the quarter ended September
30, 2000 as compared to $299,809 for the quarter ended September 30, 1999. This
increase is attributable to additional operational expenses as the Company
strengthens and expands its infrastructure both at the parent and subsidiary
level. Salaries and wages and professional fees were slightly lower in the
current quarter as compared to the prior years quarter largely as a result of
the Company applying pooling of interest accounting. Selling and marketing
expenses were comparable for both quarters as the Company has yet to
aggressively launch its global marketing efforts. Operating results for the
September 30, 1999 quarter was impacted as the Company applied pooling of
interest accounting rules to two of its four acquisitions - Abraxas in Australia
and Supernet AG of Germany. Its consolidated statement of operations includes
the operations of both Abraxas and Supernet AG for quarters ended September 30,
2000 and September 30, 1999 (restated).
Net loss was $708,093 for the quarter ended September 30, 2000 as compared to
$837,209 (restated) for the quarter ended September 30, 1999. This resulted in a
net loss per share, basic and diluted, of $0.06 for the quarter ended September
30, 2000 as compared with $0.10 (restated) for the quarter ended September 30,
1999. That is a reduction of $0.04 loss per share on a quarter to quarter
comparative basis.
The Company's cash position was $3,825,337 at September 30, 2000. This is
presented on the financial statements as $3,075,337 as cash and cash
equivalents, and a total $750,000 as certificates of deposit, which is included
in other assets.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, the Company's working capital (current assets less
current
Page 10
liabilities) totaled $4.44 million, a slight decrease of $280,097 since June 30,
2000 The Company utilizes working capital to fund both existing operations, for
anticipated capital expenditures and further development of new business. At
September 30, 2000, the Company has not elected to set up a revolving credit
facility, but is evaluating various financing activities which will enable the
Company to execute it business plan and meet its capital demands in the coming
year. ER, a subsidiary of the Company, entered into a promissory note agreement
in this quarter to assist in its cash flow management for working capital needs.
The Company's principle capital requirements have been to fund acquisitions,
working capital, and capital expenditures. The Company does not believe that the
nature of their software sales contracts will have a negative material impact
upon its liquidity. In the opinion of management, the Company currently has
sufficient funds and adequate financial sources available to provide it with
liquidity to meet its current foreseeable cash needs for at least the next year.
Management believes that its anticipated cash flows from financing and investing
activities, existing cash balances and any successful newly sought after
borrowings and private raises, will be sufficient for the foreseeable future to
finance anticipated working capital requirements and capital expenditures.
RAISING OF ADDITIONAL CAPITAL
The Company filed a Form S-3 with the Securities and Exchange
Commission on November 13, 2000 to sell $30 million of its securities.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is currently party to one dispute filed by its former
Chief Financial Officer and director, Gill Champion, which involves
litigation. The plaintiff filed a Complaint for Declaratory Relief on May 9,
2000 in the Los Angeles, CA Superior Court (Case No. BC229642). The plaintiff
contends that, on or about May 29, 1998, he was granted 120,000 options at a
$.01 per share exercise price. The Company has responded that the options
were originally granted by the Board to all board members but later all of
the directors agreed to forego such grant, and none received such options as
the Plaintiff claims were granted him. The parties are in the discovery stage
of the proceeding. The Company denies the allegations and is currently
defending the action and believes it will win on its merits.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company did not receive any additional proceeds from its Public
Offering since its Annual Report.
In July 2000, the Company issued and sold 63,666 shares of common
stock for aggregate gross proceeds of $955,000 in a private placement. The
Company relied upon the registration requirements section of Section 4(2) of
the Securities Act of 1933 and restricted securities were sold only to
accredited investors.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
3.1 Articles of Incorporation of Mirage Holdings, Inc., a Nevada
corporation, incorporated by reference to the Company's
Registration Statement No. 333-28861 filed on Form SB-2 filed
June 10, 1997
3.2 Amendment to Articles of Incorporation dated May 21, 1999,
incorporated by reference to the Company's Annual Report on Form
10-KSB filed September 28, 1999
3.3 Bylaws of Mirage Holdings, Inc., as amended and restated as of
November 28, 2000, incorporated by reference to the Company's
Annual Report on Form 10-KSB/A filed February 2, 2001
27 Financial Data Schedule was previously filed with the Company's
Quarterly Report on Form 10-QSB filed November 14, 2000
(b) REPORTS ON FORM 8-K
On July 25, 2000, a Form 8-K was filed announcing a Settlement
Agreement and Release by and between the Company and Blue Water Partners, LLC.
Page 11
In accordance with the requirements of the Exchange Act, the registrant caused
this amendment to the report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NETSOL INTERNATIONAL, INC.
(Registrant)
Date: February 1, 2001 /s/ Najeeb U. Ghauri
-------------------------------------
NAJEEB U. GHAURI
Chief Executive Officer
/s/ Syed Husain
-------------------------------------
SYED HUSAIN
Chief Financial Officer
(Principal Financial Officer)