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                       SECURITIES AND EXCHANGE COMMISSION
                                  WASHINGTON, D.C. 20549

                                    FORM 10-K

|X|         ANNUAL REPORT  PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            For the fiscal year ended December 31, 2000
                                         OR
|_|         TRANSITION  REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            For the transition period from ____ to ____

                          Commission File No. 0-17020

                               SENSAR CORPORATION
               (Exact name of registrant as specified in charter)

             Nevada                                          82-0429944
  ----------------------------                        -----------------------
(State or other jurisdiction of                         (I. R. S. Employer
 incorporation or organization)                         Identification No.)

                       136 East South Temple, Suite 2325
                           Salt Lake City, Utah 84111
                                 (801) 350-0587
         (Address of principal executive offices and telephone number)

        Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $0.001 per share
                    ----------------------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes |X|   No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|

As of March 27, 2001, there were 6,562,546 shares of the Registrant's common
stock, par value $0.001, issued and outstanding. The aggregate market value of
the Registrant's voting stock held by nonaffiliates of the Registrant was
approximately $6,134,000, computed at the closing quotation for the Registrant's
common stock of $0.9375 as of March 27, 2001.

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                               TABLE OF CONTENTS
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Item Number and Caption                                                   Page

PART I

1.    Business.............................................................  2

2.    Properties........................................................... 13

3.    Legal Proceedings.................................................... 13

4.    Submission of Matters to a Vote of Security Holders.................. 13

PART II

5.    Market for Registrant's Common Equity and Related Stockholder Matters 14

6.    Selected Financial Data.............................................. 15

7.    Management's  Discussion and Analysis of Financial Condition and
      Results of Operations................................................ 16

7a.   Quantitative and Qualitative Disclosures About Market Risk........... 19

8.    Financial Statements and Supplementary Data.......................... 19

9.    Changes in and Disagreements With Accountants on Accounting and
      Financial Disclosure................................................. 19

PART III

10.   Directors and Executive Officers of the Registrant................... 20

11.   Executive Compensation............................................... 22

12.   Security Ownership of Certain Beneficial Owners and Management....... 25

13.   Certain Relationships and Related Transactions....................... 27

PART IV

14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K..... 28

SIGNATURES................................................................. 31
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                                     PART I

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                                ITEM 1. BUSINESS
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      This report on Form 10-K contains certain forward looking statements and
information relating to the Company. These forward looking statements are not
based on historical facts, but reflect the Company's current expectations
concerning future results and events. Such statements generally describe the
objectives, goals, and plans of the Company and are not intended to be accurate
descriptions of the future. The Company does not intend to update these forward
looking statements, except as may occur in the regular course of its periodic
reporting obligations.

Overview

      Sensar Corporation (the "Company") was historically engaged in the design,
development, manufacturing, and marketing of analytical scientific
instrumentation. The Company's prior operations included the development,
manufacturing and marketing of acoustics instrumentation, development involving
supercritical fluid chromatography instruments and the development of mass
spectrometer products.

      The Company experienced losses in each year of its operations, and these
losses became more significant in 1997. The Company continued to experience
significant losses during 1998, despite cost-cutting measures, and sales of the
Company's products did not meet expectations. As a result of ongoing losses, the
Company was unable to attract new financing to fund its operations, and the
Company was forced to consider the sale of a portion of its assets to fund its
cash requirements.

      During 1999, the Company sold substantially all of its assets relating to
its prior operations and abandoned certain development projects. The Company
sold its acoustics instrumentation business in March 1999 and agreed not to
compete in this business. About this same time, the Company decided to terminate
its development work involving supercritical fluid chromatography instruments.
This minor line of business was sold to a group of former employees, none of
whom were members of executive management. In July 1999, the Company completed
the sale of its real property to the purchaser of the acoustic instrumentation
business. In August 1999, the Company sold its Jaguar mass spectrometer
technology to a privately-held corporation, and also sold a residual interest in
an airport noise monitoring software technology, which the Company had sold to a
third party in 1995.

      The Company also instituted significant changes to the Company's
management in 1999. In April 1999, Andrew C. Bebbington resigned as chief
executive officer, all of the directors of the Company resigned, and a new board
of directors was appointed. Howard S. Landa was appointed as the new chief
executive officer of the Company and Mr. Bebbington agreed to continue to
provide transitional services as a consultant to the Company. The new board of
directors initiated an aggressive search for a potential acquisition to provide
value to the shareholders of the Company.


                                       2
<PAGE>

Net2Wireless Transaction

      In September 1999, the Company entered into negotiations and signed a
letter of intent to acquire a wireless communications technology that ultimately
led to the execution of an agreement with Net2Wireless Corporation
("Net2Wireless") relating to a proposed merger between the Company and
Net2Wireless. During the remainder of 1999 and most of 2000, the Company and
Net2Wireless worked to obtain the necessary regulatory approvals and satisfy the
other conditions precedent to the proposed merger. A joint meeting of the
shareholders of the Company and Net2Wireless was scheduled for December 5, 2000
to approve the proposed merger.

      In connection with its review of the listing application for the combined
company, the staff of the Nasdaq Stock Market raised concerns in November 2000
about the proposed merger between the Company and Net2Wireless. Although the
Company and Net2Wireless attempted to resolve these concerns, the Nasdaq staff
ultimately informed the Company, on December 1, 2000, that it would deny the
listing application for the combined company and institute delisting proceedings
if the merger were consummated.

      Due to the position of the Nasdaq staff and uncertainties regarding the
Company's obtaining the required votes to approve the proposed merger, the
Company and Net2Wireless entered into an agreement as an alternative to the
proposed merger, on December 4, 2000. Under the terms of the alternative
arrangement, the Company received 3,000,000 shares of common stock of
Net2Wireless and a warrant to acquire an additional 1,000,000 shares at an
exercise price of $10.00 per share. Net2Wireless was released from any
obligation to repay a loan of $500,000 advanced by the Company in February 2000
and the related accrued interest of $33,534, and both parties were released from
any further obligations under the merger agreement. In addition, the Company
paid $1,500,000 to Net2Wireless in additional consideration for the shares
acquired by the Company. The shares acquired by the Company represented
approximately 14.1% of the outstanding capital stock of Net2Wireless on December
4, 2000.

Current Business of the Company

      Following the termination of the proposed merger between the Company and
Net2Wireless, the assets of the Company consisted primarily of cash and its
equity interest in Net2Wireless. The Company initiated a search for additional
investment opportunities in order to provide further value to the Company's
shareholders.

      On January 17, 2001, the Company announced the resignations of Howard S.
Landa and Brian B. Lewis and the appointment of Steven P. Strasser as Chief
Executive Officer of the Company. On January 18, 2001, the board of directors of
the Company elected Andrew C. Bebbington to the board of directors and appointed
Mr. Bebbington as Chief Operating Officer. The Company's newly constituted board
of directors adopted a policy and initiated a strategy of making additional
minority investments in private companies. Pursuant to the Company's strategy,
the Company is seeking to achieve value for its shareholders principally by
making investments in equity and equity-oriented securities issued by
privately-owned companies in transactions negotiated directly with such
companies ("Portfolio Companies").

      The Company is principally seeking to make investments in technology
companies; however, the Company will consider opportunities in non-technology
markets as well. The Company's investments will consist primarily of equity
securities, such as common stock or preferred stock, or debt combined with
warrants, options or other rights to acquire common or preferred stock. The
Company considers a number of factors before making investments in Portfolio
Companies, including strength of management,


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market positioning, and future liquidity. Current income is not a significant
factor in the Company's selection of Portfolio Companies.

      As part of the Company's strategy of making minority investments in
private companies, the Company must comply with the Investment Company Act of
1940 (the "Investment Company Act"). The Company is attempting to qualify as a
business development company under the Investment Company Act; however, the
Company does not currently meet all of the requirements for a business
development company election. Specifically, the Company will need to cancel or
otherwise negotiate the termination of substantially all of its outstanding
stock options and, subject to shareholder approval, grant new options in
compliance with the requirements of the Investment Company Act applicable to
business development companies. Further, the current percentage of the Company's
assets invested in qualifying assets may not be sufficient to allow the Company
to become a business development company, or the Company may need to increase
the percentage of its assets invested in qualifying assets in order to maintain
a business development company election.

      The Company has had preliminary discussions with the staff of the
Securities and Exchange Commission (the "SEC") regarding the issues that need to
be addressed in order for the Company to make an election to become a business
development company. The Company is also considering whether to request formal
guidance from the SEC with respect to certain requirements of the Investment
Company Act as they would apply to the Company's election to become a business
development company. If the Company is able to satisfactorily resolve these
issues, the Company intends to promptly file an election to become a business
development company. If the Company is unable to meet the requirements for a
business development company, it may be necessary for the Company to register as
an investment company under the Investment Company Act. Registered investment
companies are subject to restrictions and regulations that are significantly
more burdensome than those applicable to business development companies. As a
result, it may not be practical for the Company to register as an investment
company, and it may be necessary for the Company to dispose of its investments
or take other actions necessary to ensure compliance with the Investment Company
Act. If the Company is unable to become a business development company and does
not register as an investment company, the Company will have to abandon its
strategy of making minority investments in private companies and either acquire
an operating business or liquidate its assets.

Investment Practices

      Substantially all of the net assets of the Company are invested or are
intended to be invested in securities of Portfolio Companies. Substantially all
amounts not invested in securities of Portfolio Companies are invested in
short-term, highly liquid investments providing, in the opinion of management of
the Company, safety of principal.

      The Company's investments in portfolio securities are structured in
private transactions negotiated directly with the owner or issuer of the
securities acquired. The Company is attempting to reduce certain risks inherent
in private equity-oriented investments by investing in a portfolio of companies
involved in different industry sectors. At March 27, 2001, the Company has
investments in only two Portfolio Companies, however, and the Company has
limited funds with which to make additional investments. As a result, unless the
Company raises additional capital for new investments, each of the Company's
investments will account for a significant percentage of the Company's net
assets. Therefore, if the value of any of the Company's investments
deteriorates, the Company could be adversely affected.


                                       4
<PAGE>

Investment Identification and Evaluation

      Investment opportunities are identified for the Company by management.
Investment proposals, however, come to the Company from many other sources, and
may include unsolicited proposals from the public and from referrals from banks,
lawyers, other accountants and other members of the financial community.

      Prospective investments are evaluated by management based upon criteria
that may be modified from time to time. The criteria being used by management in
determining whether to make an investment in a prospective company include: the
presence or availability of a strong management team; favorable industry and
competitive dynamics; and markets characterized by rapid growth and new product
adaptation. Prior to committing funds to an investment opportunity, due
diligence is conducted to assess the prospects and risks of the potential
investment.

      The Company structures the terms of a proposed investment, including the
purchase price, the type of security to be purchased and the future involvement
of the Company and affiliates in the Portfolio Company's business. Private
equity investors often assist their portfolio companies with various aspects of
their business. The Company provides guidance and management assistance to its
Portfolio Companies with respect to such matters as budgets, profit goals,
business and financing strategy, management additions or replacements and plans
for liquidity events for portfolio investors.

Current Portfolio Companies

Jigami Corporation (formerly Net2Wireless)

      Jigami Corporation ("Jigami") is a privately-held Delaware corporation
that operates a research and development facility in Israel. Jigami develops
technology intended to enable and enhance a wide variety of wireless
communication services. Jigami's 3Gate(TM) product offers digital cellular
operators the ability to include attractive 3G value-added services to their
existing portfolio of subscriber services and deliver rich content-based
services to wireless devices over existing infrastructures. Jigami's JIGAMI
mB(TM) product allows enterprises to securely extend their corporate networks to
authorized mobile employees.

      At December 31, 2000, the Company's investment in Jigami, recorded at
$2,033,534, consisted of 3,000,000 shares of common stock. The Company also
holds a warrant to acquire an additional 1,000,000 shares of common stock at an
exercise price of $10.00 per share. The warrant expires on December 31, 2003.

      Like many early stage companies, Jigami must raise additional financing in
order to fund its operations. In light of current market conditions, it is
uncertain whether sufficient financing will be available to Jigami, and the
terms of any such financing could be based on a valuation lower than that
reflected by the recorded amount of the Company's investment. The Company
intends to monitor Jigami's financing efforts to determine whether any
adjustment should be made to the recorded amount of the Company's investment.

Nex2, LLC

      Nex2, LLC ("Nex2") is a Utah limited liability company developing the
technology and business to act as a clearing house for personal health
information received from Pharmaceutical Benefits Managers ("PBMs"), with the
consent of individuals, for use by life insurance companies for determining


                                       5
<PAGE>

risks in underwriting life insurance policies. Nex2 is in the process of
completing the development of the technology for capturing the data from the
PBMs, and this technology is scheduled to be beta tested with a limited number
of life insurance companies in 2001. Nex2 has also entered into a number of
contracts with PBMs, most notably Merk-Medco and AdvancePCS, to acquire personal
data. Nex2 expects to make its product available to life insurance companies
approximately three months after the beta testing is complete.

      The Company completed its investment in Nex2 on January 22, 2001. The
Company acquired 249,700 Investor Units and 300 Voting Units for an aggregate
purchase price of $750,000. The Units were acquired directly from Nex2 and
represent approximately 1.9% of the outstanding Units of Nex2.

Follow-On Investments

      Following its initial investment in a Portfolio Company, the Company may
be requested to make follow-on investments in the portfolio company. Follow-on
investments may be made to take advantage of warrants or other preferential
rights granted to the Company or otherwise to maintain or increase the Company's
position in a successful or promising Portfolio Company. The Company may also be
called upon to provide additional equity or loans needed by a portfolio company
to fully implement its business plans, to develop a new line of business or to
recover from unexpected business problems.

Disposition of Investments

      The method and timing of the disposition of the Company's portfolio
investments will be critical to the realization of capital appreciation and to
the minimization of any capital losses. The Company expects to dispose of its
portfolio securities through a variety of transactions, including sales of
portfolio securities in underwritten public offerings, public sales of such
securities and negotiated private sales of such securities to other investors.
The Company bears the costs of disposing of investments to the extent not paid
by a Portfolio Company.

Valuation

      The Company's investments do not have a ready market. The Company's
investments are accounted for under the cost method and are carried at the lower
of cost or estimated net realizible value. The Company assesses the need to
record impairment losses on investments if impairment of an investment is
determined to be other than temporary.

      If the Company becomes a business development company under the Investment
Company Act, investments in Portfolio Companies will then be carried at fair
market value with the net change in unrealized appreciation or depreciation
included in the determination of net assets. Cost or adjusted cost will be used
to approximate fair value of these investments until significant developments
affecting an investment provide a basis for valuing such investment at an amount
other than cost.

      If the Company becomes a business development company, the fair value of
investments for which no market exists, and for which our board of directors
determines that the original cost of the investment is no longer an appropriate
valuation, will be determined on the basis of procedures established in good
faith by the board of directors. Valuations will be based upon such factors as
the financial and/or operating results of the most recent financial period, the
performance of the company relative to planned budgets/forecasts, the issuer's
financial condition and the markets in which it does business, the prices of any
recent transactions or offerings regarding such securities or any proxy
securities, any available analysis, media, or other reports or information
regarding the issuer, or the


                                       6
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markets or industry in which it operates, the nature of any restrictions on
disposition of the securities and other analytical data. In the case of
unsuccessful operations, the valuation may be based upon anticipated liquidation
proceedings.

      Because of the inherent uncertainty of the valuation of portfolio
securities which do not have readily ascertainable market values, the Company's
estimate of fair value may significantly differ from the fair market value that
would have been used had a ready market existed for the securities. Appraised
values will not reflect brokers' fees or other normal selling costs which might
become payable on disposition of such investments. Investments in companies
whose securities are or become publicly traded, if any, will be valued at their
quoted market price, less a discount to reflect the estimated effects of
restrictions on the sale of such securities ("Valuation Discount"), if
applicable. Short-term investments having maturities of 60 days or less will be
stated at amortized cost, which will approximate fair value. Other fixed income
securities will be stated at fair value. Fair value of these securities will be
determined at the most recent bid or yield equivalent from dealers that make
markets in such securities. The directors will review the valuation policies on
a quarterly basis, or more frequently if deemed necessary, to determine their
appropriateness and may also hire independent firms to review the methodology of
valuation or to conduct an independent valuation.

Factors That May Affect Future Results, The Market Price Of Common Stock, And
The Accuracy Of Forward-Looking Statements

      In the normal course of its business, the Company, in an effort to keep
its shareholders and the public informed about the Company's operations and
portfolio of investments, may from time-to-time issue certain statements, either
in writing or orally, that contain or may contain forward-looking information.
Generally, these statements relate to business plans or strategies of the
Company or Portfolio Companies in which it invests, projected or anticipated
benefits or consequences of such plans or strategies, projected or anticipated
benefits of new or follow-on investments made by or to be made by the Company,
or projections involving anticipated purchases or sales of securities or other
aspects of the Company's operating results. Forward-looking statements are not
guarantees of future performance and are subject to risks and uncertainties that
could cause actual results to differ materially. As noted elsewhere in this
report, the Company's operations and portfolio of investments are subject to a
number of uncertainties, risks, and other influences, many of which are outside
the control of the Company, and any one of which, or a combination of which,
could materially affect the results of the Company's operations, the value of
its assets, the market price of its common stock, and whether forward-looking
statements made by the Company ultimately prove to be accurate.

      The following discussion outlines certain factors that in the future could
affect the Company's results for 2001 and beyond and cause them to differ
materially from those that may be set forth in any forward-looking statement
made by or on behalf of the Company:

Investment Company Act Compliance

      In order to execute its strategy of making minority investments in private
companies, the Company must comply with the Investment Company Act. The Company
is attempting to qualify as a business development company under the Investment
Company Act; however, the Company does not currently meet all of the
requirements for a business development company election. Specifically, the
Company will need to cancel or otherwise negotiate the termination of
substantially all of its outstanding stock options and, subject to shareholder
approval, grant new options in compliance with the requirements of the
Investment Company Act applicable to business development companies. Further,
the current percentage of the Company's assets invested in qualifying assets may
not be sufficient to


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<PAGE>

allow the Company to become a business development company, or the Company may
need to increase the percentage of its assets invested in qualifying assets in
order to maintain a business development company election.

      The Company has had preliminary discussions with the staff of the SEC
regarding the issues that need to be addressed in order for the Company to make
an election to become a business development company. The Company is also
considering whether to request formal guidance from the SEC with respect to
certain requirements of the Investment Company Act as they would apply to the
Company's election to become a business development company. If the Company is
able to satisfactorily resolve these issues, the Company intends to promptly
file an election to become a business development company. If the Company is
unable to meet the requirements for a business development company, it may be
necessary for the Company to register as an investment company under the
Investment Company Act. Registered investment companies are subject to
restrictions and regulations that are significantly more burdensome than those
applicable to business development companies. As a result, it may not be
practical for the Company to register as an investment company, and it may be
necessary for the Company to dispose of its investments or take other actions
necessary to ensure compliance with the Investment Company Act. If the Company
is unable to become a business development company and does not register as an
investment company, the Company will have to abandon its strategy of making
minority investments in private companies and either acquire an operating
business or liquidate its assets.

Long-Term Objective

      The Company's investment strategy is intended for investors seeking
long-term capital growth. The Company is not meant to provide a vehicle for
those who wish to play short-term swings in the stock market. The portfolio
securities acquired by the Company generally will require several years to reach
maturity and generally will be illiquid. An investment in shares of the Company
should not be considered a complete investment program. Prospective purchasers
should take into account their investment objectives as well as their other
investments when considering the purchase of shares of the Company.

Non-Diversified Status; Number Of Investments

      The Company is not limited in the proportion of its assets that may be
invested in the securities of a single issuer. The Company has investments in
only two Portfolio Companies so far, and the Company has limited funds with
which to make additional investments. As a result, unless the Company raises
additional captial for new investments, each of the Company's investments will
account for a significant percentage of the Company's net assets. Due to these
large positions in the securities of a small number of issuers, the Company is
exposed to a greater risk of loss and the market price of the Company's common
stock may fluctuate as a result of changes in the financial condition, the stock
price of, or in the market's assessment of any single portfolio company to a
greater extent than would be the case if it were a "diversified" company holding
numerous investments. If the value of any of the Company's investments
deteriorates, the value of the Company's common stock will be adversely
affected.


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Lack Of Liquidity Of Portfolio Investments

      The portfolio investments of the Company will consist principally of
securities will be subject to restrictions on sale because they were acquired
from the issuer in "private placement" transactions or because the Company is
deemed to be an affiliate of the issuer. Generally, the Company will not be able
to sell these securities publicly without the expense and time required to
register the securities under the Securities Act of 1933 and applicable state
securities laws unless an exemption from such registration requirements is
available. In addition, contractual or practical limitations may restrict the
Company's ability to liquidate its securities in Portfolio Companies since in
many cases the securities of such companies will be privately held and the
Company may own a relatively large percentage of the issuer's outstanding
securities. Sales may also be limited by securities market conditions, which may
be unfavorable for sales of securities of particular issuers or issuers in
particular industries. These limitations on liquidity of the Company's
securities could preclude or delay any disposition of such securities or reduce
the amount of proceeds that might otherwise be realized.

Need For Follow-On Investments In Portfolio Companies

      After its initial investment in a Portfolio Company, the Company may be
called upon from time to time to provide additional funds to such company or
have the opportunity to increase its investment in a successful situation, e.g.,
the exercise of a warrant to purchase common stock. There is no assurance that
the Company will make, or have sufficient funds to make, follow-on investments.
Any decision by the Company not to make a follow-on investment or any inability
on its part to make such an investment may have a negative impact on a Portfolio
Company in need of such an investment or may result in a missed opportunity for
the Company to increase its participation in a successful operation and may
dilute the Company's equity interest in or reduce the expected yield on its
investment.

Competition For Investments

      The Company encounters competition from other persons or entities with
similar investment objectives. These competitors include venture capital
partnerships, investment partnerships and corporations, small business
investment companies, large industrial and financial companies investing
directly or through affiliates, other business development companies, foreign
investors of various types and individuals. Many of these competitors have
greater financial resources and more personnel than the Company and may be
subject to different and frequently less stringent regulation.

Loss Of Conduit Tax Treatment

      The Company does not qualify for conduit tax treatment. Therefore, the
Company will be subject to income tax on its income and gains, and shareholders
will be subject to income tax on distributions. The Company may also be subject
to a 4% excise tax if it fails to distribute a sufficient portion of its net
investment income and net realized capital gains.

Valuation Of Investments

      If the Company becomes a business development company, the Company's net
asset value will be based on the value assigned to its portfolio investments.
The value of the Company's investments in securities for which market quotations
are not available will be determined as of the end of each fiscal quarter but
monitored in case there is a significant event requiring a change in valuation
in the interim. Cost will be used to approximate fair value of such investments
until significant developments affecting an investment provide a basis for use
of an appraisal valuation. Thereafter, such portfolio investments


                                       9
<PAGE>

will be carried at appraised values as determined at least quarterly. Due to the
inherent uncertainty of the valuation of portfolio securities which do not have
readily ascertainable market values, the Company's estimate of fair value may
significantly differ from the fair value that will be used if a ready market
exists for the securities. At December 31, 2000, 100% of the securities in
portfolio companies held by the Company, representing approximately 40% of the
Company's stockholders' equity, were invested in securities for which market
quotations were not readily available. See "BUSINESS--Valuation".

Possible Volatility Of Stock Price

      The market price of the Company's common stock could be subject to
significant fluctuations in response to variations in the value of the Company's
investments in portfolio companies, its quarterly operating results, and other
factors. The market price of the common stock may be significantly affected by
such factors as the announcement of new or follow-on investments in portfolio
companies, the sale or proposed sale of a portfolio investment, the results of
operations or fluctuations in the market prices or appraised value of one or
more of the Company's portfolio companies, changes in earnings estimates by
market analysts, speculation in the press or analyst community and general
market conditions or market conditions specific to particular industries. From
time to time in recent years, the securities markets have experienced
significant price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of particular companies. These
broad fluctuations may adversely affect the market price of the common stock.
Securities markets are cyclical and the prices of the securities traded in such
markets rise and fall at various times. These cyclical periods may extend over
significant periods of time.

Regulation

      The Company is attempting to become a business development company under
the Investment Company Act of 1940. If the Company files an election with the
SEC to become a business development company, it will not be permitted to
withdraw its election without first obtaining the approval of a majority
interest of its shareholders. The following brief description of the Investment
Company Act, as it relates to business development companies, is qualified in
its entirety by reference to the full text of the Investment Company Act and the
rules thereunder.

      A business development company must be operated for the purpose of
investing in the securities of certain present and former "eligible portfolio
companies" or certain bankrupt or insolvent companies and must make available
significant managerial assistance to portfolio companies. An eligible portfolio
company generally is a company that (i) is organized under the laws of, and has
its principal place of business in, any state or states, (ii) is not an
investment company and (iii) (a) does not have a class of securities registered
on an exchange or included in the Federal Reserve Board's over-the-counter
margin list, (b) is actively controlled by the business development company
acting either alone or as part of a group acting together, and an affiliate of
the business development company is a member of the portfolio company's board of
directors or (c) meets such other criteria as may be established by the SEC.
Control is presumed to exist where the business development company owns more
than 25% of the outstanding voting securities of a portfolio company.

      "Making available significant managerial assistance" is defined under the
Investment Company Act to mean (i) any arrangement whereby a business
development company, through its directors, officers or employees, offers to
provide and, if accepted, does provide significant guidance and counsel
concerning the management, operations or business objectives or policies of a
portfolio company or (ii) the exercise of a controlling influence over the
management or policies of a portfolio company by the business development
company acting individually or as part of a group of which the business


                                       10
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development company is a member acting together which controls such company
("Managed Company"). A business development company may satisfy the requirements
of clause (i) with respect to a portfolio company by purchasing securities of
such a company as part of a group of investors acting together if one person in
such group provides the type of assistance described in such clause. However,
the business development company will not satisfy the general requirement of
making available significant managerial assistance if it only provides such
assistance indirectly through an investor group. A business development company
need only extend significant managerial assistance with respect to portfolio
companies which are treated as Qualifying Assets (as defined below) for the
purpose of satisfying the 70% test discussed below.

      The Investment Company Act prohibits or restricts a business development
company from investing in certain types of companies, such as brokerage firms,
insurance companies, investment banking firms and investment companies.
Moreover, the Investment Company Act limits the type of assets that a business
development company may acquire to "Qualifying Assets" and certain assets
necessary for its operations (such as office furniture, equipment and
facilities) if, at the time of the acquisition, less than 70% of the value of
the business development company's total assets consists of Qualifying Assets.
Qualifying Assets include (i) securities of companies that were eligible
portfolio companies at the time that the business development company acquired
their securities; (ii) securities of companies that are actively controlled by
the business development company; (iii) securities of bankrupt or insolvent
companies that are not otherwise eligible portfolio companies; (iv) securities
acquired as follow-on investments in companies that were eligible portfolio
companies at the time of the business development company's initial acquisition
of their securities but are no longer eligible portfolio companies, provided
that the business development company has maintained a substantial portion of
its initial investment in such companies; (v) securities received in exchange
for or distributed on or with respect to any of the foregoing; and (vi) cash
items, government securities and high-quality, short-term debt. The Investment
Company Act also places restrictions on the nature of the transactions in which,
and the persons from whom, securities can be purchased in order for such
securities to be considered Qualifying Assets. As a general matter, Qualifying
Assets may only be purchased from the issuer or an affiliate in a transaction
not constituting a public offering. A business development company may not
purchase any security on margin, except such short-term credits as are necessary
for the clearance of portfolio transactions, or engage in short sales of
securities.

      A business development company is permitted by the Investment Company Act,
under specified conditions, to issue multiple classes of senior debt and a
single class of preferred stock senior to the common stock if its asset
coverage, as defined in the Investment Company Act, is at least 200% after the
issuance of the debt or the senior shareholders' interests. In addition,
provisions must be made to prohibit any distribution to common shareholders or
the repurchase of any shares unless the asset coverage ratio is at least 200% at
the time of the distribution or repurchase.

      A business development company generally may sell its securities at a
price that is below the prevailing net asset value per share only upon the
approval of the policy by shareholders holding a majority of the shares issued
by the business development company, including a majority of shares held by
nonaffiliated shareholders. The business development company may, in accordance
with certain conditions established by the SEC, sell shares below net asset
value in connection with the distribution of rights to all of its shareholders.
The business development company may also issue shares at less than net asset
value in payment of dividends to existing shareholders. Shareholders of a
closed-end business development company have no right to present their shares to
the business development company for redemption.


                                       11
<PAGE>

      Many of the transactions involving a business development company and its
affiliates (as well as affiliates of such affiliates) require the prior approval
of a majority of the independent directors and a majority of the independent
directors having no financial interest in the transactions. However, certain
transactions involving closely affiliated persons of a business development
company would require the prior approval of the SEC. In general (a) any person
who owns, controls or holds with power to vote more than 5% of the outstanding
shares, (b) any director or executive officer and (c) any person who directly or
indirectly controls, is controlled by or is under common control with such
person, must obtain the prior approval of a majority of the independent
directors and, in some situations, the prior approval of the SEC, before
engaging in certain transactions involving a business development company or any
company controlled by the business development company. In accordance with the
Investment Company Act, a majority of the directors must be persons who are not
"interested persons" as defined in such act. Except for certain transactions
which must be approved by the independent directors, the Investment Company Act
generally does not restrict transactions between a business development company
and its portfolio companies.

Employees

      The Company currently has two employees, Mr. Strasser, the chief executive
officer of the Company, and Mr. Bebbington, the chief operating officer of the
Company.


                                       12
<PAGE>

--------------------------------------------------------------------------------
                               ITEM 2. PROPERTIES
--------------------------------------------------------------------------------

      Prior to March 1, 2000, the Company leased 1,692 square feet of space at
50 West Broadway, Suite 501, Salt Lake City, Utah 84101, for monthly lease
payments of $2,256 under the terms of a three-year lease. As of March 1, 2000,
this lease was assumed by Mr. Landa, then chief executive officer of the
Company, as required by the terms of the proposed merger agreement with
Net2Wireless. As part of his consideration, Mr. Landa agreed to permit the
Company to continue to use the facilities pending the closing of the proposed
merger with Net2Wireless. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."

      Commencing February 15, 2001, the Company relocated to 136 East South
Temple, Suite 2325, Salt Lake City, Utah 84111. The Company has leased 1,146
square feet of office space through August 30, 2002. In exchange for a discount,
the Company prepaid the lease obligation for the entire term in the amount of
$28,082.

--------------------------------------------------------------------------------
                           ITEM 3. LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

      On September 28, 1999, an action entitled Edgar Lee, et al. v. Sensar
Corporation was filed in the Fourth Judicial District Court in Utah County,
Utah, Civil No. 990403473. The action was brought by several former employees of
the Company, seeking the payment of a bonus based on the successful completion
of the sale of certain of the Company's assets, technologies, and/or businesses.
The Company does not believe the employees are entitled to such a bonus. The
Company filed a motion to dismiss a portion of the claims (which was granted in
part to dismiss a claim for certain penalties), and intends to vigorously defend
its position. Mr. Landa agreed to indemnify the Company against all future costs
or liabilities associated with this litigation after March 1, 2000, under the
provisions of the indemnification agreement originally contemplated under the
proposed merger agreement with Net2Wireless. See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."

--------------------------------------------------------------------------------
          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------------------------

      A special meeting of the stockholders of the Company was held on December
5, 2000. The first item of consideration was a proposal to approve the adoption
of a Stock Option Plan covering up to 6,000,000 shares of common stock of the
Company, with the votes tabulated as follows: 2,684,466 for, 339,613 against,
and 103,708 abstaining. The second item of consideration was a proposal to
ratify certain options granted to management, directors and consultants to
acquire up to 2,200,000 shares of common stock of the Company, with the votes
tabulated as follows: 5,817,013 for, 391,277 against, and 70,626 abstaining. The
two other items that had been proposed for consideration at this meeting, the
approval of the proposed merger of the Company with Net2Wireless Corporation and
the change of the name and corporate domicile of the Company, were withdrawn
from consideration. See "BUSINESS: Net2Wireless Transaction."


                                       13
<PAGE>

                                    PART II

--------------------------------------------------------------------------------
               ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
                          RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------

      The Company's common stock is traded on the Nasdaq SmallCap Market under
the trading symbol "SCII." The following table sets forth high and low closing
sale prices for the Company's common stock as reported on Nasdaq for the periods
indicated. All amounts have been adjusted to give effect to the 1:5
consolidation of the outstanding common stock of the Company effective May 3,
1999 and the 2:1 forward split of the outstanding common stock effective January
17, 2000.

            Quarter Ended             High              Low
            -------------           -------           -------

            March 31, 1999          $ 1.094           $ 0.703
            June 30, 1999           $ 3.594           $ 0.859
            September 30, 1999      $ 2.797           $ 1.500
            December 31, 1999       $34.250           $ 2.094
            March 31, 2000          $79.688           $22.625
            June 30, 2000           $41.500           $10.000
            September 30, 2000      $30.438           $16.063
            December 31, 2000       $18.750           $ 0.438

      On March 27, 2001, the last reported sales price for the Company's common
stock as reported by Nasdaq was $0.9375. On March 27, 2001, the Company had
approximately 270 stockholders of record.

      The Company has not paid dividends with respect to its common stock. There
are no restrictions on the declaration or payment of dividends in the articles
of incorporation or bylaws of the Company or in any of its contractual
agreements. However, it is anticipated that any potential earnings of the
Company will be retained for working capital and investments. Consequently, it
is not anticipated that the Company will pay dividends in the foreseeable
future.



                                       14
<PAGE>

--------------------------------------------------------------------------------
                        ITEM 6. SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------

CERTAIN FINANCIAL DATA

      The following statement of operations and balance sheet data as of and for
the periods ended December 31, 2000, 1999, 1998, 1997 and 1996, and June 30,
1996, were derived from the Consolidated Financial Statements of the Company. In
January 1997, the Company changed its fiscal year end from June 30 to December
31 effective December 31, 1996. The Consolidated Financial Statements of the
Company for the fiscal years ended December 31, 2000, 1999, 1998, and 1997, for
the six months ended December 31, 1996, and for the fiscal year ended June 30,
1996, have been audited by independent certified public accountants. The
selected financial data below should be read in conjunction with the
Consolidated Financial Statements of the Company and the notes thereto and "ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."

<TABLE>
<CAPTION>


                                                          Year Ended December 31,                       Six Months
                                        --------------------------------------------------------           Ended        Year Ended
                                                                                                        December 31,      June 30
                                           2000(2)         1999(2)          1998            1997             1996         1996(3)
                                           -------         -------          ----            ----             ----         -------

<S>                                     <C>            <C>             <C>             <C>             <C>             <C>
Statement of Operations
Data(1):
  Revenues:                             $    359,405   $    147,944    $    137,814    $    140,870    $     59,638    $     12,320
                                        ============   ============    ============    ============    ============    ============
  Income (loss) from
    continuing operations               $  4,067,977   $(11,995,158)   $ (1,221,025)   $ (2,324,262)   $   (326,242)   $   (463,637)
  Income (loss) from
    discontinued operations                       --         22,528      (5,702,419)    (12,493,549)     (1,317,678)     (1,242,611)
  Gain on sale of
     discontinued operations                 224,075      3,268,250              --              --              --              --
                                        ------------   ------------    ------------    ------------    ------------    ------------
  Net income (loss)                     $  4,292,052   $ (8,704,380)   $ (6,923,444)   $(14,817,811)   $ (1,643,920)   $ (1,706,248)
                                        ============   ============    ============    ============    ============    ============

  Basic income
     (loss) per common
     shares from
     continuing operations              $       0.62   $      (2.11)   $      (0.51)   $      (0.51)   $      (0.08)   $      (0.16)
  Basic income (loss)
     per common share from
     discontinued operations                    0.04           0.58           (1.12)          (2.71)          (0.32)          (0.38)
                                        ------------   ------------    ------------    ------------    ------------    ------------
  Basic income
     (loss) per common
     share                              $       0.66   $      (1.53)   $      (1.63)   $      (3.22)   $      (0.40)   $      (0.54)
                                        ============   ============    ============    ============    ============    ============

  Weighted average
     common shares
     outstanding                           6,536,352      5,693,514       5,073,463    $  4,603,080       4,164,328       3,255,489

Balance Sheet Data:
  Working capital                       $  3,251,870   $  5,034,089    $  4,038,840    $  6,784,305    $ 15,584,953    $ 15,737,295
  Total assets                          $  5,349,509   $  5,568,839    $  4,317,769    $  7,104,476    $ 15,716,524    $ 16,032,158
  Long-term liabilities
     and deferred gain                  $    200,000   $  5,542,040    $         --    $         --    $         --    $     45,792
  Stockholders' equity
     (deficit)                          $  5,085,404   $   (154,959)   $  4,049,572    $  6,853,003    $ 15,591,513    $ 15,661,097
  Cash dividends declared
     per common share                   $         --   $         --    $         --    $         --    $         --    $         --

</TABLE>

                    (footnotes contained on following page)


                                       15
<PAGE>

----------

(1)   During the year ended December 31, 1999, the Company discontinued the
      operations of its analytical instrumentation business. The results of
      these operations have been segregated from continuing operations for all
      periods presented.

(2)   During the year ended December 31, 1999, the Company recognized total
      non-cash expenses of $11,227,873 ($1.97 per share) in the statement of
      operations related to compensation expense for stock options and deferred
      compensation expense that principally resulted from an increase in the
      price of the common stock of the Company. During the year ended December
      31, 2000, due to the decline in the price of the common stock, the Company
      recognized non-cash credits (resulting in increased net income) primarily
      from the reversal of previously-recorded compensation expense for stock
      options and deferred compensation expense in the total amount of
      $5,523,532 ($0.84 per share). See Notes C and H to the Consolidated
      Financial Statements for a more detailed explanation of these charges and
      credits.

(3)   Effective October 27, 1995, the Company acquired Sensar Instruments, Inc.
      (formerly Sensar Corporation), in a transaction accounted for as a
      purchase.

--------------------------------------------------------------------------------
                ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

      The following discussion should be read in conjunction with the
consolidated financial statements and related notes contained herein.

OVERVIEW

      During the year ended December 31, 1999, the Company completed the sale or
disposition of its various product lines and technologies. The results of
operations and cash flows associated with these products and technologies have
been accounted for and segregated as discontinued operations in the accompanying
consolidated financial statements. All periods have been restated to reflect the
treatment of these operations as discontinued.

      In conjunction with the disposition of its historical operations, the
Company undertook a search for a suitable business or technology to acquire,
which led to the execution of an agreement with Net2Wireless. Although the
acquisition of Net2Wireless did not occur, the Company did acquire an equity
interest in Net2Wireless in December 2000. In January 2001, the Company acquired
a small equity interest in Nex2, LLC. The Company is attempting to qualify as a
business development company under the Investment Company Act of 1940 and
intends to make additional investments in other companies, if permitted.

RESULTS OF OPERATIONS

Comparison of Years Ended December 31, 2000 and 1999

      Revenues

      With the disposition of the assets of its historical operations, the
Company's sole source of revenue from continuing operations was interest income
of $359,405 for 2000 and $147,944 for 1999 earned on temporary cash investments
and notes receivable.


                                       16
<PAGE>

      Costs and Expenses

      General and administrative expenses associated with continuing operations
increased from $893,416 for the year ended December 31, 1999, to $1,458,810 for
the year ended December 31, 2000. The increase was principally related to
increases of approximately $229,000 for legal and accounting fees, $109,000 in
travel costs and $203,000 for proxy printing, mailing and solicitation costs
associated primarily with the Net2Wireless transaction.

      During the year ended December 31, 2000, the Company recorded a net credit
of $181,492 related to compensation for stock options. This net credit is
composed of three elements: (1) a credit of $1,200,000 related to the stock
option to acquire 200,000 shares granted to the chief executive officer in 1999
that had a cashless exercise provision, (2) a charge of $868,508 for an option
to acquire 650,000 shares approved by shareholders for the Company's chief
consultant and (3) a charge of $150,000 for options approved by shareholders for
directors where the market price of the common stock exceeded the exercise price
on the date of shareholder approval. The cashless exercise feature of the option
to the chief executive officer was eliminated at the end of June 2000 as the
result of the third amendment to the agreement between the Company and
Net2Wireless. Generally accepted accounting principles require that compensation
be recorded for the amount of the change in the value of the common stock
underlying options with such provisions. Likewise, if the price of the stock
declines during the period, compensation is reduced by the amount of the
decrease in the value of the stock underlying the options, but not in excess of
the cumulative compensation recorded since the grant date. The amount of the
reduction in compensation is equal to the decrease in the stock price during the
period that the cashless feature was in effect, multiplied by the 200,000
shares. The charge for options granted to the Company's chief consultant is
based on the fair value of the option as computed under the Black-Scholes model.
The charge for options granted to directors is equal to the difference between
the market value of the underlying common stock and the exercise price of the
options, multiplied by 300,000 shares.

      During the year ended December 31, 2000, the Company recorded a reduction
in non-cash deferred compensation expense of $5,342,040 for the decrease during
the year in the accrual of amounts earned under a deferred compensation plan
established in 1999. This plan created an unfunded deferred compensation pool
based on specified percentages of the Company's net income and increases in
market capitalization. On December 5, 2000, the deferred compensation plan was
terminated and the participants in the plan abandoned their interest in the plan
with the shareholder approval of options previously granted to the participants.
With the decrease in the market capitalization as a result of the decline in the
price of the Company's common stock between December 31, 1999 and December 5,
2000, the total amount of the deferred compensation pool declined to zero.
Accordingly, the Company reversed the entire deferred compensation liability in
the year ended December 31, 2000 and recorded a corresponding credit in the
statement of operations. See Note C to the Consolidated Financial Statements of
the Company for additional information about this plan.

      During the year ended December 31, 2000, the Company recorded an unusual
charge of $356,150 in connection with an agreement entered into with the chief
executive officer whereby he agreed to indemnify the Company with respect to
pending litigation. In exchange for his indemnification, the Company distributed
to him certain investments with a book value of $325,000 and office equipment
and furnishings with a carrying value of $31,150. See "LEGAL PROCEEDINGS" and
Note J to the Consolidated Financial Statements of the Company for additional
information about this indemnification.

      As a result of the non-cash credits recognized during the year ended
December 31, 2000, primarily for the reversal of previously recorded
compensation expense for stock options and deferred


                                       17
<PAGE>

compensation expense as described above, the Company reported income from
continuing operations of $4,067,977 ($0.62 per share) rather than a loss of
$1,455,555 ($0.22 per share), a difference of $5,523,532 ($0.84 per share). As a
result of the non-cash charges recognized during the year ended December 31,
1999 for compensation expense for stock options and deferred compensation
expense as described above, the Company reported a loss from continuing
operations of $11,995,158 ($2.11 per share) rather than a loss of $767,285
($0.14 per share), a difference of $11,227,873 ($1.97 per share).

Comparison of Years Ended December 31, 1999 and 1998

      Revenues

      With the disposition of the assets of its historical operations, the
Company's sole source of revenue from continuing operations was interest income
of $147,944 for 1999 and $137,814 for 1998 earned on temporary cash investments
and notes receivable.

      Costs and Expenses

      General and administrative expenses associated with continuing operations
increased from $708,890 for the year ended December 31, 1998, to $893,416 for
the year ended December 31, 1999. The increase was principally related to
increases of approximately $99,000 for legal fees and $27,000 in travel costs
associated primarily with the due diligence review of various potential
candidates for business transactions.

      During the year ended December 31, 1999, the Company recorded non-cash
compensation related to stock options of $5,885,833. The principal element of
this charge, $5,618,740, relates to stock options to acquire 240,000 shares
granted to management that have a cashless exercise provision. Generally
accepted accounting principles require that compensation be recorded for stock
options with such provisions. The amount of compensation is equal to the change
in the stock price above the exercise price. Additionally, the Company has
recorded non-cash compensation expense during 1999 of $267,093 for the fair
value of stock options granted to certain non-employees to acquire an aggregate
of 270,000 shares of common stock.

      During 1999, the Company also recorded a non-cash deferred compensation
expense of $5,342,040 for the accrual of amounts earned under a deferred
compensation plan established in 1999. This plan created an unfunded deferred
compensation pool based on specified percentages of the Company's net income and
increases in market capitalization. As of December 31, 1999, the entire amount
of the deferred compensation pool is attributable to the increase in market
capitalization of the Company.

      The Company also recorded a net credit of $31,663 for unusual items during
the year ended December 31, 1999. This credit principally consisted of a
recovery of approximately $145,000 on notes receivable from the exercise of
stock options which were previously reserved, net of a termination benefit paid
to the former chief executive officer of $125,000.

LIQUIDITY AND CAPITAL RESOURCES

      At December 31, 2000, the Company had total current assets of $3,315,975,
including cash and cash equivalents of $3,248,505. The Company had total current
liabilities of $64,105 at December 31, 2000, resulting in working capital of
$3,251,870.


                                       18
<PAGE>

      The Company's primary source of cash for the year ended December 31, 2000,
was cash collected on notes receivable of $1,419,589. The Company's primary uses
of cash for the year ended December 31, 2000, were net cash used in operations
of $1,278,572 and the investment in Net2Wireless of $2,000,000 (including the
conversion of a note receivable of $500,000).

      The Company has limited funds available with which to make additional
investments. In addition, the Company believes it would be difficult to raise
additional capital at this time. As a result, the Company will have limited
ability to make investments in new portfolio companies or follow on investments
in existing portfolio companies. Further, while management believes that the
Company's current cash balances are more than sufficient to meet the existing
commitments of the Company for at least the next fiscal year, additional
investments by the Company could reduce the amounts available to fund future
salaries and other operating expenses of the Company. Due to the illiquid nature
of minority investments in private companies, the Company may not be able to
sell its investments in portfolio companies, if necessary, to obtain working
capital, and the Company may need to seek alternative financing sources to fund
operations. There can be no assurance that the Company will be able to obtain
this financing if it is needed.

--------------------------------------------------------------------------------
      ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------

      Concentrations of market risk exist with respect to equity investments in
companies which are subject to significant business and financial risk usual to
companies in early stages of development. Such investments are generally
long-term in nature and there is generally no ready market for such investments,
as they are closely held and are not publicly traded. The Company currently
records these investments at the lower of cost or net realizable value. This
method of accounting does not result in increases or decreases in the carrying
value of these investments in response to changes in market prices.

      The Company does not have any derivative instruments, commodity
instruments, or other financial instruments for trading or speculative purposes,
nor is it presently at risk for changes in foreign currency exchange rates.

--------------------------------------------------------------------------------
              ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------------------------------

      The financial statements and supplementary data are set forth immediately
following the signature page.

--------------------------------------------------------------------------------
            ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                      ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------------------------------------------------

      Not applicable.


                                       19
<PAGE>

                                    PART III

--------------------------------------------------------------------------------
          ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------------------------------------

      Set forth below is the name and age of each executive officer and director
of the Company, together with all positions and offices of the Company held by
each and the term of office and the period during which each has served:

                                                         Director and/or
      Name              Age   Position and Office Held   Executive Officer Since
 --------------------   ---   ------------------------   -----------------------

 Steven P. Strasser     52    Chief Executive Officer    April 21, 1999
                              and Director

 Mickey Hale            53    Secretary and Director     May 5, 1999

 Andrew C. Bebbington   40    Chief Operating Officer    January 18, 2001
                              and Director

 Simon J. Constantine   42    Director                   January 24, 2001

      A director's regular term is for a period of three years or until his or
her successor is duly elected and qualified. The terms of the board are
staggered so that one-third of the board is subject to election at each annual
shareholders' meeting. The current term of Andrew C. Bebbington expires at the
2001 annual meeting; the current terms of Steven P. Strasser and Mickey Hale
expire at the 2002 annual meeting; and the current term of Simon J. Constantine
expires at the 2003 annual meeting.

      There is no family relationship among the current directors and executive
officers. The following sets forth brief biographical information for each
director and executive officer of the Company.

      Steven P. Strasser, age 52, was appointed a director of the Company on
April 21, 1999 and Chief Executive Officer on January 16, 2001. Since 1987, Mr.
Strasser has been engaged in stock and venture capital investments on his own
behalf. Mr. Strasser served as co-chairman of Modula Computer from 1980 to 1987.
Prior to that time, Mr. Strasser was involved in investment banking first with
Edwards & Handley and then with J. Franklin Investments. Mr. Strasser received
his bachelor of science degree in economics from the University of Utah in 1970
and a masters of business administration from Columbia University in 1972.

      Mickey Hale, age 53, was appointed a director of the Company on May 5,
1999 and Secretary on January 18, 2001. Ms. Hale has been president and chief
executive officer of Imperial Development Corporation and related travel
services and real estate entities since 1990. Ms. Hale was an investment advisor
at Shearson Lehman Brothers from 1987-1990 and served in the same capacity at
Paine Webber from 1980-1987.

      Andrew C. Bebbington, age 40, was appointed a director of the Company and
Chief Operating Officer on January 18, 2001. Mr. Bebbington served as President
of the Company from November 1997 until April 1999, and as a consultant to the
Company from April 1999 until his appointment as Chief


                                       20
<PAGE>

Operating Officer. Mr. Bebbington was formerly president of Neslab Instruments
Inc. for a period of six years, as well as serving on the board of directors of
Life Sciences International plc until its purchase by Thermo Electron, Inc., in
March 1997. Prior to this position, Mr. Bebbington served as business
development director of Life Sciences for a period of four years, during which
time he was responsible for coordinating Life Sciences' rapid expansion through
acquisition. Mr. Bebbington is a graduate of the London School of Economics and
a Chartered Accountant. Mr. Bebbington served in the KPMG consulting practice,
specializing in mergers, acquisitions and other strategic and financial planning
activities.

      Simon J. Constantine, age 42, was appointed a director of the Company on
January 24, 2001. Mr. Constantine has been Executive Chairman of Auto Online
Limited since 1999. Mr. Constantine has made a number of venture capital
investments on his own behalf since 1997. From 1987 to 1997, Mr. Constantine
served in multiple positions with Life Sciences International plc, including
Finance Director, Acquisitions and Finance Director, and Chief Operating Officer
- Europe and Asia Pacific. He has also been a director of Bioquell plc since
1999. From 1992 through 1995, Mr. Constantine was a member of the Listing Policy
Committee and the Quotations Committee of the London Stock Exchange. Mr.
Constantine holds a degree in mathematics from Oxford University and is a
Chartered Accountant. Mr. Constantine was also employed in the KPMG consulting
practice specializing in acquisitions and other strategic and financial planning
services.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Officers, directors,
and greater than 10% shareholders are required to furnish the Company with
copies of all Section 16(a) forms they file.

      Based solely upon a review of the copies of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that during 2000 all persons subject to the reporting requirements of
Section 16(a) filed the required reports on a timely basis, except that a Form 5
was filed late by Brian B. Lewis, a Form 3 was filed late by Andrew C.
Bebbington, and a Form 3 was filed late by Simon J. Constantine.


                                       21
<PAGE>

--------------------------------------------------------------------------------
                        ITEM 11. EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

      The following table sets forth the annual and long-term compensation
awarded to, earned by, or paid to the chief executive officer of the Company,
who is referred to as the "named executive officer". No other executive officer
of the Company received compensation in excess of $100,000 for the periods
indicated.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                       Long Term Compensation
                                                                 ---------------------------------
                                        Annual Compensation                 Awards            Payouts
                                    ----------------------------------------------------------------------------------------
      (a)                 (b)         (c)       (d)       (e)          (f)          (g)         (h)            (i)

                                                        Other                    Securities
                                                        Annual     Restricted    Underlying                 All Other
                                                       Compen-       Stock       Options/       LTIP         Compen-
     Name and                       Salary     Bonus    sation(1)    Award(s)       SARs       Payouts       sation
  Principal Position     Year         ($)       ($)       ($)          ($)          (#)          ($)           ($)
----------------------------------------------------------------------------------------------------------------------------

<S>                   <C>           <C>         <C>     <C>            <C>        <C>             <C>     <C>
  Howard S. Landa     12/31/00(2)   $88,000     $0      $3,985         $0                0        $0      $(3,908,810)(3)
   CEO and            12/31/99(2)   $66,585     $0      $    0         $0         1,000,000(4)    $0      $ 3,908,810 (3)
   Chairman of
   the Board until
   January 16, 2001

----------------------------------------------------------------------------------------------------------------------------
</TABLE>



----------

(1)   These amounts reflect the benefit to the named executive officer of
      amounts paid by the Company for health insurance.

(2)   Mr. Landa accepted the positions of chief executive officer and a member
      of the board of directors effective April 21, 1999. Mr. Landa was not
      previously an employee of the Company. The foregoing table reflects
      amounts paid, awarded, or accrued for Mr. Landa from April 21, 1999, to
      December 31, 2000. Mr. Landa resigned as chief executive officer and from
      the board of directors on January 16, 2001. With his resignation, Mr.
      Landa waived his rights to options to acquire 500,000 shares of common
      stock at $2.00 per share. Steven P. Strasser was appointed chief executive
      officer on January 16, 2001. Mr. Strasser will be paid $96,000 per year
      and received options to acquire 250,000 shares of common stock at $2.00
      per share.

(3)   This 1999 amount represents Mr. Landa's share of the deferred compensation
      pool accrued during the year ended December 31, 1999. With the decrease in
      market capitalization between December 31, 1999 and December 5, 2000,
      amounts previously accrued under the deferred compensation plan were
      reversed. As described in Note (4) below, Mr. Landa forfeited his interest
      in this plan on December 5, 2000 when options to acquire 800,000 shares of
      common stock were approved by shareholders.

(4)   Of these options granted, 800,000 were subject to stockholder approval,
      which approval was sought and obtained on December 5, 2000. With this
      approval by the stockholders, Mr. Landa forfeited his interest in the
      deferred compensation plan described in Note (3) above. Upon his
      resignation as chief executive officer and a director of the Company on
      January 16, 2001, Mr. Landa waived his rights to options to acquire
      500,000 shares of common stock as disclosed in Note (2) above.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

      There were no stock options or stock appreciation rights granted by the
Company during the year ended December 31, 2000. Certain options that were
granted in November 1999 (and reported in Item 11


                                       22
<PAGE>

on Form 10-K for the year ended December 31, 1999) were approved by shareholders
at a special meeting on December 5, 2000.

      The following table sets forth the information concerning the options
exercised by the named executive officer during the year ended December 31,
2000, and the value of unexercised options as of December 31, 2000.

              AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES

       (a)             (b)           (c)             (d)                (e)
                                                  Number of
                                                  Securities          Value of
                                                  Underlying        Unexercised
                                                 Unexercised        In-the-Money
                     Shares                   Options/SARs at    Options/SARs at
                     Acquired                     FY End (#)         FY End ($)
                   on Exercise      Value        Exercisable/       Exercisable/
       Name            (#)      Realized ($)    Unexercisable      Unexercisable
--------------------------------------------------------------------------------

Howard S. Landa         0            $0          1,000,000/0           $0/$0


      At December 31, 2000, the Company had options outstanding to acquire
2,495,256 shares of common stock at a weighted-average exercise price of $2.25,
all of which are exercisable.

EXECUTIVE EMPLOYMENT AGREEMENTS

      The Company had an employment contract with Howard S. Landa with an
initial term through December 31, 2002, that provided for monthly compensation
of $8,000. On January 16, 2001, the Company entered into a Transition Agreement
with Mr. Landa and the remaining members of the board of directors. Under this
agreement, Mr. Landa resigned as chief executive officer and from the board of
directors of the Company, and waived his rights to options to acquire 500,000
shares of common stock. Under the transition agreement, Steven P. Strasser was
appointed chief executive officer of the Company. Andrew C. Bebbington was
appointed chief operating officer of the Company and to the board of directors
on January 18, 2001.

      In connection with their appointments, the Company entered into employment
agreements with Mr. Strasser and Mr. Bebbington. These agreements have initial
terms that expire January 14, 2002, but renew automatically so there is always
an unexpired one-year term. The employment agreements require the employee to
devote such time, attention, and services as may be required to perform
faithfully the duties assigned by the board of directors, although the
agreements do not anticipate that such duties will require the executive's full
business time. The agreements prohibit the executive from competing in any
fashion with the Company during the term of the agreement and for one year
subsequent to termination, and prohibit disclosure or use by the executive of
trade secrets or other confidential information of the Company for a period of
three years subsequent to termination.

      The employment agreements provide for annual compensation of $96,000 and
$144,000 for the CEO and COO, respectively, plus normal benefits for vacation,
sick leave, and health, medical, and disability insurance.

      In connection with his appointment, Mr. Strasser received options to
acquire 250,000 shares of common stock with an exercise price of $2.00 per
share. In connection with his employment agreement, Mr. Bebbington waived his
right to options to acquire 150,000 shares of common stock with an exercise


                                       23
<PAGE>

price of $2.00 per share. Mr. Bebbington continues to hold options to purchase
503,056 shares of common stock with a weighted-average exercise price of $2.00
per share.

      In the event that the executive is disabled or dies during the term of his
employment agreement, he is entitled to his base salary for a period of 90 days.
The employment agreements can be terminated by the Company for cause by showing
that the executive has materially breached the terms of the employment
agreement, that the executive, in the reasonable determination of the board of
directors, has been grossly negligent or engaged in material willful or gross
misconduct in the performance of his duties, or that the executive has committed
or been convicted of fraud, embezzlement, theft, dishonesty, or other criminal
conduct against the Company. On the sale or transfer of all or substantially all
of the assets of the Company, the merger of the Company into another entity, the
termination of the business of the Company, a change in control of the Company,
or the continued breach by the Company of the employment agreement after 20 days
written notice, the executive has the right to terminate the employment
agreement. In the event of a termination of the employment agreement other than
by the Company for cause, the executive will receive an amount equal to the
amount of salary that would otherwise accrue to the executive during the
remaining employment period, a one-year period.

      The Company agrees to indemnify the executives and hold them harmless from
liability for acts or decisions made by the executive in connection with
providing services to the Company to the greatest extent permitted by law. The
Company has an obligation to use its best efforts to obtain officer's and
director's insurance covering the executive. Each of the executives agree to
indemnify the Company and hold it harmless from liabilities arising from their
acts or omissions in violation of their duties under the employment agreements
that constitute fraud, gross negligence, or willful and knowing violations.

DEFERRED COMPENSATION PLAN

      The Company adopted a deferred compensation plan on June 24, 1999, when
the strategy to identify potential acquisitions was being implemented. Under the
terms of the plan, Mr. Landa received a 30% interest in the compensation pool,
the outside directors were each granted a 3% interest, and consultants to the
Company were granted a 2% interest.

      The deferred compensation pool consisted of two components: (a) an
increasing percentage of 3% to 7-1/2% of the net income of the Company
subsequent to March 31, 1999, in excess of $2 million, excluding gains on the
sale of the technologies then held by the Company and excluding compensation
charges related to the granting of options, but including 75% of any net
unrealized gain on investments made by the Company in marketable securities
subsequent to March 31, 1999; and (b) an amount equal to 7-1/2% of any increase
in the market capitalization of the Company above $13.4 million that is in
excess of 150% of the increase in the Russell 2000 Index over the same period.
The maximum amount permitted to be included in the compensation pool under these
two components is $25 million and $50 million, respectively. The deferred
compensation pool was to be fixed at December 31, 2002, or, if sooner, on any
change of control. In the event of a change of control, the deferred
compensation pool was not to be less than $5 million. The pool was required to
be paid in cash unless payment in stock of the Company has been approved by the
shareholders. Each of the holders of interests in the deferred compensation plan
agreed to relinquish their interest in the plan upon stockholder approval of
options granted to them by the board of directors. On December 5, 2000 at a
special meeting of stockholders, those options were approved by shareholders.
The deferred compensation plan was terminated, and the participants abandoned
their interests in the plan.


                                       24
<PAGE>

COMPENSATION OF DIRECTORS

      The Company compensates its outside directors for service on the board of
directors by payment of $1,000 for each board meeting attended and reimbursement
of expenses incurred in attending board meetings. The Company does not
separately compensate its board members who are also employees of the Company
for their service on the board. Each of the members of the board have received
options to acquire shares of stock at a weighted-average exercise price of $2.00
per share.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

      The Company did not have a compensation committee during the year ended
December 31, 2000. The entire board, other than the particular individual
executive officer involved, participated in the setting of compensation for
senior management. On February 8, 2001, a compensation committee was formed
consisting of Mr. Strasser, Ms. Hale, and Mr. Constantine.

--------------------------------------------------------------------------------
                         ITEM 12. SECURITY OWNERSHIP OF
                    CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------

      The table below sets forth information as to each person owning of record
or who was known by the Company to own beneficially more than 5% of the
Company's outstanding common stock as of March 27, 2001, and information as to
the ownership of the Company's common stock by each director and named executive
officer and by the directors and executive officers as a group. Except as
otherwise indicated, all shares are owned directly, and the persons named in the
table have sole voting and investment power with respect to shares shown as
beneficially owned by them.


                                       25
<PAGE>

           Name and Address         Nature of         Number of
       of Beneficial Owners(1)      Ownership        Shares Owned   Percent(2)
    --------------------------      --------------  -------------   ----------

    Named Executive Officer

       Howard S. Landa(3)           Common stock(4)      56,076        0.9%
                                    Options             500,000        7.1%
                                                    -------------
                                    Total               556,076        7.9%

    Directors

       Steven P. Strasser           Common stock              0        0.0%
                                    Options             500,000        7.1%
                                                    -------------
                                    Total               500,000        7.1%

       Mickey Hale                  Common stock         12,500        0.2%
                                    Options             190,000        2.8%
                                                    -------------
                                    Total               202,500        3.0%

       Andrew C. Bebbington         Common stock              0        0.0%
                                    Options             503,056        7.1%
                                                    -------------
                                    Total               503,056        7.1%

       Simon J. Constantine         Common stock(5)       7,600        0.1%
                                    Options             150,000        2.2%
                                                    -------------
                                    Total               157,600        2.3%

    All Executive Officers and      Common stock         20,100        0.3%
      Directors as a Group          Options           1,343,056       17.0%
      (four persons)                                -------------
                                    Total             1,363,156       17.2%

----------

(1)   Except as otherwise indicated, to the best knowledge of the Company, all
      stock is owned beneficially and of record by the indicated person, and
      each shareholder has sole voting and investment power.

(2)   The percentages shown are based on 6,562,546 shares of common stock of the
      Company issued and outstanding as of March 27, 2001. The percentages shown
      for options assume the exercise of all options held solely by that
      individual and a corresponding increase in the issued and outstanding
      common stock. The percentage shown for total holdings assumes the exercise
      of all options held by the individual and a corresponding increase in the
      issued and outstanding common stock.

(3)   Mr. Landa resigned as chief executive officer and from the board of
      directors on January 16, 2001.

(4)   These 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 disclaims direct beneficial ownership and control of these shares.

(5)   These shares are beneficially owned by Mr. Constantine's spouse. Mr.
      Constantine disclaims beneficial ownership and control of these shares.


                                       26
<PAGE>

--------------------------------------------------------------------------------
            ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

      In anticipation of the proposed merger with Net2Wireless, which required
that the Company's liabilities not exceed $50,000, the Company entered into an
indemnification agreement with Howard S. Landa. Under that agreement, Mr. Landa
agreed to indemnify the Company for any costs arising out of an action entitled,
Edgar Lee, et al. v. Sensar Corporation, filed in the Fourth Judicial District
Court in Utah County, Utah, Civil No. 990403473, subsequent to March 1, 2000,
including costs of defense and the payment of any settlement or judgment. Under
the terms of the indemnification agreement, the Company transferred to Mr. Landa
the assets held by the Company's subsidiary, Eagle Lake Ventures, Inc.,
including the right to use that name, plus certain office furniture and
equipment. These assets had a book value of $356,150 at the date of transfer,
and included two minority investments in unrelated companies, with a total
combined cost to the Company of $325,000. In addition, Mr. Landa agreed to
assume the lease for the office space located at 50 West Broadway, Suite 501,
Salt Lake City, Utah. Finally, Mr. Landa agreed to make any space that the
Company would like to have at the Salt Lake City office available prior to the
planned merger at no charge and thereafter, for a period of one year subsequent
to the closing of the planned merger with Net2Wireless, at a cost of $1.00 per
month. This agreement was approved by the board of directors of the Company but
was not negotiated at arms-length. Because of the contingent nature of the
litigation and the inability of the parties to currently predict the outcome, it
is uncertain what the cost would have been to the Company to obtain similar
benefits from an unrelated third-party.

      In addition to the indemnification agreement, Mr. Landa agreed to
terminate the unexpired term of his employment agreement with the Company, to
provide 100 hours of transitional services without charge to the Company and to
forego his 30% interest in the compensation pool under the terms of the deferred
compensation plan approved by the board of directors of the Company in June
1999, contingent upon approval by the stockholders of Mr. Landa's option to
acquire 800,000 shares of common stock at $2.00 per share. That approval was
sought and obtained on December 5, 2000.


                                       27
<PAGE>

                                    PART IV

--------------------------------------------------------------------------------
             ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                              REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

FINANCIAL STATEMENTS AND SCHEDULES

      The financial statements, including the index to the financial statements,
are included immediately following the signatures to this report.

EXHIBITS
<TABLE>
<CAPTION>

              SEC
Exhibit    Reference
  No.          No.     Title of Document                                Location
  ---          ---     -----------------                                --------

  <S>         <C>       <C>                                             <C>
  1           (3)       Articles of Incorporation, as amended           Exhibit to report on
                        November 3, 1987                                Form 10-K for the year
                                                                        ended June 30, 1988*

  2           (3)       Certificate of Amendment to the                 Exhibit to report on
                        Articles of Incorporation                       Form 10-K for the year
                        filed July 3, 1989                              ended June 30, 1989*

  3           (3)       Designation of Rights, Privileges, and          Registration Statement
                        Preferences of 1995 Series Preferred Stock      filed on Form SB-2,
                                                                        Exhibit 3, SEC File
                                                                        No. 33-59963*

  4           (3)       Designation of Rights, Privileges, and          Exhibit to report on
                        Preferences of 1998 Series A Preferred Stock    Form 8-K dated
                                                                        February 13, 1998*

  5           (3)       Bylaws                                          Registration Statement
                                                                        filed on Form S-4,
                                                                        Exhibit 3.5, SEC File
                                                                        No. 333-34298*

  6           (10)      Executive Employment Agreement of               Exhibit to report on
                        Howard S. Landa effective                       Form 10-Q for the
                        April 22, 1999                                  quarter ended
                                                                        June 30, 1999*

  7           (10)      Deferred Compensation Plan                      Exhibit to report on
                        Adopted by the Board of Directors               Form 10-K for the
                        Effective May 1, 1999                           year ended
                                                                        December 31, 1999*
</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>

                SEC
 Exhibit    Reference
   No.          No.     Title of Document                               Location
   ---          ---     -----------------                               --------

  <S>         <C>       <C>                                             <C>
  8           (10)      1997 Stock Option and Award Plan                Exhibit to report on
                                                                        Form 10-Q for the
                                                                        quarter ended
                                                                        March 31, 1997*

  9           (10)      Asset Purchase Agreement by and among           Exhibit "A" to Proxy
                        PCB Group, Inc., Beehive Acquisition Corp.,     Statement dated
                        Larson-Davis Incorporated, and Larson-Davis     February 16, 1999*
                        Laboratories, dated November 30, 1998,          and Exhibit to report
                        as amended February 16, 1999, and               on Form 10-K for the
                        March 31, 1999                                  year ended
                                                                        December 31, 1998*

  10          (10)      Asset Purchase Agreement between                Exhibit to report on
                        Sensar Instruments, Inc., Sensar                Form 8-K dated
                        Corporation, and LECO Corporation,              August 19, 1999*
                        dated August 19, 1999

  11          (10)      Form of Market Stand Off and                    Exhibit to report on
                        Redemption Agreement by and between             Form 10-K for the
                        Larson-Davis Incorporated and Investors         year ended of
                        1998 Series A Preferred Stock,                  December 31, 1998*
                        dated January, 1999

  12          (10)      Release Agreement between Sensar                Exhibit to report on
                        Corporation and Net2Wireless                    Form 8-K dated
                        Corporation dated December 4, 2000              December 4, 2000*

  13          (10)      Employment Agreement between                    This filing
                        Sensar Corporation and
                        Steven P. Strasser

  14          (10)      Employment Agreement between                    This filing
                        Sensar Corporation and
                        Andrew C. Bebbington

  15          (10)      2000 Stock Option Plan                          Exhibit to Registration
                                                                        Statement on Form
                                                                        S-4 SEC File No.
                                                                        333-34298*

  16          (21)      Subsidiaries of LarsonoDavis Incorporated       Exhibit to report on
                                                                        Form 10-KSB for the
                                                                        year ended
                                                                        June 30, 1996*

  17          (23)      Consent of Grant Thornton LLP                   This Filing

</TABLE>


----------
*Incorporated by reference


                                       29
<PAGE>

REPORTS ON FORM 8-K

      During the last quarter of the fiscal year ended December 31, 2000, the
Company filed seven reports on Form 8-K, dated October 5, 2000, October 16,
2000, November 8, 2000, November 22, 2000, December 4, 2000, December 4, 2000
and December 5, 2000, respectively. Subsequent to December 31, 2000, the Company
has filed one report on Form 8-K, dated January 22, 2001.


                                       30
<PAGE>

--------------------------------------------------------------------------------
                                   SIGNATURES
--------------------------------------------------------------------------------

      Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has caused this report to be
signed on its behalf by the undersigned, hereunto duly authorized.


                               SENSAR CORPORATION


Dated:  March 30, 2001         By  /s/ Steven P. Strasser
                                  ---------------------------------------------
                                  Steven P. Strasser, Chief Executive Officer


      Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated:


Dated:  March 30, 2001         By  /s/ Steven P. Strasser
                                  ---------------------------------------------
                                  Steven P. Strasser, Chief Executive Officer
                                  and Director
                                  (Principal Executive Officer)


Dated:  March 30, 2001         By  /s/ Andrew C. Bebbington
                                  ---------------------------------------------
                                  Andrew C. Bebbington, Chief Operating
                                  Officer and Director
                                  (Principal Financial and Accounting Officer)


Dated:  March 30, 2001         By  /s/ Mickey Hale
                                  ---------------------------------------------
                                  Mickey Hale, Director


Dated:  March 30, 2001         By  /s/ Simon J. Constantine
                                  ---------------------------------------------
                                  Simon J. Constantine, Director


                                       31
<PAGE>

                       Sensar Corporation and Subsidiaries

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                          Page
Consolidated Financial Statements:

   Report of Independent Certified Public Accountants                      F-2

   Consolidated Balance Sheets as of December 31, 2000 and 1999            F-3

   Consolidated Statements of Operations and Comprehensive Income (Loss)
       for the Years Ended December 31, 2000, 1999 and 1998                F-4

   Consolidated Statements of Stockholders' Equity (Deficit)
       for the Years Ended December 31, 2000, 1999 and 1998                F-5

   Consolidated Statements of Cash Flows for the Years Ended
       December 31, 2000, 1999 and 1998                                    F-7

   Notes to Consolidated Financial Statements                              F-9

Financial Statement Schedules:

All financial statement schedules are omitted because they are not applicable or
because the required information is contained in the Consolidated Financial
Statements or the Notes thereto.


                                      F-1
<PAGE>

                             REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Sensar Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Sensar
Corporation and Subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations and comprehensive income (loss),
stockholders' equity (deficit), and cash flows for each of the three years in
the period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Sensar Corporation
and Subsidiaries as of December 31, 2000 and 1999, and the consolidated results
of their operations and their consolidated cash flows for each of the three
years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.


                                                   /s/ Grant Thornton LLP

Salt Lake City, Utah
February 12, 2001


                                      F-2
<PAGE>

                      Sensar Corporation and Subsidiaries

                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>

                                                             December 31,
                                                     ------------------------------
                                                         2000             1999
                                                     -------------    -------------
<S>                                                  <C>              <C>
CURRENT ASSETS
    Cash and cash equivalents                        $  3,248,505     $  3,735,115
    Notes receivable (Note K)                                   -        1,455,134
    Other current assets                                   67,470           25,598
                                                     -------------    -------------

             Total current assets                       3,315,975        5,215,847

OFFICE EQUIPMENT AND FURNISHINGS,
   net of accumulated depreciation                              -           27,992

INVESTMENTS (Notes B and I)                             2,033,534          325,000
                                                     -------------    -------------

                                                     $  5,349,509     $  5,568,839
                                                     =============    =============

            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
    Accounts payable                                 $     51,105     $     31,438
    Accrued liabilities                                    13,000          150,320
                                                     -------------    -------------

             Total current liabilities                     64,105          181,758

LONG-TERM LIABILITIES AND DEFERRED GAIN
    Deferred compensation (Note C)                              -        5,342,040
    Deferred gain (Note K)                                200,000          200,000
                                                     -------------    -------------

             TOTAL LIABILITIES AND DEFERRED GAIN          264,105        5,723,798
                                                     -------------    -------------

CONTINGENT LIABILITY (Note I)                                   -                -

STOCKHOLDERS' EQUITY (DEFICIT) (Notes E, F, H and M)
  Preferred stock, $.001 par value; authorized
       10,000,000 shares; issued and outstanding
       zero shares                                              -                -
    Common stock, $.001 par value; authorized
       290,000,000 shares; issued and outstanding
       6,562,546 shares at December 31, 2000 and
       6,326,038 shares at December 31, 1999                6,563            6,326
    Additional paid-in capital                         35,798,891       34,850,817
    Accumulated deficit                               (30,720,050)     (35,012,102)
                                                     -------------    -------------
             Total stockholders' equity (deficit)       5,085,404         (154,959)
                                                     -------------    -------------
                                                     $  5,349,509     $  5,568,839
                                                     =============    =============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-3
<PAGE>

                       Sensar Corporation and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        AND COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                      Year ended December 31,
                                                          ----------------------------------------------
                                                              2000             1999             1998
                                                          ------------    -------------    -------------

<S>                                                       <C>             <C>              <C>
Revenues
    Interest income                                       $    359,405    $     147,944    $    137,814
                                                          ------------    -------------    -------------

Costs and expenses
    General and administrative                               1,458,810          893,416         708,890
    Compensation expense for stock options (Note H)           (181,492)       5,885,833               -
    Deferred compensation expense (Note C)                  (5,342,040)       5,342,040               -
    Unusual charges (credits), net (Note J)                    356,150          (31,663)        649,949
    Interest expense                                                 -           31,811               -
    Other                                                            -           21,665               -
                                                          ------------    -------------    -------------

                                                            (3,708,572)      12,143,102       1,358,839
                                                          ------------    -------------    -------------

             Income (loss) from continuing operations
                before income taxes                          4,067,977      (11,995,158)     (1,221,025)

Income taxes (Note D)                                                -                -               -
                                                          ------------    -------------    -------------

             Income (loss) from continuing operations        4,067,977      (11,995,158)     (1,221,025)

Gain on sale of discontinued operations (Note K)               224,075        3,268,250               -

Income (loss) from discontinued operations (Note K)                  -           22,528      (5,702,419)
                                                          ------------    -------------    -------------

             Net income (loss)                               4,292,052       (8,704,380)     (6,923,444)

Other comprehensive income - foreign
   currency translation adjustments                                  -                -         (64,512)
                                                          ------------    -------------    -------------

             Comprehensive income (loss)                  $  4,292,052    $  (8,704,380)   $ (6,987,956)
                                                          ============    =============    =============

Income (loss) per common share (Note G)
    Continuing operations
        Basic and diluted                                 $       0.62     $      (2.11)   $      (0.51)

    Discontinued operations
        Basic and diluted                                 $       0.04     $       0.58    $      (1.12)

    Net income (loss)
        Basic and diluted                                 $       0.66     $      (1.53)   $      (1.63)

Income (loss) from continuing operations applicable
   to common stock                                        $  4,067,977     $(12,020,572)   $ (2,567,588)

Weighted average common and
   common equivalent shares outstanding
    Basic and diluted                                        6,536,352        5,693,514       5,073,463
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                      F-4
<PAGE>

                      Sensar Corporation and Subsidiaries

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                  Years ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                                                                                                       Notes
                                                                                                                     receivable
                                    Preferred stock             Common stock          Additional                       from
                                 ---------------------   ------------------------      paid-in       Accumulated      exercise
                                   Shares      Amount       Shares        Amount       capital         deficit       of options
                                 ---------    --------   -----------    ---------    -----------    -------------   -------------
<S>                              <C>          <C>         <C>           <C>          <C>            <C>              <C>
Balances at January 1, 1998              -    $      -    4,850,157     $   4,850    $26,104,607    $(19,251,591)    $   (69,375)

Shares issued for services
   rendered (Note F)                     -           -       19,499            19        148,294               -               -

Shares issued upon exercise
   of options (Note H)                   -           -      110,546           111        726,079               -        (726,190)

Shares purchased under
   employee stock purchase
   plan (Note H)                         -           -       29,273            29         81,143               -               -

Shares issued upon exercise
   of warrants (Note H)                  -           -       29,634            30        359,794               -               -

Shares issued in private
   placement (Note E)             3,500.00           3            -             -      3,281,605               -               -

Conversion of preferred
   stock (Note E)                  (460.05)          -      189,257           189           (189)              -               -

Collection of and allowance
   on notes receivable from
   exercise of options (Note H)          -           -            -             -              -               -         420,881

Adjustment for translation
   of foreign currency                   -           -            -             -              -               -               -

Preferred dividends                      -           -            -             -              -        (107,273)              -

Net loss for the year                    -           -            -             -              -      (6,923,444)              -
                                 ---------    --------   ----------     ---------    -----------     ------------    -----------

Balances at December 31, 1998     3,039.95           3    5,228,366         5,228     30,701,333     (26,282,308)       (374,684)

Shares issued upon exercise
   of options (Note H)                   -           -      105,880           106           (106)              -               -

Shares issued upon exercise
   of warrants (Note H)                  -           -      411,764           412        231,967               -               -

Conversion of preferred
   stock (Note E)                  (101.20)          -      128,032           128           (128)              -               -

Collection of and allowance
   on notes receivable from
   exercise of options (Note H)          -           -            -             -              -               -         265,371

Shares issued in private
   placement (Note F)                    -           -      500,000           500        986,105               -               -

Redemption of preferred
   stock (Note E)                (2,938.75)         (3)           -             -     (2,938,747)              -               -

Conversion of debenture
   (Note F)                              -           -       17,778            18         39,982               -               -

Settlement of litigation
   (Note H)                              -           -      (65,782)          (66)       (86,312)              -         109,313

Capital contribution for
   compensation from stock
   option grants (Note H)                -           -            -             -      5,885,833               -               -

Capital contribution for
   beneficial conversion feature         -           -            -             -         30,890               -               -

Preferred dividends                      -           -            -             -              -         (25,414)              -

Net loss for the year                    -           -            -             -              -      (8,704,380)              -
                                 ---------    --------   -----------    ---------    -----------    ------------     -----------
Balances at December 31, 1999            -    $      -    6,326,038     $   6,326    $34,850,817    $(35,012,102)    $         -

<CAPTION>
                                  Accumulated
                                     other
                                 comprehensive
                                     income
                                     (loss)          Total
                                  ------------   ------------
<S>                               <C>            <C>
Balances at January 1, 1998       $    64,512    $ 6,853,003

Shares issued for services
   rendered (Note F)                        -        148,313

Shares issued upon exercise
   of options (Note H)                      -              -

Shares purchased under
   employee stock purchase
   plan (Note H)                            -         81,172

Shares issued upon exercise
   of warrants (Note H)                     -        359,824

Shares issued in private
   placement (Note E)                       -      3,281,608

Conversion of preferred
   stock (Note E)                           -              -

Collection of and allowance
   on notes receivable from
   exercise of options (Note H)             -        420,881

Adjustment for translation
   of foreign currency                (64,512)       (64,512)

Preferred dividends                         -       (107,273)

Net loss for the year                       -     (6,923,444)
                                  -----------    -----------

Balances at December 31, 1998               -      4,049,572

Shares issued upon exercise
   of options (Note H)                      -              -

Shares issued upon exercise
   of warrants (Note H)                     -        232,379

Conversion of preferred
   stock (Note E)                           -              -

Collection of and allowance
   on notes receivable from
   exercise of options (Note H)             -        265,371

Shares issued in private
   placement (Note F)                       -        986,605

Redemption of preferred
   stock (Note E)                           -     (2,938,750)

Conversion of debenture
   (Note F)                                 -         40,000

Settlement of litigation
   (Note H)                                 -         22,935

Capital contribution for
   compensation from stock
   option grants (Note H)                   -      5,885,833

Capital contribution for
   beneficial conversion feature            -         30,890

Preferred dividends                         -        (25,414)

Net loss for the year                       -     (8,704,380)
                                  -----------    -----------
Balances at December 31, 1999     $         -    $  (154,959)
</TABLE>

                                   (Continued)


                                      F-5
<PAGE>

                      Sensar Corporation and Subsidiaries

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED

                  Years ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>

                                                                                                                   Notes
                                                                                                                receivable
                                Preferred stock              Common stock         Additional                       from
                             ---------------------    ------------------------     paid-n       Accumulated      exercise
                               Shares      Amount        Shares       Amount       capital        deficit       of options
                             ----------   --------    -----------   ----------   -----------   ------------    ------------
<S>                                  <C>  <C>          <C>          <C>          <C>           <C>             <C>
Balances at
   December 31, 1999                 -    $      -     6,326,038    $   6,326    $34,850,817   $(35,012,102)   $          -

Shares issued upon
   exercise of options
   (Note H)                          -           -       220,911          221      1,150,690              -               -

Shares issued upon
   exercise of warrants
   (Note H)                          -           -         2,800            3          3,497              -               -

Shares issued for
   compensation (Note F)             -           -        14,000           14         10,923              -               -

Capital contribution for
   compensation from stock
   option grants (Note H)            -           -             -            -       (181,492)             -               -

Shares cancelled to
   satisfy note receivable           -           -        (1,203)          (1)       (35,544)             -               -

Net income for the year              -           -             -            -              -      4,292,052               -
                             ----------   --------    -----------   ----------   -----------   ------------    ------------
Balances at
   December 31, 2000                 -    $      -     6,562,546    $   6,563    $35,798,891   $(30,720,050)   $          -
                             ==========   ========    ===========   ==========   ===========   ============    ============

<CAPTION>
                              Accumulated
                                 other
                             comprehensive
                                 income
                                 (loss)          Total
                              ------------   ------------
<S>                           <C>            <C>
Balances at
   December 31, 1999          $         -    $  (154,959)

Shares issued upon
   exercise of options
   (Note H)                             -      1,150,911

Shares issued upon
   exercise of warrants
   (Note H)                             -          3,500

Shares issued for
   compensation (Note F)                -         10,937

Capital contribution for
   compensation from stock
   option grants (Note H)               -       (181,492)

Shares cancelled to
   satisfy note receivable              -        (35,545)

Net income for the year                 -      4,292,052
                              ------------   ------------
Balances at
   December 31, 2000          $         -    $ 5,085,404
                              ============   ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                      F-6
<PAGE>

                      Sensar Corporation and Subsidiaries

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                             Year ended December 31,
                                                                            -----------------------------------------------------
                                                                                 2000                1999               1998
                                                                            -------------        -------------      -------------

<S>                                                                         <C>                  <C>                <C>
Increase (decrease) in cash and cash equivalents

  Cash flows from operating activities
    Income (loss) from continuing operations                                $   4,067,977        $ (11,995,158)     $  (1,221,025)
    Adjustments to reconcile income (loss) from continuing
       operations to net cash used in continuing operations
        Depreciation                                                                2,955                6,385              2,475
        Compensation expense for stock options (Note H)                          (181,492)           5,885,833                  -
        Deferred compensation expense (Note C)                                 (5,342,040)           5,342,040                  -
        Stock issued in payment of compensation                                    10,937                    -             46,338
        Indemnity costs                                                           356,150                    -                  -
        Interest expense from beneficial conversion feature                             -               30,890                  -
        Provision for (recovery of) impairment losses                                   -             (157,239)           621,549
        Changes in assets and liabilities
             Other current assets                                                 (75,406)             (24,989)            26,886
             Accounts payable                                                      19,667              (94,304)           (35,614)
             Accrued liabilities                                                 (137,320)             112,138             57,201
                                                                            --------------       -------------      -------------

                     Net cash used in
                        continuing operations                                  (1,278,572)            (894,404)          (502,190)

                     Net cash used in
                        discontinued operations                                         -             (195,411)        (2,207,682)
                                                                            --------------       -------------      -------------

                     Net cash used in
                        operating activities                                   (1,278,572)          (1,089,815)        (2,709,872)
                                                                            --------------       -------------      -------------

  Cash flows from investing activities
    Purchase of office equipment and furnishings                                  (11,681)             (23,645)            (9,022)
    Proceeds from sale of office equipment and furnishings                          5,568                    -                  -
    Collection of notes receivable                                              1,419,589              365,411                  -
    Issuance of notes receivable                                                 (500,000)             (35,000)                 -
    Increase in investments                                                    (1,500,000)            (325,000)                 -
                                                                            --------------       -------------      -------------

                     Net cash used in investing activities of
                        continuing operations                                    (586,524)             (18,234)            (9,022)
                     Net cash provided by sale of discontinued
                        operations and other investing activities of
                        discontinued operations                                   224,075            5,566,491             37,495
                                                                            --------------       -------------      -------------

                     Net cash provided by (used in)
                        investing activities                                     (362,449)           5,548,257             28,473
                                                                            --------------       -------------      -------------
</TABLE>
                                   (Continued)


                                      F-7
<PAGE>

                      Sensar Corporation and Subsidiaries

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
                                                                                          Year ended December 31,
                                                                            --------------------------------------------------
                                                                                  2000              1999              1998
                                                                            ---------------    -------------     -------------

<S>                                                                         <C>                <C>               <C>
  Cash flows from financing activities
    Net proceeds from issuance of common
       stock and exercise of options and warrants                                 1,154,411        1,628,984         3,743,485
    Redemption of preferred stock                                                         -       (3,071,437)                -
    Proceeds from issuance of convertible debenture                                       -           40,000                 -
                                                                            ---------------    -------------     -------------
                     Net cash provided by (used in) financing
                        activities of continuing operations                       1,154,411       (1,402,453)        3,743,485

                     Net cash used in financing activities of
                        discontinued operations                                           -          (15,833)       (1,515,088)
                                                                            ---------------    -------------     -------------
                     Net cash provided by (used in)
                        financing activities                                      1,154,411       (1,418,286)        2,228,397
                                                                            ---------------    -------------     -------------
Effect of exchange rates on cash                                                          -                -           (64,512)
                                                                            ---------------    -------------     -------------

Net increase (decrease) in cash and cash equivalents                               (486,610)       3,040,156          (517,514)

Cash and cash equivalents at beginning of year                                    3,735,115          694,959         1,212,473
                                                                            ---------------    -------------     -------------

Cash and cash equivalents at end of year                                    $     3,248,505    $   3,735,115     $     694,959
                                                                            ===============    =============     =============

Supplemental disclosures of cash flow information

  Cash paid during the year for
    Interest                                                                $             -    $      29,839     $     146,510
    Income taxes                                                                          -                -                 -

Significant noncash investing and financing activities

  Conversion of note receivable and accrued interest into investment        $       533,534    $           -     $           -
  Notes receivable issued in exercise of stock options                                    -                -           726,190
  Note receivable satisfied through cancellation of common stock                     35,545                -                 -
  Conversion of debenture into common stock                                               -           40,000                 -
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      A summary of the significant accounting policies consistently applied in
      the preparation of the accompanying financial statements follows.

      1. Business activity and principles of consolidation

      Sensar Corporation (the Company) was formerly engaged in one industry
      segment; the design, development, manufacture, and marketing of analytical
      instruments. The Company has sold or otherwise disposed of all product
      lines of this business (Note K) and has no current operations. The Company
      is currently assessing its future operating strategy and potential
      industry segments. The accompanying consolidated financial statements of
      the Company include the accounts of the Company and its wholly-owned
      subsidiaries. All subsidiaries are inactive at December 31, 2000. All
      significant intercompany transactions and accounts have been eliminated in
      consolidation.

      2. Depreciation

      Office equipment and furnishings are stated at cost. Depreciation is
      provided in amounts sufficient to relate the cost of depreciable assets to
      operations over estimated service lives of three to five years. The
      straight-line method of depreciation is followed for financial reporting
      purposes and accelerated methods are used for income tax purposes.

      3. Income taxes

      The Company utilizes the liability method of accounting for income taxes.
      Under the liability method, deferred tax assets and liabilities are
      determined based on differences between financial reporting and tax bases
      of assets and liabilities and are measured using the enacted tax rates and
      laws that will be in effect when the differences are expected to reverse.
      An allowance against deferred tax assets is recorded when it is more
      likely than not that such tax benefits will not be realized.

      4. Cash and cash equivalents

      For purposes of the financial statements, the Company considers all highly
      liquid debt instruments with an original maturity of three months or less
      when purchased to be cash equivalents.


                                      F-9
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

      5. Investments

      The Company has no investments that have a ready market. The Company's
      investments are accounted for under the cost method, and are carried at
      the lower of cost or estimated net realizable value. The Company assesses
      the need to record impairment losses on investments if impairment of an
      investment is determined to be other than temporary.

      6. Income (loss) per common share

      The Company follows the provisions of Statement of Financial Accounting
      Standards No. 128 "Earnings Per Share" (SFAS No. 128). SFAS No. 128
      requires the presentation of basic and diluted EPS. Basic EPS are
      calculated by dividing income (loss) available to common shareholders by
      the weighted average number of common shares outstanding during each
      period. Diluted EPS are similarly calculated, except that the weighted
      average number of common shares outstanding includes common shares that
      may be issued subject to existing rights with dilutive potential.

      7. Business and credit risk

      The Company's financial instruments that are exposed to concentration of
      business and credit risk consist primarily of cash equivalents and its
      investment in Net2Wireless Corporation. The Company maintains its cash and
      cash equivalents principally at one major financial institution. Cash
      equivalents are invested through a daily repurchase agreement with the
      financial institution. The agreement provides for the balance of available
      funds to be invested in an undivided interest in one or more direct
      obligations of, or obligations that are fully guaranteed as to principal
      and interest by, the United States Government, or an agency thereof. These
      securities are not a deposit and are not insured by the Federal Deposit
      Insurance Corporation.

      As described in Note B, the Company owns approximately 14.1 percent of
      Net2Wireless Corporation, a privately-held company. The Company's
      investment in Net2Wireless represents approximately 38 percent of the
      Company's assets at December 31, 2000.

      8. Use of estimates

      The preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect reported amounts
      of assets, liabilities, revenues and expenses during the reporting period.
      Estimates also affect the disclosure of contingent assets and liabilities
      at the date of the financial statements. Actual results could differ from
      these estimates.


                                      F-10
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

      9. Fair value of financial instruments

      The estimated fair value of financial instruments is not presented
      because, in management's opinion, the carrying amounts and estimated fair
      values of financial instruments in the accompanying consolidated balance
      sheets are not materially different due to the short period of time to
      maturity of the financial instruments.

      10. Stock options

      The Company has elected to follow Accounting Principles Board Opinion No.
      25, "Accounting for Stock Issued to Employees" (APB 25) and related
      Interpretations in accounting for its employee stock options rather than
      adopting the alternative fair value accounting provided for under FASB
      Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS 123).
      For options granted to employees that do not qualify for fixed plan
      accounting (i.e., options with cashless exercise provisions) under APB 25,
      the Company recognizes compensation expense equal to the change in the
      stock price above the exercise price. For options granted for services
      from nonemployees, the Company follows the provisions of SFAS 123 and
      records compensation expense equal to the fair value of options granted.

      11. Recent accounting pronouncements

      There are no recent accounting pronouncements that have been issued, but
      are not yet effective, that apply to the Company.

NOTE B - INVESTMENTS

      During 1999, the Company entered into an Agreement with Net2Wireless
      Corporation, that gave the Company the right to acquire Net2Wireless in
      exchange for the issuance of 18,295,060 shares of the Company's common
      stock. Net2Wireless is a privately-held startup company that is developing
      wireless internet communication, including multimedia applications. As
      part of the agreement, the Company agreed to provide Net2Wireless with
      short-term financing of up to $2 million, of which $500,000 was advanced
      in February 2000. The advance bore interest at 8 percent per annum and was
      due on or before December 31, 2000.


                                      F-11
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE B - INVESTMENTS - CONTINUED

      A stockholders' meeting was set for December 5, 2000, at which the merger
      with Net2Wireless was to be voted upon. On December 4, 2000, when it had
      become clear that the Company would not obtain the required vote from its
      stockholders to approve the proposed merger with Net2Wireless (and in
      light of certain other developments with Nasdaq related to the uncertainty
      of continued listing of the Company by Nasdaq in the event of completion
      of the merger), the Company entered into a Release Agreement with
      Net2Wireless to terminate the prior Agreement to merge with Net2Wireless.
      In connection with the Release Agreement, Net2Wireless agreed to issue the
      Company 3,000,000 shares of its common stock and a warrant to acquire an
      additional 1,000,000 shares of common stock in exchange for the payment of
      $1.5 million and the forgiveness of the advance in February 2000 of
      $500,000, plus accrued interest of $33,534. The warrant is exercisable at
      any time prior to December 31, 2003 at an exercise price of $10 per share.
      The Company's investment in Net2Wireless represents approximately 14.1
      percent of the outstanding stock of Net2Wireless and is accounted for
      under the cost method of accounting. Net2Wireless has now changed its name
      to Jigami Corporation.

      In 1999, the Company invested $150,000 in PayStation.com, Inc.
      (PayStation) in the form of $75,000 for a convertible promissory note and
      $75,000 for 15,000 shares of convertible preferred stock, representing 2.5
      percent of the offering. PayStation repaid the promissory note, leaving a
      balance of $75,000 as the Company's investment. PayStation is an
      internet-based company that has the capability to deliver internet-based
      financial services to consumers who prefer to pay bills through the
      internet. The Company's investment in PayStation was accounted for under
      the cost method of accounting. The Company also participated in the second
      round funding of Durect Corporation (Durect), a pioneer in drug therapy
      treatments, employing subcutaneous delivery technology and paid $250,000
      for preferred stock convertible into approximately one percent of Durect.
      The Company's investment in Durect was accounted for under the cost method
      of accounting. As described in Note J, the Company's investments in
      PayStation and Durect were transferred to the then chief executive officer
      in 2000 as part of the consideration for his agreement to indemnify the
      Company against certain litigation.


                                      F-12
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE C - DEFERRED COMPENSATION PLAN

      On June 24, 1999, the board adopted a deferred compensation plan to
      provide long-term incentive compensation to the members of the board and
      certain other consultants or members of management. The plan established
      an unfunded deferred compensation pool, based on specified percentages of
      the Company's net income and increases in its market capitalization. No
      earnings compensation would be paid into the pool until the cumulative net
      income from the operations under the new board has exceeded $2,000,000 and
      no amounts would be paid for increases in market capitalization unless the
      increase in market capitalization exceeds 150 percent of any increase in
      the Russell 2000 Index (with appropriate adjustments for additional
      capital infusions or acquisitions). The then chief executive officer
      received an initial 30 percent ownership in the pool and an additional 11
      percent was granted to others. As discussed in Note H to the financial
      statements, the deferred compensation plan was terminated and the
      participants in the plan abandoned their interest in the plan with the
      shareholder approval on December 5, 2000 of options previously granted to
      the participants.

      Deferred compensation expense was measured based on the changes in factors
      which determined the amount of the deferred compensation pool, which was
      solely the change in market capitalization of the Company's common stock.
      For the year ended December 31, 1999, the Company recognized deferred
      compensation expense of $5,342,040 representing the total amount of the
      deferred compensation pool at December 31, 1999 multiplied by 41 percent
      for the interests granted through December 31, 1999. With the decrease in
      the Company's market capitalization as a result of the decline in the
      price of the Company's common stock between December 31, 1999 and December
      5, 2000, the total amount of the deferred compensation pool had declined
      to zero. Accordingly, the Company reversed the entire deferred
      compensation liability in the year ended December 31, 2000 and recorded a
      corresponding credit in the statement of operations.


                                      F-13
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE D - INCOME TAXES

      The income tax expense (benefit) reconciled to the tax computed at the
      statutory federal rate of 34 percent is as follows:

<TABLE>
<CAPTION>
                                                                                           Year ended December 31,
                                                                             ----------------------------------------------------
                                                                                 2000               1999               1998
                                                                             --------------     --------------     --------------
             <S>                                                             <C>                <C>                <C>
             Income taxes (benefit) at statutory rate                        $    1,459,298     $   (2,959,489)    $   (2,353,971)
             State income taxes (benefit)
                net of federal tax effect                                           175,407           (287,245)          (228,474)
             Stock option compensation                                              346,293                  -                  -
             Amortization of acquired technology                                          -                  -            900,420
             Settlement with former directors                                             -             33,723             70,427
             Valuation allowance changes affecting the provision for
                income taxes                                                     (1,982,634)         3,199,056          1,605,535
             Other, net                                                               1,636             13,955              6,063
                                                                             --------------     --------------     --------------

             Income tax expense                                              $            -     $            -     $            -
                                                                             ==============     ==============     ==============
</TABLE>

        Deferred income tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                                                                     December 31,
                                                                                          -----------------------------------
                                                                                               2000                1999
                                                                                          ---------------     ---------------
         <S>                                                                              <C>                 <C>
         Deferred tax assets
             Benefit of net operating loss carryforwards                                  $    10,718,367     $     8,340,728
             Compensation expense for stock options                                                     -           2,141,656
             Deferred compensation expense                                                              -           1,992,581
             Capitalized software development costs and
                amortization of intangible assets                                                 209,880             257,383
             Deferred gain                                                                         74,600              74,600
             Accrued liabilities                                                                    4,849              34,664
             Allowance for doubtful accounts                                                            -              27,043
             Other, net                                                                             4,364               4,364
                                                                                          ---------------     ---------------
                                                                                               11,012,060          12,873,019
         Less valuation allowance                                                             (11,012,060)        (12,872,910)
                                                                                          ---------------     ---------------
                                                                                                        -                 109
         Deferred tax liabilities
             Depreciation of property and equipment                                                     -                (109)
                                                                                          ---------------     ---------------

         Net deferred tax asset                                                           $             -     $             -
                                                                                          ===============     ===============
</TABLE>


                                      F-14
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE D - INCOME TAXES - CONTINUED

      Historically, the Company has sustained net operating losses. As of
      December 31, 2000, the Company had net operating loss carryforwards for
      tax reporting purposes of approximately $28 million expiring in various
      years through 2020. Utilization of approximately $3.1 million of the total
      net operating loss is dependent on the future profitable operation of
      Sensar Instruments, Inc. under the separate return limitation rules and
      limitations on the carryforward of net operating losses after a change in
      ownership. Only a portion of the net operating loss carryforward is
      attributable to operating activities. The remainder is attributable to tax
      deductions related to the exercise of stock options. There were no
      deferred tax assets or income tax benefits recorded in the financial
      statements for net deductible temporary differences or net operating loss
      carryforwards because the likelihood of realization of the related tax
      benefits cannot be established. Accordingly, a valuation allowance has
      been recorded to reduce the net deferred tax asset to zero.

      The valuation allowance for deferred tax assets decreased by $1,860,850
      during the year ended December 31, 2000. The decrease was principally due
      to the reversal of temporary differences related to compensation
      previously recorded for stock options and under the deferred compensation
      plan and the utilization of operating loss carryforwards relating to book
      taxable income, net of an increase in net operating loss carryforwards
      related to the exercise of stock options which will result in future tax
      deductions. The increase in the deferred tax asset relating to the
      exercise of stock options is approximately $1,655,500 in 2000 and $231,000
      in 1999 (none in 1998), and will be credited to paid in capital when
      realized.

NOTE E - PREFERRED STOCK

      1998 Series A Preferred Stock

      In February 1998, the Company completed the private placement of shares of
      1998 Series A Preferred Stock (the "Preferred Stock") and warrants to
      purchase common stock for gross proceeds of $3,500,000. Of this amount,
      approximately $549,000 was assigned as the value of the warrants and the
      balance was assigned as the value of the Preferred Stock. The Preferred
      Stock bore an annual dividend of four percent per annum and had a
      liquidation preference equal to $1,000 per share plus all accrued, but
      unpaid dividends. The Preferred holders voted as a class with the common
      stockholders.


                                      F-15
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE E - PREFERRED STOCK - CONTINUED

      1998 Series A Preferred Stock - continued

      The Preferred Stock was convertible at the election of the holders into
      that number of shares of common stock calculated by dividing $1,000 plus
      any accrued but unpaid dividends, by the lower of (1) $9.00 or (2) 85
      percent of the average closing price of the common stock for the ten
      trading days preceding the conversion. During the years ended December 31,
      1999 and 1998, holders of 101.20 shares and 460.05 shares of Preferred
      Stock converted their shares into 128,032 and 189,257 shares of common
      stock, respectively.

      In an attempt to eliminate the potential market disruption of a
      significant conversion of the Preferred Stock into common stock, the
      Company used part of the proceeds from the sale of the assets of the
      acoustic division (Note K), to reacquire and cancel 100 percent of the
      remaining outstanding shares of Preferred Stock for approximately $3.07
      million, including accrued but unpaid dividends. The Company agreed to
      reprice one-half of the associated warrants at $1.25 per share and to
      cancel the other half of the warrants.

NOTE F - COMMON STOCK

      At a special meeting of stockholders held on March 18, 1999, a
      one-for-five consolidation of the issued and outstanding common stock of
      the Company was approved. The board of directors implemented the
      consolidation of the common stock effective at the close of business on
      April 30, 1999. At the close of business on January 17, 2000, a forward
      two-for-one stock split became effective for the issued and outstanding
      common stock of the Company. All common share and per common share
      information included in the accompanying financial statements has been
      retroactively restated to reflect the one-for-five consolidation and the
      two-for-one forward stock split.

      In May 1999, the Company completed a private placement of 500,000 shares
      of common stock at $2.00 per share. The net proceeds to the Company, after
      associated expenses, were approximately $987,000. The stock issued was
      subsequently registered for resale with the Securities and Exchange
      Commission. During 1999, the Company also issued a convertible debenture
      in the amount of $40,000, which was converted into 17,778 shares of common
      stock in December 1999.


                                      F-16
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE F - COMMON STOCK - CONTINUED

      During the years ended December 31, 2000 and 1998, the Company issued
      14,000 shares and 19,499 shares, respectively, of common stock valued at
      $0.78 for the year ended December 31, 2000 and at prices ranging from
      $5.75 to $11.58 per share for the year ended December 31, 1998, for
      services rendered.

NOTE G - INCOME (LOSS) PER COMMON SHARE

      The following data show the amounts used in computing income (loss) per
      common share from continuing operations, including the effect on net loss
      for preferred stock dividends and a beneficial conversion feature
      associated with preferred stock and warrants. The following data also show
      the weighted average number of shares and rights to acquire shares with
      dilutive potential. For 1998, loss from continuing operations applicable
      to common stock includes a noncash imputed dividend to the preferred
      shareholders related to the beneficial conversion feature on the 1998
      Series A Preferred Stock and related warrants (Note E). The beneficial
      conversion feature is computed as the difference between the market value
      of the common stock into which the Series A Preferred Stock can be
      converted and the value assigned to the Series A Preferred Stock in the
      private placement. The imputed dividend is a one-time, noncash charge
      increasing the loss per common share.

<TABLE>
<CAPTION>
                                                                                           Year ended December 31,
                                                                             -------------------------------------------------
                                                                                  2000              1999             1998
                                                                             ---------------   ---------------  --------------
           <S>                                                               <C>                 <C>                <C>
           Income (loss) from continuing operations                          $   4,067,977     $ (11,995,158)   $  (1,221,025)
           Dividends on preferred stock                                                  -           (25,414)        (107,273)
           Imputed dividend from beneficial
              conversion feature                                                         -                 -       (1,239,290)
                                                                             -------------     --------------   --------------
           Income (loss) from continuing operations applicable to
              common stock                                                   $   4,067,977     $ (12,020,572)   $  (2,567,588)
                                                                             =============     ==============   ==============
</TABLE>


                                      F-17
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE G - INCOME (LOSS) PER COMMON SHARE - CONTINUED

<TABLE>
<CAPTION>
                                                                                           Year ended December 31,
                                                                             ----------------------------------------------------
                                                                                   2000               1999              1998
                                                                             ---------------     -------------     --------------
           <S>                                                                     <C>               <C>                <C>
           Common shares outstanding during the entire
            year                                                                   6,326,038         5,228,366          4,850,157
           Weighted average common shares issued
            during the year                                                          210,314           465,148            223,306
                                                                             ---------------     -------------     --------------
           Weighted average number of common shares
            used in basic EPS                                                      6,536,352         5,693,514          5,073,463
           Dilutive effect of stock options
              and warrants                                                                 -                 -                  -
                                                                             ---------------     -------------     --------------
           Weighted average number of common shares
            and dilutive potential common stock used in
            diluted EPS                                                            6,536,352         5,693,514          5,073,463
                                                                             ===============     =============     ==============
</TABLE>

      None of the options and warrants that were outstanding, as described in
      Note H, were included in the computation of diluted EPS because the market
      price of the underlying stock was less than the exercise price at December
      31, 2000 and because the years ended December 31, 1999 and 1998 were loss
      years and to do so would have been anti-dilutive.

NOTE H - STOCK OPTIONS AND WARRANTS

      1. Stock-based compensation plans

      During the periods presented in the accompanying financial statements, the
      Company had stock options that were granted or available for grant under
      five stock option plans: the 1991 Director Stock Option Plan (the 1991
      Director Plan); the 1996 Director Stock Option Plan (the 1996 Director
      Plan); the 1997 Stock Option and Award Plan (the 1997 Employee Plan); the
      1987 Stock Option Plan (the 1987 Employee Plan); and the 2000 U.S. Stock
      Option Plan (the 2000 Plan). The Company has also granted options under
      executive employment agreements.

      A summary of the status of the options granted under the Company's stock
      option plans and employment agreements at December 31, 2000, 1999 and 1998
      and changes during the years then ended is presented in the table below:


                                      F-18
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE H - STOCK OPTIONS AND WARRANTS - CONTINUED

      1. Stock-based compensation plans - continued

<TABLE>
<CAPTION>
                                                                      Year ended December 31,
                                       -------------------------------------------------------------------------------------
                                                  2000                          1999                         1998
                                       --------------------------    --------------------------   --------------------------
                                                       Weighted-                     Weighted-                    Weighted-
                                                        average                       average                      average
                                                        exercise                      exercise                     exercise
                                          Shares         price          Shares         price         Shares         price
                                       ------------   -----------    -----------    -----------   -----------    -----------
          <S>                            <C>            <C>            <C>            <C>          <C>             <C>
          Outstanding at beginning
           of year                         524,932      $5.17           924,990       $10.53       1,014,736       $13.55
          Granted                        2,200,000       2.00           560,000         2.05         704,000         9.95
          Exercised                       (220,913)      6.71          (105,880)        1.61        (110,546)        6.58
          Forfeited                         (8,763)      3.43          (830,178)        9.44        (130,400)       12.88
          Canceled                               -         -            (24,000)        7.34        (552,800)       15.55
                                       ------------                  -----------                  -----------

          Outstanding at end
           of year                       2,495,256      $2.25           524,932       $ 5.17         924,990       $10.53
                                       ============                  ===========                  ===========

          Exercisable at
           end of year                   2,495,256      $2.25           515,144       $ 5.03         482,994       $10.20
                                       ============                  ===========                  ===========
</TABLE>

      The weighted-average fair value of each option grant is $1.34, $0.89 and
      $2.88 for the years ended December 31, 2000, 1999 and 1998, respectively,
      and is estimated on the date of grant using the Black-Scholes option
      pricing model with the following weighted-average assumptions used for
      grants during the years ended December 31, 2000, 1999 and 1998,
      respectively: risk-free interest rates of 5.7 percent, 5.1 percent, and
      5.5 percent; expected dividend yields of zero for all periods; expected
      lives of 1.0, 2.5, and 5.4 years; and expected volatility of 190 percent,
      114 percent, and 46 percent.

      A summary of the status of the options outstanding under the Company's
      stock option plans and employment agreements at December 31, 2000 is
      presented below:

<TABLE>
<CAPTION>
                                                                    Weighted-
                                                                      average          Weighted                       Weighted
                                                                     remaining         average                         average
                                                     Number         contractual        exercise         Number        exercise
                Range of exercise prices          outstanding       life (years)        price        exercisable        price
                ------------------------         -------------    ---------------    ------------   --------------    --------
<S>                                                  <C>                <C>           <C>                <C>           <C>
                $ 1.50 - $ 2.00                      2,000,000          1.77          $  1.90            2,000,000     $  1.90
                $ 2.01 - $ 3.00                        453,056          1.24             2.50              453,056        2.50
                $ 3.01 - $ 17.50                        42,200          0.77            15.87               42,200       15.87
                                                 -------------                                      --------------

                $ 1.50 - $ 17.50                     2,495,256          1.65          $  2.25            2,495,256     $  2.25
                                                 =============                                      ==============
</TABLE>


                                      F-19
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE H - STOCK OPTIONS AND WARRANTS - CONTINUED

      1. Stock-based compensation plans - continued

      In 1998 and 1997, two former executives exercised options to acquire
      110,546 shares and 12,000 shares, respectively, of common stock in
      exchange for notes receivable in the aggregate amount of $726,190 and
      $69,375, respectively. In 1998, the Company established a reserve of
      $400,000 against these notes due to the uncertainty of their collection in
      light of the decline in the price of the Company's common stock. During
      1999, the Company agreed to accept substantially all of the proceeds from
      the sale of the common stock held by one of the former officers of
      approximately $438,000 in satisfaction of his notes totaling $726,190. The
      note for $69,375 was extinguished in 1999 as part of a settlement of
      litigation against the other former officer.

      In conjunction with the 1997 employment of a new chief executive officer,
      the Company granted options to acquire 400,000 shares of common stock. The
      options were granted at $14.375 per share, but were exercisable at the
      lower of the grant price or 80 percent of the trading price on the date of
      exercise (but not less than $9.00 per share). During 1998, this option was
      canceled in favor of an option to purchase 400,000 shares of common stock
      at prices ranging from $9.00 to $16.25 per share. During 1998, the Company
      granted options to acquire 120,000 shares of common stock to a new chief
      operating officer at prices ranging from $7.475 to $13.75 per share. All
      of the foregoing options were forfeited in April 1999 with the resignation
      of both officers from the board of directors.

      A new chief executive officer was appointed in April 1999. In conjunction
      with his appointment, the chief executive officer was granted an option to
      acquire 200,000 shares of common stock, half of which are exercisable at
      $1.50 per share and half at $2.50 per share. During April and May of 1999,
      three new non-executive directors were appointed to the board. On
      appointment, each received an option to acquire 200,000 shares of common
      stock, half of which are exercisable at $1.50 per share and half at $2.50
      per share. Under Nasdaq corporate governance rules, these options were
      subject to shareholder approval, which approval was sought and obtained on
      December 5, 2000. For accounting purposes, these options to acquire
      600,000 shares of common stock are deemed to have been granted in the year
      ended December 31, 2000. Additionally in 1999, options to acquire an
      aggregate of 360,000 shares of common stock were granted principally to
      nonemployees, at prices ranging from $1.50 to $2.50 per share. All of
      these options are immediately exercisable, generally expire three years
      after grant, and initially had cashless exercise provisions.


                                      F-20
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE H - STOCK OPTIONS AND WARRANTS - CONTINUED

      1. Stock-based compensation plans - continued

      Generally accepted accounting principles require that compensation be
      recorded each period for stock options with cashless exercise provisions
      granted to management, equal to the change in the stock price above the
      exercise price. If the price of the stock declines during the period, a
      credit is recorded against previously recorded compensation expense, but
      not in excess of the cumulative compensation recorded since the grant
      date. During the year ended December 31, 1999, the Company recognized
      $5,618,740 as a noncash compensation charge as a consequence of the
      cashless exercise provisions of the options granted to management to
      acquire an aggregate of 240,000 shares. Additionally, the Company has
      recorded non-cash compensation expense during the year ended December 31,
      1999, of $267,093 for stock options granted to nonemployees to acquire an
      aggregate of 270,000 shares of common stock. The compensation expense was
      based on the fair value of options granted using the assumptions discussed
      earlier in this Note.

      In November 1999, the board of directors approved options to acquire an
      aggregate of 1,600,000 shares of common stock for $2.00 per share to the
      chief executive officer, to the non-executive members of the board of
      directors, and to the Company's chief consultant. These grants were
      subject to shareholder approval, which approval was sought and obtained on
      December 5, 2000. For accounting purposes, these options to acquire
      1,600,000 shares of common stock are deemed to have been granted in the
      year ended December 31, 2000. With the approval of these options, the
      participants in the deferred compensation plan agreed to abandon their
      interests in the deferred compensation pool and the board of directors
      agreed to terminate the deferred compensation plan (Note C). During the
      year ended December 31, 2000, the Company recognized a credit against
      previously recorded compensation on the options granted to management with
      cashless exercise provisions in the amount of $1,200,000 as a consequence
      of the decrease in the price of the Company's common stock through the end
      of June 2000 (the date when the cashless exercise provisions of all
      options were terminated by management). Additionally, the Company recorded
      noncash compensation expense during the year ended December 31, 2000 of
      $868,508 for a stock option to acquire 650,000 shares of common stock
      approved by shareholders for a nonemployee. This compensation was based on
      the fair value of the option using the assumptions discussed earlier in
      this Note. Compensation in the amount of $150,000 was recorded for the
      remaining options approved by shareholders for management and board
      members where the market value of the Company's common stock was more than
      the exercise price of the options on December 5, 2000.


                                      F-21
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE H - STOCK OPTIONS AND WARRANTS - CONTINUED

      1. Stock-based compensation plans - continued

      Under the 1991 Director Plan, the Company granted options to acquire
      12,000 shares of common stock annually to each director. Under this plan,
      the Company could grant up to an aggregate of 300,000 options. Options
      granted under this plan vested immediately and expired five years after
      the grant. The 1991 Director Plan terminated July 1, 1996.

      Under the 1996 Director Plan, the Company reserved 560,000 shares of
      common stock to be granted to directors of the Company. Options under the
      1996 Director Plan vested 25 percent on the grant date and 25 percent for
      each year of service thereafter and expire five years after their vesting
      date. At December 31, 2000, there are options to acquire 30,000 shares of
      common stock outstanding under this plan. The 1996 Director Plan
      terminated May 9, 1999.

      Under the 1987 Employee Plan, as amended in 1994, the Company could grant
      options to acquire up to 300,000 shares of common stock, of which no
      options are outstanding as of December 31, 2000. The 1987 Employee Plan
      terminated November 9, 1997.

      The 1997 Employee Plan reserved 300,000 shares of common stock for
      issuance pursuant to stock options or stock awards granted, all of which
      have been exercised or awarded to employees and others as of December 31,
      2000, with no further awards or grants available. Concurrently with the
      granting of certain options in 1998, the Company canceled existing options
      previously granted to certain employees to purchase 72,800 shares of
      common stock at prices ranging from $11.725 to $26.25 per share.

      The board of directors adopted the 2000 Plan on May 6, 2000 and
      shareholders approved the 2000 Plan on December 5, 2000. Under the 2000
      Plan, the Company may grant options to acquire up to 6,000,000 shares of
      common stock to employees, officers, directors, consultants and others who
      perform services for the Company. No options have been granted under the
      2000 Plan through December 31, 2000. The 2000 Plan will terminate May 6,
      2010, unless terminated earlier by the board of directors.

      The Company adopted the 1997 Employee Stock Purchase Plan (the Stock
      Purchase Plan) effective as of February 1, 1997. The maximum number of
      shares of common stock which were available under this plan was 40,000
      shares. The Stock Purchase Plan provided an opportunity to the employees
      of the Company to purchase shares of common stock in the Company at 85
      percent of fair market value on each offering date. During the year ended
      December 31, 1998, the employees of the Company purchased 29,273 shares of
      common stock for gross proceeds of $81,172. The Stock Purchase Plan
      expired December 31, 1998.


                                      F-22
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE H - STOCK OPTIONS AND WARRANTS - CONTINUED

      1. Stock-based compensation plans - continued

      The Company accounts for options granted to management and to the members
      of the board of directors under APB 25 and its related interpretations and
      the opinions of the Emerging Issues Task Force. Had compensation cost for
      these plans been determined based on the fair value of the options at the
      grant dates for awards under these plans consistent with the method
      prescribed by SFAS 123, the Company's net income (loss) and income (loss)
      per common share would have been changed to the pro forma amounts
      indicated below:

<TABLE>
<CAPTION>
                                                                                       Year ended December 31,
                                                                        ----------------------------------------------------
                                                                             2000               1999                1998
                                                                        --------------     --------------     --------------
            <S>                                  <C>                       <C>               <C>                <C>
            Net income (loss)                    As reported               $4,292,052        $(8,704,380)       $(6,923,444)
                                                 Pro forma                   (201,005)        (3,492,019)        (7,337,855)

            Income (loss) per
              common share                       As reported                    $0.66             $(1.53)            $(1.63)
                                                 Pro forma                      (0.03)             (0.62)             (1.79)
</TABLE>

      2. Stock warrants

      In 1998, in connection with a private placement of the Preferred Stock,
      the Company granted warrants to purchase 280,000 shares of common stock at
      $11.25 per share. In connection with the redemption of the remaining
      Preferred Stock in 1999, the Company canceled one half of the remaining
      warrants and reduced the exercise price of the other half to $1.25 per
      share.

      In conjunction with a private placement of common stock in May 1995, the
      Company issued warrants to a group of investors to acquire common stock of
      the Company. After that time, the Company issued additional warrants to
      this group as the previously outstanding warrants were exercised. During
      1998, warrants to acquire 29,634 shares of common stock were exercised by
      this group of investors and an equal amount of replacement warrants were
      granted. Due to the decrease in the market price of the Company's common
      stock, warrants to acquire 465,387 shares of common stock were allowed to
      expire in November 1998.


                                      F-23
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE H - STOCK OPTIONS AND WARRANTS - CONTINUED

      2. Stock warrants - continued

      In November 1999, the exercise price of 374,680 warrants and 44,900
      warrants with exercise prices of $21.875 and $11.25, respectively, were
      reduced to $2.00 per share.

      A summary of the status of common stock underlying the warrants issued and
      changes during the years is presented in the table below:

<TABLE>
<CAPTION>
                                                                             Year ended December 31,
                                              -----------------------------------------------------------------------------------
                                                         2000                         1999                         1998
                                              --------------------------   --------------------------   -------------------------
                                                              Weighted-                    Weighted-                   Weighted-
                                                               average                      average                     average
                                                              exercise                     exercise                    exercise
                                                 Shares         price         Shares         price         Shares        price
                                              -----------   ------------   -----------   ------------   -----------   -----------
          <S>                                     <C>          <C>           <C>           <C>            <C>           <C>
          Outstanding at
           beginning of year                       2,800       $1.25          654,680      $17.33          840,067      $17.23
          Granted                                      -           -          537,130        1.84          309,634       12.28
          Exercised                               (2,800)       1.25         (534,330)       1.84          (29,634)      13.25
          Expired                                      -           -                -           -         (465,387)      14.03
          Canceled                                     -           -         (654,680)      17.33                -           -
                                              -----------                  -----------                  -----------

          Outstanding at
           end of year                                 -       $   -            2,800      $ 1.25          654,680      $17.33
                                              ===========                  ===========                  ===========
</TABLE>

NOTE I - CONTINGENT LIABILITY

      In September 1999, certain former employees of the Company filed a lawsuit
      against the Company seeking damages for non-payment of a bonus
      arrangement, plus penalties and attorneys fees. The Company denies that
      the conditions of the bonus were met, filed a motion to dismiss certain
      claims (which was granted in part to dismiss the claim for certain
      penalties), and intends to vigorously defend its position. Management of
      the Company believes that it has substantial defenses to the claims. In
      March 2000, the then chief executive officer agreed to indemnify the
      Company for all costs and expenses, including any judgments, arising out
      of this litigation subsequent to March 1, 2000 (Note J). The Company does
      not believe that this litigation will have a material impact on the
      financial position of the Company. This litigation is set for trial in May
      2001.


                                      F-24
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE J - UNUSUAL CHARGES

      The Company has incurred the following unusual charges (credits) during
      the years covered by the financial statements:

<TABLE>
<CAPTION>
                                                                                             Year Ended December 31,
                                                                            -----------------------------------------------------
                                                                                 2000               1999              1998
                                                                            ---------------     -------------    ----------------
           <S>                                                              <C>                 <C>              <C>
           Indemnification expense                                          $       356,150     $          -     $              -
           Termination benefits paid to former executive officer                          -          125,000                    -
           Write down (recovery) of receivable from former executive
              officer and related litigation costs                                        -          (12,035)             187,492
           Write down (recovery) of notes receivable and accrued
              interest from former executive management for exercise of
              stock options                                                               -         (144,628)             456,723
           Other charges                                                                  -                -                5,734
                                                                            ---------------     -------------    ----------------

                                                                            $       356,150     $    (31,663)    $        649,949
                                                                            ===============     =============    ================
</TABLE>

      In anticipation of the merger with Net2Wireless (Note B) and in order to
      eliminate the Company's liabilities other than nominal current
      liabilities, the Company entered into an agreement effective March 1, 2000
      with the then chief executive officer whereby he agreed to indemnify the
      Company with respect to pending litigation and assume the real property
      lease to which the Company was a party. As part of his consideration, the
      chief executive officer permitted the Company to continue to use the
      office space covered by the lease through December 31, 2000. In exchange
      for the indemnification and the assumption of the lease in March 2000, the
      Company distributed to the then chief executive officer the minority
      investment interests held by the Company with a book value of $325,000 and
      the office equipment and furnishings located at the Company's Salt Lake
      City office with a book value of $31,150. The distribution of assets in
      exchange for the indemnification was accounted for as an unusual charge to
      continuing operations in the year ended December 31, 2000.

NOTE K - DISCONTINUED OPERATIONS

      Historically, the Company developed and marketed various products in one
      industry segment, analytical instrumentation. These historical product
      lines were sold or otherwise disposed of as follows:

      1.    During 1998, the Company sold its supercritical fluid chromatography
            (SFC) product and abandoned its TOF2000 mass spectrometer product.
            The SFC product was not significant to the operations of the
            Company. With the abandonment of the TOF2000 product, the Company
            recognized an unusual charge of $2,458,004 principally related to
            the write off of intangible assets and a charge to cost of sales of
            $490,882 for the write off of inventory.


                                      F-25
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE K - DISCONTINUED OPERATIONS - CONTINUED

      2.    At March 31, 1999, the Company sold the assets and operations
            associated with its acoustics division to PCB Group, Inc. (PCB),
            except for certain real estate, which was sold to PCB in July 1999.
            The Company received gross cash proceeds of approximately $5.3
            million, a note for $500,000, and the assumption or payoff of
            approximately $1.7 million of liabilities. The note bore interest at
            7.28 percent, was payable $22,450 per month, and the balance was
            paid in 2000. In conjunction with this sale, the Company has
            deferred $200,000 of gain under a non-compete arrangement.

      3.    The Jaguar mass spectrometer assets and operations were sold to LECO
            Corporation (LECO) in August 1999. The Company received proceeds of
            approximately $1.8 million, consisting of cash of approximately
            $800,000 (net of certain expenses, payments, and third quarter
            losses, but without deductions for losses incurred prior to June 30
            or the delivery of two Jaguar units to Brigham Young University at
            no charge), and a non-interest bearing note with a carrying value of
            $1,000,000 (interest imputed at 6.92 percent). The note was due and
            was paid in 2000. The Company recognized a gain of approximately
            $416,000 on the sale in 1999.

      4.    The CrossCheck technology was returned to Brigham Young University
            and the associated license agreement was terminated during the
            quarter ended September 30, 1999. The Company recognized a loss of
            approximately $76,000 from the disposal of the technology in 1999.

      5.    In August 1999, the right to receive royalty payments on the ANOMS
            intellectual property was assigned to Lochard Pty Ltd for
            installment payments totaling $200,000, plus contingent payments
            based upon future performance. The Company received the installment
            payments between August 1999 and March 2000, and accepted $120,000
            in March 2000 in satisfaction of the contingent payments. The
            Company recognized a gain of approximately $189,000 and $120,000 on
            this transaction in 1999 and 2000, respectively.

      The analytical instrumentation operations of the Company have been
      accounted for as discontinued operations. The results of operations and
      cash flows associated with these assets and liabilities are segregated and
      reported as discontinued operations in the accompanying consolidated
      statements of operations and cash flows. The financial statements for the
      years ended December 31, 1999 and 1998 have been restated to reflect the
      discontinued operations.


                                      F-26
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE K - DISCONTINUED OPERATIONS - CONTINUED

      Information related to the discontinued operations of the analytical
      instrumentation business is set forth below:

<TABLE>
<CAPTION>
                                                                                        Year ended December 31,
                                                                                   -----------------------------------
                                                                                        1999               1998
                                                                                   ----------------   ----------------
               <S>                                                                 <C>                <C>
               Net sales                                                           $     1,763,711    $      8,729,192
               Costs and operating expenses:
                   Cost of sales                                                          (970,730)         (5,241,186)
                   Research and development                                               (653,605)         (2,919,945)
                   Selling, general and administrative                                    (833,608)         (3,346,298)
                   Unusual credits (charges), net                                          537,258          (2,786,784)
                                                                                   ----------------   ----------------

                            Operating loss                                                (156,974)         (5,565,021)

               Other expense, net                                                          (70,470)           (137,398)
               Less loss subsequent to measurement
                  date of June 30, 1999 charged against gain on
                  disposition                                                              249,972                   -
                                                                                   ----------------   ----------------
                            Income (loss) from discontinued operations             $        22,528    $     (5,702,419)
                                                                                   ================   ================
</TABLE>

      Unusual credits (charges), net included in discontinued operations is
      comprised of the following:

<TABLE>
<CAPTION>
                                                                                        Year ended December 31,
                                                                                   -----------------------------------
                                                                                        1999               1998
                                                                                   ----------------   ----------------
               <S>                                                                 <C>                <C>
               Termination payments to personnel of discontinued operations
                  and other related costs                                          $      (129,000)   $             -
               Provision for costs and estimated losses on the discontinuance
                  of the TOF2000 and SFC products and closure of machine shop              106,330           (351,626)

               Settlement, net of expenses                                                 466,765                  -

               Writedown of TOF2000 assets                                                       -         (2,458,004)

               Other                                                                        93,163             22,846
                                                                                   ----------------   ----------------

                                                                                   $       537,258    $    (2,786,784)
                                                                                   ================   ================
</TABLE>


                                      F-27
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE L - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

      Quarterly financial data for the years ended December 31, 2000 and 1999
      are as follows:

<TABLE>
<CAPTION>
                                                                                 Fiscal Quarters
                                                         ----------------------------------------------------------------
                Year ended December 31, 2000                First            Second           Third             Fourth
        ----------------------------------------------   ------------     -----------      -----------      -------------
        <S>                                              <C>              <C>              <C>              <C>
        Revenues                                         $    85,699      $    97,955      $    95,027      $      80,724

        Income (loss) from continuing operations          (7,490,589)       8,903,724          759,711          1,895,131

        Income (loss) from discontinued operations and
          gain on sale of discontinued operations            178,875           30,000           15,200                  -

        Net income (loss)                                 (7,311,714)       8,933,724          774,911          1,895,131

        Income (loss) per common share: (1)

            Continuing operations:
                Basic                                          (1.15)            1.36             0.12               0.29
                Diluted                                        (1.15)            1.31             0.11               0.29

            Discontinued operations:
                Basic                                           0.02             0.00             0.00               0.00
                Diluted                                         0.02             0.00             0.00               0.00

            Net income (loss)
                Basic                                          (1.13)            1.36             0.12               0.29
                Diluted                                        (1.13)            1.31             0.11               0.29
<CAPTION>
                                                                                 Fiscal Quarters
                                                         ----------------------------------------------------------------
                Year ended December 31, 1999                 First           Second           Third             Fourth
        ----------------------------------------------   ------------     ------------     ------------     -------------

        <S>                                              <C>              <C>              <C>              <C>
        Revenues                                         $     4,493      $    29,624      $    42,072      $      71,755

        Income (loss) from continuing operations            (247,909)        (953,274)          87,199        (10,881,174)

        Income (loss) from discontinued operations and
          gain (loss) on sale of discontinued operations   1,755,374          318,421        1,180,639             16,344

        Net income (loss)                                  1,527,465         (634,853)       1,267,838        (10,864,830)

        Income (loss) per common share: (1)

            Continuing operations:
                Basic                                          (0.05)           (0.17)            0.02              (1.83)
                Diluted                                        (0.05)           (0.17)            0.01              (1.83)

            Discontinued operations:
                Basic                                           0.33             0.06             0.20               0.00
                Diluted                                         0.33             0.06             0.20               0.00

            Net income (loss)
                Basic                                           0.28            (0.11)            0.22              (1.83)
                Diluted                                         0.28            (0.11)            0.21              (1.83)
</TABLE>

----------
(1) Income (loss) per common share is computed independently for each of the
quarters presented. Therefore, the sum of the quarterly income (loss) per common
share amounts do not necessarily equal the total for the year.


                                      F-28
<PAGE>

                      Sensar Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31 2000, 1999 and 1998

NOTE M - SUBSEQUENT EVENTS

      1. Change in executive management

      In January 2001, the Company entered into a Transition Agreement with the
      chief executive officer and all of the current board of directors. Under
      the agreement, Howard S. Landa, the then chief executive officer, and
      Brian B. Lewis, a board member, resigned their positions with the Company
      and waived options to acquire an aggregate of 560,000 shares of common
      stock at an average exercise price of $2.00 per share. Additionally,
      Mickey Hale, a board member, and Andrew Bebbington, the Company's chief
      consultant, also waived options to acquire an aggregate of 210,000 shares
      of common stock at an average exercise price of $2.00 per share. Steven
      Strasser was appointed chief executive officer of the Company and received
      options to acquire 250,000 shares of common stock at $2.00 per share. Mr.
      Bebbington was appointed to the board of directors of the Company and
      named chief operating officer. Mr. Strasser and Mr. Bebbington each
      entered into employment agreements with the Company which provide for
      aggregate annual compensation of $240,000. The initial terms of the
      employment agreements are through January 2002, but renew automatically
      such that there is always one year remaining under the agreements.

      2. Investment in Nex2, LLC

      In January 2001, the Company acquired 249,700 Investor Units and 300
      Voting Units (the Units) of Nex2, LLC (Nex2) for an aggregate purchase
      price of $750,000. Nex2 is a privately-held company organized in 1999 and
      is developing technology to provide electronic access to computer based
      medical information, including prescription profiles and other patient
      specific information, for use by the insurance industry. The Units
      represent approximately 1.9 percent of the outstanding Units of Nex2. The
      Company's investment in Nex2 will be accounted for under the cost method
      of accounting.


                                      F-29