As Filed: September 13, 2000 SEC File No. 333-43320
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
Registration Statement on Form S-3
Under the Securities Act of 1933
SENSAR CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada 87-0429944
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
50 West Broadway, Suite 501, Salt Lake City, Utah 84101, (801) 350-0587
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Howard S. Landa, 50 West Broadway, Suite 501, Salt Lake City, Utah 84101,
(801) 350-0587
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Keith L. Pope, Esq.
Keith L. Pope, LLC
1000 Boston Building
Nine Exchange Place
Salt Lake City, Utah 84111
Telephone: (801) 531-6686
Telecopy: (801) 531-6690
e-mail: [email protected]
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this registration statement.
If the only securities being registered on this Form are to be 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, as amended, 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 of 1933, as amended, 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 of 1933, as amended, 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,
check the following box. / /
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CALCULATION OF REGISTRATION FEE
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Title of each class Proposed Proposed
of securities to Amount to be maximum offering maximum aggregate Amount of
be registered registered price per unit(1) offering price(1) registration fee
<S> <C> <C> <C> <C>
Common Stock 10,689,619 $20.57 $215,316,402 $56,844
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<FN>
(1) Bona fide estimate of maximum offering price solely for the purpose of
calculating the registration fee. The offering price for the common stock being
sold by selling stockholders is based on the average of the high and low price
reported on the Nasdaq SmallCap Market for the Registrant's common stock on
August 4, 2000, for the 5,689,278 included in the initial filing and the average
of the high and low price reported on the Nasdaq SmallCapSM Market for the
Registrant's common stock on September 11, 2000, for the additional 5,000,341
shares included in Amendment No. 1 (rule 457(c)).
</TABLE>
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, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said section 8(a), may determine.
<PAGE>
The information in this Prospectus is not complete and may be changed. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. The selling stockholders 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.
Preliminary Prospectus dated September 13, 2000
____________________
SENSAR CORPORATION
Resale of 10,689,619 Shares of Common Stock
The stockholders of Sensar Corporation named on page 9 under the caption
"Selling Stockholders" may publicly offer and sell from time to time, 10,689,619
shares of common stock using this Prospectus.
The selling stockholders will sell the common stock on the Nasdaq
SmallCapSM Market, in privately negotiated transactions, or otherwise at the
market price, which may vary during the offering period, or at a negotiated
price. The selling stockholders will receive all of the proceeds from the sale
of the shares and will pay all underwriting discounts and selling commissions
relating to the sale of the shares. Sensar has agreed to pay the legal,
accounting, printing, and other expenses related to the registration of the sale
of the shares.
Sensar's common stock trades on the Nasdaq SmallCap Market under the symbol
"SCII." On September 11, 2000, the last reported sales price of Sensar's common
stock on the Nasdaq SmallCap Market was $19.875 per share.
An investment in our common stock is subject to risks. We urge you to read
the information set forth under the caption "Risk Factors," beginning on page 2,
as well as the other information in this Prospectus before making an investment
decision.
____________________
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 mailing address and telephone number of the principal executive offices
of Sensar is 50 West Broadway, Suite 501, Salt Lake City, Utah 84101, (801)
350-0587.
The name, address, and telephone number of Sensar's transfer agent is
Progressive Transfer Company, 1981 East, 4800 South, Suite 100, Salt Lake City,
Utah 84117, (801) 277-1400.
Prospectus dated September _____, 2000
<PAGE 1>
RECENT DEVELOPMENTS
Sensar has entered into an agreement to merge with Net2Wireless Corporation
pursuant to which the business of Net2Wireless will become the business of
Sensar and the current directors and management of Net2Wireless will become the
directors and management of Sensar. Sensar will issue 18,295,060 shares of its
common stock, 71% of the total outstanding subsequent to the merger, to the
current stockholders of Net2Wireless. Sensar will also assume options and
warrants outstanding in Net2Wireless to purchase up to an additional 16,623,071
shares of common stock and will issue 1,000,000 shares of common stock to
individuals involved in introducing Sensar and Net2Wireless. If the transaction
contemplated by the stock purchase between Net2Wireless and Nextel Finance
Company is completed prior to the merger, Sensar will issue an additional
1,000,000 shares. Sensar has filed a registration statement on Form S-4, SEC
File No. 333-34298, with respect to the proposed merger with Net2Wireless, which
is incorporated into this Prospectus by reference.
FORWARD LOOKING STATEMENTS
This Prospectus contains certain forward looking statements. These forward
looking statements reflect Sensar's and Net2Wireless' current expectations
concerning future results and events. These forward looking statements
generally can be identified by the use of phrases such as "believe," "expect,"
"anticipate," "intent," "plan," "foresee," "likely," "will," "potential,"
"proposed," or other similar words. Generally, the statements describe the
objectives, plans, or goals of the companies. These forward looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results or the performance or achievement of such goals to
differ from those anticipated by these statements. Many of the important
factors that could cause actual results to differ materially from expectations
are discussed under the caption "Risk Factors" below. In addition to those risk
factors specifically addressed, there may be other factors that have not been
considered by Sensar and/or Net2Wireless or that are not currently considered to
be significant, that may in fact turn out to be material and cause actual
results to differ substantially from the forward looking statements.
Stockholders should be aware that such forward looking statements are not
intended to be precise descriptions of the future and that actual results will
differ, either based on one or more of the factors specifically discussed or on
other factors or influences that may develop in the future. Neither Sensar nor
Net2Wireless undertakes any obligation to update the forward-looking statements
contained herein or elsewhere to reflect actual results, changes in assumptions,
or changes in other factors affecting the forward-looking statements.
RISK FACTORS
The merger and the proposed business of Net2Wireless involves a high degree
of risk. Set forth below is a discussion of what Sensar and Net2Wireless
consider to be the material risk factors as of the date of this Prospectus. In
addition to considering the information set forth elsewhere in this Prospectus,
you should specifically evaluate the following risk factors during your
consideration of whether to invest in Sensar. If any of these risks occur, or
if other risks not currently anticipated or fully appreciated by the companies
occur, the business and prospects of the combined company could be materially
adversely affected, which could have an adverse effect on the trading price for
the stock of Sensar.
Risk of Merger not Being Completed
The proposed merger with Net2Wireless may not be completed, in which case
Sensar would not have any current operations and only a limited amount of cash
to invest in developing or acquiring operations.
The proposed merger with Net2Wireless is subject to the approval of the
stockholders of both Sensar and Net2Wireless. Net2Wireless has received proxies
from the holders of approximately 67% of the stock of Net2Wireless to be voted
in favor of the merger, but Sensar has not solicited proxies to date and
management only controls approximately 1.2% of the vote of Sensar. In addition,
the completion of the merger is subject to the satisfaction or waiver of a
number of contractual conditions. In the event that the merger with
Net2Wireless is not approved by the stockholders or is not completed for any
other reason, Sensar would not have any operations and its assets would consist
of approximately $5.9 million of cash, cash equivalents, and a note receivable
based on its June 30, 2000, financials, less amounts expended in excess of
interest income since that date. This would adversely affect the market price
<PAGE 2>
of the common stock and could result in the delisting of the common stock from
the Nasdaq SmallCapSM Market. If the merger were not completed, Sensar would
probably seek to merge with another entity or seek to acquire another business
or operations but it may not be able to do so in the short term, or at all, with
the assets available to it.
Risks Related to Net2Wireless' Proposed Business
Net2Wireless is recently formed, does not have an operating history, and,
consequently, lacks a historical basis on which to predict future results.
Net2Wireless was formed in December 1999. Shortly after its formation,
Net2Wireless acquired technology from I.T.E.S. - Imaging Technologies
Enterprises Systems, Ltd., a development company in Israel. The initial product
is still subject to pilot tests with cellular carriers. The technology has not
generated any operating revenues or binding contractual commitments to purchase
products or services to date. Net2Wireless does not have a historical basis on
which to evaluate whether or not its proposed business will be successful,
including whether it can:
- develop products that successfully address a market need;
- successfully resolve problems that arise in designing and
implementing the manufacturing process for its proposed products or in marketing
these products;
- implement a business model that will permit it to operate profitably;
- hire and retain employees with the technical skills necessary to
continue to develop and support products; and
- successfully develop the necessary administrative support systems
such as personnel management, accounting records and controls, marketing
supervision and control, service and support, and record keeping and office
administration.
If Net2Wireless is not successful in addressing these issues, it will likely not
be successful in implementing its proposed business.
Net2Wireless expects to operate at a substantial loss at least during
fiscal 2000 and possibly for substantially longer, lacks internal funding, and
may be unable to obtain the additional financing that it needs.
Net2Wireless has not generated any operating revenues and expects to
operate at a loss at least during fiscal 2000 and possibly for substantially
longer. Expenses are expected to grow significantly and more rapidly than
revenues during the implementation stage. The combined company may, from time
to time, incur additional non-cash charges in connection with future grants of
options and warrants to purchase common stock, which charges may be material.
It is not anticipated that in the short term expenses can be met through the
internal generation of cash flow from the operation of the business. The
proposed sale of 1,000,000 shares of Net2Wireless stock to Nextel Finance
Company may not be completed because it is subject to customary closing
conditions as well as the requirement that Nextel Finance Company be satisfied
with its due diligence inquiry. The combined company may need to seek
additional funding from outside sources, including equity financing. We cannot
be sure that the combined company will be able to obtain the needed financing.
If an equity financing is completed in the future, it would result in dilution
of the percentage of ownership of existing stockholders and could result in
dilution of the per share book value. If financing is not available, or only
available on unfavorable terms, the combined company may not be able to
successfully implement its business plan.
The display screens of most currently available wireless devices are
inadequate to take full advantage of the services made available by
Net2Wireless' proposed products.
The display screens currently available on most mobile wireless devices are
inadequate to display the full color video and graphic information made
available by Net2Wireless' proposed products. In order for consumers to have
access to the full range of services and convenience of the proposed products,
the combined company will be dependent on the continued development of
sophisticated display technology by others and the adoption of that technology
by wireless device manufacturers.
<PAGE 3>
Factors beyond the control of Net2Wireless such as product and services
acceptance, competitive pressures, and the strategic decisions of wireless
carriers, may adversely affect its proposed business.
Net2Wireless may not be able to achieve or sustain its revenue or profit
goals as a result of factors outside of its control, including:
- the lack of market acceptance of the products and services to be
offered by Net2Wireless;
- the lack of acceptance by consumers of the services to be made
available as a result of the application of Net2Wireless' products;
- competitive pressures, including the announcement of competing
products and services or a decrease in the prices of such competing products and
services; and
- the lack of dedication, by the telecommunications carriers and
manufacturers of wireless devices, of the resources necessary to successfully
market the services potentially made available as a result of Net2Wireless'
products.
Net2Wireless may not be successful in obtaining the necessary adoption of
its products by cellular carriers, which adoption is critical for its success.
Net2Wireless' proposed products are based on an enabling technology that
permits the transmission of graphic, sound, and video information between the
Internet and wireless devices. This technology differs from standards recently
adopted for wireless access to services on the Internet. The initial business
strategy of Net2Wireless is to make products and services based on this
technology available to wireless telecommunications carriers to permit them to
offer new services to their customers. The success of this strategy is
dependent on one or more carriers with significant customers adopting
Net2Wireless' technology and products as the standard for offering their
customers these services. Net2Wireless may not succeed in finding these
strategic partners, as some of them may have invested in adopting alternative
technologies. In addition, in the course of trying to form relationships with
strategic partners, Net2Wireless may forego revenue opportunities in the short
term in order to establish market acceptance of its products. As a result, the
search for strategic partners could initially adversely affect Net2Wireless'
revenues and profitability.
The combined company may not be able to successfully manage its growth.
Net2Wireless has expanded from having 22 employees at December 31, 1999, to
having 91 employees at June 15, 2000, and 147 employees at August 29, 2000,
which has strained its management resources. Additionally, the diversion of
the attention of Net2Wireless' management caused by the process of completing
the merger and combining the companies could cause a disruption of the business
activities of Net2Wireless. If the combined company is successful in the
introduction of its products, it will be required to continue to rapidly expand
the number of its employees in all areas of operations, including
administration, development, support, marketing, sales, consulting, and
distribution. Net2Wireless cannot assure you that it will be able to locate
and hire, or retain, the necessary personnel, nor that it will be able to
successfully manage the growth and expansion of its business.
Net2Wireless may not successfully complete the development of its current
platform or develop additional products for other wireless technologies.
There are a number of wireless technologies currently in use. Initially,
Net2Wireless' product was designed to work with the global system for mobile
communications, or GSM, a wireless protocol that is used in Israel and Europe.
If the beta test of this product is successful, Net2Wireless will need to
complete the development of this platform, as well as to initiate and continue
the development of products for other wireless protocols, including the dominant
systems used for digital cellular mobile networks in North America, code
division multiple access, or CDMA, and time division multiple access, or TDMA.
In addition, there are many unique wireless protocols based on these general
standards and many operating systems which are unique to individual carriers.
Integration with different systems can be a long and costly process. There can
be no assurance that the combined company will be able to successfully complete
the development of the GSM platform or develop additional products compatible
with other platforms. Even if it successfully completes these products, there
can be no assurance that the combined company will be able to successfully
<PAGE 4>
recover its development costs for any particular system. Even if it
successfully completes these products, there can be no assurance that the
combined company will be able to successfully recover its development costs
for any particular system.
The technology of Net2Wireless is not entirely based on the current
industry standard for wireless communications and, as a result, may not be
accepted.
In 1998, the Wireless Application Protocol Forum, adopted open, worldwide
specifications for wireless data transmission, designed to establish a standard
for wireless data transmission. These standards were based on, among other
things, the concept that Internet sites to be accessed by wireless devices
should be specifically designed streamlined sites that require less data to be
transmitted and received by the wireless device. Major telecommunications
companies, equipment manufacturers, and software and service companies are
members of this forum. While Net2Wireless' products are expected to be
compatible with the wireless application protocol used to allow cellular phones
access to the Internet adopted by the forum, they will utilize proprietary
software and technology not included in the existing wireless application
protocol standards. Telecommunications companies and others may be reluctant to
adopt new technology that is not wholly based on the existing wireless
application protocol standard.
New products and services developed by Net2Wireless' competitors may
perform better than those developed by Net2Wireless and, therefore,
Net2Wireless' products and services may not be accepted in the marketplace.
The market for the delivery of Internet services through wireless
communication devices is evolving extremely rapidly and is characterized by
intense competition by a large number of companies seeking to establish a
dominant market presence. As a result of the very recent development of this
market, Net2Wireless cannot estimate the potential product lifecycle.
Net2Wireless may not be able to successfully introduce its products or continue
to develop and enhance its products at a pace sufficient to keep up with the
introduction of new products and services by others. In addition, the
prediction of the demand for these services is extremely speculative and the
overall market and pricing for these services may not grow at the pace or to the
size currently anticipated. Competition could also adversely affect the
combined company's ability to develop new products and service offerings.
Increasing competition could have a material adverse affect on future revenues
and profitability.
Net2Wireless' potential competitors have access to significantly greater
resources, limiting Net2Wireless' ability to compete.
The telecommunications industry is highly competitive. The
telecommunications industry is changing rapidly due to, among other things,
deregulation, privatization, consolidation, technological improvements,
expansion of infrastructure, the globalization of the world's economies, the
expansion of free trade, and new service offerings rapidly being added. These
changes create new international and domestic competitors, new network service
providers and new competitive infrastructures and services. There can be no
assurance that the combined company will be able to compete effectively under
these rapidly changing market conditions.
A number of companies have announced their intent to address the potential
market for access to the Internet with wireless communication devices. These
include large device manufacturers such as (i) Ericsson, Motorola, Qualcomm,
AT&T, and Nokia; (ii) developers of operating systems, software, and browsers
such as Microsoft, and Wireless Knowledge, a joint venture of Microsoft and
Qualcomm; (iii) systems integrators, such as CMG and APiON; and (iv) software
companies such as Oracle and Sendit.
It is anticipated that this market will continue to be the focus of
telephone and wireless device manufacturers, telecommunications companies, and
software and browser companies, some of which are among the largest and most
successful companies in the world. These companies have resources, including
access to technical ability, funding, manufacturing, marketing, and
distribution, far in excess of those of Net2Wireless. As a result, Net2Wireless
may not be able to successfully compete in this marketplace.
<PAGE 5>
Net2Wireless may not be able to recruit and retain key management and
technical personnel, in which case its proposed business will be adversely
affected.
The success of Net2Wireless is dependent, in part, on its ability to
attract and retain key management and technical personnel. Net2Wireless does
not carry life insurance on Nechemia Davidson, its founder and chief executive
officer. In addition, Net2Wireless' full management team has not yet been
assembled. The combined company will be required to assemble a worldwide
administrative and marketing team in order to be successful. Net2Wireless has
recently hired a number of technical employees and is seeking to identify and
attract additional executive management and technical personnel. Net2Wireless
has an employment agreement with Mr. Davidson, who will be the president and
chief executive officer of the combined company, for an initial term of three
years, renewable for additional two-year terms. Under Mr. Davidson's agreement,
Net2Wireless will pay him $500,000 annually and grant him options. The
agreement also provides for the payment of additional benefits and potential
cash and equity bonuses. Additionally, Net2Wireless receives management
assistance from two of its directors under consulting agreements. Under Mr.
Rubner's consulting agreement, Net2Wireless will pay him $100,000 annually for
his services and under Mr. Avtalion's consulting agreement, Net2Wireless will
pay him $2,000 for each day that he performs consulting services for
Net2Wireless. These individuals do not dedicate their full business time to the
affairs of Net2Wireless, and there can be no assurance their services will
remain available. If the combined company is unable to attract management with
the necessary experience and expertise, or if it loses the services of Mr.
Davidson or other key members of its executive or technical team, it may be
unable to successfully implement its planned business operations.
Net2Wireless may not be able to adequately protect its intellectual
property rights, which would substantially harm the combined company's
competitive position.
The ability of the combined company to establish a position in the market
for wireless communication with the Internet is dependent to a large degree on
its proprietary technology having advantages over competing products.
Net2Wireless presently relies on copyright and trademark laws, trade secret
laws, and confidentiality and noncompetition contractual provisions to protect
its intellectual property. Net2Wireless has filed two patent applications and
anticipates seeking patent protection for other aspects of its technology that
may be patentable. Until patents are actually issued, of which there can be no
assurance, Net2Wireless will not be able to determine the full extent of the
protection they may afford. The effectiveness of all of the above protections
varies from country to country and may not adequately protect Net2Wireless'
rights. If Net2Wireless cannot adequately protect its technology, other
competitors could potentially use the intellectual property developed by
Net2Wireless to their own competitive advantage.
The combined company could be sued for violations of the intellectual
property rights of others.
There are a large number of patents and products constantly being developed
in the areas of telecommunications and Internet applications. The highly
technologically-dependent aspect of these industries and the rapid development
of products and services enhance the possibility of claims based on violations
of intellectual property rights. Any such claim brought against the combined
company, even if ultimately determined to be without merit, could be expensive
and time consuming and detract from the implementation of the products and
services of the combined company. In addition, the combined company may be
required to obtain licenses to patents or other proprietary rights of third
parties. There can be no assurance that any licenses would be available on
terms acceptable to the combined company, or at all.
The telecommunications industry in which the combined company will compete
is highly regulated and the proposed business of the combined company may be
adversely affected by existing regulations or new regulations adopted in the
future.
The telecommunications industry is rapidly changing and highly regulated.
Cellular carriers require licenses from governmental authorities to use the
airwaves. If a cellular carrier using the combined company's products and
services lost its license, was restricted in the use of airwaves, or did not
gain access to the third generation licenses currently being granted by
countries around the world, it could adversely affect the proposed business of
<PAGE 6>
the combined company. Other aspects of the combined company's business will
also be subject to the authority of regulatory bodies of the countries in which
it operates. Regulations established by such regulatory bodies may impose
limits on the combined company's operations, and there can be no assurance that
such restrictions will not place burdens on the combined company. In addition,
the combined company's business may be adversely affected by regulatory changes
resulting from judicial decision or the adoption of treaties, legislation, or
regulations by the national authorities where the combined company operates.
Significant charges associated with stock-based compensation may adversely
affect the market price of the common stock and the ability of the combined
company to obtain financing.
For the six months ended June 30, 2000, Net2Wireless had a non-cash expense
of approximately $125 million associated with the grant of options with exercise
prices below the fair market value of its stock at the date of grant. To the
extent that Net2Wireless, or the combined company, continues to use stock based
compensation for employees and others in the future, it may incur associated
compensation expenses. Any expense will reduce the earnings of the combined
company, which may have a negative impact on the market price of the common
stock and ability of the combined company to obtain financing.
Risks Related to Operations in Israel
Conditions in Israel affect operations and may limit the combined company's
ability to produce and sell products.
Net2Wireless' principal research and development and manufacturing
facilities are located in the state of Israel. Political, economic, and
military conditions in Israel directly affect its operations. Some of its
officers and employees in Israel are obligated to perform up to 39 days of
military reserve duty annually. The absence of these employees for significant
periods during the work week may cause Net2Wireless to operate inefficiently
during these periods. Additionally, a number of countries continue to restrict
or ban business with Israel or Israeli companies, which may limit the ability of
Net2Wireless to make sales in those countries.
The Israeli rate of inflation may negatively impact the costs of the
combined company if it exceeds the rate of devaluation of the New Israeli Shekel
against the U.S. dollar.
A portion of the cost of the Israeli operations, mainly personnel and
facility-related, will be incurred in New Israeli Shekels. As a result, the
combined company will bear the risk that the rate of inflation in Israel will
exceed the rate of devaluation of the New Israeli Shekel in relation to the
dollar, which will increase costs of the combined company as expressed in
dollars.
To date, Net2Wireless has not engaged in hedging transactions. In the
future, the combined company might enter into currency hedging transactions to
decrease the risk of financial exposure from fluctuations in the exchange rate
of the dollar against the New Israeli Shekel. These measures may not adequately
protect the combined company from material adverse effects due to the impact of
inflation in Israel.
It may be difficult to enforce a U.S. judgment against the officers and
directors of the combined company and some of the experts named in this
Prospectus or to assert U.S. securities law claims in Israel.
Substantially all of the executive officers and directors of the combined
company and the independent certified public accountants of Net2Wireless are
nonresidents of the United States, and a substantial portion of the assets of
the combined company and the assets of these persons are located outside the
United States. Therefore, it may be difficult to enforce a judgment obtained in
the United States against the combined company or any such persons.
Additionally, it may be difficult for you to enforce civil liabilities under
U.S. federal securities laws in original actions instituted in Israel.
<PAGE 7>
Risks Related to the Merger
The trading price for the stock of the combined company may be volatile.
The market price of Sensar common stock has been and may continue to be
volatile. For example, from October 6, 1999, through September 11, 2000, the
closing price for Sensar's common stock, as reported by Nasdaq, has been as high
as $79.688 and as low as $2.094. The trading price can be affected by a number
of factors unrelated to the business prospects and results of the combined
company. These factors include:
- announcements of developments by competitors;
- acquisitions or strategic alliances by the combined company or others in
the industry;
- changes in the estimates as to the potential market and Net2Wireless'
share of that market;
- changes in the recommendations of security analysts; and
- changes in the trading prices of telecommunications companies or others in
related industries generally.
There can be no prediction as to the price or trading volume of the stock
of the combined company subsequent to the merger.
The concentration of control of the combined company in the members of
management may limit the ability of other stockholders to influence the
direction and policies of the combined company.
The executive officers and directors of Net2Wireless will own approximately
26% of the outstanding common stock of the combined company subsequent to the
merger. In addition, they will hold options, of which approximately 5,000,000
are exercisable at $1.86 per share, to increase their stock ownership to
approximately 40%. Consequently, these stockholders may, as a practical matter,
be able to exert significant influence over those matters requiring approval by
the stockholders, limiting the ability of other stockholders of the combined
company to effectively influence the direction and policies of the combined
company. This concentration of ownership could also discourage, delay, or
prevent others from a takeover attempt that could otherwise be beneficial to the
other stockholders of the combined company.
The authorization of 10,000,000 shares of preferred stock in the
certificate of incorporation of the combined company, and the authority of the
board of directors to determine the attributes of and to issue the preferred
stock, may discourage, delay, or prevent a merger or acquisition that may be
favorable to the stockholders of Net2Wireless.
The terms of the merger may not reflect the value of Sensar or
Net2Wireless.
The terms of the merger and the determination of the number of shares and
options to be held by the stockholders of Sensar and Net2Wireless represent
determinations arrived at during the negotiation process merely for the purpose
of calculating the relative ownership percentages of the parties. Such
calculations do not, and are not intended to, represent any price at which the
common stock of Sensar could be sold or the value of Net2Wireless or the
combined company, either before or after giving effect to the merger. The
market price of the common stock subsequent to the merger may vary widely from
the historical trading prices of the Sensar common stock.
Additional shares that become available for sale may have an adverse affect
on the trading price.
All of the shares to be issued to the Net2Wireless stockholders in
connection with the merger have been registered under a registration statement
filed by Sensar and, except for the stock held by affiliates of Net2Wireless,
will be freely available for sale on issuance in connection with the closing of
the merger. In addition, following the merger, the combined company will have
outstanding options and warrants to purchase up to an aggregate of 19,132,327
shares of our common stock. The currently granted options to acquire 19,040,729
shares of stock have a weighted average exercise price of $4.40 per share,
significantly below the current trading price of the common stock. Of these
options, 16,505,610 are currently exercisable. The holders of these warrants
and options have registration rights requiring the combined company to register
<PAGE 8>
the sale of the common stock issuable upon exercise. This Prospectus permits
the resale of 10,689,619 shares of restricted common stock issued on the
conversion of options held by directors, officers, and consultants of Sensar and
Net2Wireless. The sale of the stock issued under this Prospectus, the sale of
stock issued to Net2Wireless stockholders, and the sale of stock covered by
other registration statements that may be filed by Sensar, or even the potential
for the sale of such stock, may adversely affect the trading price for the
common stock of the combined company.
SELLING STOCKHOLDERS
The following table provides information, as of the date of this
Prospectus, concerning the selling stockholders. This information has been
provided by the selling stockholders. Sensar is not a party to any agreement,
arrangement, or understanding regarding the sale of any of the shares. Except
for Cedar Investment Services, Ltd., none of selling stockholders will own 1% of
the outstanding stock subsequent to the sale of the securities subject to this
Prospectus.
<TABLE>
<CAPTION>
Beneficially Beneficially
Owned Before Offering Owned After Offering
--------------------- --------------------
Shares
Selling Stockholder Shares Percent to be Sold Shares Percent
------------------- ------ ------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Cedar Investment Services,. 9,850,349 32.5% 3,222,222 6,628,127 21.9%
Ltd.(2)
Nechemia Davidson
ML Partners LLC/ . . . 5,000,341 16.2% 5,000,341 0 0.0%
S. M. Meyers(3)
Howard S. Landa(4) . . . 1,056,076 14.0% 1,000,000 56,076 (11)
Andrew C. Bebbington(5). 653,056 9.1% 653,056 0 0.0%
Mickey Hale(6) . . . . . 262,500 3.9% 250,000 12,500 (11)
Steven P. Strasser(7). . 262,500 3.9% 250,000 12,500 (11)
Brian B. Lewis(8). . . . 250,000 3.7% 250,000 0 0.0%
Larry J. Davis(9). . . . 50,790 0.8% 50,000 790 (11)
Steve Witzel(10). . . . . 31,778 0.5% 14,000 17,778 (11)
<FN>
(1) The percentages for Cedar Investment Services, Ltd. and ML Partners LLC
are based on 25,843,606 shares outstanding, the total of the 6,548,546 currently
outstanding in Sensar, plus the minimum of 19,295,060 shares to be issued in
connection with the completion of the merger with Net2Wireless, which is a
necessary condition for these two entities to be able to acquire shares of
Sensar stock on exercise of their options. Each percentage is then calculated
assuming that the individual holder exercises the options or warrants held by it,
increasing the issued and outstanding common stock by that amount. The
percentages for the rest of the selling shareholders are based on the
6,548,546 shares of Sensar outstanding as of September 11, 2000. Each
percentage is then calculated assuming that the individual holder exercises
his or her option, increasing the issued and outstanding common stock by that
amount. The percentage calculations for these shareholders do not include the
19,295,060 additional shares that will be issued in connection with the merger
with Net2Wireless, which would substantially reduce the percentages shown on
the foregoing table.
<PAGE 9>
(2) Cedar Investment Services, Ltd. is an entity controlled by Nechemia
Davidson. Mr. Davidson is the chief executive officer and a director of
Net2Wireless. On completion of the merger between Net2Wireless and Sensar, Mr.
Davidson will assume these positions with Sensar. The shares shown include
1,200,000 shares subject to an option with an exercise price of $32.00 per
share. This option is currently vested with respect to 400,000 shares and
will vest with respect to an additional 400,000 shares each on September 2,
2001, and 2002. The shares to be sold by Cedar Investment Services, Ltd.
are subject to an option with an exercise price of $1.86 per share. The
percentages for Cedar Investment Services, Ltd. are calculated based on
the assumption that the merger between Sensar and Net2Wireless has been
completed and 25,843,606 shares are outstanding since it will not hold
the shares in Sensar set forth in the foregoing table unless and until
the merger is closed.
(3) ML Partners LLC is an entity controlled by S. M. Meyers. The
shares shown for ML Partners LLC are all subject to a warrant with an
exercise price of $2.3276 per share.
(4) Mr. Landa is chairman of the board and chief executive officer of
Sensar. The shares shown for Mr. Landa include 1,000,000 shares subject to
options with an average weighted exercise price of $2.00 per share. The
remaining 56,076 shares are held by the spouse and children of Mr. Landa and a
limited liability company in which Mr. Landa is a minority owner. Mr. Landa
denies direct beneficial ownership and control of these shares.
(5) Mr. Bebbington is currently a consultant to Sensar. From November 1997
through April 21, 2000, Mr. Bebbington was the chief executive officer and a
director of Sensar. All of the shares shown for Mr. Bebbington are subject to
options held by Mr. Bebbington with a weighted average exercise price of $2.00
per share, except for 3,056 options which have an exercise price of $2.50 per
share.
(6) Ms. Hale is a director of Sensar. The shares shown for Mr. Hale include
250,000 shares subject to options with a weighted average exercise price of
$2.00 per share.
(7) Mr. Strasser is a director of Sensar. The shares shown for Mr. Strasser
include 250,000 shares subject to options with a weighted average exercise price
of $2.00 per share held by an entity controlled by Mr. Strasser.
(8) Mr. Lewis is a director of Sensar. All of the shares shown for Mr.
Lewis are subject to options with a weighted average exercise price of $2.00 per
share.
(9) Mr. Davis was formerly a director and officer of Sensar, but resigned
from these positions in November 1997. Mr. Davis continued as an employee of
Sensar until the sale of its acoustics and vibration business in March 1999.
The shares shown for Mr. Davis are subject to an option with an exercise price
of $2.50 per share.
(10) Mr. Witzel is currently a consultant to Sensar.
(11) Represents an amount less than 1%.
</TABLE>
PLAN OF DISTRIBUTION
All of the selling shareholders, except for Mr. Witzel who holds only a
minor amount of shares, have signed a commitment pursuant to which they have
agreed not to sell more than 50% of the shares held by them covered by this
prospectus during the 180 days subsequent to the effectiveness of the
registration statement of which this prospectus forms a part. These individuals
have also agreed to include up to 75% of the shares subject to this prospectus
then held by them in any lock-up agreement required by an underwriter of the
officers and directors of Sensar in an underwritten public offering of at least
$100 million of the securities of Sensar.
The selling stockholders may offer their shares at various times in one or
more of the following transactions:
- on the Nasdaq SmallCapSM Market (or any other exchange on which the shares
may be listed);
- in the over-the-counter market;
- in negotiated transactions other than in such markets;
<PAGE 10>
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and exchange-traded put and
call options, in hedge transactions, in covering previously established short
positions, and in settlement of other transactions in standardized or
over-the-counter options; or
- in a combination of any of the above transactions.
Any such sale of common stock by the selling stockholders must be
accompanied by, or follow the delivery of, this Prospectus, unless the selling
stockholder elects to rely on Rule 144 or another exemption from the
registration requirements in connection with a particular transaction. The
selling stockholders may sell their shares at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices. The selling stockholders may use broker-dealers to
sell their shares. The broker-dealers will either receive discounts or
commissions from the selling stockholders, or they will receive commissions from
purchasers of shares. Sensar has not and does not intend to enter into any
arrangement with any broker-dealers concerning the sale of the common stock or
solicitation of offers to purchase the common stock.
Under certain circumstances the selling stockholders and any broker-dealers
that participate in the distribution may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
Any commissions received by these broker-dealers and any profits realized on the
resale of shares by them may be considered underwriting discounts and
commissions under the Securities Act. The selling stockholders may agree to
indemnify the broker-dealers against liabilities, including liabilities under
the Securities Act. In addition, Sensar has agreed to indemnify the selling
stockholders against liabilities, including certain liabilities under the
Securities Act.
Under the rules and regulations of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any person engaged in the distribution of the
resale of shares may not simultaneously engage in market making activities with
respect to Sensar's common stock for a period of two business days prior to the
commencement of such distribution. The selling stockholders will also be
subject to applicable provisions of the Exchange Act and regulations under the
Exchange Act which may limit the timing of purchases and sales of shares of
Sensar's common stock by the selling stockholders.
The selling stockholders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by them. The shares
offered hereby are being registered pursuant to contractual obligations of
Sensar, and Sensar has paid the expenses of the preparation of this Prospectus.
Sensar estimates that it will incur costs of approximately $40,000 in
connection with this offering for legal, accounting, printing, and other costs
related to the registration and sale of the shares of common stock. The selling
stockholders will bear other separate costs incurred by them.
DESCRIPTION OF SECURITIES
The description of Sensar's common stock is incorporated by this reference
to Sensar's registration statement on Form 8-A, SEC File Number 0-17020,
effective March 4, 1997.
The transfer agent for Sensar's common stock is Progressive Transfer
Company, 1981 East 4800 South, Suite 100, Salt Lake City, Utah 84117, telephone
(801) 277-1400.
NO PROCEEDS TO SENSAR FROM THE SALE OF COMMON STOCK
Sensar will not receive any proceeds from the sale by the selling
stockholders of the common stock covered by this Prospectus. The shares to be
offered under this Prospectus are subject to options and other rights which, on
exercise, will result in gross proceeds to Sensar of up to $10,925,973 which
will be used by Sensar for general working capital purposes.
<PAGE 11>
NO DIVIDENDS
Sensar has not paid dividends on the common stock. Sensar seeks growth and
expansion of its business through the reinvestment of profits, if any, and does
not anticipate that it will pay dividends on the common stock in the foreseeable
future.
LEGALITY OF SECURITIES
The validity under the Nevada Revised Statutes of the common stock to be
sold by the selling stockholders has been passed on for Sensar by Keith L. Pope,
LLC.
EXPERTS
The audited consolidated balance sheets of Sensar and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations and comprehensive loss, stockholders' equity (deficit) and cash flows
for each of the years in the three year period ended December 31, 1999,
incorporated in this Prospectus by reference to Sensar's annual report on Form
10-K for the year ended December 31, 1999, have been audited by Grant Thornton
LLP, independent public accountants, as indicated in their report with respect
thereto included therein, and are incorporated herein by reference, in reliance
upon the authority of said firm as experts in accounting and auditing.
The audited consolidated balance sheet of Net2Wireless (a development stage
company) and its subsidiaries as of December 31, 1999, and the related
consolidated statements of operations, changes in stockholders' deficiency and
cash flows from commencement of operations (April 1, 1999) through December 31,
1999, included in Sensar's registration statement on Form S-4, SEC File No.
333-34298, which is incorporated in this Prospectus by reference, have been
audited by Kost, Forer & Gabbay, a member of Ernst & Young International,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference, and are incorporated herein in reliance upon
the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Sensar has filed a registration statement (File No. 333-43320) on Form
S-3 with the Securities and Exchange Commission (the "SEC"). This Prospectus,
which is a part of that registration statement, does not contain all of the
information included in the registration statement. You should refer to the
registration statement and its exhibits for additional information. With
respect to references made in this document to any contract, agreement, or other
document, such references are not necessarily complete and you should refer to
the exhibits attached to the registration statement for copies of the actual
contract, agreement, or other document. You may review a copy of the
registration statement, including exhibits, at the principal offices of the SEC
at:
- Judiciary Plaza, 450 Fifth Street, N.W., Room 2104 or the public reference
room, Washington, D.C. 20549;
- Seven World Trade Center, 13th Floor, 26 Federal Plaza, New York, New York
10048; or
- 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms.
Sensar is subject to the informational requirements of the Securities
Exchange Act and, consequently, files annual, quarterly, and current reports,
proxy statements, and other information with the SEC. You may read and copy any
reports, statements, or other information on file at the public reference rooms.
You can also request copies of these documents, for a copying fee, by writing to
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Sensar's SEC filings and the registration statement of which this
Prospectus is a part can also be reviewed by accessing the SEC's Internet site
at http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding registrants that file electronically with the
SEC.
<PAGE 12>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. The information incorporated by reference is an
important part of this Prospectus. These documents are available on request,
and without charge, from Carol Ashworth, Sensar Corporation, 50 West Broadway,
Suite 501, Salt Lake City, Utah 84101, telephone number (801) 350-0587. The
following documents are filed with the SEC and are incorporated by reference
into this Prospectus:
- registration statement on Form S-4, SEC File No. 333-34298;
- annual report of Sensar on Form 10-K for the fiscal year ended December
31, 1999;
- quarterly reports of Sensar on Form 10-Q for the quarters ended March 31,
and June 30, 2000;
- interim reports of Sensar on Form 8-K dated January 4, January 5, March
16, March 24, March 30, April 7, May 31, June 6, June 22, June 27, and July 27,
2000; and
- the description of Sensar's common stock contained in its registration
statement on Form 8-A dated March 4, 1997, and any amendments or report filed
for the purpose of updating that description.
All documents and reports subsequently filed by Sensar pursuant to Section
13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this Prospectus
are also incorporated by reference in this Prospectus and will be deemed a part
of this Prospectus from the date of filing of such documents or reports.
Information in reports that are filed later with the SEC will update and
supersede statements contained in previously filed documents or this Prospectus
to the extent that the new information differs from the old information.
Investors should rely only on the information contained or incorporated by
reference in this Prospectus. Sensar has not authorized anyone to provide
investors with information that is different from that contained or incorporated
by reference in this Prospectus. The selling stockholders are offering to sell,
and seeking offers to buy, shares of common stock only in jurisdictions where
offers and sales are permitted. The information contained in this Prospectus is
accurate only as of the date of this Prospectus, except where incorporation by
reference of a document later filed with the SEC supersedes such information,
regardless of the time of delivery of this Prospectus or of any sale of the
shares of common stock under this Prospectus.
<PAGE 13>
TABLE OF CONTENTS SENSAR CORPORATION
Section Page
Recent Developments 2
Forward Looking Statements 2
Risk Factors 2 RESALE OF 10,689,619
Selling Stockholders 9 SHARES OF COMMON STOCK
Plan of Distribution 10
Description of Securities 11
No Proceeds to Sensar 11
No Dividends 12
Legality of Securities 12
Experts 12 PROSPECTUS
Where You Can Find More Information 12
Incorporation of Certain Documents by
Reference 13
Investors should only rely on the information
contained in this Prospectus. Sensar has not
authorized anyone to provide different
information. This Prospectus does not
constitute an offer to sell or the
solicitation of an offer to buy any
securities covered by this Prospectus in
any state or other jurisdiction to any person
to whom it is unlawful to make such offer or
solicitation in such state or jurisdiction. September __, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses in connection with the
distribution of the securities being registered:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee $56,844
Legal fees. . . . . . . . . . . . . . . . . . . . . 15,000
Accounting fees and expenses. . . . . . . . . . . . 5,000
Printing expenses . . . . . . . . . . . . . . . . . 1,000
Courier, reproduction, and miscellaneous. . . . . . 3,000
-------
Total . . . . . . . . . . . . . . . . . . . . . . . $80,844
=======
</TABLE>
All expenses, except the SEC fees, are estimates.
The selling stockholders will not bear any portion of the foregoing
expenses, but will pay fees in connection with the sale of the common stock in
those transactions completed to or through securities brokers and/or dealers in
the form of markups, markdowns, or commissions.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.037 and 78.751 of the Nevada Revised Statutes and "ARTICLE VII.
INDEMNIFICATION OF DIRECTORS AND OFFICERS" of the Registrant's articles of
incorporation provide for indemnification of the Registrant's directors and
officers and the limitation of liability thereon in a variety of circumstances,
which may include liabilities under the Securities Act of 1933.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons pursuant to the
foregoing provisions, the Registrant has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is contrary to
public policy as expressed in the Securities Act and, therefore, is
unenforceable. (See "ITEM 17. UNDERTAKINGS.")
<PAGE II-1>
ITEM 16. EXHIBITS
The following documents are included as exhibits to this Registration
Statement, pursuant to item 601 of regulation S-K.
<TABLE>
<CAPTION>
SEC
Exhibit Reference
Number Number Title of Document Location
------ ------ ------------------------------------------------------- -----------------------
<S> <C> <C> <C>
Item 2. Plan of Acquisition
2.1 2 Agreement dated December 8, 1999, as amended January 4, Appendix A to Joint
March 21, June 26, July 26, and September 6, 2000, Proxy Statement/
between Sensar Corporation and Net2Wireless Corporation Prospectus to
Registration Statement
filed on Form S-4,
SEC File No.
333-34298*
Item 5. 5 Opinion re: Legality
5.1 Opinion of Keith L. Pope, LLC This Filing
Item 23. Consents of Experts and Counsel
23.1 23 Consent of Grant Thornton LLP, independent accountants This Filing
23.2 23 Consent of Kost, Forer & Gabbay, a member of This Filing
Ernst & Young International
23.3 23 Consent of Keith L. Pope, LLC Included in Exhibit 5.1
Item 24. Power of Attorney
24.1 Power of Attorney Signature Page
<FN>
*Incorporated by reference
</TABLE>
ITEM 17. UNDERTAKINGS
Rule 415 Offerings: Post-Effective Amendments [Regulation S-K, Item 512(a)]
The undersigned Registrant will:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
<PAGE II-2>
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Filings Incorporating Subsequent Exchange Act Documents by Reference [Regulation
S-K, Item 512(b)]
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Incorporated Annual and Quarterly Reports [Regulation S-K, Item 512(e)]
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide interim financial information required to
be presented pursuant to Article 3 of Regulation S-X.
Indemnification [Regulation S-K, Item 512(h)]
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has 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 the payment by the registrant of expenses incurred or paid by a
director, officer, or controlling person of the registrant in the successful
defense of any action, suit, or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE II-3>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Salt Lake City, state of Utah, on the 12th day of
September, 2000.
SENSAR CORPORATION
(Registrant)
By /s/ Howard S. Landa
Howard S. Landa, Chairman of the Board
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities
indicated and on the 12th day of September, 2000.
/s/ Howard S. Landa
Howard S. Landa, Director and Chairman of the
Board (Principal Executive and Financial Officer)
/s/ Brian B. Lewis
Brian B. Lewis, Director
/s/ Steven P. Strasser
Steven P. Strasser, Director
/s/ Mickey Hale
Mickey Hale, Director
<PAGE II-4>
