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###### Securities and Exchange Commission

          - [Release No. IC-25320; 812-12684] 

# AGENCY:

Securities and Exchange Commission (“Commission”). 

# ACTION:

Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the “Act”).

# Summary of Application:

                        Sensar Corporation (“Applicant”) requests an order exempting it from all provisions of the Act until the earlier of one year from the date that the requested order is                               ( print page 66955)                            issued or the date that it no longer may be deemed to be an investment company.                     

# Filing Dates:

The application was filed on November 13, 2001, and amended on December 19, 2001. 

# Hearing or Notification of Hearing:

An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on January 11, 2002, and should be accompanied by proof of service on applicant, in the form of an affidavit, or for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. 

# ADDRESSES:

Secretary, Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Applicant, c/o Stoel Rives LLP, 201 South Main Street, Suite 1100, Salt Lake City, UT 84111. 

# FOR FURTHER INFORMATION, CONTACT:

Stacy L. Fuller, Senior Counsel, at 202-942-0553, or Janet M. Grossnickle, Branch Chief, at 202-942-0564 (Division of Investment Management, Office of Investment Company Regulation). 

# SUPPLEMENTARY INFORMATION:

The following is a summary of the application. The complete application may be obtained for a fee at the Commission's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 20549-0102 (telephone 202-942-8090). 

## Applicant's Representations 

1. Applicant is a Nevada corporation whose principal offices are in Utah. Prior to August 1999, Applicant was engaged in the design, development, manufacturing, and marketing of analytical scientific instrumentation. Between March and August 1999, Applicant sold substantially all of its assets related to such business and began to search for an acquisition. In September 1999, Applicant entered into negotiations with Net2Wireless Corporation (now known as Jigami Corporation) (“Jigami”) to acquire Jigami, and devoted substantial time in the remainder of 1999 and 2000 to completing the acquisition. On December 1, 2000, Nasdaq informed Applicant that it had determined to deny the listing application for the combined company (or initiate delisting proceedings against Applicant if Jigami merged into Applicant). The proposed merger was abandoned, and on December 4, 2000, Applicant and Jigami entered into a settlement, whereby Applicant received 3,000,000 shares of Jigami stock and a warrant to acquire another 1,000,000 shares, representing approximately 14.1% of the outstanding capital stock of Jigami. As a result of the settlement, on December 4, 2000, Applicant's assets consisted of approximately (a) $3.25 million of cash, (b) $2 million of Jigami securities, and (c) $67,000 of other assets that were not securities. 

2. In January 2001, Applicant determined that it might be deemed to be an investment company under section 3(a)(1)(C) of the Act as of the date that it acquired the securities of Jigami. Based on the information available to Applicant at that time, Applicant did not believe that it could alter its investment in Jigami so as to reduce the value of its investment securities to less than 40% of its total assets (exclusive of government securities and cash). Accordingly, Applicant determined that its best alternative was to try to qualify, and make election under section 54 of the Act, to become a business development company, as defined in section 2(a)(48) of the Act (“BDC”). On January 22, 2001, as part of its plan to become a BDC, Applicant purchased 3.5% of the outstanding shares of common stock of a privately held company (“Private Company”) for $750,000. 

3. At the end of the first quarter of 2001, Applicant wrote down the value of the Jigami investment to zero. As of March 31, 2001, Applicant's assets consisted of approximately (a) $2.35 million of cash, (b) $750,000 of Private Company's securities, and (c) $82,000 of other assets that were not securities. In light of the changes in Applicant's assets, Applicant then began to focus its efforts on a revised strategy of actively attempting to purchase an operating business. 

## Applicant's Legal Analysis 

1. Under section 3(a)(1)(C) of the Act, an issuer is an investment company if it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 percent of the value of such issuer's total assets (exclusive of government securities and cash items) on an unconsolidated basis. Section 3(a)(2) of the Act defines “investment securities” to include all securities except government securities, securities issued by employees' securities companies, and securities issued by majority-owned subsidiaries of the owner that are not investment companies and are not relying on the exception from the definition of investment company in section 3(c)(1) or 3(c)(7) of the Act. 

2. Applicant states that the Jigami securities acquired on December 4, 2000, and the Private Company securities acquired on January 22, 2001, constitute “investment securities” within the meaning of section 3(a)(2) of the Act. Applicant states that because investment securities have represented substantially all of its non-cash assets since December 4, 2000, Applicant may be deemed to be an investment company within the meaning of section 3(a)(1)(C) of the Act. 

3. Section 6(c) of the Act permits the Commission to exempt any person from any provision of the Act, if and to the extent that the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. 

4. Applicant requests an exemption under section 6(c) from all provisions of the Act until the earlier of one year from the date that the requested order is issued or the date that Applicant no longer may be deemed to be an investment company. Applicant believes that within the period covered by the requested order, it will be able to complete an acquisition of or a merger with an operating business. 

                    5. Applicant states that its failure to become primarily engaged in a non-investment business or an excepted business within the past year was due to factors beyond its control and that, during the period, its officers tried in good faith to invest Applicant's assets in a non-investment business or excepted business. Specifically, Applicant states that once it realized that it might be deemed to be an investment company under section 3(a)(1)(C), it took steps to comply with the Act, first by pursuing BDC status, and later by pursuing a merger or acquisition. Applicant states that in its pursuit of a suitable merger with or acquisition of an operating business, it has actively investigated 30 companies and completed field due diligence on four such companies. Applicant contends that it has been hampered in its efforts to find a suitable partner or target by the recent economic downturn. Applicant further states that on or about December 13, 2001, Applicant entered into a non-binding letter of intent with VitalStream, Inc.                           ( print page 66956)                        (“VitalStream”), a California-based digital broadcasting company, pursuant to which VitalStream would merge with and into a wholly-owned subsidiary of Applicant. Applicant states that it expects the proposed merger to close in the first or second quarter of 2002. Applicant further states that, in addition to seeking to merge with or acquire an operating business, it has attempted to sell the Private Company securities by convincing Private Company to repurchase the securities, discussing a sale with existing shareholders of Private Company, and contacting other persons who have shown an interest in Private Company. Applicant states that it is continuing to attempt to find a purchaser for its block of Private Company securities. In addition, Applicant states that since determining to pursue operating company status at the end of the first quarter of 2001, it has declined to make additional investments in Private Company and has not acquired any other investment securities. Applicant also states that it will hold its cash assets in federally insured money market or demand accounts. Finally, Applicant notes that on November 7, 2001, the Board formalized the decision to pursue operating company status by adopting a resolution that directs Applicant to abandon its efforts to become a BDC and take whatever steps are necessary to become an operating company.                 

6. Applicant contends that registration under the Act would involve an unnecessary burden and expense for Applicant and its shareholders and would serve no regulatory purpose. For the reasons discussed above, Applicant asserts that the requested relief is consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. 

## Applicant's Conditions 

1. Applicant will not acquire additional investment securities, as defined in section 3(a)(2) of the Act, or engage in the trading of securities for short-term speculative purposes. 

2. Applicant will not hold itself out as being engaged in the business of investing, reinvesting, owning, holding or trading in securities. 

For the Commission, by the Division of Investment Management, under delegated authority. 

Margaret H. McFarland, 

Deputy Secretary. 

[FR Doc. 01-31740 Filed 12-26-01; 8:45 am] 

BILLING CODE 8010-01-P