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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NETSOL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NEVADA 95-4627685
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
24025 PARK SORRENTO, SUITE 220, CALABASAS, CA 91302
(818) 222-9197
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
--------------------------
MALEA FARSAI, ESQ.
GENERAL COUNSEL
NETSOL INTERNATIONAL, INC.
24025 PARK SORRENTO, SUITE 220
CALABASAS, CALIFORNIA 91302
(818) 222-9195
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
COPIES TO:
KAREN C. GOODIN, ESQ.
Riordan & McKinzie
600 Anton Boulevard, 18th Floor
Costa Mesa, CA 92626
(714) 433-2900
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT IS EFFECTIVE.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
<S> <C> <C>
Common Stock, $.001 par value...............................
Warrants to Purchase Common Stock...........................
Total....................................................... $30,000,000 $7,920
</TABLE>
(1) Not specified as to each class of securities to be registered pursuant to
General Instruction II(D) to Form S-3.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SUBJECT TO COMPLETION DATED NOVEMBER 13, 2000
THE INFORMATION IN THIS PROSPECTUS IN NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS
NETSOL INTERNATIONAL, INC.
$30,000,000
COMMON STOCK
WARRANTS TO PURCHASE COMMON STOCK
This prospectus is part of the registration statement we filed with the
Securities and Exchange Commission using a "shelf" registration process. This
means:
- We may issue up to $30,000,000 of our common stock or warrants to purchase
our common stock from time to time.
- We will circulate a prospectus supplement each time we plan to issue our
common stock or warrants to purchase common stock.
- The prospectus supplement will inform you about the specific terms of that
offering and also may add, update or change information contained in this
prospectus.
- You should read this prospectus and any prospectus supplement carefully
before you invest.
Our common stock, $.001 par value is listed on the Nasdaq SmallCap Market,
under the symbol "NTWK". On November 10, 2000, the last reported sale price for
our common stock was $12 per share.
We have engaged Ladenburg Thalmann & Co, Inc. as our exclusive placement
agent for this offering on a best efforts basis. The offering will end on
September 1, 2002 or sooner if we sell all the common stock covered by this
prospectus before such time.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. PLEASE CAREFULLY
CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
------------------------
Our principal executive offices are located at 24025 Park Sorrento, Suite
220, Calabasas, CA 91302 and our telephone number is (818) 222-9195. Our web
site is located at www.netsol-intl.com. Information contained in our web site is
not part of this prospectus.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk Factors................................................ 3
The Company................................................. 9
Special Note Regarding Forward-Looking Statements........... 9
Use of Proceeds............................................. 9
General Description of Securities........................... 9
Plan of Distribution........................................ 11
Legal Matters............................................... 11
Experts..................................................... 11
Where You Can Find More Information......................... 12
</TABLE>
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RISK FACTORS
An investment in the shares of common stock offered by this prospectus
involves a high degree of risk. You should carefully review the following risk
factors as well as the other information set forth in this prospectus before
making an investment.
SOME OF THE INFORMATION IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL
RISKS AND UNCERTAINTIES. YOU CAN IDENTIFY THESE STATEMENTS BY FORWARD-LOOKING
WORDS SUCH AS "MAY," "WILL," "EXPECT," "ANTICIPATE," "BELIEVE," "ESTIMATE" AND
"CONTINUE" OR SIMILAR WORDS. YOU SHOULD READ STATEMENTS THAT CONTAIN THESE WORDS
CAREFULLY BECAUSE THEY:
- discuss our future expectations;
- contain projections of our future operating results or of our future
financial condition; and/or
- state other "forward-looking" information.
WE BELIEVE IT IS IMPORTANT TO COMMUNICATE OUR EXPECTATIONS TO OUR INVESTORS.
THERE MAY BE EVENTS IN THE FUTURE, HOWEVER, THAT WE ARE NOT ACCURATELY ABLE TO
PREDICT OR OVER WHICH WE HAVE NO CONTROL. THE RISK FACTORS LISTED IN THIS
SECTION, AS WELL AS ANY CAUTIONARY LANGUAGE IN THIS PROSPECTUS, PROVIDE EXAMPLES
OF RISKS, UNCERTAINTIES AND EVENTS THAT MAY CAUSE OUR ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE EXPECTATIONS WE DESCRIBE IN OUR FORWARD-LOOKING STATEMENTS.
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THE OCCURRENCE
OF ANY OF THE EVENTS DESCRIBED IN THESE RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL
CONDITION AND OPERATING RESULTS AND THAT UPON THE OCCURRENCE OF ANY OF THESE
EVENTS, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU COULD LOSE
ALL OR PART OF YOUR INVESTMENT.
IF WE DO NOT ATTRACT AND RETAIN QUALIFIED PROFESSIONAL STAFF, WE MAY NOT BE
ABLE TO ADEQUATELY PERFORM OUR CLIENT ENGAGEMENTS, WHICH COULD LIMIT ACCEPT OUR
ABILITY TO NEW CLIENT ENGAGEMENTS
Our business is labor intensive and our success depends in large part upon
our ability to attract, retain, train and motivate highly skilled employees.
Because of the rapid growth in the Information Technology or I/T sector, there
is intense competition for employees who have modeling, creative design,
technical and program management experience. In addition, the Internet has
created many opportunities for people with the skills we seek to form their own
companies or join startup companies and these opportunities frequently offer the
potential for significant future financial profit through equity incentives
which we cannot match. We may not be successful in attracting a sufficient
number of highly skilled employees in the future, or in retaining, training and
motivating the employees we are able to attract. Any inability to attract,
retain, train and motivate employees could impair our ability to adequately
manage and complete existing projects and to bid for or accept new client
engagements.
IF WE DO NOT MANAGE OUR GROWTH EFFECTIVELY, OUR OPERATING RESULTS WILL BE
ADVERSELY AFFECTED
Our growth has placed significant demands on our management and other
resources. Our revenues increased approximately 100% from $3.5 million
(restated) in 1999 to $7.0 million in 2000. Our staff increased from 112
full-time employees at June 30, 1999 to 354 at June 30, 2000. Our future success
will depend on our ability to manage our growth effectively, including by:
- developing and improving our operational, financial and other internal
systems;
- integrating and managing acquired businesses, joint ventures and strategic
investments;
- training, motivating and managing our employees;
- estimating fixed-price fees and project timeframes accurately;
- maintaining high rates of employee utilization; and
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- maintaining project quality and client satisfaction.
We have significant fixed operating costs, which may be difficult to adjust
in response to unanticipated fluctuations in revenues.
A high percentage of our operating expenses, particularly personnel and
rent, are fixed in advance of any particular quarter. As a result, unanticipated
variations in the number, or progress toward completion, of our projects may
cause significant variations in operating results in any particular quarter and
could have a material adverse effect on operations for that quarter.
An unanticipated termination of a major project, a client's decision not to
proceed with a project we anticipated, or the completion during a quarter of
several major client projects could require us to maintain underutilized
employees and could therefore have a material adverse effect on our business,
financial condition and results of operations. Our revenues and earnings may
also fluctuate from quarter to quarter based on such factors as:
- the contractual terms and timing of completion of projects;
- any delays incurred in connection with projects;
- the adequacy of provisions for losses and bad debts;
- the accuracy of our estimates of resources required to complete ongoing
projects; and general economic conditions.
IF BUSINESSES DO NOT INCREASE THEIR USE OF THE INTERNET AS A MEANS FOR
CONDUCTING COMMERCE, OUR REVENUES WILL BE ADVERSELY AFFECTED
One of the sources of our revenue is use of our software on-line. We have
spent our resources to develop our software so that it will be used via the
Internet. Our future success depends on the increased acceptance and use of the
Internet as a means for conducting commerce. If commerce on the Internet does
not continue to grow, or grows more slowly than expected, revenue growth would
slow or decline and our business, financial condition and results of operations
would be materially adversely affected. Consumers and businesses may delay
adoption of the Internet as a viable medium for commerce for a number of reasons
not within our control, including:
- inadequate network infrastructure;
- delays in the development of Internet enabling technologies and
performance improvements;
- delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity;
- delays in the development of security and authentication technology
necessary to effect secure transmission of confidential information;
- changes in, or insufficient availability of, telecommunications services
to support the Internet; and
- failure of companies to meet their customers' expectations in delivering
goods and services over the Internet.
INTERNATIONAL EXPANSION OF OUR BUSINESS COULD RESULT IN FINANCIAL LOSSES DUE
TO CHANGES IN FOREIGN ECONOMIC CONDITIONS OR FLUCTUATIONS IN CURRENCY AND
EXCHANGE RATES
We expect to continue to expand our international operations. We currently
have offices in the United Kingdom, Germany, Pakistan and Australia. We have
limited experience in marketing, selling and
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providing our services internationally. International operations are subject to
other inherent risks, including:
- recessions in foreign countries;
- fluctuations in currency exchange rates;
- difficulties and costs of staffing and managing foreign operations;
- reduced protection for intellectual property in some countries;
- political instability or changes in regulatory requirements or
overthrowing the current government in the foreign countries; and
- U.S. imposed restrictions on the import and export of technologies.
WE DEPEND HEAVILY ON A LIMITED NUMBER OF CLIENT PROJECTS AND THE LOSS OF ANY
WOULD ADVERSELY AFFECT OUR OPERATING RESULTS
We have derived, and believe that we will continue to derive, a significant
portion of our revenues from a limited number of clients for whom we perform
large projects. For the year ended June 30, 2000, our four largest clients
accounted for over 30% of our revenues. In addition, revenues from a large
client may constitute a significant portion of our total revenues in a
particular quarter. The loss of any principal client for any reason, including
as a result of the acquisition of that client by another entity, could have a
material adverse effect on our business, financial condition and results of
operations.
IF WE ARE UNABLE TO ACHIEVE ANTICIPATED BENEFITS FROM ACQUISITIONS, JOINT
VENTURES AND STRATEGIC INVESTMENTS, OUR BUSINESS COULD BE ADVERSELY AFFECTED
During the past year, we have completed four acquisitions and entered into
one alliance. The anticipated benefits from these and future acquisitions, joint
ventures and strategic investments may not be achieved. For example, when we
acquire a company, we cannot be certain that customers of the acquired business
will continue to do business with us or that employees of the acquired business
will continue their employment or become well integrated into our operations and
culture. The identification, consummation and integration of acquisitions, joint
ventures and strategic investments require substantial attention from
management. The diversion of the attention of management relating to these
activities, as well as any difficulties encountered in the integration process,
could have an adverse impact on our business, financial condition and results of
operations.
IF ANY CLIENT UNEXPECTEDLY TERMINATES THEIR CONTRACTS WITH US OUR BUSINESS
COULD BE ADVERSELY AFFECTED
Our clients, with limited advance notice and without significant penalty,
can cancel some of our contracts. Termination by any client of a contract for
our services could result in a loss of expected revenues and additional expenses
for staff which were allocated to that client's project. The cancellation or a
significant reduction in the scope of a large project could have a material
adverse effect on our business, financial condition and results of operations.
OUR STOCK PRICE IS VOLATILE AND MAY RESULT IN SUBSTANTIAL LOSSES FOR
INVESTORS
The trading price of our common stock could be subject to wide fluctuations
in response to:
- quarterly variations in operating results and our achievement of key
business metrics;
- changes in earnings estimates by securities analysts;
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- any differences between reported results and securities analysts'
published or unpublished expectations;
- announcements of new contracts or service offerings by us or our
competitors;
- market reaction to any acquisitions, joint ventures or strategic
investments announced by us or our competitors;
- general economic or stock market conditions unrelated to our operating
performance; and
- In the past, securities class action litigation has often been instituted
against companies following periods of volatility in the market price of
their securities. This type of litigation could result in substantial
costs and a diversion of management attention and resources.
IF WE DO NOT KEEP PACE WITH TECHNOLOGICAL CHANGES, OUR COMPETITIVE POSITION
WILL SUFFER
Our markets and the technologies used in our solutions are characterized by
rapid technological change. Failure to respond in a timely and cost-effective
way to these technological developments would have a material adverse effect on
our business, financial condition and results of operations. We expect to derive
a substantial portion of our revenues from providing software that is based upon
leading technologies and that is capable of adapting to future technologies. As
a result, our success will depend on our ability to offer services that keep
pace with continuing changes in technology, evolving industry standards and
changing client preferences. We may not be successful in addressing future
developments on a timely basis. Our failure to keep pace with the latest
technological developments would have a material adverse effect on our business,
financial condition and results of operations.
WE FACE SIGNIFICANT COMPETITION IN MARKETS THAT ARE NEW AND RAPIDLY CHANGING
The markets for the services we provide are highly competitive. We believe
that we currently compete principally with strategy consulting firms, Internet
professional services firms, systems integration firms, software developers,
technology vendors and internal information systems groups. Many of the
companies that provide services in our markets have significantly greater
financial, technical and marketing resources than we do and generate greater
revenues and have greater name recognition than we do. In addition, there are
relatively low barriers to entry into our markets and we have faced, and expect
to continue to face competition from new entrants into our markets.
We believe that the principal competitive factors in our markets include:
- ability to integrate strategy, experience modeling, creative design and
technology services;
- quality of service, speed of delivery and price;
- industry knowledge;
- sophisticated project and program management capability; and
- Internet technology expertise and talent.
We believe that our ability to compete also depends in part on a number of
competitive factors outside our control, including:
- the ability of our competitors to hire, retain and motivate professional
staff;
- the development by others of Internet services or software that is
competitive with our solutions; and
- the extent of our competitors' responsiveness to client needs.
There can be no assurance that we will be able to compete successfully in
our markets.
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IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY SOFTWARE, OUR BUSINESS COULD BE
ADVERSELY AFFECTED
Our success depends, in part, upon our proprietary software and other
intellectual property rights. We rely upon a combination of trade secrets,
nondisclosure and other contractual arrangements, and copyright and trademark
laws to protect our proprietary rights. We enter into confidentiality agreements
with our employees, generally require that our consultants and clients enter
into these agreements, and limit access to and distribution of our proprietary
information. There can be no assurance that the steps we take in this regard
will be adequate to deter misappropriation of our proprietary information or
that we will be able to detect unauthorized use and take appropriate steps to
enforce our intellectual property rights. In addition, although we believe that
our services and products do not infringe on the intellectual property rights of
others, there can be no assurance that infringement claims will not be asserted
against us in the future, or that if asserted that any infringement claim will
be successfully defended. A successful claim against us could materially
adversely affect our business, financial condition and results of operations.
WE MAY NOT HAVE THE RIGHT TO RESELL OR REUSE SOFTWARE DEVELOPED FOR SPECIFIC
CLIENTS
A portion of our business involves the development of software for specific
client engagements. Ownership of these solutions is the subject of negotiation
and is frequently assigned to the client, although we may retain a license for
certain uses. Some clients have prohibited us from marketing the software
developed for them for specified periods of time or to specified third parties
and there can be no assurance that clients will not demand similar or other
restrictions in the future. Issues relating to the ownership of and rights to
use solutions can be complicated and there can be no assurance that disputes
will not arise that affects our ability to resell or reuse these solutions. Any
limitation on our ability to resell or reuse a solution could require us to
incur additional expenses to develop new solutions for future projects.
WE ARE DEPENDENT ON OUR KEY PERSONNEL
Our success will depend in large part upon the continued services of a
number of key employees, including Messrs. Salim Ghauri, Najeeb Ghauri and Naeem
Ghauri. The loss of the services of either of these or of one or more of our
other key personnel could have a material adverse effect on our business,
financial condition and results of operations. In addition, if one or more of
our key employees resigns from NetSol to join a competitor or to form a
competing company, the loss of such personnel and any resulting loss of existing
or potential clients to any such competitor could have a material adverse effect
on our business, financial condition and results of operations. In the event of
the loss of any personnel, there can be no assurance that we would be able to
prevent the unauthorized disclosure or use of our technical knowledge, practices
or procedures by such personnel.
WE DO NOT PAY CASH DIVIDENDS
We have never paid dividends and do not presently intend to pay any
dividends in the foreseeable future.
FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE
Future sales of our common stock could negatively impact the market price of
our common stock. Shares of our common stock that have not been previously
traded in the public market but may at some time be sold in the public market
include:
- shares held by affiliates;
- shares issued or to be issued in acquisitions;
- shares issuable upon conversion of convertible notes; and
- shares to be issued pursuant to stock options and warrants.
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The aggregate number of such shares is much greater than the number of
shares of our common stock which have previously traded on the public market.
THERE IS ONLY A LIMITED TRADING MARKET FOR OUR COMMON STOCK AND IT IS
POSSIBLE THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES EASILY
There is currently only a limited trading market for our common stock. Our
common stock trades on the Nasdaq SmallCap Market under the symbol "NTWK" with
very limited trading volume. There can be no assurance that a substantial
trading market will ever develop (or be sustained, if developed) for our common
stock upon completion of this offering, or that purchasers will be able to
resell their securities or otherwise liquidate their investment without delay.
THE FUTURE ISSUANCE OF COMMON STOCK UPON EXERCISE OF OPTIONS, WARRANTS AND
CONVERTIBLE NOTES MAY DEPRESS THE PRICE OF OUR COMMON STOCK
As of June 30, 2000, there were outstanding options to purchase an aggregate
of 2,067,250 shares of our common stock under our 1999 and 1997 option plans and
outstanding warrants to purchase an aggregate of 147,192 shares of common stock.
In addition, we have issued 8% convertible notes, the remaining balance of which
may be converted into an aggregate of approximately 15,400 shares of common
stock.
During the respective terms of the convertible notes, warrants and options
granted or to be granted under our option plans, the holders thereof are given
an opportunity to benefit from a rise in the market price of the common stock,
with a resultant dilution of the interests of existing stockholders. The
existence of these convertible notes, warrants and options could make it more
difficult for us to obtain additional financing while such securities are
outstanding. The holders may be expected to exercise their rights to acquire
common stock and sell at a time when we would, in all likelihood, be able to
obtain needed capital through a new offering of securities on terms more
favorable than those provided by these convertible notes, warrants and options.
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THE COMPANY
NetSol International, Inc. (formerly Mirage Holding, Inc.) was founded in
1997 and is now in the business of information technology or I/T services.
NetSol 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. or NetSol PK develops the majority of the software for NetSol. NetSol
PK was the first company in Pakistan to achieve the ISO 9001 accreditation.
NetSol is in the process of attaining SEI CMM Level 3 accreditation. This is one
of the highest level of recognition for quality and best practices a software
house can achieve.
NetSol 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.
Our principal executive offices are located at 24025 Park Sorrento, Suite
220, Calabasas, California 91302 and our telephone number is (818) 222-9195.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this prospectus
are forward-looking statements concerning our operations, economic performance
and financial condition. Forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, are included,
for example, in the discussions about:
- our strategy;
- product sales and revenues;
- new product development or product introduction;
- expenses, earnings and net income; and
- our operational and legal risks.
These statements involve risks and uncertainties. Actual results may differ
materially from those expressed or implied in those statements. Factors that
could cause such differences include, but are not limited to, those discussed
under "Risk Factors".
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, the net proceeds from
the sale of the securities will be used for general corporate purposes,
primarily to fund our operations and capital expenditures and for working
capital.
GENERAL DESCRIPTION OF SECURITIES
We may offer under this prospectus shares of common stock and warrants to
purchase common stock or any combination of the foregoing, either individually
or as units consisting of one or more securities. The aggregate offering price
of securities offered by us under this prospectus will not exceed $30,000,000.
Each time we offer these securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. Certain
of the securities to be offered hereby may involve a high degree of risk. To the
extent not set forth under "Risk Factors" in this prospectus, such risks will be
set forth in the prospectus supplement relating to such securities.
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DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
25,000,000 shares of common stock. As of November 9, 2000, we had 11,830,039
shares of common stock issued and outstanding.
DIVIDENDS
The holders of common stock are entitled to receive dividends when, as and
if declared by our board of directors, out of funds legally available for their
payment.
RIGHTS UPON LIQUIDATION
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of common stock will be entitled to share equally in any
of our assets available for distribution after the payment in full of all debts
and distributions and after the holders of all series of outstanding preferred
stock, if any, have received their liquidation preferences in full.
VOTING RIGHTS
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders.
MISCELLANEOUS
The holders of common stock are not entitled to redemption rights. Shares of
common stock are not convertible into shares of any other class of capital
stock. Compushare, Inc. is the transfer agent and registrar for our common
stock.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of common stock. Warrants may be
issued independently or together with common stock and may be attached to or
separate from any offered securities. Each series of warrants will be issued
under a separate warrant agreement. It is anticipated that any warrants issued
pursuant to this prospectus will not be freely transferable pursuant to an
agreement between us and the holder. This summary of some provisions of the
warrants is not complete. You should refer to the warrant agreement relating to
the specific warrants being offered for the complete terms of the warrants. The
warrant agreements will be filed with the SEC in connection with the offering of
the specific warrants.
The particular terms of any issue of warrants will be described in the
prospectus supplement relating to the issue. Those terms may include:
(1) the number of shares of common stock purchasable upon the exercise of
warrants to purchase shares of common stock and the price at which such number
of shares of common stock may be purchased upon such exercise;
(2) the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
(3) United States Federal income tax consequences applicable to the
warrants; and
(4) any other terms of the warrants.
Warrants for the purchase of common stock will be offered and exercisable
for U.S. dollars only. Warrants will be issued in registered form only. Each
warrant will entitle its holder to purchase the number of shares of common stock
at the exercise price set forth in, or calculable as set forth in, the
applicable prospectus supplement. The exercise price may be adjusted upon the
occurrence of certain events as set forth in the prospectus supplement. After
the close of business on the expiration date, unexercised
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warrants will become void. We will specify the place or places where, and the
manner in which, warrants may be exercised in the applicable prospectus
supplement.
Prior to the exercise of any warrants to purchase common stock, holders of
the warrants will not have any of the rights of holders of the common stock
purchasable upon exercise, including the right to vote or to receive any
payments of dividends on the common stock purchasable upon exercise.
LISTING OF SECURITIES
Our common stock is traded on the Nasdaq Small Cap Market under the symbol
"NTWK." We do not intend to list for trading our warrants that are issued under
this prospectus.
PLAN OF DISTRIBUTION
We have engaged Ladenburg Thalmann & Co, Inc. as our exclusive placement
agent for this offering on a best efforts basis. Ladenburg Thalmann has agreed
with us that it will seek to identify institutional investors who may wish to
purchase our common stock or warrants from time to time on specific terms to be
negotiated between us and such institutional investors. Ladenburg Thalmann is
not committed to purchase any of our securities, regardless of whether Ladenburg
Thalmann does or does not successfully identify others to purchase our
securities. Also, Ladenburg Thalmann has advised us that they will not purchase
any of our securities for their own account or for any discretionary accounts
managed by them.
We have agreed to pay Ladenburg Thalmann a placement fee equal to 5% of the
gross proceeds to NetSol from each such sale. We have also agreed to issue
Ladenburg Thalmann common stock purchase warrants at the closing of each
placement equal to 5% of the number of shares sold in each such placement. The
exercise price of each such warrant shall be equal to the greater of (a) 120% of
the offering price of the common stock in such particular placement or (b) the
exercise price of any warrants issued to any purchaser of common stock in such
particular placement.
We have also given Ladenburg Thalmann a $25,000 non-accountable expense
allowance and a right of first refusal for a period of one year from the
conclusion of this offering to provide additional financing to us. We have also
agreed to give Ladenburg and Ladenburg has agreed to give us customary
underwriter's indemnification against liabilities under the Securities Act.
Any variance from those placement terms will be disclosed in a prospectus
supplement.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Malea Farsai, Esq. General Counsel of NetSol International, Inc.
EXPERTS
The consolidated financial statements and schedule incorporated by reference
in this prospectus and elsewhere in the registration statement have been audited
by Stonefield Josephson, Inc., independent public accountants, as indicated in
their reports with respect thereto and are incorporated herein by reference in
reliance upon the authority of said firm as experts in giving said reports.
11
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
GOVERNMENT FILINGS. We file annual, quarterly and special reports and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
you free of charge at the SEC's web site at http://www.sec.gov. Our web site can
be found at http://www.netsol-intl.com. Information contained in our web site is
not part of this prospectus.
STOCK MARKET. The common shares are traded on the Nasdaq SmallCap Market.
Materials filed by us can be inspected at the offices of the National
Association of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C.
20006.
INFORMATION INCORPORATED BY REFERENCE. The SEC allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede previously filed information, including information
contained in this prospectus.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until this offering has been completed:
- our Annual Report on Form 10-KSB for the year ended June 30, 2000;
- our Current Reports on Form 8-K dated July 25, 2000 and October 25, 2000;
- the description of our common stock, which is contained in our
registration statement filed on Form 8-A filed on June 30, 1996 as amended
by Form 8-A/A filed on November 21, 1997.
You may request free copies of these filings by writing or telephoning us at
the following address:
Aiesha Ghauri
NetSol International, Inc.
24025 Park Sorrento, Suite 220
Calabasas, CA 91302
(818) 222-9195
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a statement of estimated expenses we will pay in connection
with the issuance and distribution of the securities being registered.
<TABLE>
<CAPTION>
ITEM AMOUNT
---- --------
<S> <C>
SEC registration fee........................................ $ 7,920
Printing fees............................................... $ 30,000
Nasdaq fees................................................. $ 6,000
Blue sky fees and expenses.................................. $ 10,000
Legal fees and expenses..................................... $ 20,000
Accountants' fees and expenses.............................. $ 10,000
Transfer agent fees......................................... $ 2,500
Miscellaneous............................................... $ 13,580
--------
Total................................................... $100,000
</TABLE>
All of the above amounts, except for the SEC registration fee, have been
estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Law allows us to indemnify our officers and
directors from liability incurred by reason of the fact that he or she is or was
an officer or director of the corporation. We may authorize such indemnification
if we determine that it is proper under the circumstances. This determination
can be authorized based on a vote of our stockholders, by a majority vote of a
quorum of directors who were not parties to the relevant legal action, or under
certain circumstances, by independent legal counsel in a written opinion. The
indemnification can include, but is not limited to, reimbursement of all fees,
including amounts paid in settlement and attorney's fees actually and reasonably
incurred, in connection with the defense or settlement of any action or suit by
the officer or director.
We have purchased and maintained insurance covering our officers and
directors for the purpose of covering indemnification expenses.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of our company as to which indemnification
is being sought.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <S>
1.1+ Placement Agent Agreement with Ladenberg Thalman & Co. Inc.
dated November 8, 2000.
5.1+ Opinion of Malea Farsai, Esq., General Counsel of NetSol
International, Inc.
23.1+ Consent of Stonefield Josephson, Inc.
23.2+ Consent of Malea Farsai, Esq., General Counsel of NetSol
International, Inc. (included in Exhibit 5).
24.1 Powers of Attorney (included on the signature page of the
Registration Statement).
</TABLE>
------------------------
+ Filed herewith.
13
<PAGE>
ITEM 17. UNDERTAKINGS.
(1) We hereby undertake:
(a) To file, during any period in which we offer or sell securities, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any additional or changed material information of the
plan of distribution.
(b) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered, and the offering
of securities at that time shall be deemed to be the initial bona fide
offering.
(c) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the termination of the offering.
(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than our payment of expenses incurred or paid by a director,
officer or controlling person in the successful defense of any action, suit or
proceeding) is asserted by our directors, officers or controlling persons in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether indemnification by us
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(3) We also undertake that we will:
(a) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by us under the Rule 424(b)(1), or (4) or 497(h) under the
Securities Act as part of this registration statement as of the time the
Securities and Exchange Commission declared it effective.
(b) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the bona fide
offering of those securities.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Calabasas, State of California on November 10, 2000.
<TABLE>
<S> <C> <C>
NETSOL INTERNATIONAL, INC.
By: /s/ NAJEEB U. GHAURI
-----------------------------------------
Najeeb U. Ghauri,
PRESIDENT
Dated: November 10, 2000
</TABLE>
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Najeeb U. Ghauri, President of NetSol
International, Inc., his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities (unless revoked in writing), to
sign any and all amendments to this Registration Statement, including any
post-effective amendments as well as any related registration statement (or
amendment thereto) filed in reliance upon Rule 462(b) under the Securities Act
of 1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ SALIM GHAURI Chief Executive Officer and Director November 10, 2000
------------------------------- (Principal Executive Officer)
Salim Ghauri
/s/ SYED HUSAIN Chief Financial Officer November 10, 2000
------------------------------- (Principal Financial and Accounting
Syed Husain Officer)
/s/ NAJEEB U. GHAURI President and Director November 10, 2000
-------------------------------
Najeeb U. Ghauri
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ SHAHAB GHAURI Director November 10, 2000
-------------------------------
Shahab Ghauri
/s/ IRFAN MUSTAFA Chairman of the Board and Director November 10, 2000
-------------------------------
Irfan Mustafa
/s/ NAEEM GHAURI Chief Operating Officer and Director November 10, 2000
-------------------------------
Naeem Ghauri
/s/ CARY BURCH Director November 10, 2000
-------------------------------
Cary Burch
/s/ WAHEED AKBAR Director November 10, 2000
-------------------------------
Waheed Akbar
</TABLE>
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
<C> <S>
1.1+ Placement Agent Agreement with Ladenberg Thalman & Co. Inc.
dated November 8, 2000.
5.1+ Opinion of Malea Farsai, Esq., General Counsel of NetSol
International, Inc.
23.1+ Consent of Stonefield Josephson, Inc.
23.2+ Consent of Malea Farsai, Esq., General Counsel of NetSol
International, Inc. (included in Exhibit 5).
24.1 Powers of Attorney (included on the signature page of the
Registration Statement).
</TABLE>
------------------------
+ Filed herewith.
17
