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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                               -------------------

                                    FORM 8-K

                                 CURRENT REPORT
                       Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported)

                                  April 1, 2005

                               -------------------

                          RESCON TECHNOLOGY CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
<S>                                     <C>                             <C>
              Nevada                            000-13822                  83-0210455
 (State or other jurisdiction of        (Commission File Number)          (IRS Employer
          incorporation)                                                Identification No.)
</TABLE>

                              180 Rose Orchard Way
                               San Jose, CA 95134
          (Address of principal executive offices, including zip code)

                                 (408) 956-8000
              (Registrant's telephone number, including area code)


          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))

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<PAGE>

Item 2.01 Completion of Acquisition or Distribution of Assets

On April 1, 2005, pursuant to the terms of that certain Agreement and Plan of
Reorganization, dated October 16, 2004, as amended, by and among Rescon
Technology Corporation, a Nevada corporation ("Rescon"), Nayna Acquisition
Corporation, a Nevada corporation and a wholly owned subsidiary of Rescon,
("Acquisition Sub"), Nayna Networks, Inc. ("Nayna"), and Christian Nigohossian,
(the "Merger Agreement"), Acquisition Sub, merged with and into Nayna, with
Nayna surviving as a wholly owned subsidiary of Rescon (the "Merger"). In
connection with the Merger, Rescon issued 32,249,947 shares of its Common Stock
to the stockholders of Nayna. Each share of common stock of Nayna converted into
0.198916 of a share of Rescon common stock and each share of Series D Preferred
Stock of Nayna converted into 0.683023 of a share of Rescon common stock. All
outstanding shares of Nayna Series CC Preferred Stock were cancelled in
connection with the Merger.

Upon the effectiveness of the Merger, each outstanding option or warrant to
purchase Nayna common stock, whether or not then exercisable, was converted into
an option or warrant to purchase a number of shares of Rescon common stock equal
to (i) the number of shares then subject to such option or warrant multiplied by
(ii) 0.198916 (rounded to the nearest whole share) at an exercise price equal to
(i) the exercise price in effect immediately prior to the Merger divided by (ii)
the 0.198916 (rounded to the nearest whole cent). All other terms and conditions
of each option or warrant to purchase Nayna common stock shall remain the same.

Following the Closing, the stockholders of Nayna own 32,249,947 shares of
Rescon's common stock, or approximately 89% of the outstanding shares of
Rescon's common stock, and the stockholders of Rescon immediately prior to
Closing ("Existing Stockholders") own 3,552,557 shares of Rescon's common stock,
or approximately 11% of the outstanding shares of Rescon's common stock. The
share exchange ratio in the Merger was determined through arms'-length
negotiations between Rescon and Nayna. Information in this Report on Form 8-K
regarding the number of shares of Rescon common stock issued in the Merger
assumes that no stockholders of Nayna will exercise their right under Delaware
law to seek an appraisal of the value of their Nayna stock in lieu of the
receipt of shares of Rescon common stock.

On March 24, 2005, the Merger Agreement was amended to reduce the number of
shares being issued to 32,250,000 and to include the final share exchange
ratios. A copy of First Amendment to the Merger Agreement, dated March 31, 2005,
is filed as Exhibit 2.2 to this Form 8-K.

Item 3.02 Unregistered Sales of Equity Securities

In connection with the Merger, Rescon issued 32,249,947 shares of its Common
Stock to the stockholders of Nayna. The issuance of Rescon's shares of common
stock to Nayna's stockholders was exempt from registration under the Securities
Act of 1933, as amended ("Securities Act") pursuant to Section 4(2) thereof.
<PAGE>

Item 4.01 Changes In Registrant's Certifying Accountant.

(A) On April 1, 2005, Rescon ended the engagement of Mantyla McReynolds,
Certified Public Accountants of Salt Lake City, Utah, as its independent
certified public accountants. The decision was approved by the Board of
Directors of Rescon.

The report of Mantyla McReynolds on Rescon's financial statements for the fiscal
years ended August 31, 2004 and 2003 did not contain an adverse opinion or
disclaimer of opinion, other than a going concern qualification. During Rescon's
fiscal years ended August 31, 2004 and 2003 and the subsequent interim period
preceding the termination, there were no disagreements with Mantyla McReynolds
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Mantyla McReynolds, would have caused Mantyla McReynolds
to make reference to the subject matter of the disagreements in connection with
its report on the financial statements for such years or subsequent interim
periods.

The Company requested that Mantyla McReynolds furnish it with a letter addressed
to the Securities and Exchange Commission ("SEC") stating whether or not it
agrees with Rescon's statements in this Item 4.01(a). A copy of the letter
furnished by Mantyla McReynolds in response to that request, dated April 7,
2005, is filed as Exhibit 16.1 to this Form 8-K.

(B) On April 1, 2005, Naresh Arora, CPA, Inc. was engaged as Rescon's new
independent certified accountant. During the two most recent fiscal years and
the interim period preceding the engagement of Naresh Arora, CPA, Inc., Rescon
has not consulted with Naresh Arora, CPA, Inc. regarding either: (i) the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
Rescon's financial statements; or (ii) any matter that was either the subject of
a disagreement or event identified in paragraph (a)(1)(iv) of Item 304 of
Regulation S-B.

Section 5 - Corporate Governance and Management

      Item 5.01 Changes In Control

 As described in Item 3.02 above, on April 1, 2005, pursuant to the Merger
Agreement, Acquisition Sub, merged with and into Nayna, with Nayna surviving as
a wholly owned subsidiary of Rescon. Immediately prior to the Merger, Rescon had
3,552,557 outstanding shares of common stock and no outstanding shares of
preferred stock. Pursuant to the Merger, 32,249,947 shares of Rescon common
stock were issued to the stockholders of Nayna in exchange for 100% of the
outstanding shares of common stock of Nayna. The share exchange ratio in the
Merger was determined through arms'-length negotiations between Rescon and
Nayna. Information in this Report on Form 8-K regarding the number of shares of
Rescon common stock issued in the Merger assumes that no stockholders of Nayna
will exercise their right under Delaware law to seek an appraisal of the value
of their Nayna stock in lieu of the receipt of shares of Rescon common stock. As
a result of the Merger, (i) 35,802,504 shares of Rescon common stock are
outstanding, approximately 89% of which are owned by the former stockholders of
Nayna, and (ii) Rescon is now controlled by the former stockholders of Nayna.
<PAGE>

      Item 5.02 Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.

Effective as of the Closing, Henrik Klausgaard, Ilona Klausgaard, and Tristan V.
Voth-Stonger resigned as directors and executive officers of Rescon. Prior to
their resignations, these Board members appointed Naveen S. Bisht, Tsuyoshi
Taira and Rahul Vaid to serve on the Rescon Board of Directors. The Rescon Board
of Directors expects to appoint three independent directors within thirty (30)
days following Closing. The newly-appointed board of directors has also
appointed new principal officers of Rescon effective as of the Closing.

Rescon filed an Information Statement with the U.S. Securities and Exchange
Commission on January 7, 2005 pursuant to Section 14(f) of the Exchange Act, and
Rule 14f-1 promulgated thereunder, announcing the proposed change of control.
The Information statement was mailed on January 10, 2005 to Rescon's
stockholders of record as of January 3, 2005

The following table sets forth certain information, of the newly elected
directors and principal officers:

NAME                   AGE      POSITION
----                   ---      --------

Naveen S. Bisht        41       Founder, President, Chief Executive Officer, and
                                Director

Tsuyoshi Taira         65       Chairman of the Board of Directors

Rahul Vaid             30       Director

Gautam Chanda          47       Vice President Business Development & Vertical
                                Markets

Richard D'Sa           55       Vice President Worldwide Sales

Hari Hirani            49       Vice President Engineering

Dr. Raj Jain           53       Co-Founder and Chief Technology Officer

Michael Meyer          54       Chief Financial Officer

The following sets forth biographical information concerning the newly elected
directors and principal officers:

Naveen S. Bisht has over 15 years of experience in business development,
marketing, strategy, engineering and general management in storage, networking
and the telecommunication industry. Previously he was the Founder, President and
CEO of Ukiah Software, Inc. - a leader in policy-based bandwidth and security
management software systems for service provider and enterprise networks that
was sold to Novell, Inc. in 1999. Ukiah received a number of awards including
Top 10 Companies to Watch in 1999; Top 25 Hot Startups of 1998; 1999
Telecommunications Product of the Month Award; 1999 and 1998 Hot Product Awards.
Prior to Ukiah, he was founder and President of a consulting services company
focused on telecommunication and networking market. He is also Founder/Partner
of Luxmi Ventures LLC - a seed stage venture fund focused on network
infrastructure market. Naveen attended the Ph.D. Program at University of
California, Santa Barbara; holds a MS from Texas Tech University; and earned a
MS and BSME from the Birla Institute of Technology & Science, Pilani. He holds
three patents in the area of Quality of Service and security management in IP
Networks. Mr. Bisht is not a nominee or director of any other reporting company.
<PAGE>

Tsuyoshi Taira is the CEO of Tazan International Inc, a venture capital and
management consultancy firm. Mr. Taira has been involved with a number of
Silicon Valley startup companies as founding investor/director including Atmel
Semiconductor (NASDAQ: ATML), Pico Power Technology Inc (acquired by Cirrus
Logic), Junglee Corporation (acquired by Amazon.com, NASDAQ: AMZN), Armedia
(acquired by Broadcom, NASDAQ: BRCM), Apptivity (acquired by Progress Software,
NASDAQ: PRGS) and many others. He has been instrumental in providing seed stage
financing, management and marketing advice, especially for the Far Eastern
market to the startup companies. Currently he serves on the boards of Silicon
Storage Technology Inc. (NASDAQ: SSTI) (flash memory company), Nayna Networks,
Inc. (networking products and services), Ureach.Com (unified e-mail and voice
mail messaging company), Asia-Links Media (Semiconductor components e-commerce)
and Teleweb (Call Center in China). In addition, he is on the advisory board of
Silicon Motion (Graphic Controller IC), CLCEO (Polarizer), Reveo (Revolutionary
Electro Optics Technology Company) and several other companies. Previously, Mr.
Taira was Chairman of Sanyo Semiconductor directing Sanyo's US marketing
strategy. Most of his career was spent at Sanyo Corporation except for five
years when he worked at Fairchild Semiconductor. Mr. Taira graduated from Tokyo
Metropolitan University with a BSEE. He also received an Honorary Doctor of
Humanities from Newport Asia Pacific University in March 2000. He has published
a number of books including "Audio Amplifier", "Transistor Physics and
Application" as a Co-author and most recently a book on entrepreneurship, "My
Fellow Engineer, Let's Challenge" from Nikkei BP.

Rahul Vaid is a general partner with Pacesetter Capital Group and joined the
firm in January 2001 and has led several investments for the firm. Prior to
joining the firm, he was Vice President of Investments at Doublespace LLC, an
early stage investment firm that invested in media and telecommunications
ventures in the U.S. and Europe. Prior to Doublespace, Rahul was one of the
founding members of Wit Capital's (now Soundview Technology Group - Nasdaq:
SNDV) investment banking group through the firm's initial public offering in
1999 and served as Vice President of Investment Banking. Previously, Rahul has
held engineering positions at Daat Research and the Tata Institute of
Fundamental Research in India. Rahul is involved with several entrepreneurial
and industry organizations such as TiE, CiE, IEEE, SVMG, AEA, and is a frequent
speaker at several conferences on entrepreneurship and venture capital. Rahul
holds an MEM (a joint business degree) and an MS from Dartmouth College, a BS
degree from Government College of Engineering Pune, India, and an Advanced
Diploma in Enterprise Systems from N-IIT, India. Mr. Vaid is not a nominee or
director of any other reporting company.
<PAGE>

Gautam Chanda was most recently co-founder, President, and CEO of Accordion
Networks, has over 20 years of product development experience with
telecommunications and data communications systems, including ATM/IP switching,
multi-service access, and SONET/SDH technologies. Accordion Networks developed
products to deliver Broadband Access Services in the buildings such as MTU
(Multi-Tenant Units), MDU (Multi Dwelling Units) and Hospitality (Hotels).
Accordion was funded by distinguished investors such as Intel, Transwitch Corp.,
and Bell Canada. Prior to co-founding Accordion, he was the principal founder
and VP of Engineering at Mayan Networks that developed IP over SONET products
for the Service Providers. He has held various senior technical and management
positions at Premisys, 3Com, Intel and ITT. Mr. Chanda holds a BSEE from the
Birla Institute of Technology and Science in Pilani, India and an MSEE from the
Polytechnic Institute of NY at Brooklyn.

Richard D'Sa has over 25 years of experience in the telecommunications and high
technology markets where he has been lauded by his peers for his visionary
strategies. Richard was most recently in charge of Arambei, a technology, M&A
and a channel bridging consultant company. Previous to Arambei, D'sa was
Founder, Senior Vice President, Worldwide Sales & Marketing and COO of Xpeed
Networks, in the broadband access market with DSL and optical solutions.
Previous to Xpeed, D'sa spent 18 successful years at Motorola Semiconductors,
LSI Logic and ITEX in various senior executive engineering, sales and marketing
management roles where his contributions earned him several awards and
promotions. He also spent six years at OPTi, a premier PC Chipset Company where
he served in management roles to the Senior Executive VP level. D'sa holds B.Sc
Honors degree in Electronics Engineering and Physics, majoring in optical
spectroscopy, semiconductors, electro-magnetic theory and electronics from
University of London, UK.

Hari Hirani is a senior engineering executive with extensive experience managing
the development of carrier class products for Telecom market. Hari was
previously Vice-President Engineering for NtechRA, Inc. Before NetchRA Hari was
the Director of Engineering for HAL Computers (a division of Fujitsu), ADC
Telecommunications and Telco Systems. Hari has published numerous technical
papers published by industry leading journals. Hari holds an MSEE (Computer and
Information Engineering) from the University of Florida and BSEE from MS
University, India.

Dr. Raj Jain is an industry renowned professional in communications industry for
his work in IP traffic Management, ATM, Optical Networking and quality of
service. Most recently, he has been a Professor of Computer Science at Ohio
State University. Prior to that for sixteen years, he was a Senior Consulting
Engineer at Digital Equipment Corporation and led the design and analysis of
many computer systems and networking technologies including Ethernet, DECnet,
OSI, FDDI, and ATM networks. He was also an active member of the All-Optical
Networking (AON) consortium consisting of Digital, M.I.T./Lincoln Lab, and AT&T
that started the research on Dense Wavelength Division Multiplexing networks. He
is an active participant in several other industry forums including Internet
Engineering Task Force (IETF), Optical Interoperability Forum (OIF), Institute
of Electrical and Electronic Engineering (IEEE), American National Institute
(ANSI), ITU and Telecommunications Institute of America (TIA). He is a Fellow of
IEEE, a Fellow of ACM and a member of Optical Society of America, Society of
Photo-Optical Instrumentation Engineers (SPIE), and Fiber Optic Association. Dr.
Jain has also taught at MIT and has 13 patents, over 120 publications and a
number of awards for his contribution to the industry. Previously, he was a
consultant to Nortel, Nexabit/Lucent and a number of other networking companies.
Dr. Jain received his Ph.D. in Computer Science from Harvard University.
<PAGE>

Michael Meyer has over 15 years of executive experience in finance and
operations in manufacturing and high-tech companies. Previously, from 2000 to
2004, he was the CEO of AirLink Communications, a wireless data solutions
company. Immediately prior to that, in 1999, he was at LuxN, a fiber optic
equipment startup. From 1996 to 1998 Michael was the VP Finance and Operations
for Sierra Wireless, a wireless modem manufacturer. He also was the founder and
president of a services company focused on providing temporary executive help
for manufacturing and high-tech companies. He has also been the CFO of a public
software company, a merchant bank (investing in high-tech startups), a battery
company and an electrical equipment manufacturer. Michael attended the MBA
program at Simon Fraser University and holds a CMA from the Society of
Management Accountants. Michael has lived and worked in Australia, Canada and
the US.

      Each director will serve until his successor is elected at the annual
meeting of shareholders or until his earlier death, resignation or removal and,
subject to the terms of any employment agreement with Rescon, each executive
officer serves at the pleasure of the Board of Directors. None of the new
officers or directors have been involved in any transaction with Rescon or any
of its directors, executive officers or affiliates that is required to be
disclosed pursuant to the rules and regulations of the Securities and Exchange
Commission, other than with respect to the transactions that have been described
herein. None of the current or new directors and officers has been convicted in
a criminal proceeding, excluding traffic violations or similar misdemeanors, or
has been a party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) during the past five
years, that resulted in a judgment, decree or final order enjoining the person
from future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state
securities laws.

      Neither Rescon nor Nayna have any employment agreements with any of their
employees.

      The Board has not yet determined the Board committees to which each new
director will be named. Upon such determination, Rescon shall file an amendment
to this Form 8-K.

Security Ownership of Certain Beneficial Owners And Management

      The following table sets forth certain information regarding the number of
shares of Rescon stock held as of April 1, 2005, on a pro forma basis to reflect
the transactions contemplated by the Merger Agreement for (i) each stockholder
who is the beneficial owner of 5% or more of Rescon's outstanding Common Stock,
(ii) each executive officer and director, and (iii) all executive officers and
directors as a group, on a pro forma basis to reflect the transactions
contemplated by the Merger Agreement. Unless otherwise indicated, each person in
the table will have sole voting and investment power with respect to the shares
shown after the consummation of the transactions contemplated by the Merger
Agreement. Except as otherwise noted, options granted under the Nayna 2000 Stock
Option Plan, were assumed by Rescon in connection with the Merger, and are
immediately exercisable, subject to the company's right to repurchase unvested
shares upon termination of employment or other service at a price equal to the
option exercise price, as adjusted in connection with Merger.
<PAGE>

                                                    Number of Shares
                                                      Beneficially
                        Beneficial Owner                  Owned         Percent
-------------------------------------------------   ----------------    -------
Pacestter/ MVHC, Inc. (1)                                4,423,397       12.35%
2435 North Central Expressway, Suite 200
Richardson TX 75082

Ignite Ventures (2)                                      4,360,092       12.18%
225 Shoreline Drive #510
Redwood City, CA 94065

Apex Ventures (3)                                        4,119,982       11.51%
233 South Wacker Drive, Suite 9600
Chicago, Il 60606

Eric McAfee (4)                                          3,725,000       10.40%
10600 North DeAnza Blvd., # 250
Cupertino, CA 95014

Berg McAfee Companies, LLC (5)                           3,000,000        8.38%
10600 North DeAnza Blvd. #250
Cupertino, CA 95014

MKS Ventures, LLC (6)                                    2,884,597        7.99%
3320 Baker Street
San Francisco, CA 94123

Christian Nigohossian                                    1,949,154        5.32%

Naveen S. Bisht (7)                                      2,264,273        6.10%

Gautam Chanda (8)                                          448,556        1.24%

Richard D'Sa (9)                                           440,171        1.21%

Hari Hirani (10)                                           410,377        1.13%

Dr. Raj Jain (11)                                        1,128,464        3.11%

Michael Meyer (12)                                         350,000        *

Tsuyoshi Taira (14)                                      1,174,475        3.27%

Rahul Vaid (1)                                           4,423,397       12.35%
-------------------------------------------------------------------------------
Directors and executive officers as a group             10,982,117       27.71%

(11 persons)
-------------------------------------------------------------------------------

* Less than 1.0%
<PAGE>

(1)   - 3,806,663 shares held by Alliance Enterprise Corporation, and

      - 312,655 shares held by Mesbic Ventures, Inc.

      each of which is an Small Business Investment Company and a wholly owned
      affiliate of Pacesetter /MVHC, Inc. ("PMVHC"), and through an investment
      committee, exercises sole voting and investment power with respect to all
      shares of record held by these entities. Individually, no stockholder,
      director or officer of PMVHC has or shares such voting or investment
      power. Also, includes 300,499 shares held by Pacesetter Growth Fund, L.P.,
      which shares common management with PMVHC and for which PMVHC is a limited
      partner. Mr. Vaid, a Senior Vice President of PMVHC, disclaims beneficial
      ownership of shares held by these entities except to the extent of his
      pecuniary interest in these entities and the 3,580 shares Mr. Vaid
      personally holds.

(2)   Includes:

      - 4,350,012 shares held by Ignite Ventures II, L.P.,

      - 7,192 shares held by Ignite Ventures I, L.P., and

      - 1,060 shares held by Ignite Entrepreneurs, L.P.

      each of which is an affiliate of Ignite Associates LLC, which also holds
      1,828 shares directly. Ignite Associates LLC is the general partner of
      each of these entities, and through an executive committee, exercises sole
      voting and investment power with respect to all shares of record held by
      these entities. Individually, no stockholder, director or officer of
      Ignite Associates LLC has or shares such voting or investment power.

(3)   Includes:

      - 2,744,148 shares held by Apex Investment Fund V, L.P.,

      - 1,335,369 shares held by Apex Investment Fund IV, L.P., and

      - 40,465 shares held by Apex Strategic Partners IV, LLC

      Apex Management V, LLC is the general partner of Apex Investment Fund V,
      L.P. and Apex Management IV, LLC is the general partner of Apex Investment
      Fund IV, L.P. and Apex Strategic Partners IV, LLC. Apex Management V, LLC
      and Apex Management IV, LLC, each through an executive committee,
      exercises sole voting and investment power with respect to all shares of
      record held by Apex Investment Fund V, L.P and Apex Investment Fund IV,
      L.P. and Apex Strategic Partners IV, LLC, respectively. Individually, no
      stockholder, director or officer of Apex Management V, LLC or Apex
      Management IV, LLC has or shares such voting or investment power.
<PAGE>

(4)   Includes:

      - 3,000,000 shares held by Berg McAfee Companies, LLC,

      - 500,000 shares held by McAfee Capital, LLC

      - 25,000 shares held by Cagen McAfee Capital Partners, and

      - 200,000 shares held by P2 Capital, LLC

      Mr. McAfee is a Managing Partner of Berg McAfee Companies, LLC and Cagen
      McAfee Capital Partners, each of which exercises sole voting and
      investment power with respect to all shares it holds of record through an
      executive committee. Individually, no stockholder, director or officer of
      Berg McAfee Companies, LLC or Cagen McAfee Capital Partners has or shares
      such voting or investment power. Mr. McAfee disclaims beneficial ownership
      of shares held by Berg McAfee Companies, LLC and Cagen McAfee Capital
      Partners except to the extent of his pecuniary interest in those entities.
      Mr. McAfee is the sole Managing Partner of McAfee Capital, LLC. In this
      capacity, Mr. McAfee exercises sole voting and investment power with
      respect to all shares of record held by McAfee Capital, LLC. Mr. McAfee's
      spouse is the sole Managing Partner of P2 Capital, LLC. In this capacity,
      she exercises sole voting and investment power with respect to all shares
      of record held by P2 Capital, LLC. Mr. McAfee disclaims beneficial
      ownership of shares held by P2 Capital, LLC.

(5)   Berg McAfee Companies, LLC exercises sole voting and investment power with
      respect to all shares it holds of record through an executive committee.
      Individually, no stockholder, director or officer of Berg McAfee
      Companies, LLC has or shares such voting or investment power.

(6)   Includes 1,857,054 shares held by MKS Ventures, LLC and 298,374 shares
      subject to immediately exercisable options, of which 49,729 shares will be
      vested within 60 days after April 1, 2005 held by Nicholas Mitsakos, the
      sole Managing Member of MKS Ventures, LLC. In his capacity as sole
      managing member, Mr. Mitsakos exercises sole voting and investment power
      with respect to all shares of record held by MKS Ventures.

(7)   Includes 1,208,030 shares subject to immediately exercisable options, of
      which 689,542 shares will be vested within 60 days after April 1, 2005.
      Also includes 5,966 shares held in trust for the minor children of Mr.
      Bisht, of which he disclaims beneficial ownership.

(8)   Represents 448,556 shares subject to immediately exercisable options,
      44,756 of which will be vested within 60 days after April 1, 2005.

(9)   Represents 440,171shares subject to immediately exercisable options, none
      of which will be vested within 60 days after April 1, 2005.
<PAGE>

(10)  Represents 410,377 shares subject to immediately exercisable options, of
      which 141,466 shares will be vested within 60 days after April 1, 2005.

(11)  Includes 531,716 shares subject to immediately exercisable options, of
      which 359,755 shares will be vested within 60 days after April 1, 2005.

(12)  Includes 250,000 shares subject to the company's right to repurchase
      unvested shares upon termination of employment or other service at a price
      equal to the purchase price and 100,000 shares subject to immediately
      exercisable options, none of which will be vested within 60 days after
      April 1, 2005.

(13)  Includes 59,675 shares subject to immediately exercisable options, of
      which 13,675 shares will be vested within 60 days after April 1, 2005.

(14)  See notes 7 through 13. Includes 3,198,525 shares subject to options that
      are currently exercisable or will become exercisable within 60 days after
      April 1, 2005 beneficially owned by executive officers and directors.
      1,949,331 of these shares would not be vested within 60 days after April
      1, 2005, and thus would be subject to repurchase by Nayna.

Business of Rescon

Immediately prior to the completion of the Merger, Rescon was engaged in
developing certain business opportunities it has acquired during the past few
years, including seeking funding to complete final development and marketing of
its Reading and Writing Plus educational product, its digital yearbook and its
trading software platform.

Business of Nayna

Overview

Founded in February 2000, Nayna Networks is a hardware and software development
company that designs, develops and markets next generation broadband access
solutions, also known as Ethernet In The First Mile (EFM) solutions for the
secure communications market. Typical customers include carriers, Cable TV
(CATV) service providers and municipal, defense and enterprise networks. Nayna's
multi-gigabit flagship platform, ExpressSTREAM, removes the performance
bottlenecks typically found in access networks. The high quality and rich
feature set of Nayna's solutions enables the gigabit class ExpressSTREAM
platform to address a wide variety of applications from the transport level up
to and through the application layer. Nayna, together with the companies which
it has acquired, has raised more than $65 million in venture capital investment
over the past five years, substantially all of which has been spent on product
development. In addition to continued internal development efforts, Nayna plans
to augment its product and service offerings through the acquisitions of
complementary companies in the secured communications solutions field including
infrastructure, software and services companies.
<PAGE>

Nayna's solutions are based on proprietary hardware and software implementations
that are largely based on standard components. This methodology makes Nayna's
solutions more flexible and less costly and enables Nayna to address its
customer's needs swiftly without the cost or time required to make custom
silicon chips. These high-performance, cost-effective solutions are enhanced by
intelligent enforcement of Quality of Service (QoS), which positions Nayna to
compete effectively in its target markets.

Features for quality level differentiation are critical for enabling service
providers to generate revenues by pricing and billing separately for multiple
voice, data and video applications. Service providers can create and operate
sophisticated subscriber contracts to optimize operating margins, by separating
traffic types, controlling ports and prioritizing traffic bandwidth. Using Nayna
Networks' ExpressSTREAM platform a service provider can quickly and easily
assign a pay-per-view video high priority dedicated bandwidth while standard web
surfing traffic remains a low priority using only idle bandwidth. Application
prioritization ensures that the higher margin video traffic will be of high
quality and not be affected by the web traffic flowing in the background.

Industry Background

The demand for delivery of information at increasing speed with increasing
reliability continues to grow rapidly. Next generation secured communications
providing voice over IP, data, and IP video are beginning to displace the
traditional public switched telephone networks, Web pages are displacing
newspaper pages, and High Definition TV (HDTV) video on demand (in the form of
IP Video) is replacing older broadcast standard TV. The traditional publicly
switched telephone network is much more costly than a voice over IP based
network and standard television over an analog carrier signal has an inferior
image quality compared to a HDTV IP digital signal.

The demand for consumer entertainment in the form of streaming Internet radio
stations and IP video is driving the rapid change in technology. These
applications often require large amounts of bandwidth and higher quality
priority protocols as consumers will not tolerate music dropouts and video
freeze frames. For example, a single HDTV channel using MPEG-2 encoding consumes
up to 18 Mbps. A household with 4 HD TVs with MPEG-2 encoding requires up to 80
Mbps for entertainment applications plus additional bandwidth for email and web
surfing.

Present Market Growth

Both bandwidth consumption (measured in gigabits per second) and the number of
broadband content serving sites are growing at the grass roots level. As
described above, we are seeing significant new trends unfolding in the use and
delivery of communication application services, in particular of triple play
(voice, data, video) content. These trends include a dramatic shift, away from
scheduled content programming using analog (Radio Frequency) transmission,
toward flexible on demand, any time, anywhere content using digital transmission
methods over Ethernet.
<PAGE>

Japan's Ministry of Public Management, Home Affairs, Posts and
Telecommunications recently published the following dramatic trend report for
subscriber broadband access technologies within Japan.

================================================================================
         Digital Subscriber Line Deployments (Copper based xDSL)

         Jan 2004                           10.6 million
         Feb                                10.9 million
         Mar                                11.2 million
         Apr                                11.5 million
         May                                11.8 million

         Fiber-To-The-Home (FTTH) Deployments

         Jan 2004                           0.961 million
         Feb                                1.043 million
         Mar                                1.142 million
         Apr                                1.241 million
         May                                1.328 million
================================================================================

Consumer acceptance of Fiber To The Home (FTTH) is increasing rapidly, with
almost 100,000 new deployments per month. Multiplying the number of deployments
by the line speed highlights the significant bandwidth growth trend. For Japan
alone 100,000 FTTH deployments multiplied by 100 Mbps per site yields 10,000,000
Mega bits per second (Mbps) of new peak bandwidth being added each and every
month.

As the demand for bandwidth continues to increase, older technologies are
struggling to keep pace. Traditional access solutions cannot provide the amount
of bandwidth necessary to supprt streaming content and they lack the high level
of quality of service tracking demanded by service providers.

The Nayna Solution

Based on new and unique proprietary technology our multi-gigabit ExpressSTREAM
family of products and service provides:

      1.    Greater bandwidth to transport streaming entertainment and
            information content that consumers are demanding;

      2.    A quality of service mechanism that allows service provider to
            increase revenue by means of pricing & billing by content type,
            optimizing margins and enforcing subscriber contracts;

      3.    Reduced equipment costs through implementation of end-to-end
            Ethernet, thereby eliminating conversion equipment,
<PAGE>

      4.    Topology flexibility that enables service providers to use one
            platform to reach all potential customers over existing fiber and
            copper or new fiber while at the same time reducing operational
            costs.

Our solutions provide a wide range of benefits in a variety of customer
applications. We believe our initial focus on providing broadband access
leveraging our Ethernet In The First Mile technology offers near-term revenue
opportunity. From our strong Ethernet technology base, we expect to continue to
expand our range of addressable applications through strategic acquisitions and
incremental in-house development. For example, our recent VoIP development
efforts open up the voice transport and value added voice-processing
applications. Our high carrier class products and QoS provide a reliable
platform for voice applications and related service contracts.

The Nayna solution also includes planning and installation services up to the
application layer. The result of this mix of hardware, software and services is
a highly compatible and smoothly running infrastructure for the service
provider.

Our Products: ExpressSTREAM Platform

The ExpressSTREAM family of optical broadband access products and services are
certified for a wide variety of applications including handling of advanced real
time applications such as streaming content, and we believe the ExpressSTREAM
family of products and services was one of the first set of products in the
market to meet rigorous Ethernet Passive Optical Networking (EPON) industry
standards. Previous generations of products were limited to average bandwidths
of just a few hundred Kilo bits per second (Kbps) and a total of just 2.5Gbps
per system. Nayna's ExpressSTREAM solutions range up to 32 Gbps of non-blocking
system capacity and 10/100/1000 Mbps per subscriber site.

ExpressSTREAM solutions are supported by high performance switching capacity of
up to 48 million packets per second, compared to just 2 million packets per
second in many gigabit LAN data switches. Nayna's high performance switching
fabric is the key to its excellent carrier class QOS and in turn, provides Nayna
the ability to mix and match voice, data and IP video on the same links. While
typical LAN products can only handle large data packets efficiently,
ExpressSTREAM has sufficient additional capacity to enable it to mix small high
priority voice packets in the same stream as the larger packets without packets
being lost or delayed.

We believe that our ExpressSTREAM platform's ability to move traffic at gigabit
speeds while maintaining the integrity and superior quality provides us with a
sustainable advantage and is an excellent base for adding revenue enhancing
advanced information processing at higher application layers.

Research and Development

We focus our development activities on addressing the evolving needs of our
customers within the secure communications and broadband access markets. We work
closely with our partners and customers to monitor changes in the marketplace.
We design our products around current industry standards and will continue to
support emerging standards.
<PAGE>

Our development process also includes manufacturability, predicted reliability,
expected lifetime, manufacturing costs, design reviews and testing. We
continuously undertake development efforts with emphasis on increasing
reliability, integrity and performance as well as value-added features and
functions. We believe our development team and process are keys to our ability
to maintain technical competitiveness and deliver innovative products that
address the needs of the market. However, there can be no assurance that our
product development efforts will result in commercially successful products, or
that our products will not be rendered obsolete by changing technology or new
product announcement by other companies.

Successful Complementary Customer Solutions Increase Our Addressable Market

Our flexible platform offers services on fiber, copper and wireless
infrastructure. Nayna solutions leverage a mix of topologies and technologies
such as ring, PON, TDM, VDSL and others to meet customer requirements. Our Very
High Speed Digital Subscriber Loop (VDSL) concentrators and modems expand our
addressable market into locations that have copper infrastructure rated below
CAT5 standards.

Our success with systems integrators such as Air2Data and HITS Entertainment Inc
demonstrates our ability to provide products and services over different media.
Air2Data selected Nayna's ExpressSTREAM platform to serve as the backbone of its
project to provide wireless broadband access to all 376 rooms of the Red Lion
Inn in Sacramento, California (covering more people than some luxury
communities). Air2Data chose Nayna's ExpressSTREAM platform due to its ability
to offer better distance reach resulting in the elimination of WiFi signal fade
and interference which reduced deployment costs and significantly simplified
on-going operations for Air2Data.

We partnered with HITS Entertainment Inc. to provide broadband access to a
Canadian historic site project over existing copper wiring. The owners of the
historic site needed broadband service, but did not want to turn the site into a
heavy construction zone. To meet these requirements, Nayna engineers were able
to design an ExpressSTREAM broadband solution that re-used existing copper
wiring, thus eliminating the labor, expense and time of installing new wiring at
a historic site.

Strategic Acquisitions and Partnerships

Strategic acquisitions and corporate partnerships are an important component of
our growth strategy. We believe that we can develop a comprehensive integrated
platform of related product and service offerings through acquisitions of and
partnerships with companies in the secure network field, and that, if
successful, these acquisitions and partnerships can accelerate revenue growth
and reduce operating costs through economies of scale. We intend to actively
pursue acquisition and partnership opportunities with companies that we believe
will provide us with short and long term potential for revenue growth.
<PAGE>

Sales and Marketing

We sell our products and services globally to meet a wide range of needs.
Typical customers include: traditional large scale telephony service providers,
smaller independents and rural service providers, Cable TV service providers,
cyber villages, corporations and call centers etc. Our sales channel includes:
direct sales to key strategic accounts, system integrators, distributors, and
large OEM accounts.

Our sales and marketing strategy involves a combination of direct and indirect
sales channels. We are in discussions with a number of large original equipment
vendors for possible partnerships and OEM agreements to deliver our solutions to
customers. We intend to further strengthen our competitive advantage with the
strategic addition of solution integration and support. We believe that we can
generate revenue growth through both our direct and indirect sales channels,
using our solutions approach.

Our direct sales force maintains close contact with our customers and provides
technical support to our channel partners. We have recently expanded efforts
with our partners in Asia and Europe.

Both our products and services are frequently sold to the same customers. By
increasing our product and service offering we are increasingly able to
capitalize on our customers' satisfaction with one of our solutions to gain
introductions that can lead to sales of our other solutions. We anticipate that
we will continue to benefit from these trends in the future.

Our marketing group also provides marketing support services for our executive
staff, our direct sales force and our channel partners. Through our marketing
activities, we provide technical and strategic sales support to our direct sales
personnel and channel partners, including inn-depth product presentations,
technical manuals, sales tools, pricing, marketing communications, marketing
research and other support functions.

A high standard of continuing service and support is critical to our objectives
of developing long-term customer relationship. Our support services utilizes a
technical team of field and factory engineers, technical marketing personnel and
when required product design engineers. We provide extensive customer support
throughout the qualifications and sales process. We intend to continue to
provide a high standard of service and we believe it is a key factor to being
competitive in the market.

Competition

Nayna believes the principal competitive factors in our markets are:

      o     Product speed and throughput performance

      o     QoS features with traffic management functionality

      o     Price & reliability

      o     Timeliness of new product introduction

      o     Support of industry standards
<PAGE>

      o     Size and scope of the sales channel

      o     Size of the installed customers base

Nayna believes that we compete favorably with respect to most of the foregoing
factors; however, the markets for secure communications and services are highly
competitive. Our current competitors include a number of domestic and
international companies, some of who have substantially greater financial,
technical, marketing and sales channel resources. We expect that more companies
will enter the market. We may not be able to compete successfully against either
current or future competitors. Increased competition could result in significant
price erosion, reduced revenue, lower margins or loss of market, which could
significantly harm our business.

For Passive Optical Networking (PON) systems, we compete primarily with: Salira
Networks, Inc., Alloptic Inc., TeraWave Communications, Tellabs and Alcatel.

Our competitors continue to introduce improved products with lower prices, and
we will have to do the same to remain competitive. In addition, our current and
potential customers may attempt to integrate their operations by producing their
own solutions or acquiring one of our competitors, thereby eliminating the need
to purchase our products. Furthermore, larger companies in other related
industries may develop or acquire technologies and apply their significant
resources, including their distribution channels and brand name recognition to
capture significant market share.

Manufacturing

We outsource to local and international contract manufacturers to procure our
product. This approach enables us to focus on our design strengths, reduce fixed
costs and capital expenditures and provide flexibility in meeting market demand.
Any rise in volume will provide the opportunity for further cost reductions. We
use inspection, testing, and process controls to assure the quality and
reliability of our products.

Any interruption or delay in the manufacturing process or delay in the supply of
any components or the inability to procure components from alternate sources at
acceptable prices and within a reasonable time, would substantially harm our
business. Lead times for materials and components vary significantly and depend
on factors such as the specific supplier, contract terms and demand for a
component at any given time. In addition, qualifying additional suppliers can be
time-consuming and expensive and may increase the likelihood of errors.

Intellectual Property

We have obtained several patents in the area of networking and optical
networking and filed several other patent applications. Our trade secret
intellectual property includes valuable software/firmware combinations that
ensure billable quality traffic enforcement known in the industry as Quality of
Service (QoS). QoS software provides extra revenue opportunities for both our
products and our synergistic services. QoS is of vital importance in the Video
on Demand (VoD) market segment where consumers pay to view a movie or special
sporting event. QoS is also of critical importance to the leased line market
segment where, for example, mission critical corporate PBX traffic is carried to
the central office.
<PAGE>

                                  RISK FACTORS

We are a development stage company and have only a limited operating history on
which to evaluate our potential for future success.

We have only recently launched many of our products and services and therefore
have a limited operating history upon which you can evaluate our business and
future prospects. In addition, since we are a development stage company, we have
yet to develop sufficient experience in forecasting the actual revenues to be
received from the sale of our products and services. If we are unsuccessful in
addressing the risks and uncertainties commonly faced by development stage
companies, our business, results of operations and financial condition will be
materially and adversely affected.

We expect to incur operating losses for the foreseeable future.

We continue to incur operating losses due primarily to product development costs
and increasing sales and marketing expenses. In addition, we plan to invest
heavily in marketing and promotion, the hiring of additional employees and to
enhance our network content and management technologies through both internal
development efforts and strategic acquisitions. As a result of these
expenditures, we expect to incur net losses for a significant period of time. We
believe these expenditures are necessary to build and maintain hardware and
software technology and to penetrate our target product markets. If our revenue
growth is slower than we anticipate or our operating expenses exceed our
expectations, our losses will be significantly greater than they are at the
present time and we may never achieve profitability.

We will need to raise additional capital in the immediate future.

We anticipate that our currently available funds are sufficient to meet our
needs for working capital, capital expenditures and business expansion for the
next three months. Thereafter, we will need to raise additional funds. If any of
our assumptions are incorrect, we may need to raise capital before the end of
three months. We cannot assure you that we will be able to raise such additional
capital on terms that are favorable to us or at all. Such inability could have a
material adverse effect on our business, results of operations and financial
condition.

Acquisitions may disrupt or otherwise have a negative impact on our business.

We may acquire or make investments in complementary businesses, products,
services or technologies on an opportunistic basis when we believe they will
assist us in carrying out our business strategy. Growth through acquisitions has
been a successful strategy used by other network control and management
technology companies. We plan to use this as a strategy to grow our business and
are in discussions with a number of parties relating to any such acquisition or
investment. If we buy a company, then we could have difficulty in assimilating
that company's personnel and operations. In addition, the key personnel of the
acquired company may decide not to work for us. An acquisition could distract
our management and employees and increase our expenses. Furthermore, we may have
to incur debt or issue equity securities to pay for any future acquisitions, the
issuance of which could be dilutive to our existing stockholders.
<PAGE>

Our common stock price is likely to be highly volatile and the current market
for our common stock is limited.

The market price of our common stock will likely be highly volatile as the stock
market in general, and the market for small cap and micro cap technology
companies in particular, has been highly volatile. You may not be able to resell
your shares of our common stock following periods of volatility because of the
market's adverse reaction to volatility. We cannot assure you that our stock
will trade at the same levels of other stocks in our industry or that our
industry stocks in general will sustain their current market prices.

Factors that could cause such volatility may include, among other things:

      o     actual or anticipated fluctuations in our quarterly operating
            results;

      o     announcements of technological innovations;

      o     changes in financial estimates by securities analysts;

      o     conditions or trends in the network control and management industry;

      o     changes in the market valuations of other such industry related
            companies; and

      o     the acceptance of market makers and institutional investors of the
            Company and our stock.

In addition, our stock is currently traded on the NASD O-T-C Bulletin Board and
it is uncertain that we will be able to successfully apply for listing on the
American Stock Exchange or the NASDAQ National or Small Cap Markets in the
foreseeable future due to our inability to satisfy their respective listing
criteria. Failure to list our shares on any of the American Stock Exchange or
the NASDAQ National or Small Cap Markets will impair the liquidity of our common
stock.

Your holdings may be diluted in the future.

We are authorized to issue up to 1,000,000,000 shares of common stock. Our board
of directors has the ability to issue additional shares of our common stock,
without stockholder approval and in exchange for the consideration that the
board of directors may deem adequate, up to such authorized amount. The issuance
of additional common stock will reduce the proportionate ownership and voting
power of our existing common stockholders. In addition, we currently have
outstanding options and warrants to purchase approximately 3,700,000 shares of
common stock whose exercise could also have a substantial dilutive effect on the
ownership of our common stockholders at such time. In addition, the future
designation and issuance of one or more series of preferred stock would create
additional securities that would have, among other things, dividend and
liquidation preferences senior to our common stock.
<PAGE>

Shares eligible for future sale by our current stockholders may adversely affect
our stock price.

Sales of substantial amounts of common stock, including shares issued upon the
exercise of outstanding options and warrants, under Securities and Exchange
Commission Rule 144, or otherwise, could adversely affect the prevailing market
price of our common stock and could impair our ability to raise capital at that
time through the sale of our securities. In addition, we are obligated to
register the shares and additional securities for immediate resale under the
Securities Act of 1933, as amended, and, upon completion of such registration a
substantial number of additional securities will be placed into the public
market with the potential adverse consequences described above.

If we lose the services of our President and Chief Executive Officer, Naveen
Bisht, or our Chief Technology Officer, Dr. Raj Jain or other key personnel, we
may not be able to execute our business strategy effectively.

Our future success depends in large part upon the continued services of our key
technical, sales, marketing and senior management personnel. In particular,
Naveen Bisht, our President and Chief Executive Officer and Dr. Raj Jain, our
Chief Technology Officer are very important to our business. The loss of any of
our senior management or other key research, development, sales or marketing
personnel, particularly if lost to competitors, could harm our ability to
implement our business strategy and respond to the rapidly changing needs of our
customers. In addition, we believe we will need to attract, retain and motivate
talented management and other highly skilled employees to be successful. We may
be unable to retain our key employees or attract, assimilate and retain other
highly qualified employees in the future.

We may not be able to compete successfully.

We are engaged in new, rapidly evolving and intensely competitive markets, and
we expect competition to intensify further in the future. We currently or
potentially compete with a number of other companies, such as Alcatel, Alloptic,
Inc., Salira Networks, Inc., Tellabs and TeraWave Communications. A number of
our competitors, such as Alcatel, are large and well funded. Competitive
pressures created by any one of these companies, or by our competitors
collectively, could have a material adverse effect on our business, results of
operations and financial condition.

The market in which we compete is subject to rapid technological progress and to
compete successfully we must continually introduce new products that achieve
broad market acceptance.

The network equipment market is characterized by rapid technological progress,
frequent new product introductions, changes in customer requirements and
evolving industry standards. If we do not regularly introduce new products in
this dynamic environment, our product lines will become obsolete. Developments
in routers and routing software could also significantly reduce demand for our
products. Alternative technologies could achieve widespread market acceptance
and displace the technology on which we have based our product architecture. We
cannot assure you that our technological approach will achieve broad market
acceptance or that other technologies or devices will not supplant our own
products and technology.
<PAGE>

Our products must comply with evolving industry standards and complex government
regulations or else our products may not be widely accepted, which may prevent
us from growing our net revenue or achieving profitability.

The market for network equipment is characterized by the need to support
industry standards as different standards emerge, evolve and achieve acceptance.
We will not be competitive unless we continually introduce new products and
product enhancements that meet these emerging standards. Our products must
comply with various United States federal government regulations and standards
defined by agencies such as the Federal Communications Commission, as well as
standards established by various foreign governmental authorities and
recommendations of the International Telecommunication Union. If we do not
comply with existing or evolving industry standards or if we fail to obtain
timely domestic or foreign regulatory approvals or certificates, we will not be
able to sell our products where these standards or regulations apply, which may
prevent us from sustaining our net revenue or achieving profitability.

Our future performance will depend on the successful development, introduction
and market acceptance of new and enhanced products.

Our new and enhanced products must address customer requirements in a timely and
cost-effective manner. In the past, we have experienced delays in product
development and such delays may occur in the future. The introduction of new and
enhanced products may cause our customers to defer or cancel orders for existing
products. Therefore, to the extent customers defer or cancel orders in the
expectation of new product releases, any delay in the development or
introduction of new products could cause our operating results to suffer. The
inability to achieve and maintain widespread levels of market acceptance for our
current and future products may significantly impair our revenue growth.

Our limited ability to protect our proprietary intellectual property rights may
adversely affect our ability to compete.

We rely on a combination of patent, copyright, trademark and trade secret laws
and restrictions on disclosure to protect our proprietary intellectual property
rights. We cannot assure you that we have adequately protected our proprietary
intellectual property or that other parties will not independently develop
similar or competing products that do not infringe on our patents. We also enter
into confidentiality or license agreements with our employees, consultants and
corporate partners to protect our intellectual property. In addition, we control
access to and limit the distribution of our software, documentation and other
proprietary information. Despite our efforts to protect our proprietary
intellectual property rights, unauthorized parties may attempt to copy or
otherwise misappropriate or use our products or technology. If we are
unsuccessful in protecting our proprietary intellectual property rights, our
business, results of operations and financial condition may be harmed.
<PAGE>

Our limited ability to defend ourselves against intellectual property
infringement claims made by others may adversely affect our ability to compete.

Our industry is characterized by the existence of a large number of patents and
frequent claims and related litigation regarding patent and other intellectual
property rights. If we are found to infringe the proprietary rights of others,
or if we otherwise settle such claims, we could be compelled to pay damages or
royalties and either obtain a license to those intellectual property rights or
alter our products so that they no longer infringe upon such proprietary rights.
Such a license could be very expensive to obtain or may not be available at all.
Similarly, changing our products or processes to avoid infringing the rights of
others may be costly or impractical. Litigation resulting from claims that we
are infringing the proprietary rights of others could result in substantial
costs and a diversion of resources, and could have a material adverse effect on
our business, financial condition and operating results.

Our dependence on contract manufacturers for substantially all of our
manufacturing requirements could harm our operating results.

We rely on independent contractors to manufacture our products. We do not have
long-term contracts with any of these manufacturers. Delays in product shipments
from contract manufacturers are not unusual. Similar or other problems may arise
in the future, such as inferior quality, insufficient quantity of products or
the interruption or discontinuance of operations of a manufacturer, any of which
could have a material adverse effect on our business, financial condition and
operating results.

We do not know whether we will effectively manage our contract manufacturers or
that these manufacturers will meet our future requirements for timely delivery
of products of sufficient quality and quantity. We will continue to monitor the
performance of our current contract manufacturers and if they are unable to meet
our future requirements, we will need to transition to other manufacturers. We
also intend to regularly introduce new products and product enhancements, which
will require that we rapidly achieve volume production by coordinating our
efforts with those of our suppliers and contract manufacturers. The inability of
our contract manufacturers to provide us with adequate supplies of high-quality
products or a reduction in the number of contract manufacturers may cause a
delay in our ability to fulfill orders and may have a material adverse effect on
our business, financial condition and operating results.

If our products contain undetected software or hardware errors, we could incur
significant unexpected expenses and lose sales.

Network equipment products frequently contain undetected software or hardware
errors when new products, versions or updates of existing products are first
released to the marketplace. We have experienced such errors in connection with
prior product releases. We expect that such errors or component failures will be
found from time to time in the future in new or existing products, including the
components incorporated therein, after the commencement of commercial shipments.

These errors may have a material adverse effect on our business and may result
in the following, among other things:

      o     significant warranty and repair costs;
<PAGE>

      o     diverting the attention of our engineering personnel from new
            product development efforts;

      o     delaying the recognition of revenue; and

      o     significant customer relations problems.

In addition, if our product is not accepted by customers due to defects, and
such returns exceed the amount we accrued for defect returns based on our
historical experience, our operating results would be adversely affected.

If problems occur in a computer or communications network, even if unrelated to
our products, we could incur unexpected expenses and lose sales.

Our products must successfully interoperate with products from other vendors. As
a result, when problems occur in a computer or communications network, it may be
difficult to identify the sources of these problems. The occurrence of hardware
and software errors, whether or not caused by our products, could result in the
delay or loss of market acceptance of our products and any necessary revisions
may cause us to incur significant expenses. The occurrence of any such problems
would likely have a material adverse effect on our business, financial condition
and operating results.

We expect the average selling prices of our products to decrease, which may
reduce our gross margin or revenue.

The network equipment industry has experienced a rapid erosion of average
selling prices due to a number of factors, including competitive pricing
pressures, promotional pricing, technological progress and lower selling prices
as companies attempt to liquidate excess inventory resulting from the industry
slowdown that began in the later part of 2000.

We anticipate that the average selling prices of our products will decrease in
the future in response to the following, among other things:

      o     competitive pricing pressures;

      o     excess inventories;

      o     increased sales discounts; and

      o     new product introductions by us or our competitors.

We may experience substantial decreases in future operating results due to the
erosion of our average selling prices. We expect competitive pressures to
increase as a result of the industry slowdown that began in the later part of
2000, coupled with the slow recovery and still uncertainty of the broader
economy.

Some of our customers may not have the resources to pay for our products as a
result of the current economic environment.

Some of our customers are experiencing cash flow problems as a result of the
current economic environment and are finding it increasingly difficult to obtain
financing. As a result, we may be unable to collect the payments owed to us, or
such payments may be significantly delayed, if our customers are unsuccessful in
generating sufficient revenue or securing alternate financing arrangements. In
addition, our customers may not order as many products from us as we had
originally forecast or they may cancel their orders with us entirely. The
inability of some of our potential customers to pay us for our products may
adversely affect our cash flow, the timing of our revenue recognition and the
amount of revenue we generate, which may cause our stock price to decline.
<PAGE>

Failure to successfully expand our sales and support teams or educate them in
regard to technologies and our product families may harm our business, financial
condition and operating results.

The sale of our products and services requires a sophisticated sales effort that
frequently involves several levels within a prospective customer's organization.
We may not be able to increase net revenue unless we expand our sales and
support teams in order to address all of the customer requirements necessary to
sell our products.

We cannot assure you that we will be able to successfully integrate new
employees into our company or to educate current and future employees in regard
to rapidly evolving technologies and our product families. A failure to do so
may hurt our business, financial condition and operating results.

We must continue to develop and increase the productivity of our sales and
distribution channels to increase net revenue and improve our operating results.

Our sales channel includes our own direct sales people, large original equipment
manufacturer, system integrators, agents, resellers and distributors. Outside
sales channels require us to develop and cultivate strategic relationships and
allocate substantial internal resources for the maintenance of such
relationships. We may not be able to increase gross revenues unless we expand
our sales channel and support teams to handle all of our customer requirements
in a professional manner. If we are unable to expand our sales channel and
support teams in a timely manner, and/or manage them in all cases, our business,
financial condition and operating results may be hurt.

In addition, many of our sales channel partners also carry products they make
themselves or that are made by our competitors. We cannot assure you that our
sales channel partners will continue to market or sell our products effectively
or continue to devote the resources necessary to provide us with effective
sales, marketing and technical support. Their failure to do so may hurt our
revenue growth and operating results.

Legislative actions, higher insurance costs and potential new accounting
pronouncements are likely to impact our future financial position and results of
operations.

There have been regulatory changes, including the Sarbanes-Oxley Act of 2002,
which will have an impact on our future financial position and results of
operations. The Sarbanes-Oxley Act of 2002 and other rule changes and proposed
legislative initiatives are resulting in increased general and administrative
costs to us. The new rules could make it more difficult for us to obtain certain
types of insurance, including director and officer liability insurance, and we
may be forced to accept reduced policy limits and coverage and/or incur
substantially higher costs to obtain the same or similar coverage. The impact of
these events could also make it more difficult for us to attract and retain
qualified persons to serve on our board of directors, on committees of our board
of directors or as executive officers. We cannot predict or estimate the amount
of the additional costs we may incur or the timing of such costs as we implement
these new and proposed rules.
<PAGE>

In addition, proposed initiatives could result in changes in accounting rules,
including legislative and other proposals to account for employee stock options
as an expense. These and other potential changes could materially increase the
expenses we report under generally accepted accounting principles, and adversely
affect our operating results.

We may need to expend considerable resources in order to comply with recent SEC
rulemaking including the Sarbanes-Oxley Act of 2002.

The costs associated with being a public company have increased dramatically
over the last several years following the advent of the Sarbanes-Oxley Act of
2002. We expect to spend significant resources in order to comply with the new
legislation and rulemaking aimed at public companies. As a result, we expect our
general and administrative expenses will rise as a result of these compliance
efforts. In addition, our management team will need to devote a substantial
amount of time to these efforts which could distract them from their current
responsibilities.

Our headquarters are located in Northern California where natural disasters may
occur that could disrupt our operations and harm our business.

Our corporate headquarters are located in Silicon Valley in Northern California.
Historically, this region has been vulnerable to natural disasters and other
risks, such as earthquakes, which at times have disrupted the local economy and
posed physical risks to our and our manufacturers' property.

In addition, terrorist acts or acts of war targeted at the United States, and
specifically Silicon Valley, could cause damage or disruption to us, our
employees, facilities, partners, suppliers, distributors and resellers, and
customers, which could have a material adverse effect on our operations and
financial results. We currently do not have redundant, multiple site capacity in
the event of a natural disaster or catastrophic event. In the event of such an
occurrence, our business would suffer.

                           FORWARD LOOKING STATEMENTS

Information included in this Form 8-K may contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
information may involve known and unknown risks, uncertainties and other factors
which may cause the Rescon's and/or Nayna's actual results, performance or
achievements to be materially different from future results, performance or
achievements expressed or implied by any forward-looking statements.
Forward-looking statements, which involve assumptions and describe the Rescon's
and/or Nayna's future plans, strategies and expectations, are generally
identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend" or "project" or the negative of
these words or other variations on these words or comparable terminology. These
forward-looking statements are based on assumptions that may be incorrect, and
there can be no assurance that any projections included in these forward-looking
statements will come to pass. Rescon's and/or Nayna's actual results could
differ materially from those expressed or implied by the forward-looking
statements as a result of various factors. Except as required by applicable
laws, neither Rescon nor Nayna undertakes any obligation to update publicly any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
<PAGE>

                              AVAILABLE INFORMATION

Please read all the sections of the Information Statement carefully. Rescon is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended ("Exchange Act") and in accordance therewith, files reports,
proxy statements and other information with the Securities and Exchange
Commission. These reports, proxy statements and other information filed by
Rescon with the SEC may be inspected without charge at the public reference
section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549. Copies of this material also may be obtained from the SEC at prescribed
rates. The SEC also maintains a website that contains reports, proxy and
information statements and other information regarding public companies that
file reports with the SEC. Copies of these materials may be obtained from the
SEC's website at http://www.sec.gov.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change of Fiscal
Year.

On April 6, 2005, Rescon filed a Certificate of amendment with the Nevada
Secretary of State changing the name of the corporation from Rescon Technology
Corporation to Nayna Networks, Inc. A copy of this Certificate of Amendment to
the Articles of Incorporation, dated April 6, 2005, is filed as Exhibit 3.2 to
this Form 8-K

Item 8.01. Other Events

As a result of the Merger, Rescon has moved its principal executive offices to
180 Rose Orchard Way, San Jose, CA 95134.

Following all required filings with governmental authorities, Rescon intends to
change its name to Nayna Networks, Inc. and to obtain a new trading symbol on
the OTC Bulletin Board.

Item 9.01. Financial Statements and Exhibits

      (a)   Financial Statement of Businesses Acquired.
<PAGE>

NAYNA NETWORKS, INC.
(a development stage enterprise)

Audted BALANCE SHEET
(000's)

December 31,2003

<TABLE>
<CAPTION>
<S>                                                                                                  <C>
ASSETS
Current assets:
Cash and cash equivalents                                                                            $  1,663
Restricted cash                                                                                      $     48
Accounts receivable, net                                                                                  121
Inventory                                                                                                   0
Prepaid expenses                                                                                           63
                                                                                                     --------
Total current assets                                                                                    1,895

Property and equipment, net                                                                             1,388
Other Assets                                                                                                9
                                                                                                     --------

Total assets                                                                                         $  3,292
                                                                                                     ========



LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                                                                     $    682
Accrued liabilities                                                                                       523
Current Portion - Notes payable & Equipment Leases                                                      1,027
                                                                                                     --------
Total current liabilities                                                                               2,232
                                                                                                     --------

Long Term Debt                                                                                          1,006

Redeemable conveertible prefeerred stock:
  Series A preferred stock, $0.001 par value:
     Authorized shares - 15,000,000: issued and outstanding shares - 15,000,000 at
       December 31, 2003 and 2002 (Liquidation preference $12,000)                                     11,953
  Series B preferred stock, $0.001 par value:
     Authorized shares - 11,111,112: issued and outstanding shares - 7,999,997 at
       December 31, 2003 and 2002 (Liquidation preference $36,000)                                     36,118
  Series C preferred stock, $0.001 par value:
     Authorized shares - 13,840,000: issued and outstanding shares - 4,680,647 at
       December 31, 2003 (issued for consideration other than cash; liquidation preference $5,041)         --
                                                                                                     --------
Total redeemable convertible preferred stock                                                           48,071
                                                                                                     --------

Stockholders' deficit:
Preferred stock, $0.001 par value; 72,000,000 shares authorized;
  none issued and outstanding at December 31, 2002                                                         --
Common stock, $0.001 par value, 72,000,000 shares authorized; 20,512,289 at December 31, 2003
  and 15,552363 at December 31, 2002                                                                      267
Deficit accumulated during the development stage                                                      (48,284)
                                                                                                     --------
Total stockholders' deficit                                                                           (48,017)
                                                                                                     --------
Total liabilities and stockholders' deficit                                                          $  3,292
                                                                                                     ========
</TABLE>
<PAGE>

                              NAYNA NETWORKS, INC.
                        (a development stage enterprise)

                         Audited STATEMENT OF OPERATIONS
                                     (000's)

            for the period from February 10, 2000 (date of inception)
                              to December 31, 2003


Sales                                                                  $     --
Cost of sales                                                                 0
                                                                       --------
Gross profit                                                                  0
                                                                       --------


Operating expenses:
Engineering                                                              35,978
Sales and marketing                                                       1,600
General and administrative                                                6,464
                                                                       --------
Total operating expenses                                                 44,043
                                                                       --------

Loss from operations                                                    (44,043)

Other income (expense)
Interest Income                                                           2,376
Interest expense                                                           (792)
Impairment of goodwill related to the
  acquisition of Xpeed, Inc.                                             (5,825)
                                                                       --------

Net loss                                                               $(48,284)
                                                                       ========
<PAGE>

<TABLE>
<CAPTION>
                                                     NAYNA NETWORKS, INC.
                                               (a development stage enterprise)

                                          Audited STATEMENT OF STOCKHOLDERS' DEFICIT
                  for the Cumulative Period from February 10, 2000 (date of inception) to December 31, 2003
                                           (000's) except share and per share data

                                                                             Series A Redeemable          Series B Redeemable
                                                                                 Convertible                  Convertible
                                                                                Preferred Stock             Preferred Stock
                                                                          --------------------------  --------------------------
                                                                             Shares        Amount        Shares        Amount
                                                                          ------------  ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>           <C>
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                   $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash                                15,000,000        11,953
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash                                                           7,999,997        35,927
Issuance cost related to Series B preferred stock                                                                            (30)
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000                                                         259
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock                                                                            (38)
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 15,000,000       $11,953     7,999,997       $36,118
                                                                          ============  ============  ============  ============

<CAPTION>
                                                                            Series C Redeemable          Series D Redeemable
                                                                                Convertible                  Convertible
                                                                               Preferred Stock             Preferred Stock
                                                                         --------------------------  --------------------------
                                                                            Shares        Amount        Shares        Amount
                                                                         ------------  ------------  ------------  ------------
<S>                                                                      <C>           <C>           <C>           <C>
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                  $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition    4,680,647
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                         ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 4,680,647            $0             0            $0
                                                                         ============  ============  ============  ============

<CAPTION>
                                                                                                         Deficit
                                                                                                       Accumulated
                                                                                Common Stock            During the     Total
                                                                          --------------------------  Developmental Stockholders'
                                                                             Shares        Amount          Stage       Deficit
                                                                          ------------  ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>           <C>
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                             15,000,000           $15                         $15
Exercise of common stock options for cash                                    4,288,124           434                         434
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash                                    (1,241,066)         (117)                       (117)
Repurchase of common stock for  $0.10 to  $0.90 per share                   (1,410,841)         (105)                       (105)
Cancellation of previously issued common stock subject to restriction       (1,472,500)           (1)                         (1)
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition                                       5,348,572                                         0
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees                                                                  28                          28
Compensation expense related to stock option grants to
  consultants                                                                                     12                          12
Net loss - February 10, 2000 - December 31, 2003                                                           (48,284)      (48,284)
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 20,512,289          $266      ($48,284)     ($48,018)
                                                                          ============  ============  ============  ============
</TABLE>
<PAGE>

NAYNA NETWORKS, INC.
(a development stage enterprise)

                         Audited STATEMENT OF CASH FLOW
                                     (000's)

for the period from February 10, 2000 (date of inception) to December 31, 2003

<TABLE>
<CAPTION>
<S>                                                                                     <C>
Cash flows from operating activities:
Net loss                                                                                $(48,284)
Adjustments to reconcile net loss to net cash used in operations:
  Noncash charges related to stock options granted to consultants and accelerated
    vesting of employee stock options                                                   $     40
  Depreciation                                                                          $  3,136
  Amortization of discount on warrants associated with equipment financing              $    202
  Impariment of goodwill related to acquisition of Xpeed, Inc.                          $  5,825
  Loss on sale of property and equipment                                                   1,114

Changes in assets and liabilities:
Restricted cash                                                                              (48)
Increase in accounts receivable                                                             (121)
Increase in prepaid expenses                                                                 (63)
Increase in other assets                                                                      (9)
Increase in accounts payable                                                                 682
Increase in accrued liabilities                                                              162
Increase in payroll liabilities                                                              361
                                                                                        --------
Net cash used in operating activities:                                                   (37,004)
                                                                                        --------

Cash flows used in investing activities:
Purchase of property and equipment                                                        (1,193)
Proceeds from sale of property and equipment                                                 437
Costs associated with acquisition of Xpeed, Inc.                                          (3,685)
                                                                                        --------
Net cash used in investing activities                                                     (4,441)
                                                                                        --------

Cash flows provided by financing activities:
Proceeds from loan facility                                                                  327
Payments on capital lease obligations and loan facility                                   -4,831
Proceeds from issuance of common stock, net of repurchases                                   227
Proceeds from issuance of Series A redeemable convertible preferred stock,
  net of issuance costs                                                                   11,953
Proceeds from issuance of Series B redeemable convertible preferred stock,
  net of issuance costs                                                                   35,927
Issuance of convertible notes receivable                                                    (300)
Restricted Cash                                                                             (165)
Issuance costs related to Series B redeemable convertible preferred stock                    (30)
                                                                                        --------
Net cash provided by financing activities                                                 43,108
                                                                                        --------

Net increase in cash and cash equivalents                                                  1,663

Cash and cash equivalents, beginning of period                                                --
                                                                                        --------
Cash and cash equivalents, end of period                                                $  1,663
                                                                                        ========
</TABLE>
<PAGE>

Created by EDGAR Online, Inc.

                              NAYNA NETWORKS, INC.
                        (a development stage enterprise)
                    Notes to Financial Statements, Continued


C:   PROPERTY  AND  EQUIPMENT

      Property and equipment consist of the following at December 31, 2003:

Computer software and equipment                                         $   416
Computer software                                                         1,354
Test equipment                                                            1,629
Furniture and fixtures                                                        2
Leasehold improvements                                                        0
                                                                        -------

Total  cost                                                               3,401

Less  accumulated depreciations                                          (2,013)
                                                                        -------
                                                                        $ 1,388
                                                                        =======
<PAGE>

UNAUDITED CONDENSED FINANCIAL STATEMENTS:

NAYNA NETWORKS, INC.
(a development stage enterprise)

                       Unaudited CONDENSED BALANCE SHEETS
                                     (000'S)

<TABLE>
<CAPTION>
                                                                                                                as of December 31,

                                                                                                                 2004       2003
                                                                                                               --------   --------
<S>                                                                                                            <C>        <C>
ASSETS
Current assets:
Cash and cash equivalents                                                                                      $    710   $  1,663
Restricted cash                                                                                                $     48   $     48
Accounts receivable, net                                                                                            160        121
Inventory                                                                                                           440          0
Prepaid expenses                                                                                                     42         63
                                                                                                               --------   --------
Total current assets                                                                                              1,400      1,895

Property and equipment, net                                                                                         775      1,388
Other Assets                                                                                                          9          9
                                                                                                               --------   --------

Total assets                                                                                                   $  2,184   $  3,292
                                                                                                               ========   ========


LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                                                                               $    636   $    682
Accrued liabilities                                                                                                 569        523
Current Portion - Notes payable & Equipment Leases                                                                1,016      1,027
                                                                                                               --------   --------
Total current liabilities                                                                                         2,221      2,232
                                                                                                               --------   --------

Long Term Debt                                                                                                               1,006
Convertible Note Payable                                                                                            921

Redeemable convertible preferred stock:
  Series A preferred stock, $0.001 par value:
     Authorized shares - 15,000,000: issued and outstanding shares - 0 at December 31, 2004
       15,000,000 at December 31, 2003 and 2002 (Liquidation preference $12,000)                                            11,953
  Series B preferred stock, $0.001 par value:
     Authorized shares - 11,111,112: issued and outstanding shares - 0 at December 31, 2004
       7,999,997 at December 31, 2003 and 2002 (Liquidation preference $36,000)                                             36,118
  Series C preferred stock, $0.001 par value:
     Authorized shares - 13,840,000: issued and outstanding shares - 0 at December 31, 2004
       4,680,647 at December 31, 2003 (issued for consideration other than cash; liquidation preference $5,041)                 --
  Series D preferred stock, $0.001 par value:
    Authorized shares - 52,500,000: 19,531,247 issued and outstanding shares -  at December 31, 2004              3,649
                                                                                                               --------   --------
Total redeemable convertible preferred stock                                                                      3,649     48,071
                                                                                                               --------   --------

Stockholders' deficit:
Common stock, $0.001 par value, 125,000,000 shares authorized; 48,794,091 issued and outstanding at
 December 31, 2004 and 20,512,289 at December 31, 2003 and 15,552363 at December 31, 2002                        48,353        267
Deficit accumulated during the development stage                                                                (52,960)   (48,284)
                                                                                                               --------   --------
Total stockholders' deficit                                                                                      (4,607)   (48,017)
                                                                                                               --------   --------
Total liabilities and stockholders' deficit                                                                    $  2,184   $  3,292
                                                                                                               ========   ========
</TABLE>
<PAGE>

                              NAYNA NETWORKS, INC.
                        (a development stage enterprise)

                       CONDENSED STATEMENTS OF OPERATIONS
                                     (000'S)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                              Period from
                                              February 10,
                                                2000 (date            Three Months Ended               Twelve Months Ended
                                             of inception)                December 31,                      December 31,
                                               to December     -----------------------------     -----------------------------
                                                31, 2004            2004             2003             2004             2003
                                              ------------     ------------     ------------     ------------     ------------
<S>                                           <C>              <C>              <C>              <C>              <C>
Sales                                         $        425     $        133     $         --     $        425     $         --
Cost of sales                                          345               91                0              345                0
                                              ------------     ------------     ------------     ------------     ------------
Gross profit                                            80               42                0               80                0
                                              ------------     ------------     ------------     ------------     ------------


Operating expenses:
Engineering                                         38,187              642              739            2,209            3,051
Sales and marketing                                  2,379              268              208              779              720
General and administrative                           8,194              418              729            1,730            3,675
                                              ------------     ------------     ------------     ------------     ------------
Total operating expenses                            48,761            1,328            1,676            4,718            7,447
                                              ------------     ------------     ------------     ------------     ------------

Loss from operations                               (48,681)          (1,286)          (1,676)          (4,638)          (7,447)

Other income (expense)
Interest Income                                      2,390                1               12               14              121
Interest expense                                      (832)              (3)             (29)             (40)            (137)
Loss on Sale of Assets                                 (12)             (12)                              (12)
Impairment of goodwill related to the
  acquisition of Xpeed, Inc.                        (5,825)                           (5,825)                           (5,825)
                                              ------------     ------------     ------------     ------------     ------------

Net loss                                      $    (52,960)    $     (1,288)    $     (7,518)    $     (4,676)    $    (13,288)
                                              ============     ============     ============     ============     ============
</TABLE>
<PAGE>

NAYNA NETWORKS, INC.
(a development stage enterprise)

CONDENSED STATEMENTS OF CASH FLOWS
(000'S)
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                              Period from
                                                                           February 10, 2000         Twelve Months Ended
                                                                          (date of inception)            December 31,
                                                                               to December       -----------------------------
                                                                                 31, 2004            2004              2003
                                                                               -----------       -----------       -----------
<S>                                                                            <C>            <C>            <C>
Cash flows from operating activities:
Net loss                                                                       $   (52,960)      $    (4,676)      $   (13,288)
Adjustments to reconcile net loss to net
  cash used in operations:
  Noncash charges related to stok options granted to
    consultants and accelerated vesting of employee stock options              $        40
  Depreciation                                                                 $     3,699       $       563       $       930
  Amortization of discount on warrants associated
    with equipment financing                                                   $        11       $      (191)      $        67
  Impariment of goodwill related to acquisition of Xpeed, Inc.                 $     5,825                         $     5,825
  Loss on sale of property and equipment                                             1,164                50               364

Changes in assets and liabilities:
Restricted cash                                                                        (48)                                117
(Increase)/decrease in accounts receivable                                            (160)              (39)             (121)
(Increase)/decrease in Inventory                                                      (440)             (440)
(Increase)/decrease in prepaid expenses                                                (42)               21                13
(Increase)/decrease in other assets                                                     (9)                                 (9)
Increase/(decrease) in accounts payable                                                636               (46)              306
Increase/(decrease) in accrued liabilities                                             569                46               295
                                                                               -----------       -----------       -----------
Net cash used in operating activities:                                             (41,716)           (4,712)           (5,502)
                                                                               -----------       -----------       -----------

Cash flows used in investing activities:
Purchase of property and equipment                                                  (1,193)                               (108)
Proceeds from sale of property and equipment                                           437                                 193
Costs associated with acquisition of Xpeed, Inc.                                    (3,685)                             (3,685)
                                                                               -----------       -----------       -----------
Net cash used in investing activities                                               (4,441)                0            (3,600)
                                                                               -----------       -----------       -----------

Cash flows provided by financing activities:
Payments on capital lease obligations and loan facility                             (5,521)           (1,017)           (1,373)
Proceeds from convertible notes payable, net of of costs                               921               921
Proceeds from issuance of common stock, net of repurchases                          48,313            48,086                 4
Proceeds from issuance of Series A redeemable convertible
  preferred stock, net of issuance costs                                                 0           (11,953)
Proceeds from issuance of Series B redeemable convertible
  preferred stock, net of issuance costs                                                 0           (35,927)
Proceeds from issuance of Series D redeemable convertible
  preferred stock, net of issuance costs                                             3,649             3,649

Issuance of convertible notes receivable                                              (300)
Restricted Cash                                                                       (165)
Issuance costs related to Series B redeemable convertible preferred stock              (30)
                                                                               -----------       -----------       -----------
Net cash provided by financing activities                                           46,867             3,759            (1,369)
                                                                               -----------       -----------       -----------

Net increase in cash and cash equivalents                                              710              (953)          (10,471)

Cash and cash equivalents, beginning of period                                          --             1,663            12,134
                                                                               -----------       -----------       -----------

Cash and cash equivalents, end of period
with an advisory agreement                                                     $       710       $       710       $     1,663
                                                                               ===========       ===========       ===========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                        NAYNA NETWORKS, INC.
                                                  (a development stage enterprise)

                         CONDENSED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
                        for the Cumulative Period from February 10, 2000 (date of inception) to December 31, 2004
                                             (000's) except share and per share data

                                                                             Series A Redeemable          Series B Redeemable
                                                                                 Convertible                  Convertible
                                                                                Preferred Stock             Preferred Stock
                                                                          --------------------------  --------------------------
                                                                             Shares        Amount        Shares        Amount
                                                                          ------------  ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>           <C>
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                   $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash                                15,000,000        11,953
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash                                                           7,999,997        35,927
Issuance cost related to Series B preferred stock                                                                            (30)
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000                                                         259
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock                                                                            (38)
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 15,000,000       $11,953     7,999,997       $36,118
                                                                          ============  ============  ============  ============

Conversion of Series A convertible, redeemable preferred
  stock into common stock                                                  (15,000,000)      (11,953)
Conversion of Series B convertible, redeemable preferred
  stock into common stock                                                                               (7,999,997)      (36,118)
Conversion of Series C convertible, redeemable preferred
  stock into common stock
Issuance of Series D redeemable convertible preferred stock
  in July 2004 at  $0.19072 per share for cash
Exercise of common stock options for cash
Issuance of common stock for consideration other than cash
  on the purchase of the Accordion asset acquisition
Issuance of common stock on conversion of note payable
Net loss for the twelve months ending December 31, 2004
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2004                                                          0            $0             0            $0
                                                                          ============  ============  ============  ============


<CAPTION>
                                                                            Series C Redeemable          Series D Redeemable
                                                                                Convertible                  Convertible
                                                                               Preferred Stock             Preferred Stock
                                                                         --------------------------  --------------------------
                                                                            Shares        Amount        Shares        Amount
                                                                         ------------  ------------  ------------  ------------
<S>                                                                      <C>           <C>           <C>           <C>
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                  $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition    4,680,647
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                         ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 4,680,647            $0             0            $0
                                                                         ============  ============  ============  ============

Conversion of Series A convertible, redeemable preferred
  stock into common stock
Conversion of Series B convertible, redeemable preferred
  stock into common stock
Conversion of Series C convertible, redeemable preferred
  stock into common stock                                                  (4,680,647)
Issuance of Series D redeemable convertible preferred stock
  in July 2004 at  $0.19072 per share for cash                                                         19,531,247         3,649
Exercise of common stock options for cash
Issuance of common stock for consideration other than cash
  on the purchase of the Accordion asset acquisition
Issuance of common stock on conversion of note payable
Net loss for the twelve months ending December 31, 2004
                                                                         ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2004                                                         0            $0    19,531,247        $3,649
                                                                         ============  ============  ============  ============


<CAPTION>
                                                                                                         Deficit
                                                                                                       Accumulated
                                                                                Common Stock            During the     Total
                                                                          --------------------------  Developmental Stockholders'
                                                                             Shares        Amount          Stage       Deficit
                                                                          ------------  ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>           <C>
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                             15,000,000           $15                         $15
Exercise of common stock options for cash                                    4,288,124           434                         434
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash                                    (1,241,066)         (117)                       (117)
Repurchase of common stock for  $0.10 to  $0.90 per share                   (1,410,841)         (105)                       (105)
Cancellation of previously issued common stock subject to restriction       (1,472,500)           (1)                         (1)
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition                                       5,348,572                                         0
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees                                                                  28                          28
Compensation expense related to stock option grants to
  consultants                                                                                     12                          12
Net loss - February 10, 2000 - December 31, 2003                                                           (48,284)      (48,284)
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 20,512,289          $266      ($48,284)     ($48,018)
                                                                          ============  ============  ============  ============

Conversion of Series A convertible, redeemable preferred
  stock into common stock                                                   15,000,000        11,953                      11,953
Conversion of Series B convertible, redeemable preferred
  stock into common stock                                                    7,999,997        36,118                      36,118
Conversion of Series C convertible, redeemable preferred
  stock into common stock                                                    4,680,647                                         0
Issuance of Series D redeemable convertible preferred stock
  in July 2004 at  $0.19072 per share for cash
Exercise of common stock options for cash                                      301,158            16                          16
Issuance of common stock for consideration other than cash
  on the purchase of the Accordion asset acquisition
Issuance of common stock on conversion of note payable                         300,000                                         0
Net loss for the twelve months ending December 31, 2004                                                     (4,676)       (4,676)
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2004                                                 48,794,091       $48,353      ($52,960)      ($4,607)
                                                                          ============  ============  ============  ============

</TABLE>
<PAGE>

      (b)   Pro Forma Financial Information.

               UNAUDITED PRO FORMA CONDENSED
                   COMBINED BALANCE SHEET
                          (000's)


<TABLE>
<CAPTION>
                                                                as at             as at             PRO FORMA
                                                            December 31,       November 30,        ADJUSTMENTS        PRO FORMA
                                                             2004 NAYNA        2004 RESCON          (NOTE #4)          COMBINED
                                                            ------------       ------------       ------------       ------------
<S>                                                         <C>                <C>                <C>                <C>
ASSETS
Current assets:
Cash and cash equivalents                                   $        710       $          2       $         (2)      $        710
Restricted cash                                             $         48                                             $         48
Accounts receivable, net                                             160                 --                                   160
Inventory                                                            440                 --                                   440
Prepaid expenses                                                      42                 20                (20)                42
                                                            ------------       ------------       ------------       ------------
Total current assets                                               1,400                 22                (22)             1,400

Property and equipment, net                                          775                 24                (24)               775
Other assets                                                           9                760               -760                  9
                                                            ------------       ------------       ------------       ------------

Total assets                                                $      2,184       $        806       $       (806)      $      2,184
                                                            ============       ============       ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable                                            $        636       $         25       $        (25)               636
Accrued liabilities                                                  569                 --                                   569
Current portion - notes payable & equipment leases                 1,016                 --                                 1,016
Due to related parties                                                --                691               (691)                 0
                                                            ------------       ------------       ------------       ------------
Total current liabilities                                          2,221                716               (716)             2,221

Minority Interest                                                                        (1)                 1                  0
Convertible note payable, net                                        921                                                      921

Stockholders' equity (deficit)
Preferred stock                                                    3,649                 --                                 3,649
Common stock                                                      48,353                  0                  0             48,353
Additonal paid in capital                                                             6,342             (6,342)                 0
Deficit accumulated prior to development stage                                       (4,468)             4,468                  0
Deficit accumulated during the development stage                 (52,960)            (1,784)             1,784            (52,960)
                                                            ------------       ------------       ------------       ------------
Stockholders' equity (deficit)                                      (958)                90                (90)              (958)
                                                            ------------       ------------       ------------       ------------
Total liabilities and stockholders' deficit                 $      2,184       $        806       $       (806)      $      2,184
                                                            ============       ============       ============       ============
</TABLE>
<PAGE>

                          UNAUDITED PRO FORMA CONDENSED
                        COMBINED STATEMENT OF OPERATIONS
                     (000's) except share and per share data

<TABLE>
<CAPTION>
                                                  for the              for the
                                               twelve months        twelve months          PRO  FORMA
                                              ending December      ending November         ADJUSTMENTS          PRO FORMA
                                               31, 2004 NAYNA      30, 2004 RESCON          (NOTE #4)            COMBINED
                                               --------------       --------------       --------------       --------------
<S>                                            <C>                  <C>                  <C>                  <C>
Sales                                          $          425       $           --       $           --       $          425
Cost of sales                                             345                   --                   --                  345
                                               --------------       --------------       --------------       --------------
Gross profit                                               80                   --                   --                   80
                                               --------------       --------------       --------------       --------------


Operating expenses:
Engineering                                             2,209                   --                   --                2,209
Sales and marketing                                       779                   --                   --                  779
General and administrative                              1,730                  697                 (697)               1,730
                                               --------------       --------------       --------------       --------------
Total operating expenses                                4,718                  697                 (697)               4,718
                                               --------------       --------------       --------------       --------------

Loss from operations                                   (4,638)                (697)                 697               (4,638)

Loss on sales of assets                                   (12)                                                           (12)
Other income                                               14                   --                                        14
Interest expense                                          (40)                  --                                       (40)
                                               --------------       --------------       --------------       --------------

Net loss                                       $       (4,676)      $         (697)      $          697       $       (4,676)
                                               ==============       ==============       ==============       ==============


Net loss per share, basic                                                                                     $        (0.32)
                                                                                                              ==============

Net loss per share, diluted                                                                                   $        (0.25)
                                                                                                              ==============

Weighted average shares used in computing
  net loss per share, basic                                                                                       14,789,996
                                                                                                              ==============

Weighted average shares used in computing
  net loss per share, diluted                                                                                     18,729,670
                                                                                                              ==============
</TABLE>
<PAGE>

                     Nayna Networks, Inc.

                          UNAUDITED PRO FORMA CONDENSED
                 Calculation of basic and fully diluted shares
<TABLE>
<CAPTION>



                                                              Series A      Series B      Series C       Series D       Common
<S>                                                          <C>            <C>           <C>           <C>           <C>
Nayna balance as at December 31, 2003                        15,000,000     7,999,997     4,680,647              0    20,512,289

Pre-merger post-reverse split Rescon                                                                                   3,550,000

Conversion to common                                        (15,000,000)   (7,999,997)   (4,680,647)                  27,680,644

Issuance of Series D on July 2004                                                                       19,531,247

Issuance on purchase of Accordion asset on August 2004                                                                   300,000

Exercise of employee stock options on September 2004                                                                     301,158
                                                            ---------------------------------------------------------------------
Total basic shares as at December 31, 2004                            0             0             0     19,531,247    52,344,091
                                                            =====================================================================

as converted to common
                                                                                                        47,533,726
                                                            ---------------------------------------------------------------------
Total fully diluted shares as at December 31, 2004                    0             0             0     67,064,973    52,344,091
                                                            =====================================================================

<CAPTION>
                                                                                                        Weighted
                                                                                                         Average
                                                                         as converted    Weighted     as converted
                                                               Total        to Rescon     Average       to Rescon
<S>                                                          <C>            <C>          <C>            <C>
Nayna balance as at December 31, 2003                        48,192,933     9,586,346    48,192,933     9,586,346

Pre-merger post-reverse split Rescon                          3,550,000                                 3,550,000

Conversion to common                                                  0             0             0             0

Issuance of Series D on July 2004                            19,531,247     3,885,078     8,138,020     1,618,782

Issuance on purchase of Accordion asset on August 2004          300,000        59,675       100,000        19,892

Exercise of employee stock options on September 2004            301,158        59,905        75,290        14,976
                                                            -----------------------------------------------------
Total basic shares as at December 31, 2004                   71,875,338    13,591,003    56,506,242    14,789,996
                                                            =====================================================

as converted to common
                                                             47,533,726     9,455,219    19,805,719     3,939,675
                                                            -----------------------------------------------------
Total fully diluted shares as at December 31, 2004          119,409,064    23,046,222    76,311,961    18,729,670
                                                            =====================================================

                                                             47,758,853     9,500,000
</TABLE>
<PAGE>

      (c)   Exhibits.

            2.2 First Amendment Agreement and Plan of Reorganization, dated
March 24, 2005, by and among Rescon Technology Corporation, a Nevada
corporation, Nayna Acquisition Corporation, a Nevada corporation and a wholly
owned subsidiary of Rescon, Nayna Networks, Inc., and Christian Nigohossian.

            3.2 Certificate of Amendment to the Articles of Incorporation, dated
April 6, 2005.

            16.1 Letter dated April 7, 2005 from Mantyla McReynolds, Certified
Public Accountants, regarding its concurrence with the statements made by Rescon
concerning the change in accountants.

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                       Rescon Technology Corporation

                                       By: /s/ NAVEEN S. BISHT
                                           -------------------------------------
                                           Naveen S. Bisht
                                           President and Chief Executive Officer


Date:  April 7, 2005
{"company-data": {"conformed-name": "RESCON TECHNOLOGY CORP", "cik": "0000769591", "assigned-sic": "6770", "irs-number": "830210455", "state-of-incorporation": "WY", "fiscal-year-end": "0831"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-13822", "film-number": "05741622"}, "business-address": {"street1": "5525 SOUTH 900 EAST SUITE 110", "city": "SALT LAKE CITY", "state": "UT", "zip": "84117", "phone": "8012628844"}}
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                               -------------------

                                    FORM 8-K

                                 CURRENT REPORT
                       Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934

                Date of Report (Date of earliest event reported)

                                  April 1, 2005

                               -------------------

                          RESCON TECHNOLOGY CORPORATION
             (Exact name of registrant as specified in its charter)
Nevada                            000-13822                  83-0210455
 (State or other jurisdiction of        (Commission File Number)          (IRS Employer
          incorporation)                                                Identification No.)
180 Rose Orchard Way
                               San Jose, CA 95134
          (Address of principal executive offices, including zip code)

                                 (408) 956-8000
              (Registrant's telephone number, including area code)

          (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))

================================================================================
Item 2.01 Completion of Acquisition or Distribution of Assets

On April 1, 2005, pursuant to the terms of that certain Agreement and Plan of
Reorganization, dated October 16, 2004, as amended, by and among Rescon
Technology Corporation, a Nevada corporation ("Rescon"), Nayna Acquisition
Corporation, a Nevada corporation and a wholly owned subsidiary of Rescon,
("Acquisition Sub"), Nayna Networks, Inc. ("Nayna"), and Christian Nigohossian,
(the "Merger Agreement"), Acquisition Sub, merged with and into Nayna, with
Nayna surviving as a wholly owned subsidiary of Rescon (the "Merger"). In
connection with the Merger, Rescon issued 32,249,947 shares of its Common Stock
to the stockholders of Nayna. Each share of common stock of Nayna converted into
0.198916 of a share of Rescon common stock and each share of Series D Preferred
Stock of Nayna converted into 0.683023 of a share of Rescon common stock. All
outstanding shares of Nayna Series CC Preferred Stock were cancelled in
connection with the Merger.

Upon the effectiveness of the Merger, each outstanding option or warrant to
purchase Nayna common stock, whether or not then exercisable, was converted into
an option or warrant to purchase a number of shares of Rescon common stock equal
to (i) the number of shares then subject to such option or warrant multiplied by
(ii) 0.198916 (rounded to the nearest whole share) at an exercise price equal to
(i) the exercise price in effect immediately prior to the Merger divided by (ii)
the 0.198916 (rounded to the nearest whole cent). All other terms and conditions
of each option or warrant to purchase Nayna common stock shall remain the same.

Following the Closing, the stockholders of Nayna own 32,249,947 shares of
Rescon's common stock, or approximately 89% of the outstanding shares of
Rescon's common stock, and the stockholders of Rescon immediately prior to
Closing ("Existing Stockholders") own 3,552,557 shares of Rescon's common stock,
or approximately 11% of the outstanding shares of Rescon's common stock. The
share exchange ratio in the Merger was determined through arms'-length
negotiations between Rescon and Nayna. Information in this Report on Form 8-K
regarding the number of shares of Rescon common stock issued in the Merger
assumes that no stockholders of Nayna will exercise their right under Delaware
law to seek an appraisal of the value of their Nayna stock in lieu of the
receipt of shares of Rescon common stock.

On March 24, 2005, the Merger Agreement was amended to reduce the number of
shares being issued to 32,250,000 and to include the final share exchange
ratios. A copy of First Amendment to the Merger Agreement, dated March 31, 2005,
is filed as Exhibit 2.2 to this Form 8-K.

Item 3.02 Unregistered Sales of Equity Securities

In connection with the Merger, Rescon issued 32,249,947 shares of its Common
Stock to the stockholders of Nayna. The issuance of Rescon's shares of common
stock to Nayna's stockholders was exempt from registration under the Securities
Act of 1933, as amended ("Securities Act") pursuant to Section 4(2) thereof.
Item 4.01 Changes In Registrant's Certifying Accountant.

(A) On April 1, 2005, Rescon ended the engagement of Mantyla McReynolds,
Certified Public Accountants of Salt Lake City, Utah, as its independent
certified public accountants. The decision was approved by the Board of
Directors of Rescon.

The report of Mantyla McReynolds on Rescon's financial statements for the fiscal
years ended August 31, 2004 and 2003 did not contain an adverse opinion or
disclaimer of opinion, other than a going concern qualification. During Rescon's
fiscal years ended August 31, 2004 and 2003 and the subsequent interim period
preceding the termination, there were no disagreements with Mantyla McReynolds
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Mantyla McReynolds, would have caused Mantyla McReynolds
to make reference to the subject matter of the disagreements in connection with
its report on the financial statements for such years or subsequent interim
periods.

The Company requested that Mantyla McReynolds furnish it with a letter addressed
to the Securities and Exchange Commission ("SEC") stating whether or not it
agrees with Rescon's statements in this Item 4.01(a). A copy of the letter
furnished by Mantyla McReynolds in response to that request, dated April 7,
2005, is filed as Exhibit 16.1 to this Form 8-K.

(B) On April 1, 2005, Naresh Arora, CPA, Inc. was engaged as Rescon's new
independent certified accountant. During the two most recent fiscal years and
the interim period preceding the engagement of Naresh Arora, CPA, Inc., Rescon
has not consulted with Naresh Arora, CPA, Inc. regarding either: (i) the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
Rescon's financial statements; or (ii) any matter that was either the subject of
a disagreement or event identified in paragraph (a)(1)(iv) of Item 304 of
Regulation S-B.

Section 5 - Corporate Governance and Management

      Item 5.01 Changes In Control

 As described in Item 3.02 above, on April 1, 2005, pursuant to the Merger
Agreement, Acquisition Sub, merged with and into Nayna, with Nayna surviving as
a wholly owned subsidiary of Rescon. Immediately prior to the Merger, Rescon had
3,552,557 outstanding shares of common stock and no outstanding shares of
preferred stock. Pursuant to the Merger, 32,249,947 shares of Rescon common
stock were issued to the stockholders of Nayna in exchange for 100% of the
outstanding shares of common stock of Nayna. The share exchange ratio in the
Merger was determined through arms'-length negotiations between Rescon and
Nayna. Information in this Report on Form 8-K regarding the number of shares of
Rescon common stock issued in the Merger assumes that no stockholders of Nayna
will exercise their right under Delaware law to seek an appraisal of the value
of their Nayna stock in lieu of the receipt of shares of Rescon common stock. As
a result of the Merger, (i) 35,802,504 shares of Rescon common stock are
outstanding, approximately 89% of which are owned by the former stockholders of
Nayna, and (ii) Rescon is now controlled by the former stockholders of Nayna.
Item 5.02 Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.

Effective as of the Closing, Henrik Klausgaard, Ilona Klausgaard, and Tristan V.
Voth-Stonger resigned as directors and executive officers of Rescon. Prior to
their resignations, these Board members appointed Naveen S. Bisht, Tsuyoshi
Taira and Rahul Vaid to serve on the Rescon Board of Directors. The Rescon Board
of Directors expects to appoint three independent directors within thirty (30)
days following Closing. The newly-appointed board of directors has also
appointed new principal officers of Rescon effective as of the Closing.

Rescon filed an Information Statement with the U.S. Securities and Exchange
Commission on January 7, 2005 pursuant to Section 14(f) of the Exchange Act, and
Rule 14f-1 promulgated thereunder, announcing the proposed change of control.
The Information statement was mailed on January 10, 2005 to Rescon's
stockholders of record as of January 3, 2005

The following table sets forth certain information, of the newly elected
directors and principal officers:

NAME                   AGE      POSITION
----                   ---      --------

Naveen S. Bisht        41       Founder, President, Chief Executive Officer, and
                                Director

Tsuyoshi Taira         65       Chairman of the Board of Directors

Rahul Vaid             30       Director

Gautam Chanda          47       Vice President Business Development & Vertical
                                Markets

Richard D'Sa           55       Vice President Worldwide Sales

Hari Hirani            49       Vice President Engineering

Dr. Raj Jain           53       Co-Founder and Chief Technology Officer

Michael Meyer          54       Chief Financial Officer

The following sets forth biographical information concerning the newly elected
directors and principal officers:

Naveen S. Bisht has over 15 years of experience in business development,
marketing, strategy, engineering and general management in storage, networking
and the telecommunication industry. Previously he was the Founder, President and
CEO of Ukiah Software, Inc. - a leader in policy-based bandwidth and security
management software systems for service provider and enterprise networks that
was sold to Novell, Inc. in 1999. Ukiah received a number of awards including
Top 10 Companies to Watch in 1999; Top 25 Hot Startups of 1998; 1999
Telecommunications Product of the Month Award; 1999 and 1998 Hot Product Awards.
Prior to Ukiah, he was founder and President of a consulting services company
focused on telecommunication and networking market. He is also Founder/Partner
of Luxmi Ventures LLC - a seed stage venture fund focused on network
infrastructure market. Naveen attended the Ph.D. Program at University of
California, Santa Barbara; holds a MS from Texas Tech University; and earned a
MS and BSME from the Birla Institute of Technology & Science, Pilani. He holds
three patents in the area of Quality of Service and security management in IP
Networks. Mr. Bisht is not a nominee or director of any other reporting company.
Tsuyoshi Taira is the CEO of Tazan International Inc, a venture capital and
management consultancy firm. Mr. Taira has been involved with a number of
Silicon Valley startup companies as founding investor/director including Atmel
Semiconductor (NASDAQ: ATML), Pico Power Technology Inc (acquired by Cirrus
Logic), Junglee Corporation (acquired by Amazon.com, NASDAQ: AMZN), Armedia
(acquired by Broadcom, NASDAQ: BRCM), Apptivity (acquired by Progress Software,
NASDAQ: PRGS) and many others. He has been instrumental in providing seed stage
financing, management and marketing advice, especially for the Far Eastern
market to the startup companies. Currently he serves on the boards of Silicon
Storage Technology Inc. (NASDAQ: SSTI) (flash memory company), Nayna Networks,
Inc. (networking products and services), Ureach.Com (unified e-mail and voice
mail messaging company), Asia-Links Media (Semiconductor components e-commerce)
and Teleweb (Call Center in China). In addition, he is on the advisory board of
Silicon Motion (Graphic Controller IC), CLCEO (Polarizer), Reveo (Revolutionary
Electro Optics Technology Company) and several other companies. Previously, Mr.
Taira was Chairman of Sanyo Semiconductor directing Sanyo's US marketing
strategy. Most of his career was spent at Sanyo Corporation except for five
years when he worked at Fairchild Semiconductor. Mr. Taira graduated from Tokyo
Metropolitan University with a BSEE. He also received an Honorary Doctor of
Humanities from Newport Asia Pacific University in March 2000. He has published
a number of books including "Audio Amplifier", "Transistor Physics and
Application" as a Co-author and most recently a book on entrepreneurship, "My
Fellow Engineer, Let's Challenge" from Nikkei BP.

Rahul Vaid is a general partner with Pacesetter Capital Group and joined the
firm in January 2001 and has led several investments for the firm. Prior to
joining the firm, he was Vice President of Investments at Doublespace LLC, an
early stage investment firm that invested in media and telecommunications
ventures in the U.S. and Europe. Prior to Doublespace, Rahul was one of the
founding members of Wit Capital's (now Soundview Technology Group - Nasdaq:
SNDV) investment banking group through the firm's initial public offering in
1999 and served as Vice President of Investment Banking. Previously, Rahul has
held engineering positions at Daat Research and the Tata Institute of
Fundamental Research in India. Rahul is involved with several entrepreneurial
and industry organizations such as TiE, CiE, IEEE, SVMG, AEA, and is a frequent
speaker at several conferences on entrepreneurship and venture capital. Rahul
holds an MEM (a joint business degree) and an MS from Dartmouth College, a BS
degree from Government College of Engineering Pune, India, and an Advanced
Diploma in Enterprise Systems from N-IIT, India. Mr. Vaid is not a nominee or
director of any other reporting company.
Gautam Chanda was most recently co-founder, President, and CEO of Accordion
Networks, has over 20 years of product development experience with
telecommunications and data communications systems, including ATM/IP switching,
multi-service access, and SONET/SDH technologies. Accordion Networks developed
products to deliver Broadband Access Services in the buildings such as MTU
(Multi-Tenant Units), MDU (Multi Dwelling Units) and Hospitality (Hotels).
Accordion was funded by distinguished investors such as Intel, Transwitch Corp.,
and Bell Canada. Prior to co-founding Accordion, he was the principal founder
and VP of Engineering at Mayan Networks that developed IP over SONET products
for the Service Providers. He has held various senior technical and management
positions at Premisys, 3Com, Intel and ITT. Mr. Chanda holds a BSEE from the
Birla Institute of Technology and Science in Pilani, India and an MSEE from the
Polytechnic Institute of NY at Brooklyn.

Richard D'Sa has over 25 years of experience in the telecommunications and high
technology markets where he has been lauded by his peers for his visionary
strategies. Richard was most recently in charge of Arambei, a technology, M&A
and a channel bridging consultant company. Previous to Arambei, D'sa was
Founder, Senior Vice President, Worldwide Sales & Marketing and COO of Xpeed
Networks, in the broadband access market with DSL and optical solutions.
Previous to Xpeed, D'sa spent 18 successful years at Motorola Semiconductors,
LSI Logic and ITEX in various senior executive engineering, sales and marketing
management roles where his contributions earned him several awards and
promotions. He also spent six years at OPTi, a premier PC Chipset Company where
he served in management roles to the Senior Executive VP level. D'sa holds B.Sc
Honors degree in Electronics Engineering and Physics, majoring in optical
spectroscopy, semiconductors, electro-magnetic theory and electronics from
University of London, UK.

Hari Hirani is a senior engineering executive with extensive experience managing
the development of carrier class products for Telecom market. Hari was
previously Vice-President Engineering for NtechRA, Inc. Before NetchRA Hari was
the Director of Engineering for HAL Computers (a division of Fujitsu), ADC
Telecommunications and Telco Systems. Hari has published numerous technical
papers published by industry leading journals. Hari holds an MSEE (Computer and
Information Engineering) from the University of Florida and BSEE from MS
University, India.

Dr. Raj Jain is an industry renowned professional in communications industry for
his work in IP traffic Management, ATM, Optical Networking and quality of
service. Most recently, he has been a Professor of Computer Science at Ohio
State University. Prior to that for sixteen years, he was a Senior Consulting
Engineer at Digital Equipment Corporation and led the design and analysis of
many computer systems and networking technologies including Ethernet, DECnet,
OSI, FDDI, and ATM networks. He was also an active member of the All-Optical
Networking (AON) consortium consisting of Digital, M.I.T./Lincoln Lab, and AT&T
that started the research on Dense Wavelength Division Multiplexing networks. He
is an active participant in several other industry forums including Internet
Engineering Task Force (IETF), Optical Interoperability Forum (OIF), Institute
of Electrical and Electronic Engineering (IEEE), American National Institute
(ANSI), ITU and Telecommunications Institute of America (TIA). He is a Fellow of
IEEE, a Fellow of ACM and a member of Optical Society of America, Society of
Photo-Optical Instrumentation Engineers (SPIE), and Fiber Optic Association. Dr.
Jain has also taught at MIT and has 13 patents, over 120 publications and a
number of awards for his contribution to the industry. Previously, he was a
consultant to Nortel, Nexabit/Lucent and a number of other networking companies.
Dr. Jain received his Ph.D. in Computer Science from Harvard University.
Michael Meyer has over 15 years of executive experience in finance and
operations in manufacturing and high-tech companies. Previously, from 2000 to
2004, he was the CEO of AirLink Communications, a wireless data solutions
company. Immediately prior to that, in 1999, he was at LuxN, a fiber optic
equipment startup. From 1996 to 1998 Michael was the VP Finance and Operations
for Sierra Wireless, a wireless modem manufacturer. He also was the founder and
president of a services company focused on providing temporary executive help
for manufacturing and high-tech companies. He has also been the CFO of a public
software company, a merchant bank (investing in high-tech startups), a battery
company and an electrical equipment manufacturer. Michael attended the MBA
program at Simon Fraser University and holds a CMA from the Society of
Management Accountants. Michael has lived and worked in Australia, Canada and
the US.

      Each director will serve until his successor is elected at the annual
meeting of shareholders or until his earlier death, resignation or removal and,
subject to the terms of any employment agreement with Rescon, each executive
officer serves at the pleasure of the Board of Directors. None of the new
officers or directors have been involved in any transaction with Rescon or any
of its directors, executive officers or affiliates that is required to be
disclosed pursuant to the rules and regulations of the Securities and Exchange
Commission, other than with respect to the transactions that have been described
herein. None of the current or new directors and officers has been convicted in
a criminal proceeding, excluding traffic violations or similar misdemeanors, or
has been a party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) during the past five
years, that resulted in a judgment, decree or final order enjoining the person
from future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state
securities laws.

      Neither Rescon nor Nayna have any employment agreements with any of their
employees.

      The Board has not yet determined the Board committees to which each new
director will be named. Upon such determination, Rescon shall file an amendment
to this Form 8-K.

Security Ownership of Certain Beneficial Owners And Management

      The following table sets forth certain information regarding the number of
shares of Rescon stock held as of April 1, 2005, on a pro forma basis to reflect
the transactions contemplated by the Merger Agreement for (i) each stockholder
who is the beneficial owner of 5% or more of Rescon's outstanding Common Stock,
(ii) each executive officer and director, and (iii) all executive officers and
directors as a group, on a pro forma basis to reflect the transactions
contemplated by the Merger Agreement. Unless otherwise indicated, each person in
the table will have sole voting and investment power with respect to the shares
shown after the consummation of the transactions contemplated by the Merger
Agreement. Except as otherwise noted, options granted under the Nayna 2000 Stock
Option Plan, were assumed by Rescon in connection with the Merger, and are
immediately exercisable, subject to the company's right to repurchase unvested
shares upon termination of employment or other service at a price equal to the
option exercise price, as adjusted in connection with Merger.
Number of Shares
                                                      Beneficially
                        Beneficial Owner                  Owned         Percent
-------------------------------------------------   ----------------    -------
Pacestter/ MVHC, Inc. (1)                                4,423,397       12.35%
2435 North Central Expressway, Suite 200
Richardson TX 75082

Ignite Ventures (2)                                      4,360,092       12.18%
225 Shoreline Drive #510
Redwood City, CA 94065

Apex Ventures (3)                                        4,119,982       11.51%
233 South Wacker Drive, Suite 9600
Chicago, Il 60606

Eric McAfee (4)                                          3,725,000       10.40%
10600 North DeAnza Blvd., # 250
Cupertino, CA 95014

Berg McAfee Companies, LLC (5)                           3,000,000        8.38%
10600 North DeAnza Blvd. #250
Cupertino, CA 95014

MKS Ventures, LLC (6)                                    2,884,597        7.99%
3320 Baker Street
San Francisco, CA 94123

Christian Nigohossian                                    1,949,154        5.32%

Naveen S. Bisht (7)                                      2,264,273        6.10%

Gautam Chanda (8)                                          448,556        1.24%

Richard D'Sa (9)                                           440,171        1.21%

Hari Hirani (10)                                           410,377        1.13%

Dr. Raj Jain (11)                                        1,128,464        3.11%

Michael Meyer (12)                                         350,000        *

Tsuyoshi Taira (14)                                      1,174,475        3.27%

Rahul Vaid (1)                                           4,423,397       12.35%
-------------------------------------------------------------------------------
Directors and executive officers as a group             10,982,117       27.71%

(11 persons)
-------------------------------------------------------------------------------

* Less than 1.0%
(1)   - 3,806,663 shares held by Alliance Enterprise Corporation, and

      - 312,655 shares held by Mesbic Ventures, Inc.

      each of which is an Small Business Investment Company and a wholly owned
      affiliate of Pacesetter /MVHC, Inc. ("PMVHC"), and through an investment
      committee, exercises sole voting and investment power with respect to all
      shares of record held by these entities. Individually, no stockholder,
      director or officer of PMVHC has or shares such voting or investment
      power. Also, includes 300,499 shares held by Pacesetter Growth Fund, L.P.,
      which shares common management with PMVHC and for which PMVHC is a limited
      partner. Mr. Vaid, a Senior Vice President of PMVHC, disclaims beneficial
      ownership of shares held by these entities except to the extent of his
      pecuniary interest in these entities and the 3,580 shares Mr. Vaid
      personally holds.

(2)   Includes:

      - 4,350,012 shares held by Ignite Ventures II, L.P.,

      - 7,192 shares held by Ignite Ventures I, L.P., and

      - 1,060 shares held by Ignite Entrepreneurs, L.P.

      each of which is an affiliate of Ignite Associates LLC, which also holds
      1,828 shares directly. Ignite Associates LLC is the general partner of
      each of these entities, and through an executive committee, exercises sole
      voting and investment power with respect to all shares of record held by
      these entities. Individually, no stockholder, director or officer of
      Ignite Associates LLC has or shares such voting or investment power.

(3)   Includes:

      - 2,744,148 shares held by Apex Investment Fund V, L.P.,

      - 1,335,369 shares held by Apex Investment Fund IV, L.P., and

      - 40,465 shares held by Apex Strategic Partners IV, LLC

      Apex Management V, LLC is the general partner of Apex Investment Fund V,
      L.P. and Apex Management IV, LLC is the general partner of Apex Investment
      Fund IV, L.P. and Apex Strategic Partners IV, LLC. Apex Management V, LLC
      and Apex Management IV, LLC, each through an executive committee,
      exercises sole voting and investment power with respect to all shares of
      record held by Apex Investment Fund V, L.P and Apex Investment Fund IV,
      L.P. and Apex Strategic Partners IV, LLC, respectively. Individually, no
      stockholder, director or officer of Apex Management V, LLC or Apex
      Management IV, LLC has or shares such voting or investment power.
(4)   Includes:

      - 3,000,000 shares held by Berg McAfee Companies, LLC,

      - 500,000 shares held by McAfee Capital, LLC

      - 25,000 shares held by Cagen McAfee Capital Partners, and

      - 200,000 shares held by P2 Capital, LLC

      Mr. McAfee is a Managing Partner of Berg McAfee Companies, LLC and Cagen
      McAfee Capital Partners, each of which exercises sole voting and
      investment power with respect to all shares it holds of record through an
      executive committee. Individually, no stockholder, director or officer of
      Berg McAfee Companies, LLC or Cagen McAfee Capital Partners has or shares
      such voting or investment power. Mr. McAfee disclaims beneficial ownership
      of shares held by Berg McAfee Companies, LLC and Cagen McAfee Capital
      Partners except to the extent of his pecuniary interest in those entities.
      Mr. McAfee is the sole Managing Partner of McAfee Capital, LLC. In this
      capacity, Mr. McAfee exercises sole voting and investment power with
      respect to all shares of record held by McAfee Capital, LLC. Mr. McAfee's
      spouse is the sole Managing Partner of P2 Capital, LLC. In this capacity,
      she exercises sole voting and investment power with respect to all shares
      of record held by P2 Capital, LLC. Mr. McAfee disclaims beneficial
      ownership of shares held by P2 Capital, LLC.

(5)   Berg McAfee Companies, LLC exercises sole voting and investment power with
      respect to all shares it holds of record through an executive committee.
      Individually, no stockholder, director or officer of Berg McAfee
      Companies, LLC has or shares such voting or investment power.

(6)   Includes 1,857,054 shares held by MKS Ventures, LLC and 298,374 shares
      subject to immediately exercisable options, of which 49,729 shares will be
      vested within 60 days after April 1, 2005 held by Nicholas Mitsakos, the
      sole Managing Member of MKS Ventures, LLC. In his capacity as sole
      managing member, Mr. Mitsakos exercises sole voting and investment power
      with respect to all shares of record held by MKS Ventures.

(7)   Includes 1,208,030 shares subject to immediately exercisable options, of
      which 689,542 shares will be vested within 60 days after April 1, 2005.
      Also includes 5,966 shares held in trust for the minor children of Mr.
      Bisht, of which he disclaims beneficial ownership.

(8)   Represents 448,556 shares subject to immediately exercisable options,
      44,756 of which will be vested within 60 days after April 1, 2005.

(9)   Represents 440,171shares subject to immediately exercisable options, none
      of which will be vested within 60 days after April 1, 2005.
(10)  Represents 410,377 shares subject to immediately exercisable options, of
      which 141,466 shares will be vested within 60 days after April 1, 2005.

(11)  Includes 531,716 shares subject to immediately exercisable options, of
      which 359,755 shares will be vested within 60 days after April 1, 2005.

(12)  Includes 250,000 shares subject to the company's right to repurchase
      unvested shares upon termination of employment or other service at a price
      equal to the purchase price and 100,000 shares subject to immediately
      exercisable options, none of which will be vested within 60 days after
      April 1, 2005.

(13)  Includes 59,675 shares subject to immediately exercisable options, of
      which 13,675 shares will be vested within 60 days after April 1, 2005.

(14)  See notes 7 through 13. Includes 3,198,525 shares subject to options that
      are currently exercisable or will become exercisable within 60 days after
      April 1, 2005 beneficially owned by executive officers and directors.
      1,949,331 of these shares would not be vested within 60 days after April
      1, 2005, and thus would be subject to repurchase by Nayna.

Business of Rescon

Immediately prior to the completion of the Merger, Rescon was engaged in
developing certain business opportunities it has acquired during the past few
years, including seeking funding to complete final development and marketing of
its Reading and Writing Plus educational product, its digital yearbook and its
trading software platform.

Business of Nayna

Overview

Founded in February 2000, Nayna Networks is a hardware and software development
company that designs, develops and markets next generation broadband access
solutions, also known as Ethernet In The First Mile (EFM) solutions for the
secure communications market. Typical customers include carriers, Cable TV
(CATV) service providers and municipal, defense and enterprise networks. Nayna's
multi-gigabit flagship platform, ExpressSTREAM, removes the performance
bottlenecks typically found in access networks. The high quality and rich
feature set of Nayna's solutions enables the gigabit class ExpressSTREAM
platform to address a wide variety of applications from the transport level up
to and through the application layer. Nayna, together with the companies which
it has acquired, has raised more than $65 million in venture capital investment
over the past five years, substantially all of which has been spent on product
development. In addition to continued internal development efforts, Nayna plans
to augment its product and service offerings through the acquisitions of
complementary companies in the secured communications solutions field including
infrastructure, software and services companies.
Nayna's solutions are based on proprietary hardware and software implementations
that are largely based on standard components. This methodology makes Nayna's
solutions more flexible and less costly and enables Nayna to address its
customer's needs swiftly without the cost or time required to make custom
silicon chips. These high-performance, cost-effective solutions are enhanced by
intelligent enforcement of Quality of Service (QoS), which positions Nayna to
compete effectively in its target markets.

Features for quality level differentiation are critical for enabling service
providers to generate revenues by pricing and billing separately for multiple
voice, data and video applications. Service providers can create and operate
sophisticated subscriber contracts to optimize operating margins, by separating
traffic types, controlling ports and prioritizing traffic bandwidth. Using Nayna
Networks' ExpressSTREAM platform a service provider can quickly and easily
assign a pay-per-view video high priority dedicated bandwidth while standard web
surfing traffic remains a low priority using only idle bandwidth. Application
prioritization ensures that the higher margin video traffic will be of high
quality and not be affected by the web traffic flowing in the background.

Industry Background

The demand for delivery of information at increasing speed with increasing
reliability continues to grow rapidly. Next generation secured communications
providing voice over IP, data, and IP video are beginning to displace the
traditional public switched telephone networks, Web pages are displacing
newspaper pages, and High Definition TV (HDTV) video on demand (in the form of
IP Video) is replacing older broadcast standard TV. The traditional publicly
switched telephone network is much more costly than a voice over IP based
network and standard television over an analog carrier signal has an inferior
image quality compared to a HDTV IP digital signal.

The demand for consumer entertainment in the form of streaming Internet radio
stations and IP video is driving the rapid change in technology. These
applications often require large amounts of bandwidth and higher quality
priority protocols as consumers will not tolerate music dropouts and video
freeze frames. For example, a single HDTV channel using MPEG-2 encoding consumes
up to 18 Mbps. A household with 4 HD TVs with MPEG-2 encoding requires up to 80
Mbps for entertainment applications plus additional bandwidth for email and web
surfing.

Present Market Growth

Both bandwidth consumption (measured in gigabits per second) and the number of
broadband content serving sites are growing at the grass roots level. As
described above, we are seeing significant new trends unfolding in the use and
delivery of communication application services, in particular of triple play
(voice, data, video) content. These trends include a dramatic shift, away from
scheduled content programming using analog (Radio Frequency) transmission,
toward flexible on demand, any time, anywhere content using digital transmission
methods over Ethernet.
Japan's Ministry of Public Management, Home Affairs, Posts and
Telecommunications recently published the following dramatic trend report for
subscriber broadband access technologies within Japan.

================================================================================
         Digital Subscriber Line Deployments (Copper based xDSL)

         Jan 2004                           10.6 million
         Feb                                10.9 million
         Mar                                11.2 million
         Apr                                11.5 million
         May                                11.8 million

         Fiber-To-The-Home (FTTH) Deployments

         Jan 2004                           0.961 million
         Feb                                1.043 million
         Mar                                1.142 million
         Apr                                1.241 million
         May                                1.328 million
================================================================================

Consumer acceptance of Fiber To The Home (FTTH) is increasing rapidly, with
almost 100,000 new deployments per month. Multiplying the number of deployments
by the line speed highlights the significant bandwidth growth trend. For Japan
alone 100,000 FTTH deployments multiplied by 100 Mbps per site yields 10,000,000
Mega bits per second (Mbps) of new peak bandwidth being added each and every
month.

As the demand for bandwidth continues to increase, older technologies are
struggling to keep pace. Traditional access solutions cannot provide the amount
of bandwidth necessary to supprt streaming content and they lack the high level
of quality of service tracking demanded by service providers.

The Nayna Solution

Based on new and unique proprietary technology our multi-gigabit ExpressSTREAM
family of products and service provides:

      1.    Greater bandwidth to transport streaming entertainment and
            information content that consumers are demanding;

      2.    A quality of service mechanism that allows service provider to
            increase revenue by means of pricing & billing by content type,
            optimizing margins and enforcing subscriber contracts;

      3.    Reduced equipment costs through implementation of end-to-end
            Ethernet, thereby eliminating conversion equipment,
4.    Topology flexibility that enables service providers to use one
            platform to reach all potential customers over existing fiber and
            copper or new fiber while at the same time reducing operational
            costs.

Our solutions provide a wide range of benefits in a variety of customer
applications. We believe our initial focus on providing broadband access
leveraging our Ethernet In The First Mile technology offers near-term revenue
opportunity. From our strong Ethernet technology base, we expect to continue to
expand our range of addressable applications through strategic acquisitions and
incremental in-house development. For example, our recent VoIP development
efforts open up the voice transport and value added voice-processing
applications. Our high carrier class products and QoS provide a reliable
platform for voice applications and related service contracts.

The Nayna solution also includes planning and installation services up to the
application layer. The result of this mix of hardware, software and services is
a highly compatible and smoothly running infrastructure for the service
provider.

Our Products: ExpressSTREAM Platform

The ExpressSTREAM family of optical broadband access products and services are
certified for a wide variety of applications including handling of advanced real
time applications such as streaming content, and we believe the ExpressSTREAM
family of products and services was one of the first set of products in the
market to meet rigorous Ethernet Passive Optical Networking (EPON) industry
standards. Previous generations of products were limited to average bandwidths
of just a few hundred Kilo bits per second (Kbps) and a total of just 2.5Gbps
per system. Nayna's ExpressSTREAM solutions range up to 32 Gbps of non-blocking
system capacity and 10/100/1000 Mbps per subscriber site.

ExpressSTREAM solutions are supported by high performance switching capacity of
up to 48 million packets per second, compared to just 2 million packets per
second in many gigabit LAN data switches. Nayna's high performance switching
fabric is the key to its excellent carrier class QOS and in turn, provides Nayna
the ability to mix and match voice, data and IP video on the same links. While
typical LAN products can only handle large data packets efficiently,
ExpressSTREAM has sufficient additional capacity to enable it to mix small high
priority voice packets in the same stream as the larger packets without packets
being lost or delayed.

We believe that our ExpressSTREAM platform's ability to move traffic at gigabit
speeds while maintaining the integrity and superior quality provides us with a
sustainable advantage and is an excellent base for adding revenue enhancing
advanced information processing at higher application layers.

Research and Development

We focus our development activities on addressing the evolving needs of our
customers within the secure communications and broadband access markets. We work
closely with our partners and customers to monitor changes in the marketplace.
We design our products around current industry standards and will continue to
support emerging standards.
Our development process also includes manufacturability, predicted reliability,
expected lifetime, manufacturing costs, design reviews and testing. We
continuously undertake development efforts with emphasis on increasing
reliability, integrity and performance as well as value-added features and
functions. We believe our development team and process are keys to our ability
to maintain technical competitiveness and deliver innovative products that
address the needs of the market. However, there can be no assurance that our
product development efforts will result in commercially successful products, or
that our products will not be rendered obsolete by changing technology or new
product announcement by other companies.

Successful Complementary Customer Solutions Increase Our Addressable Market

Our flexible platform offers services on fiber, copper and wireless
infrastructure. Nayna solutions leverage a mix of topologies and technologies
such as ring, PON, TDM, VDSL and others to meet customer requirements. Our Very
High Speed Digital Subscriber Loop (VDSL) concentrators and modems expand our
addressable market into locations that have copper infrastructure rated below
CAT5 standards.

Our success with systems integrators such as Air2Data and HITS Entertainment Inc
demonstrates our ability to provide products and services over different media.
Air2Data selected Nayna's ExpressSTREAM platform to serve as the backbone of its
project to provide wireless broadband access to all 376 rooms of the Red Lion
Inn in Sacramento, California (covering more people than some luxury
communities). Air2Data chose Nayna's ExpressSTREAM platform due to its ability
to offer better distance reach resulting in the elimination of WiFi signal fade
and interference which reduced deployment costs and significantly simplified
on-going operations for Air2Data.

We partnered with HITS Entertainment Inc. to provide broadband access to a
Canadian historic site project over existing copper wiring. The owners of the
historic site needed broadband service, but did not want to turn the site into a
heavy construction zone. To meet these requirements, Nayna engineers were able
to design an ExpressSTREAM broadband solution that re-used existing copper
wiring, thus eliminating the labor, expense and time of installing new wiring at
a historic site.

Strategic Acquisitions and Partnerships

Strategic acquisitions and corporate partnerships are an important component of
our growth strategy. We believe that we can develop a comprehensive integrated
platform of related product and service offerings through acquisitions of and
partnerships with companies in the secure network field, and that, if
successful, these acquisitions and partnerships can accelerate revenue growth
and reduce operating costs through economies of scale. We intend to actively
pursue acquisition and partnership opportunities with companies that we believe
will provide us with short and long term potential for revenue growth.
Sales and Marketing

We sell our products and services globally to meet a wide range of needs.
Typical customers include: traditional large scale telephony service providers,
smaller independents and rural service providers, Cable TV service providers,
cyber villages, corporations and call centers etc. Our sales channel includes:
direct sales to key strategic accounts, system integrators, distributors, and
large OEM accounts.

Our sales and marketing strategy involves a combination of direct and indirect
sales channels. We are in discussions with a number of large original equipment
vendors for possible partnerships and OEM agreements to deliver our solutions to
customers. We intend to further strengthen our competitive advantage with the
strategic addition of solution integration and support. We believe that we can
generate revenue growth through both our direct and indirect sales channels,
using our solutions approach.

Our direct sales force maintains close contact with our customers and provides
technical support to our channel partners. We have recently expanded efforts
with our partners in Asia and Europe.

Both our products and services are frequently sold to the same customers. By
increasing our product and service offering we are increasingly able to
capitalize on our customers' satisfaction with one of our solutions to gain
introductions that can lead to sales of our other solutions. We anticipate that
we will continue to benefit from these trends in the future.

Our marketing group also provides marketing support services for our executive
staff, our direct sales force and our channel partners. Through our marketing
activities, we provide technical and strategic sales support to our direct sales
personnel and channel partners, including inn-depth product presentations,
technical manuals, sales tools, pricing, marketing communications, marketing
research and other support functions.

A high standard of continuing service and support is critical to our objectives
of developing long-term customer relationship. Our support services utilizes a
technical team of field and factory engineers, technical marketing personnel and
when required product design engineers. We provide extensive customer support
throughout the qualifications and sales process. We intend to continue to
provide a high standard of service and we believe it is a key factor to being
competitive in the market.

Competition

Nayna believes the principal competitive factors in our markets are:

      o     Product speed and throughput performance

      o     QoS features with traffic management functionality

      o     Price & reliability

      o     Timeliness of new product introduction

      o     Support of industry standards
o     Size and scope of the sales channel

      o     Size of the installed customers base

Nayna believes that we compete favorably with respect to most of the foregoing
factors; however, the markets for secure communications and services are highly
competitive. Our current competitors include a number of domestic and
international companies, some of who have substantially greater financial,
technical, marketing and sales channel resources. We expect that more companies
will enter the market. We may not be able to compete successfully against either
current or future competitors. Increased competition could result in significant
price erosion, reduced revenue, lower margins or loss of market, which could
significantly harm our business.

For Passive Optical Networking (PON) systems, we compete primarily with: Salira
Networks, Inc., Alloptic Inc., TeraWave Communications, Tellabs and Alcatel.

Our competitors continue to introduce improved products with lower prices, and
we will have to do the same to remain competitive. In addition, our current and
potential customers may attempt to integrate their operations by producing their
own solutions or acquiring one of our competitors, thereby eliminating the need
to purchase our products. Furthermore, larger companies in other related
industries may develop or acquire technologies and apply their significant
resources, including their distribution channels and brand name recognition to
capture significant market share.

Manufacturing

We outsource to local and international contract manufacturers to procure our
product. This approach enables us to focus on our design strengths, reduce fixed
costs and capital expenditures and provide flexibility in meeting market demand.
Any rise in volume will provide the opportunity for further cost reductions. We
use inspection, testing, and process controls to assure the quality and
reliability of our products.

Any interruption or delay in the manufacturing process or delay in the supply of
any components or the inability to procure components from alternate sources at
acceptable prices and within a reasonable time, would substantially harm our
business. Lead times for materials and components vary significantly and depend
on factors such as the specific supplier, contract terms and demand for a
component at any given time. In addition, qualifying additional suppliers can be
time-consuming and expensive and may increase the likelihood of errors.

Intellectual Property

We have obtained several patents in the area of networking and optical
networking and filed several other patent applications. Our trade secret
intellectual property includes valuable software/firmware combinations that
ensure billable quality traffic enforcement known in the industry as Quality of
Service (QoS). QoS software provides extra revenue opportunities for both our
products and our synergistic services. QoS is of vital importance in the Video
on Demand (VoD) market segment where consumers pay to view a movie or special
sporting event. QoS is also of critical importance to the leased line market
segment where, for example, mission critical corporate PBX traffic is carried to
the central office.
RISK FACTORS

We are a development stage company and have only a limited operating history on
which to evaluate our potential for future success.

We have only recently launched many of our products and services and therefore
have a limited operating history upon which you can evaluate our business and
future prospects. In addition, since we are a development stage company, we have
yet to develop sufficient experience in forecasting the actual revenues to be
received from the sale of our products and services. If we are unsuccessful in
addressing the risks and uncertainties commonly faced by development stage
companies, our business, results of operations and financial condition will be
materially and adversely affected.

We expect to incur operating losses for the foreseeable future.

We continue to incur operating losses due primarily to product development costs
and increasing sales and marketing expenses. In addition, we plan to invest
heavily in marketing and promotion, the hiring of additional employees and to
enhance our network content and management technologies through both internal
development efforts and strategic acquisitions. As a result of these
expenditures, we expect to incur net losses for a significant period of time. We
believe these expenditures are necessary to build and maintain hardware and
software technology and to penetrate our target product markets. If our revenue
growth is slower than we anticipate or our operating expenses exceed our
expectations, our losses will be significantly greater than they are at the
present time and we may never achieve profitability.

We will need to raise additional capital in the immediate future.

We anticipate that our currently available funds are sufficient to meet our
needs for working capital, capital expenditures and business expansion for the
next three months. Thereafter, we will need to raise additional funds. If any of
our assumptions are incorrect, we may need to raise capital before the end of
three months. We cannot assure you that we will be able to raise such additional
capital on terms that are favorable to us or at all. Such inability could have a
material adverse effect on our business, results of operations and financial
condition.

Acquisitions may disrupt or otherwise have a negative impact on our business.

We may acquire or make investments in complementary businesses, products,
services or technologies on an opportunistic basis when we believe they will
assist us in carrying out our business strategy. Growth through acquisitions has
been a successful strategy used by other network control and management
technology companies. We plan to use this as a strategy to grow our business and
are in discussions with a number of parties relating to any such acquisition or
investment. If we buy a company, then we could have difficulty in assimilating
that company's personnel and operations. In addition, the key personnel of the
acquired company may decide not to work for us. An acquisition could distract
our management and employees and increase our expenses. Furthermore, we may have
to incur debt or issue equity securities to pay for any future acquisitions, the
issuance of which could be dilutive to our existing stockholders.
Our common stock price is likely to be highly volatile and the current market
for our common stock is limited.

The market price of our common stock will likely be highly volatile as the stock
market in general, and the market for small cap and micro cap technology
companies in particular, has been highly volatile. You may not be able to resell
your shares of our common stock following periods of volatility because of the
market's adverse reaction to volatility. We cannot assure you that our stock
will trade at the same levels of other stocks in our industry or that our
industry stocks in general will sustain their current market prices.

Factors that could cause such volatility may include, among other things:

      o     actual or anticipated fluctuations in our quarterly operating
            results;

      o     announcements of technological innovations;

      o     changes in financial estimates by securities analysts;

      o     conditions or trends in the network control and management industry;

      o     changes in the market valuations of other such industry related
            companies; and

      o     the acceptance of market makers and institutional investors of the
            Company and our stock.

In addition, our stock is currently traded on the NASD O-T-C Bulletin Board and
it is uncertain that we will be able to successfully apply for listing on the
American Stock Exchange or the NASDAQ National or Small Cap Markets in the
foreseeable future due to our inability to satisfy their respective listing
criteria. Failure to list our shares on any of the American Stock Exchange or
the NASDAQ National or Small Cap Markets will impair the liquidity of our common
stock.

Your holdings may be diluted in the future.

We are authorized to issue up to 1,000,000,000 shares of common stock. Our board
of directors has the ability to issue additional shares of our common stock,
without stockholder approval and in exchange for the consideration that the
board of directors may deem adequate, up to such authorized amount. The issuance
of additional common stock will reduce the proportionate ownership and voting
power of our existing common stockholders. In addition, we currently have
outstanding options and warrants to purchase approximately 3,700,000 shares of
common stock whose exercise could also have a substantial dilutive effect on the
ownership of our common stockholders at such time. In addition, the future
designation and issuance of one or more series of preferred stock would create
additional securities that would have, among other things, dividend and
liquidation preferences senior to our common stock.
Shares eligible for future sale by our current stockholders may adversely affect
our stock price.

Sales of substantial amounts of common stock, including shares issued upon the
exercise of outstanding options and warrants, under Securities and Exchange
Commission Rule 144, or otherwise, could adversely affect the prevailing market
price of our common stock and could impair our ability to raise capital at that
time through the sale of our securities. In addition, we are obligated to
register the shares and additional securities for immediate resale under the
Securities Act of 1933, as amended, and, upon completion of such registration a
substantial number of additional securities will be placed into the public
market with the potential adverse consequences described above.

If we lose the services of our President and Chief Executive Officer, Naveen
Bisht, or our Chief Technology Officer, Dr. Raj Jain or other key personnel, we
may not be able to execute our business strategy effectively.

Our future success depends in large part upon the continued services of our key
technical, sales, marketing and senior management personnel. In particular,
Naveen Bisht, our President and Chief Executive Officer and Dr. Raj Jain, our
Chief Technology Officer are very important to our business. The loss of any of
our senior management or other key research, development, sales or marketing
personnel, particularly if lost to competitors, could harm our ability to
implement our business strategy and respond to the rapidly changing needs of our
customers. In addition, we believe we will need to attract, retain and motivate
talented management and other highly skilled employees to be successful. We may
be unable to retain our key employees or attract, assimilate and retain other
highly qualified employees in the future.

We may not be able to compete successfully.

We are engaged in new, rapidly evolving and intensely competitive markets, and
we expect competition to intensify further in the future. We currently or
potentially compete with a number of other companies, such as Alcatel, Alloptic,
Inc., Salira Networks, Inc., Tellabs and TeraWave Communications. A number of
our competitors, such as Alcatel, are large and well funded. Competitive
pressures created by any one of these companies, or by our competitors
collectively, could have a material adverse effect on our business, results of
operations and financial condition.

The market in which we compete is subject to rapid technological progress and to
compete successfully we must continually introduce new products that achieve
broad market acceptance.

The network equipment market is characterized by rapid technological progress,
frequent new product introductions, changes in customer requirements and
evolving industry standards. If we do not regularly introduce new products in
this dynamic environment, our product lines will become obsolete. Developments
in routers and routing software could also significantly reduce demand for our
products. Alternative technologies could achieve widespread market acceptance
and displace the technology on which we have based our product architecture. We
cannot assure you that our technological approach will achieve broad market
acceptance or that other technologies or devices will not supplant our own
products and technology.
Our products must comply with evolving industry standards and complex government
regulations or else our products may not be widely accepted, which may prevent
us from growing our net revenue or achieving profitability.

The market for network equipment is characterized by the need to support
industry standards as different standards emerge, evolve and achieve acceptance.
We will not be competitive unless we continually introduce new products and
product enhancements that meet these emerging standards. Our products must
comply with various United States federal government regulations and standards
defined by agencies such as the Federal Communications Commission, as well as
standards established by various foreign governmental authorities and
recommendations of the International Telecommunication Union. If we do not
comply with existing or evolving industry standards or if we fail to obtain
timely domestic or foreign regulatory approvals or certificates, we will not be
able to sell our products where these standards or regulations apply, which may
prevent us from sustaining our net revenue or achieving profitability.

Our future performance will depend on the successful development, introduction
and market acceptance of new and enhanced products.

Our new and enhanced products must address customer requirements in a timely and
cost-effective manner. In the past, we have experienced delays in product
development and such delays may occur in the future. The introduction of new and
enhanced products may cause our customers to defer or cancel orders for existing
products. Therefore, to the extent customers defer or cancel orders in the
expectation of new product releases, any delay in the development or
introduction of new products could cause our operating results to suffer. The
inability to achieve and maintain widespread levels of market acceptance for our
current and future products may significantly impair our revenue growth.

Our limited ability to protect our proprietary intellectual property rights may
adversely affect our ability to compete.

We rely on a combination of patent, copyright, trademark and trade secret laws
and restrictions on disclosure to protect our proprietary intellectual property
rights. We cannot assure you that we have adequately protected our proprietary
intellectual property or that other parties will not independently develop
similar or competing products that do not infringe on our patents. We also enter
into confidentiality or license agreements with our employees, consultants and
corporate partners to protect our intellectual property. In addition, we control
access to and limit the distribution of our software, documentation and other
proprietary information. Despite our efforts to protect our proprietary
intellectual property rights, unauthorized parties may attempt to copy or
otherwise misappropriate or use our products or technology. If we are
unsuccessful in protecting our proprietary intellectual property rights, our
business, results of operations and financial condition may be harmed.
Our limited ability to defend ourselves against intellectual property
infringement claims made by others may adversely affect our ability to compete.

Our industry is characterized by the existence of a large number of patents and
frequent claims and related litigation regarding patent and other intellectual
property rights. If we are found to infringe the proprietary rights of others,
or if we otherwise settle such claims, we could be compelled to pay damages or
royalties and either obtain a license to those intellectual property rights or
alter our products so that they no longer infringe upon such proprietary rights.
Such a license could be very expensive to obtain or may not be available at all.
Similarly, changing our products or processes to avoid infringing the rights of
others may be costly or impractical. Litigation resulting from claims that we
are infringing the proprietary rights of others could result in substantial
costs and a diversion of resources, and could have a material adverse effect on
our business, financial condition and operating results.

Our dependence on contract manufacturers for substantially all of our
manufacturing requirements could harm our operating results.

We rely on independent contractors to manufacture our products. We do not have
long-term contracts with any of these manufacturers. Delays in product shipments
from contract manufacturers are not unusual. Similar or other problems may arise
in the future, such as inferior quality, insufficient quantity of products or
the interruption or discontinuance of operations of a manufacturer, any of which
could have a material adverse effect on our business, financial condition and
operating results.

We do not know whether we will effectively manage our contract manufacturers or
that these manufacturers will meet our future requirements for timely delivery
of products of sufficient quality and quantity. We will continue to monitor the
performance of our current contract manufacturers and if they are unable to meet
our future requirements, we will need to transition to other manufacturers. We
also intend to regularly introduce new products and product enhancements, which
will require that we rapidly achieve volume production by coordinating our
efforts with those of our suppliers and contract manufacturers. The inability of
our contract manufacturers to provide us with adequate supplies of high-quality
products or a reduction in the number of contract manufacturers may cause a
delay in our ability to fulfill orders and may have a material adverse effect on
our business, financial condition and operating results.

If our products contain undetected software or hardware errors, we could incur
significant unexpected expenses and lose sales.

Network equipment products frequently contain undetected software or hardware
errors when new products, versions or updates of existing products are first
released to the marketplace. We have experienced such errors in connection with
prior product releases. We expect that such errors or component failures will be
found from time to time in the future in new or existing products, including the
components incorporated therein, after the commencement of commercial shipments.

These errors may have a material adverse effect on our business and may result
in the following, among other things:

      o     significant warranty and repair costs;
o     diverting the attention of our engineering personnel from new
            product development efforts;

      o     delaying the recognition of revenue; and

      o     significant customer relations problems.

In addition, if our product is not accepted by customers due to defects, and
such returns exceed the amount we accrued for defect returns based on our
historical experience, our operating results would be adversely affected.

If problems occur in a computer or communications network, even if unrelated to
our products, we could incur unexpected expenses and lose sales.

Our products must successfully interoperate with products from other vendors. As
a result, when problems occur in a computer or communications network, it may be
difficult to identify the sources of these problems. The occurrence of hardware
and software errors, whether or not caused by our products, could result in the
delay or loss of market acceptance of our products and any necessary revisions
may cause us to incur significant expenses. The occurrence of any such problems
would likely have a material adverse effect on our business, financial condition
and operating results.

We expect the average selling prices of our products to decrease, which may
reduce our gross margin or revenue.

The network equipment industry has experienced a rapid erosion of average
selling prices due to a number of factors, including competitive pricing
pressures, promotional pricing, technological progress and lower selling prices
as companies attempt to liquidate excess inventory resulting from the industry
slowdown that began in the later part of 2000.

We anticipate that the average selling prices of our products will decrease in
the future in response to the following, among other things:

      o     competitive pricing pressures;

      o     excess inventories;

      o     increased sales discounts; and

      o     new product introductions by us or our competitors.

We may experience substantial decreases in future operating results due to the
erosion of our average selling prices. We expect competitive pressures to
increase as a result of the industry slowdown that began in the later part of
2000, coupled with the slow recovery and still uncertainty of the broader
economy.

Some of our customers may not have the resources to pay for our products as a
result of the current economic environment.

Some of our customers are experiencing cash flow problems as a result of the
current economic environment and are finding it increasingly difficult to obtain
financing. As a result, we may be unable to collect the payments owed to us, or
such payments may be significantly delayed, if our customers are unsuccessful in
generating sufficient revenue or securing alternate financing arrangements. In
addition, our customers may not order as many products from us as we had
originally forecast or they may cancel their orders with us entirely. The
inability of some of our potential customers to pay us for our products may
adversely affect our cash flow, the timing of our revenue recognition and the
amount of revenue we generate, which may cause our stock price to decline.
Failure to successfully expand our sales and support teams or educate them in
regard to technologies and our product families may harm our business, financial
condition and operating results.

The sale of our products and services requires a sophisticated sales effort that
frequently involves several levels within a prospective customer's organization.
We may not be able to increase net revenue unless we expand our sales and
support teams in order to address all of the customer requirements necessary to
sell our products.

We cannot assure you that we will be able to successfully integrate new
employees into our company or to educate current and future employees in regard
to rapidly evolving technologies and our product families. A failure to do so
may hurt our business, financial condition and operating results.

We must continue to develop and increase the productivity of our sales and
distribution channels to increase net revenue and improve our operating results.

Our sales channel includes our own direct sales people, large original equipment
manufacturer, system integrators, agents, resellers and distributors. Outside
sales channels require us to develop and cultivate strategic relationships and
allocate substantial internal resources for the maintenance of such
relationships. We may not be able to increase gross revenues unless we expand
our sales channel and support teams to handle all of our customer requirements
in a professional manner. If we are unable to expand our sales channel and
support teams in a timely manner, and/or manage them in all cases, our business,
financial condition and operating results may be hurt.

In addition, many of our sales channel partners also carry products they make
themselves or that are made by our competitors. We cannot assure you that our
sales channel partners will continue to market or sell our products effectively
or continue to devote the resources necessary to provide us with effective
sales, marketing and technical support. Their failure to do so may hurt our
revenue growth and operating results.

Legislative actions, higher insurance costs and potential new accounting
pronouncements are likely to impact our future financial position and results of
operations.

There have been regulatory changes, including the Sarbanes-Oxley Act of 2002,
which will have an impact on our future financial position and results of
operations. The Sarbanes-Oxley Act of 2002 and other rule changes and proposed
legislative initiatives are resulting in increased general and administrative
costs to us. The new rules could make it more difficult for us to obtain certain
types of insurance, including director and officer liability insurance, and we
may be forced to accept reduced policy limits and coverage and/or incur
substantially higher costs to obtain the same or similar coverage. The impact of
these events could also make it more difficult for us to attract and retain
qualified persons to serve on our board of directors, on committees of our board
of directors or as executive officers. We cannot predict or estimate the amount
of the additional costs we may incur or the timing of such costs as we implement
these new and proposed rules.
In addition, proposed initiatives could result in changes in accounting rules,
including legislative and other proposals to account for employee stock options
as an expense. These and other potential changes could materially increase the
expenses we report under generally accepted accounting principles, and adversely
affect our operating results.

We may need to expend considerable resources in order to comply with recent SEC
rulemaking including the Sarbanes-Oxley Act of 2002.

The costs associated with being a public company have increased dramatically
over the last several years following the advent of the Sarbanes-Oxley Act of
2002. We expect to spend significant resources in order to comply with the new
legislation and rulemaking aimed at public companies. As a result, we expect our
general and administrative expenses will rise as a result of these compliance
efforts. In addition, our management team will need to devote a substantial
amount of time to these efforts which could distract them from their current
responsibilities.

Our headquarters are located in Northern California where natural disasters may
occur that could disrupt our operations and harm our business.

Our corporate headquarters are located in Silicon Valley in Northern California.
Historically, this region has been vulnerable to natural disasters and other
risks, such as earthquakes, which at times have disrupted the local economy and
posed physical risks to our and our manufacturers' property.

In addition, terrorist acts or acts of war targeted at the United States, and
specifically Silicon Valley, could cause damage or disruption to us, our
employees, facilities, partners, suppliers, distributors and resellers, and
customers, which could have a material adverse effect on our operations and
financial results. We currently do not have redundant, multiple site capacity in
the event of a natural disaster or catastrophic event. In the event of such an
occurrence, our business would suffer.

                           FORWARD LOOKING STATEMENTS

Information included in this Form 8-K may contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
information may involve known and unknown risks, uncertainties and other factors
which may cause the Rescon's and/or Nayna's actual results, performance or
achievements to be materially different from future results, performance or
achievements expressed or implied by any forward-looking statements.
Forward-looking statements, which involve assumptions and describe the Rescon's
and/or Nayna's future plans, strategies and expectations, are generally
identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend" or "project" or the negative of
these words or other variations on these words or comparable terminology. These
forward-looking statements are based on assumptions that may be incorrect, and
there can be no assurance that any projections included in these forward-looking
statements will come to pass. Rescon's and/or Nayna's actual results could
differ materially from those expressed or implied by the forward-looking
statements as a result of various factors. Except as required by applicable
laws, neither Rescon nor Nayna undertakes any obligation to update publicly any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
AVAILABLE INFORMATION

Please read all the sections of the Information Statement carefully. Rescon is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended ("Exchange Act") and in accordance therewith, files reports,
proxy statements and other information with the Securities and Exchange
Commission. These reports, proxy statements and other information filed by
Rescon with the SEC may be inspected without charge at the public reference
section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549. Copies of this material also may be obtained from the SEC at prescribed
rates. The SEC also maintains a website that contains reports, proxy and
information statements and other information regarding public companies that
file reports with the SEC. Copies of these materials may be obtained from the
SEC's website at http://www.sec.gov.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change of Fiscal
Year.

On April 6, 2005, Rescon filed a Certificate of amendment with the Nevada
Secretary of State changing the name of the corporation from Rescon Technology
Corporation to Nayna Networks, Inc. A copy of this Certificate of Amendment to
the Articles of Incorporation, dated April 6, 2005, is filed as Exhibit 3.2 to
this Form 8-K

Item 8.01. Other Events

As a result of the Merger, Rescon has moved its principal executive offices to
180 Rose Orchard Way, San Jose, CA 95134.

Following all required filings with governmental authorities, Rescon intends to
change its name to Nayna Networks, Inc. and to obtain a new trading symbol on
the OTC Bulletin Board.

Item 9.01. Financial Statements and Exhibits

      (a)   Financial Statement of Businesses Acquired.
NAYNA NETWORKS, INC.
(a development stage enterprise)

Audted BALANCE SHEET
(000's)

December 31,2003
ASSETS
Current assets:
Cash and cash equivalents                                                                            $  1,663
Restricted cash                                                                                      $     48
Accounts receivable, net                                                                                  121
Inventory                                                                                                   0
Prepaid expenses                                                                                           63
                                                                                                     --------
Total current assets                                                                                    1,895

Property and equipment, net                                                                             1,388
Other Assets                                                                                                9
                                                                                                     --------

Total assets                                                                                         $  3,292
                                                                                                     ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                                                                     $    682
Accrued liabilities                                                                                       523
Current Portion - Notes payable & Equipment Leases                                                      1,027
                                                                                                     --------
Total current liabilities                                                                               2,232
                                                                                                     --------

Long Term Debt                                                                                          1,006

Redeemable conveertible prefeerred stock:
  Series A preferred stock, $0.001 par value:
     Authorized shares - 15,000,000: issued and outstanding shares - 15,000,000 at
       December 31, 2003 and 2002 (Liquidation preference $12,000)                                     11,953
  Series B preferred stock, $0.001 par value:
     Authorized shares - 11,111,112: issued and outstanding shares - 7,999,997 at
       December 31, 2003 and 2002 (Liquidation preference $36,000)                                     36,118
  Series C preferred stock, $0.001 par value:
     Authorized shares - 13,840,000: issued and outstanding shares - 4,680,647 at
       December 31, 2003 (issued for consideration other than cash; liquidation preference $5,041)         --
                                                                                                     --------
Total redeemable convertible preferred stock                                                           48,071
                                                                                                     --------

Stockholders' deficit:
Preferred stock, $0.001 par value; 72,000,000 shares authorized;
  none issued and outstanding at December 31, 2002                                                         --
Common stock, $0.001 par value, 72,000,000 shares authorized; 20,512,289 at December 31, 2003
  and 15,552363 at December 31, 2002                                                                      267
Deficit accumulated during the development stage                                                      (48,284)
                                                                                                     --------
Total stockholders' deficit                                                                           (48,017)
                                                                                                     --------
Total liabilities and stockholders' deficit                                                          $  3,292
                                                                                                     ========
NAYNA NETWORKS, INC.
                        (a development stage enterprise)

                         Audited STATEMENT OF OPERATIONS
                                     (000's)

            for the period from February 10, 2000 (date of inception)
                              to December 31, 2003

Sales                                                                  $     --
Cost of sales                                                                 0
                                                                       --------
Gross profit                                                                  0
                                                                       --------

Operating expenses:
Engineering                                                              35,978
Sales and marketing                                                       1,600
General and administrative                                                6,464
                                                                       --------
Total operating expenses                                                 44,043
                                                                       --------

Loss from operations                                                    (44,043)

Other income (expense)
Interest Income                                                           2,376
Interest expense                                                           (792)
Impairment of goodwill related to the
  acquisition of Xpeed, Inc.                                             (5,825)
                                                                       --------

Net loss                                                               $(48,284)
                                                                       ========
NAYNA NETWORKS, INC.
                                               (a development stage enterprise)

                                          Audited STATEMENT OF STOCKHOLDERS' DEFICIT
                  for the Cumulative Period from February 10, 2000 (date of inception) to December 31, 2003
                                           (000's) except share and per share data

                                                                             Series A Redeemable          Series B Redeemable
                                                                                 Convertible                  Convertible
                                                                                Preferred Stock             Preferred Stock
                                                                          --------------------------  --------------------------
                                                                             Shares        Amount        Shares        Amount
                                                                          ------------  ------------  ------------  ------------
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                   $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash                                15,000,000        11,953
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash                                                           7,999,997        35,927
Issuance cost related to Series B preferred stock                                                                            (30)
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000                                                         259
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock                                                                            (38)
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 15,000,000       $11,953     7,999,997       $36,118
                                                                          ============  ============  ============  ============
Series C Redeemable          Series D Redeemable
                                                                                Convertible                  Convertible
                                                                               Preferred Stock             Preferred Stock
                                                                         --------------------------  --------------------------
                                                                            Shares        Amount        Shares        Amount
                                                                         ------------  ------------  ------------  ------------
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                  $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition    4,680,647
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                         ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 4,680,647            $0             0            $0
                                                                         ============  ============  ============  ============
Deficit
                                                                                                       Accumulated
                                                                                Common Stock            During the     Total
                                                                          --------------------------  Developmental Stockholders'
                                                                             Shares        Amount          Stage       Deficit
                                                                          ------------  ------------  ------------  ------------
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                             15,000,000           $15                         $15
Exercise of common stock options for cash                                    4,288,124           434                         434
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash                                    (1,241,066)         (117)                       (117)
Repurchase of common stock for  $0.10 to  $0.90 per share                   (1,410,841)         (105)                       (105)
Cancellation of previously issued common stock subject to restriction       (1,472,500)           (1)                         (1)
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition                                       5,348,572                                         0
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees                                                                  28                          28
Compensation expense related to stock option grants to
  consultants                                                                                     12                          12
Net loss - February 10, 2000 - December 31, 2003                                                           (48,284)      (48,284)
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 20,512,289          $266      ($48,284)     ($48,018)
                                                                          ============  ============  ============  ============
NAYNA NETWORKS, INC.
(a development stage enterprise)

                         Audited STATEMENT OF CASH FLOW
                                     (000's)

for the period from February 10, 2000 (date of inception) to December 31, 2003
Cash flows from operating activities:
Net loss                                                                                $(48,284)
Adjustments to reconcile net loss to net cash used in operations:
  Noncash charges related to stock options granted to consultants and accelerated
    vesting of employee stock options                                                   $     40
  Depreciation                                                                          $  3,136
  Amortization of discount on warrants associated with equipment financing              $    202
  Impariment of goodwill related to acquisition of Xpeed, Inc.                          $  5,825
  Loss on sale of property and equipment                                                   1,114

Changes in assets and liabilities:
Restricted cash                                                                              (48)
Increase in accounts receivable                                                             (121)
Increase in prepaid expenses                                                                 (63)
Increase in other assets                                                                      (9)
Increase in accounts payable                                                                 682
Increase in accrued liabilities                                                              162
Increase in payroll liabilities                                                              361
                                                                                        --------
Net cash used in operating activities:                                                   (37,004)
                                                                                        --------

Cash flows used in investing activities:
Purchase of property and equipment                                                        (1,193)
Proceeds from sale of property and equipment                                                 437
Costs associated with acquisition of Xpeed, Inc.                                          (3,685)
                                                                                        --------
Net cash used in investing activities                                                     (4,441)
                                                                                        --------

Cash flows provided by financing activities:
Proceeds from loan facility                                                                  327
Payments on capital lease obligations and loan facility                                   -4,831
Proceeds from issuance of common stock, net of repurchases                                   227
Proceeds from issuance of Series A redeemable convertible preferred stock,
  net of issuance costs                                                                   11,953
Proceeds from issuance of Series B redeemable convertible preferred stock,
  net of issuance costs                                                                   35,927
Issuance of convertible notes receivable                                                    (300)
Restricted Cash                                                                             (165)
Issuance costs related to Series B redeemable convertible preferred stock                    (30)
                                                                                        --------
Net cash provided by financing activities                                                 43,108
                                                                                        --------

Net increase in cash and cash equivalents                                                  1,663

Cash and cash equivalents, beginning of period                                                --
                                                                                        --------
Cash and cash equivalents, end of period                                                $  1,663
                                                                                        ========
Created by EDGAR Online, Inc.

                              NAYNA NETWORKS, INC.
                        (a development stage enterprise)
                    Notes to Financial Statements, Continued

C:   PROPERTY  AND  EQUIPMENT

      Property and equipment consist of the following at December 31, 2003:

Computer software and equipment                                         $   416
Computer software                                                         1,354
Test equipment                                                            1,629
Furniture and fixtures                                                        2
Leasehold improvements                                                        0
                                                                        -------

Total  cost                                                               3,401

Less  accumulated depreciations                                          (2,013)
                                                                        -------
                                                                        $ 1,388
                                                                        =======
UNAUDITED CONDENSED FINANCIAL STATEMENTS:

NAYNA NETWORKS, INC.
(a development stage enterprise)

                       Unaudited CONDENSED BALANCE SHEETS
                                     (000'S)
as of December 31,

                                                                                                                 2004       2003
                                                                                                               --------   --------
ASSETS
Current assets:
Cash and cash equivalents                                                                                      $    710   $  1,663
Restricted cash                                                                                                $     48   $     48
Accounts receivable, net                                                                                            160        121
Inventory                                                                                                           440          0
Prepaid expenses                                                                                                     42         63
                                                                                                               --------   --------
Total current assets                                                                                              1,400      1,895

Property and equipment, net                                                                                         775      1,388
Other Assets                                                                                                          9          9
                                                                                                               --------   --------

Total assets                                                                                                   $  2,184   $  3,292
                                                                                                               ========   ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                                                                               $    636   $    682
Accrued liabilities                                                                                                 569        523
Current Portion - Notes payable & Equipment Leases                                                                1,016      1,027
                                                                                                               --------   --------
Total current liabilities                                                                                         2,221      2,232
                                                                                                               --------   --------

Long Term Debt                                                                                                               1,006
Convertible Note Payable                                                                                            921

Redeemable convertible preferred stock:
  Series A preferred stock, $0.001 par value:
     Authorized shares - 15,000,000: issued and outstanding shares - 0 at December 31, 2004
       15,000,000 at December 31, 2003 and 2002 (Liquidation preference $12,000)                                            11,953
  Series B preferred stock, $0.001 par value:
     Authorized shares - 11,111,112: issued and outstanding shares - 0 at December 31, 2004
       7,999,997 at December 31, 2003 and 2002 (Liquidation preference $36,000)                                             36,118
  Series C preferred stock, $0.001 par value:
     Authorized shares - 13,840,000: issued and outstanding shares - 0 at December 31, 2004
       4,680,647 at December 31, 2003 (issued for consideration other than cash; liquidation preference $5,041)                 --
  Series D preferred stock, $0.001 par value:
    Authorized shares - 52,500,000: 19,531,247 issued and outstanding shares -  at December 31, 2004              3,649
                                                                                                               --------   --------
Total redeemable convertible preferred stock                                                                      3,649     48,071
                                                                                                               --------   --------

Stockholders' deficit:
Common stock, $0.001 par value, 125,000,000 shares authorized; 48,794,091 issued and outstanding at
 December 31, 2004 and 20,512,289 at December 31, 2003 and 15,552363 at December 31, 2002                        48,353        267
Deficit accumulated during the development stage                                                                (52,960)   (48,284)
                                                                                                               --------   --------
Total stockholders' deficit                                                                                      (4,607)   (48,017)
                                                                                                               --------   --------
Total liabilities and stockholders' deficit                                                                    $  2,184   $  3,292
                                                                                                               ========   ========
NAYNA NETWORKS, INC.
                        (a development stage enterprise)

                       CONDENSED STATEMENTS OF OPERATIONS
                                     (000'S)
                                   (UNAUDITED)
Period from
                                              February 10,
                                                2000 (date            Three Months Ended               Twelve Months Ended
                                             of inception)                December 31,                      December 31,
                                               to December     -----------------------------     -----------------------------
                                                31, 2004            2004             2003             2004             2003
                                              ------------     ------------     ------------     ------------     ------------
Sales                                         $        425     $        133     $         --     $        425     $         --
Cost of sales                                          345               91                0              345                0
                                              ------------     ------------     ------------     ------------     ------------
Gross profit                                            80               42                0               80                0
                                              ------------     ------------     ------------     ------------     ------------

Operating expenses:
Engineering                                         38,187              642              739            2,209            3,051
Sales and marketing                                  2,379              268              208              779              720
General and administrative                           8,194              418              729            1,730            3,675
                                              ------------     ------------     ------------     ------------     ------------
Total operating expenses                            48,761            1,328            1,676            4,718            7,447
                                              ------------     ------------     ------------     ------------     ------------

Loss from operations                               (48,681)          (1,286)          (1,676)          (4,638)          (7,447)

Other income (expense)
Interest Income                                      2,390                1               12               14              121
Interest expense                                      (832)              (3)             (29)             (40)            (137)
Loss on Sale of Assets                                 (12)             (12)                              (12)
Impairment of goodwill related to the
  acquisition of Xpeed, Inc.                        (5,825)                           (5,825)                           (5,825)
                                              ------------     ------------     ------------     ------------     ------------

Net loss                                      $    (52,960)    $     (1,288)    $     (7,518)    $     (4,676)    $    (13,288)
                                              ============     ============     ============     ============     ============
NAYNA NETWORKS, INC.
(a development stage enterprise)

CONDENSED STATEMENTS OF CASH FLOWS
(000'S)
(UNAUDITED)
Period from
                                                                           February 10, 2000         Twelve Months Ended
                                                                          (date of inception)            December 31,
                                                                               to December       -----------------------------
                                                                                 31, 2004            2004              2003
                                                                               -----------       -----------       -----------
Cash flows from operating activities:
Net loss                                                                       $   (52,960)      $    (4,676)      $   (13,288)
Adjustments to reconcile net loss to net
  cash used in operations:
  Noncash charges related to stok options granted to
    consultants and accelerated vesting of employee stock options              $        40
  Depreciation                                                                 $     3,699       $       563       $       930
  Amortization of discount on warrants associated
    with equipment financing                                                   $        11       $      (191)      $        67
  Impariment of goodwill related to acquisition of Xpeed, Inc.                 $     5,825                         $     5,825
  Loss on sale of property and equipment                                             1,164                50               364

Changes in assets and liabilities:
Restricted cash                                                                        (48)                                117
(Increase)/decrease in accounts receivable                                            (160)              (39)             (121)
(Increase)/decrease in Inventory                                                      (440)             (440)
(Increase)/decrease in prepaid expenses                                                (42)               21                13
(Increase)/decrease in other assets                                                     (9)                                 (9)
Increase/(decrease) in accounts payable                                                636               (46)              306
Increase/(decrease) in accrued liabilities                                             569                46               295
                                                                               -----------       -----------       -----------
Net cash used in operating activities:                                             (41,716)           (4,712)           (5,502)
                                                                               -----------       -----------       -----------

Cash flows used in investing activities:
Purchase of property and equipment                                                  (1,193)                               (108)
Proceeds from sale of property and equipment                                           437                                 193
Costs associated with acquisition of Xpeed, Inc.                                    (3,685)                             (3,685)
                                                                               -----------       -----------       -----------
Net cash used in investing activities                                               (4,441)                0            (3,600)
                                                                               -----------       -----------       -----------

Cash flows provided by financing activities:
Payments on capital lease obligations and loan facility                             (5,521)           (1,017)           (1,373)
Proceeds from convertible notes payable, net of of costs                               921               921
Proceeds from issuance of common stock, net of repurchases                          48,313            48,086                 4
Proceeds from issuance of Series A redeemable convertible
  preferred stock, net of issuance costs                                                 0           (11,953)
Proceeds from issuance of Series B redeemable convertible
  preferred stock, net of issuance costs                                                 0           (35,927)
Proceeds from issuance of Series D redeemable convertible
  preferred stock, net of issuance costs                                             3,649             3,649

Issuance of convertible notes receivable                                              (300)
Restricted Cash                                                                       (165)
Issuance costs related to Series B redeemable convertible preferred stock              (30)
                                                                               -----------       -----------       -----------
Net cash provided by financing activities                                           46,867             3,759            (1,369)
                                                                               -----------       -----------       -----------

Net increase in cash and cash equivalents                                              710              (953)          (10,471)

Cash and cash equivalents, beginning of period                                          --             1,663            12,134
                                                                               -----------       -----------       -----------

Cash and cash equivalents, end of period
with an advisory agreement                                                     $       710       $       710       $     1,663
                                                                               ===========       ===========       ===========
NAYNA NETWORKS, INC.
                                                  (a development stage enterprise)

                         CONDENSED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
                        for the Cumulative Period from February 10, 2000 (date of inception) to December 31, 2004
                                             (000's) except share and per share data

                                                                             Series A Redeemable          Series B Redeemable
                                                                                 Convertible                  Convertible
                                                                                Preferred Stock             Preferred Stock
                                                                          --------------------------  --------------------------
                                                                             Shares        Amount        Shares        Amount
                                                                          ------------  ------------  ------------  ------------
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                   $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash                                15,000,000        11,953
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash                                                           7,999,997        35,927
Issuance cost related to Series B preferred stock                                                                            (30)
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000                                                         259
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock                                                                            (38)
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 15,000,000       $11,953     7,999,997       $36,118
                                                                          ============  ============  ============  ============

Conversion of Series A convertible, redeemable preferred
  stock into common stock                                                  (15,000,000)      (11,953)
Conversion of Series B convertible, redeemable preferred
  stock into common stock                                                                               (7,999,997)      (36,118)
Conversion of Series C convertible, redeemable preferred
  stock into common stock
Issuance of Series D redeemable convertible preferred stock
  in July 2004 at  $0.19072 per share for cash
Exercise of common stock options for cash
Issuance of common stock for consideration other than cash
  on the purchase of the Accordion asset acquisition
Issuance of common stock on conversion of note payable
Net loss for the twelve months ending December 31, 2004
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2004                                                          0            $0             0            $0
                                                                          ============  ============  ============  ============
Series C Redeemable          Series D Redeemable
                                                                                Convertible                  Convertible
                                                                               Preferred Stock             Preferred Stock
                                                                         --------------------------  --------------------------
                                                                            Shares        Amount        Shares        Amount
                                                                         ------------  ------------  ------------  ------------
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                                                  $0                          $0
Exercise of common stock options for cash
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash
Repurchase of common stock for  $0.10 to  $0.90 per share
Cancellation of previously issued common stock subject to restriction
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition    4,680,647
Compensation expense related to accelerated stock options
  issued to terminated employees
Compensation expense related to stock option grants to
  consultants
Net loss - February 10, 2000 - December 31, 2003
                                                                         ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 4,680,647            $0             0            $0
                                                                         ============  ============  ============  ============

Conversion of Series A convertible, redeemable preferred
  stock into common stock
Conversion of Series B convertible, redeemable preferred
  stock into common stock
Conversion of Series C convertible, redeemable preferred
  stock into common stock                                                  (4,680,647)
Issuance of Series D redeemable convertible preferred stock
  in July 2004 at  $0.19072 per share for cash                                                         19,531,247         3,649
Exercise of common stock options for cash
Issuance of common stock for consideration other than cash
  on the purchase of the Accordion asset acquisition
Issuance of common stock on conversion of note payable
Net loss for the twelve months ending December 31, 2004
                                                                         ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2004                                                         0            $0    19,531,247        $3,649
                                                                         ============  ============  ============  ============
Deficit
                                                                                                       Accumulated
                                                                                Common Stock            During the     Total
                                                                          --------------------------  Developmental Stockholders'
                                                                             Shares        Amount          Stage       Deficit
                                                                          ------------  ------------  ------------  ------------
Issuance of common stock to founders in March 2000 at
  at  $0.001 per share for cash                                             15,000,000           $15                         $15
Exercise of common stock options for cash                                    4,288,124           434                         434
Repurchase of common stock issued to founders
 at  $0.001 to  $0.10 per share for cash                                    (1,241,066)         (117)                       (117)
Repurchase of common stock for  $0.10 to  $0.90 per share                   (1,410,841)         (105)                       (105)
Cancellation of previously issued common stock subject to restriction       (1,472,500)           (1)                         (1)
Issuance of common stock for consideration other than cash
  in connection with Xpeed acquisition                                       5,348,572                                         0
Issuance of Series A redeemable convertible preferred stock
  in March 2000 at  $0.80 per share for cash
Issuance of Series B redeemable convertible preferred stock
  in December 2000 at $4.50 per share for cash
Issuance cost related to Series B preferred stock
Issuance of warrants to purchase Series B redeemable convertible
  preferred stock in connection with an equipment lease in July 2000
Adjustment to valuation of warrant issued to a lessor to purchase
  Series B redeemable convertible preferred stock
Issuance of Series C redeemable convertible preferred stock
  for consideration other than cash in connection with Xpeed acquisition
Compensation expense related to accelerated stock options
  issued to terminated employees                                                                  28                          28
Compensation expense related to stock option grants to
  consultants                                                                                     12                          12
Net loss - February 10, 2000 - December 31, 2003                                                           (48,284)      (48,284)
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2003                                                 20,512,289          $266      ($48,284)     ($48,018)
                                                                          ============  ============  ============  ============

Conversion of Series A convertible, redeemable preferred
  stock into common stock                                                   15,000,000        11,953                      11,953
Conversion of Series B convertible, redeemable preferred
  stock into common stock                                                    7,999,997        36,118                      36,118
Conversion of Series C convertible, redeemable preferred
  stock into common stock                                                    4,680,647                                         0
Issuance of Series D redeemable convertible preferred stock
  in July 2004 at  $0.19072 per share for cash
Exercise of common stock options for cash                                      301,158            16                          16
Issuance of common stock for consideration other than cash
  on the purchase of the Accordion asset acquisition
Issuance of common stock on conversion of note payable                         300,000                                         0
Net loss for the twelve months ending December 31, 2004                                                     (4,676)       (4,676)
                                                                          ------------  ------------  ------------  ------------
BALANCES, DECEMBER 31, 2004                                                 48,794,091       $48,353      ($52,960)      ($4,607)
                                                                          ============  ============  ============  ============
(b)   Pro Forma Financial Information.

               UNAUDITED PRO FORMA CONDENSED
                   COMBINED BALANCE SHEET
                          (000's)
as at             as at             PRO FORMA
                                                            December 31,       November 30,        ADJUSTMENTS        PRO FORMA
                                                             2004 NAYNA        2004 RESCON          (NOTE #4)          COMBINED
                                                            ------------       ------------       ------------       ------------
ASSETS
Current assets:
Cash and cash equivalents                                   $        710       $          2       $         (2)      $        710
Restricted cash                                             $         48                                             $         48
Accounts receivable, net                                             160                 --                                   160
Inventory                                                            440                 --                                   440
Prepaid expenses                                                      42                 20                (20)                42
                                                            ------------       ------------       ------------       ------------
Total current assets                                               1,400                 22                (22)             1,400

Property and equipment, net                                          775                 24                (24)               775
Other assets                                                           9                760               -760                  9
                                                            ------------       ------------       ------------       ------------

Total assets                                                $      2,184       $        806       $       (806)      $      2,184
                                                            ============       ============       ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable                                            $        636       $         25       $        (25)               636
Accrued liabilities                                                  569                 --                                   569
Current portion - notes payable & equipment leases                 1,016                 --                                 1,016
Due to related parties                                                --                691               (691)                 0
                                                            ------------       ------------       ------------       ------------
Total current liabilities                                          2,221                716               (716)             2,221

Minority Interest                                                                        (1)                 1                  0
Convertible note payable, net                                        921                                                      921

Stockholders' equity (deficit)
Preferred stock                                                    3,649                 --                                 3,649
Common stock                                                      48,353                  0                  0             48,353
Additonal paid in capital                                                             6,342             (6,342)                 0
Deficit accumulated prior to development stage                                       (4,468)             4,468                  0
Deficit accumulated during the development stage                 (52,960)            (1,784)             1,784            (52,960)
                                                            ------------       ------------       ------------       ------------
Stockholders' equity (deficit)                                      (958)                90                (90)              (958)
                                                            ------------       ------------       ------------       ------------
Total liabilities and stockholders' deficit                 $      2,184       $        806       $       (806)      $      2,184
                                                            ============       ============       ============       ============
UNAUDITED PRO FORMA CONDENSED
                        COMBINED STATEMENT OF OPERATIONS
                     (000's) except share and per share data
for the              for the
                                               twelve months        twelve months          PRO  FORMA
                                              ending December      ending November         ADJUSTMENTS          PRO FORMA
                                               31, 2004 NAYNA      30, 2004 RESCON          (NOTE #4)            COMBINED
                                               --------------       --------------       --------------       --------------
Sales                                          $          425       $           --       $           --       $          425
Cost of sales                                             345                   --                   --                  345
                                               --------------       --------------       --------------       --------------
Gross profit                                               80                   --                   --                   80
                                               --------------       --------------       --------------       --------------

Operating expenses:
Engineering                                             2,209                   --                   --                2,209
Sales and marketing                                       779                   --                   --                  779
General and administrative                              1,730                  697                 (697)               1,730
                                               --------------       --------------       --------------       --------------
Total operating expenses                                4,718                  697                 (697)               4,718
                                               --------------       --------------       --------------       --------------

Loss from operations                                   (4,638)                (697)                 697               (4,638)

Loss on sales of assets                                   (12)                                                           (12)
Other income                                               14                   --                                        14
Interest expense                                          (40)                  --                                       (40)
                                               --------------       --------------       --------------       --------------

Net loss                                       $       (4,676)      $         (697)      $          697       $       (4,676)
                                               ==============       ==============       ==============       ==============

Net loss per share, basic                                                                                     $        (0.32)
                                                                                                              ==============

Net loss per share, diluted                                                                                   $        (0.25)
                                                                                                              ==============

Weighted average shares used in computing
  net loss per share, basic                                                                                       14,789,996
                                                                                                              ==============

Weighted average shares used in computing
  net loss per share, diluted                                                                                     18,729,670
                                                                                                              ==============
Nayna Networks, Inc.

                          UNAUDITED PRO FORMA CONDENSED
                 Calculation of basic and fully diluted shares
Series A      Series B      Series C       Series D       Common
Nayna balance as at December 31, 2003                        15,000,000     7,999,997     4,680,647              0    20,512,289

Pre-merger post-reverse split Rescon                                                                                   3,550,000

Conversion to common                                        (15,000,000)   (7,999,997)   (4,680,647)                  27,680,644

Issuance of Series D on July 2004                                                                       19,531,247

Issuance on purchase of Accordion asset on August 2004                                                                   300,000

Exercise of employee stock options on September 2004                                                                     301,158
                                                            ---------------------------------------------------------------------
Total basic shares as at December 31, 2004                            0             0             0     19,531,247    52,344,091
                                                            =====================================================================

as converted to common
                                                                                                        47,533,726
                                                            ---------------------------------------------------------------------
Total fully diluted shares as at December 31, 2004                    0             0             0     67,064,973    52,344,091
                                                            =====================================================================
Weighted
                                                                                                         Average
                                                                         as converted    Weighted     as converted
                                                               Total        to Rescon     Average       to Rescon
Nayna balance as at December 31, 2003                        48,192,933     9,586,346    48,192,933     9,586,346

Pre-merger post-reverse split Rescon                          3,550,000                                 3,550,000

Conversion to common                                                  0             0             0             0

Issuance of Series D on July 2004                            19,531,247     3,885,078     8,138,020     1,618,782

Issuance on purchase of Accordion asset on August 2004          300,000        59,675       100,000        19,892

Exercise of employee stock options on September 2004            301,158        59,905        75,290        14,976
                                                            -----------------------------------------------------
Total basic shares as at December 31, 2004                   71,875,338    13,591,003    56,506,242    14,789,996
                                                            =====================================================

as converted to common
                                                             47,533,726     9,455,219    19,805,719     3,939,675
                                                            -----------------------------------------------------
Total fully diluted shares as at December 31, 2004          119,409,064    23,046,222    76,311,961    18,729,670
                                                            =====================================================

                                                             47,758,853     9,500,000
(c)   Exhibits.

            2.2 First Amendment Agreement and Plan of Reorganization, dated
March 24, 2005, by and among Rescon Technology Corporation, a Nevada
corporation, Nayna Acquisition Corporation, a Nevada corporation and a wholly
owned subsidiary of Rescon, Nayna Networks, Inc., and Christian Nigohossian.

            3.2 Certificate of Amendment to the Articles of Incorporation, dated
April 6, 2005.

            16.1 Letter dated April 7, 2005 from Mantyla McReynolds, Certified
Public Accountants, regarding its concurrence with the statements made by Rescon
concerning the change in accountants.

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                       Rescon Technology Corporation

                                       By: /s/ NAVEEN S. BISHT
                                           -------------------------------------
                                           Naveen S. Bisht
                                           President and Chief Executive Officer

Date:  April 7, 2005