ITEM 5. OTHER EVENTS
On November 7, 2001, the Board of Directors of Sensar Corporation adopted a
resolution formalizing its determination that Sensar should pursue a strategy of
becoming an operating company as soon as possible. As a result of such
determination, Sensar will focus exclusively on the related tasks of finding an
operating company suitable for merger with Sensar and attempting to sell
Sensar's interest in Nex2, Inc. Sensar is no longer considering the alternative
of becoming a business development company.
In December 2000, in connection with the termination of a proposed merger
between Sensar and Net2 Wireless Corporation (now known as Jigami, Inc.)
("Jigami"), Jigami issued Sensar 3,000,000 shares of its common stock. As a
result of such acquisition, Sensar inadvertently began to satisfy the definition
of "investment company" set forth in the Investment Company Act of 1940, as
amended (the "Investment Company Act"). As a result of inadvertently satisfying
the definition of investment company, Sensar would be required to be registered
as an investment company or business development company under the Investment
Company Act unless it qualifies for an exemption or obtains administrative
relief.
In early 2001, Sensar considered the advisability of, and took initial
steps toward, becoming a "business development company" under the Investment
Company Act. Nevertheless, since writing off its investment in Jigami at the end
of the first quarter in 2001 due to Jigami's inability to raise additional
capital, Sensar has primarily focused its efforts on finding an operating
company suitable for acquisition by, or merger with, Sensar. Sensar's Board of
Directors believes that becoming a business development company is no longer
Sensar's best opportunity for enhancing shareholder value due to Sensar's
limited resources and the high risk of managing a limited portfolio of
investments in current market conditions. Rather, it believes that Sensar's best
opportunity to enhance shareholder value lies in disposing of its remaining
investment securities as soon as permitted by market conditions and securities
restrictions and stepping up Sensar's search for a suitable acquisition or
merger candidate. Accordingly, Sensar will no longer consider the alternative of
becoming a business development company and will focus its efforts exclusively
on becoming or acquiring an operating company.
In order to comply with the Investment Company Act while Sensar seeks to
become an operating company, Sensar intends to rely upon the exemption from the
definition of investment company contained in Rule 3a-2 promulgated under the
Investment Company Act and/or similar legal precedent related to transient
investment companies. By its terms, Rule 3a-2 grants an inadvertent investment
company that has timely committed to becoming an operating company up to one
year from the date of becoming an inadvertent investment company to complete the
process of becoming an operating company. In order to give itself the time
necessary to become an operating company, Sensar is preparing to file a petition
with the Securities and Exchange Commission requesting additional time during
which to complete the processing of becoming a business development company.
Sensar can provide no assurance that the Securities and Exchange Commission will
grant such extension. |
