Edgar Filing: NETSOL INTERNATIONAL INC

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 2001

REGISTRATION NO. 333-49832
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
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)

NEVADA 95-4627685
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

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)
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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)
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COPIES TO:
KAREN C. GOODIN, ESQ.
Preston Gates & Ellis LLP
4 Park Plaza, Suite 1900
Irvine, CA 92614
(949) 253-0900

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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. / /
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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 JUNE 7, 2001

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.

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 June 1, 2001, the last reported sale price for our
common stock was $3.44 per share.

We may offer these shares directly to purchasers, through agents that we
designate from time to time or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of the shares, their names and
any applicable purchase price, fee, commission or discount arrangement between
them will be set forth in a supplement to this prospectus. No shares of common
stock may be sold by us without delivery of the applicable prospectus
supplement.

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.

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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.

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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.

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THE DATE OF THIS PROSPECTUS IS , 2001

TABLE OF CONTENTS

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............................................... 12

Experts..................................................... 12

Where You Can Find More Information......................... 13

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 425 at December 31, 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

- 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

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;

- 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; and

- general economic or stock market conditions unrelated to our operating
performance.

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.

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.

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 currently only a limited trading market for our common stock and it is
possible that you may not be able to sell your shares easily. 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.

In addition, during the respective terms of the 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 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
warrants and options.

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.

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 April 10, 2001, we had 11,592,997
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

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

Any of the common stock or warrants being offered by us under this
prospectus may be sold in any one or more of the following ways from time to
time:

- through agents,

- to or through underwriters,

- through dealers, and

- directly by us to purchasers.

The distribution of the shares or warrants may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Pursuant to a securities
purchase agreement dated January 8, 2001 with Deephaven Private Placement
Trading Ltd, we issued an aggregate of 462,870 shares and warrants to purchase
up to 138,861 shares of our common stock to Deephaven in January and February
2001. In certain instances we may be obligated to offer to Deephaven up to
$6 million of our common stock under this registration statement subject to the
terms of such purchase agreement.

Offers to purchase common stock or warrants may be solicited by agents
designated by us from time to time. Any agent involved in the offer or sale of
the common stock or warrants under this prospectus will be named, and any
commissions payable by us to these agents will be set forth, in a related
prospectus supplement. Unless otherwise indicated in a prospectus supplement,
any agent will be acting on a reasonable best efforts basis for the period of
its appointment. Any agent may be deemed to be an underwriter, as the term is
defined in the Securities Act, of the common stock or warrants so offered and
sold.

If common stock or warrants are sold by means of an underwritten offering,
we will execute an underwriting agreement with an underwriter or underwriters at
the time an agreement for such sale is reached, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, the
respective amounts underwritten and the terms of the transaction, including
commissions, discounts and any other compensation of the underwriters and
dealers, if any, will be set forth in a related prospectus supplement. That
prospectus supplement and this prospectus will be used by the underwriters to
make resales of the shares or warrants. If underwriters are used in the sale of
any common stock or warrants in connection with this prospectus, those shares
and warrants will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by
the underwriters and us at the time of sale. Common stock may be offered to the
public either through underwriting syndicates represented by managing
underwriters or directly by one or more underwriters. If any underwriter or
underwriters are used in the sale of common stock or warrants, unless otherwise
indicated in a related prospectus supplement, the underwriting agreement will
provide that the obligations

of the underwriters are subject to some conditions precedent and that the
underwriters with respect to a sale of these shares or warrants will be
obligated to purchase all such shares or warrants if any are purchased.

We may grant to the underwriters options to purchase additional common
stock, to cover over-allotments, if any, at the public offering price, with
additional underwriting commissions or discounts, as may be set forth in a
related prospectus supplement. If we grant any over-allotment option, the terms
of that over-allotment option will be set forth in the prospectus supplement for
these shares.

If a dealer is utilized in the sale of the common stock in respect of which
this prospectus is delivered, we will sell these shares or warrants to the
dealer as principal. The dealer may then resell such shares or warrants to the
public at varying prices to be determined by such dealer at the time of resale.
Any such dealer may be deemed to be an underwriter, as such term is defined in
the Securities Act, of the shares or warrants so offered and sold. The name of
the dealer and the terms of transaction will be set forth in the prospectus
supplement relating to those offers and sales.

Offers to purchase common stock or warrants may be solicited directly by us
and those sales may be made by us directly to institutional investors or others,
who may be deemed to be underwriters within the meaning of the Securities Act
with respect to any resale of those shares. The terms of any sales of this type
will be described in the prospectus supplement.

If so indicated in a related prospectus supplement, we may authorize agents
and underwriters to solicit offers by certain institutions to purchase shares or
warrants from us at the public offering price set forth in a related prospectus
supplement as part of delayed delivery contracts providing for payment and
delivery on the date or dates stated in a related prospectus supplement. Such
delayed delivery contracts will be subject to only those conditions set forth in
a related prospectus supplement. A commission indicated in a related prospectus
supplement will be paid to underwriters and agents soliciting purchases of
shares or warrants pursuant to delayed delivery contracts accepted by us.

Agents, underwriters and dealers may be entitled under relevant agreements
with us to indemnification by us against some liabilities, including liabilities
under the Securities Act, or to contributions with respect to payments which
such agents, underwriters and dealers may be required to make in respect
thereof.

Agents, underwriters and dealers may be customers of, engage in transactions
with, or perform services for, us in the ordinary course of our business.

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 incorporated by reference in this
prospectus have been audited by Stonefield Josephson, Inc., Saeed Kamran Patel &
Co., and Mazars Neville Russell, independent public accountants, as indicated in
their reports with respect thereto and are incorporated herein by reference in
reliance upon the authority of said firms as experts in giving said reports.

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 (File No. 0-22773) for the year ended
June 30, 2000 and filed with the SEC on October 13, 2000; and Amendment
No. 1 to our Annual Report on Form 10-KSB/ A (File No. 0-22773) for the
year ended June 30, 2000 and filed with the SEC on February 2, 2001;

- our Quarterly Report on Form 10-QSB for the quarter ended September 30,
2000 and filed with the SEC on November 14, 2000; and Amendment No. 1 to
our Quarterly Report on Form 10-QSB/A for the quarter ended September 30,
2000 and filed with the SEC on February 2, 2001;

- our Quarterly Report on Form 10-QSB for the quarter ended December 31,
2000 as filed with the SEC on February 14, 2001 and Amendment No. 1 to our
Quarterly Report on Form 10-QSB/A for the quarter ended December 31, 2000
and filed with the SEC on April 16, 2001;

- our Quarterly Report on Form 10-QSB for the quarter ended March 31, 2001;

- our Current Reports on Form 8-K dated July 25, 2000, October 25, 2000 and
January 23, 2001 and on Form 8-K/A filed with the SEC on June 7, 2001;

- 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:

Rick Poole
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.

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.

ITEM AMOUNT
---- --------

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

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.

EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------

4.1 Securities Purchase Agreement, dated as of January 8, 2001,
between Netsol International, Inc. and Deephaven Private
Placement Trading Ltd. (incorporated by reference to
Exhibit 4.1 of Netsol's Registration Statement on Form S-3
(File No. 333-57020) filed with the SEC on March 14, 2001).

4.2 Registration Rights Agreement, dated as of January 8, 2001,
between Netsol International, Inc. and Deephaven Private
Placement Trading Ltd. (incorporated by reference to
Exhibit 4.2 of Netsol's Registration Statement on Form S-3
(File No. 333-57020) filed with the SEC on March 14, 2001).

II-1

EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------

4.3 Letter Agreement, dated February 23, 2001, between Netsol
International, Inc. and Deephaven Private Placement Trading
Ltd. (incorporated by reference to Exhibit 4.3 of Netsol's
Registration Statement on Form S-3 (File No. 333-57020)
filed with the SEC on March 14, 2001).

4.4 Letter Agreement, dated April 24, 2001, among Netsol
International, Inc., Deephaven Private Placement Trading
Ltd. and Jesup & Lamont Securities Corporation (incorporated
by reference to Exhibit 4.4 of Netsol's Registration
Statement on Form S-3 (File No. 333-59454) filed with the
SEC on April 24, 2001).

4.5 Form of Warrant for Jesup & Lamont Securities Corporation
and Deephaven Private Placement Trading Ltd (incorporated by
reference to Exhibit 4.5 of Netsol's Registration Statement
on Form S-3 (File No. 333-59454) filed with the SEC on
April 24, 2001).

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).

23.3* Consent of Saeed Kamran Patel & Co.

23.4* Consent of Mazars Neville Russell.

24.1+ Powers of Attorney.

------------------------

+ Previously filed.

* Filed herewith.

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,

II-2

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.

II-3

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 amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Calabasas, State of California on June 6, 2001.

NETSOL INTERNATIONAL, INC.

By: /s/ NAJEEB U. GHAURI
-----------------------------------------
Najeeb U. Ghauri,
CHIEF EXECUTIVE OFFICER

Dated: June 6, 2001

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

* President and Director June 6, 2001
------------------------------- (Principal Executive Officer)
Salim Ghauri

* Chief Financial Officer June 6, 2001
------------------------------- (Principal Financial and Accounting
Syed Husain Officer)

/s/ NAJEEB U. GHAURI Chief Executive Officer and Director June 6, 2001
-------------------------------
Najeeb U. Ghauri

* Director June 6, 2001
-------------------------------
Shahab Ghauri

* Chairman of the Board and Director June 6, 2001
-------------------------------
Irfan Mustafa

* Chief Operating Officer and Director June 6, 2001
-------------------------------
Naeem Ghauri

II-4

SIGNATURE TITLE DATE
--------- ----- ----

* Director June 6, 2001
-------------------------------
Cary Burch

* Director June 6, 2001
-------------------------------
Waheed Akbar

* Director June 6, 2001
-------------------------------
Nasim Ashraf

* /s/ NAJEEB U. GHAURI
-------------------------------
Najeeb U. Ghauri
ATTORNEY-IN-FACT

II-5

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------

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).

23.3* Consent of Saeed Kamran Patel & Co.

23.4* Consent of Mazars Neville Russell.

24.1+ Powers of Attorney.

------------------------

+ Previously filed.

* Filed herewith.