NetSol International Inc. (NTWK)

[Tingleff]

The article:
UPDATE: NETSOL INTERNATIONAL, INC. (NASDAQ: NTWK) – ON THE RECEIVING END
June 17, 2001
Who’s in charge at NetSol International, Inc.? Not the former management team, which has been fighting a hostile takeover staged by dissident shareholders. And, as it turns out, not those dissident shareholders, who claim they gained control of the Company through a proxy contest. For the time being, NetSol is being run by a receiver named George Swarts who was appointed by Nevada District Court Judge James Mahan on June 15th to manage the Company’s affairs until the Court reconvenes on June 26th. Maybe Mr. Swarts will be able to sort through the corporate mess by then. While he attends to that task, however, a few additional questions should be considered.


Raising The Bahr

Who is David Bahr? Curious NetSol International, Inc. shareholders are probably asking the same question. What is his connection with the beleaguered Company? We first came across Mr. Bahr in July 1999, at the time we published our first article about NetSol (See NetSol: An Oasis On The Horizon Or Just Another Mirage?). Now, his name has re-emerged in the midst of the chaos that ensues as the incumbent management team battles dissident shareholders calling themselves the NetSol Shareholders Group for control of the Company. (See Update: NetSol International, Inc. - Going Nutso At NetSol and Radar’s Doghouse: NetSol International, Inc. – Dueling Press Releases).

These days, David Bahr seems to be aligned with the insurgents. But that was not always the case. Our initial article on NetSol examined the Company’s relationship with a company called Manhattan West. At the time, we made the following observations:


According to its Registration Statement, the Company offered to sell public investors (i) a minimum of 250,000 shares of common stock, and (ii) a maximum of 500,000 shares of common stock and 1,000,000 warrants, at prices of $5.15 per share and $.10 per warrant.

The Company, however, wasn’t the only one selling shares. Existing [shareholders of Mirage, the predecessor of NetSol] were registering 564,065 common shares and 397,000 warrants which had been issued in connection with an April 1997 private placement, at prices of $.50 per share and $.10 per warrant. The Company had used $200,000 of the $290,000 raised in that Private Placement to acquire its interest in Network Solutions (PVT).

More family ties. One of the investors in the Private Placement was Manhattan West, a company that is apparently involved in the financial services industry. (Manhattan West later divested its private placement warrants because of concerns raised by the NASD at the time of the IPO). The prospectus identifies Tariq Kahn as the sole officer and director of Manhattan West. At the time of the offering, his sister, Saikma Khan was the President of Mirage’s wholly owned subsidiary, Mirage Collection, Inc. Mr. Khan’s mother and father were among the selling shareholders at the time of the Mirage IPO.

The relationship between Mirage and Manhattan West did not end there. On February 13, 1997, Manhattan West entered into an agreement to provide business and consulting services to the Company. Its compensation? Mirage would pay Manhattan West’s expenses. Less than two weeks later, on February 26, 1997, Manhattan West loaned $46,997 to the Company and received a promissory note which it could choose to convert into shares of the Company’s common stock at $.50 per share -- that’s 93,994 shares. Based upon the IPO price of $5.15 those shares would be valued at $242,034.55. That makes for quite a nice return.

One thing more. Aica Ghauri, wife of the Company’s President, Najeeb Ghauri, is employed by Manhattan West.

There is one additional connection to Manhattan West that we did not explore in our earlier report. On February 13, 1997, Manhattan West entered into a Consulting Agreement with Mirage Holdings, Inc. (which subsequently became NetSol). That Agreement was signed on behalf of Manhattan West by its President, David Bahr. (A copy of that Consulting Agreement is an Exhibit to the Form SB-2 Registration Statement filed by Mirage at the time of its Initial Public Offering.)


More Bahr

More recently, the name David Bahr appeared on a Schedule 13D filed by the NetSol Shareholders Group LLC (the dissidents seeking control of the Company). Both the Form 13D and the files of the Nevada Secretary of State identify Mr. Bahr and Blue Water Master Fund L.P. (run by insurgent director-candidate Jonathan Iseson) as the “managers” of the NetSol Shareholders Group LLC. Is this the same David Bahr? If it is, the proxy documents filed by the NetSol Shareholders Group fail to omit any reference to his position at Manhattan West and prior relationship to the Company.

The David Bahr connections to NetSol seem to run long and deep. The “Rege Ludwig Clinic” operates a school for polo players. The web site for the “Rege Ludwig Clinic,” features a picture of one David Bahr standing next to one Cary Burch dressed in their polo playing regalia after a polo lesson. Is this the same David Bahr? Is it the same Cary Burch, the incumbent NetSol director who recently joined the insurgents in their efforts to seize control of the Company?

The records of the Nevada Secretary of State identify Paracorp Incorporated of Carson City, Nevada as the “Resident Agent” for NetSol Shareholders Group. Paracorp Incorporated was also the designated “Agent” in Nevada for Mirage. Has some individual been directing each of these entities to Paracorp – and, if so, who?

And consider this. NetSol International, Inc. was originally formed as a Nevada corporation on May 1, 1997. Its designated agent in Nevada was Paracorp Incorporated, and the records of the Nevada Secretary of State indicate that the corporation has now been “dissolved.” To compound the confusion, two companies called NetSol International, Inc. have been registered in California. The first, which filed in California on July 2, 1997, listed one Matthew Bahr as the “Agent for Service of Process.” That corporation is classified as “forfeited” by the California Secretary of State – which means it is no longer registered in the state. The second, registered in California on January 16, 2001, lists Najeeb Ghauri (NetSol’s President under the old management team) as the “Agent For Service of Process.” Why have there been two NetSol’s registered in California? Is Matthew Bahr related to David Bahr?


Being Bahred

Who is David Bahr anyway? In July 1996, the National Association of Securities Dealers found that a Newport Beach, California broker named David Bahr failed to invest $20,000 in customer funds and instead used $18,000 for his own benefit. The NASD also found that Bahr solicited and entered customer transactions while he was not registered. Bahr was barred from association with any NASD member in any capacity and fined $174,000.

Is that the same David Bahr now involved with NetSol? In July 1998, the NASD Adjudicatory Council considered allegations that a broker named Nancy Martin had allowed an unregistered person named David Bahr to use her account executive number to place trades for a customer named Masood. Martin claimed that Masood was actually the customer of Tariq Khan, and that Khan was the President of the brokerage firm, Shamrock Partners. Sound familiar? Tariq Khan, as we have seen, was identified by NetSol as the “sole officer and director of Manhattan West.”

Of course, there was at least one other officer at Manhattan West along the way – David Bahr.


http://www.stockpatrol.com/schlock/doghouse/netsol7.html


Kr
Jens