NetSol International seems like an unlikely takeover target.

A fashion company called Mirage Holdings Inc. that transformed itself into a software company when it acquired a Pakistani software development firm in 1996 and changed its name, NetSol has rarely reported a profit. In the four quarters dating back to March 31, 2000, the company had losses of $5.2 million on revenue of $7.4 million.

But that didn't stop a group of stockholders, accompanied by armed guards, from taking over the company's headquarters in Calabasas briefly last month. Nor did it stop the management already in place from getting a temporary restraining order forcing the group out again or a judge in Nevada (where NetSol is incorporated) from naming a receiver to run the company while things are sorted out.

The rival shareholder group, led by hedge fund manager Jonathan Iseson and his New York-based Blue Water Partners, says that after a proxy fight it now has a majority of NetSol's outstanding stock and on June 11 elected a new board.

Current management, led by Chief Executive Najeeb Ghauri, insist they still control the company and Las Vegas District Judge James Mahan has left it to an appointed receiver to straighten it out.

But why the interest in a company that lost $2.4 million in the first quarter of 2001?

"That's an interesting question," said Todd Pitcher, an analyst with Willow Cove Investment Group. "The core business model turned a lot of people's heads over the last four months."

NetSol makes financing and leasing software for the automotive industry at facilities it operates in Pakistan.

Pitcher said the low cost of doing business in Pakistan and the potential for sales to U.S. car dealers has made NetSol more attractive than it might appear.

That unrealized potential is what led NetSol Shareholders Group LLC to announce a proxy contest for control in late April.

"The existing management has had ample time to build the company and make it profitable," said Cary Burch, a member of the group who also happens to be a member of the previous NetSol board.

When the shareholders group announced it had taken control of the company on June 11, Burch was named chairman and chief executive. "(Existing management) has failed to turn a profit," Burch said, "and the shareholders were very, very vocal about this."

None of NetSol's top executives returned repeated calls.

NetSol's stock typically traded at less than $10 until Blue Water Partners took a very large position in the company in late 1999. NetSol's stock reached an all-time high on March 3, 2000 of $80 per share, after opening the day at $47.

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