<PAGE>
This filing is made pursuant to
Rule 424(b)(3) under the
Securities Act of 1933 in
connection with Registration
No. 333-12959
----------------------------------------
SUPPLEMENT TO PROSPECTUS
SENTO TECHNICAL INNOVATIONS CORPORATION
1,096,214 SHARES OF COMMON STOCK
----------------------------------------
This Supplement to Prospectus (the "Supplement") supplements certain
information contained in the Prospectus dated November 1, 1996 (the
"Prospectus") relating to 1,096,214 shares (the "Shares") of the outstanding
common stock, $0.25 par value, of Sento Technical Innovations Corporation
(the "Company") and the offer by the holders of the Shares (the "Selling
Shareholders") to sell the Shares as more fully described in the Prospectus.
The supplemental information contained herein consists solely of the
Company's quarterly report on Form 10-QSB for the quarter ended September 30,
1996 (the "Quarterly Report"), as filed with the Securities and Exchange
Commission on November 14, 1996. Accordingly, a copy of the Quarterly Report
is attached hereto, and the Quarterly Report is incorporated herein by this
reference. The Prospectus is hereby amended by the terms of this Supplement,
and the information set forth herein supersedes any contrary statements
contained in the Prospectus. The terms and conditions of the offer by the
Selling Shareholders to sell the Shares remain as set forth in the Prospectus.
THE COMMON STOCK OFFERED BY THE PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 5 OF THE PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SUPPLEMENT TO PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS SUPPLEMENT TO PROSPECTUS IS DECEMBER 9, 1996.
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 06425
SENTO TECHNICAL INNOVATIONS CORPORATION
---------------------------------------
(Exact name of registrant as specified in its charter)
Utah 87-0284979
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
311 North State Street
Orem, Utah 84057
----------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (801)226-3355
-----------------------------------------------------------------
Spire International Corp.
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
--------------------- ---------------------------------
Common capital stock, 4,347,914
$.25 par value
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
1
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION
Quarterly Report on Form 10-QSB
for the Quarter Ended September 30, 1996
INDEX
Part I - Financial Information
ITEM 1.
Condensed Consolidated Balance Sheets -
September 30, 1996 and April 30, 1996 3
Condensed Consolidated Statements of Operations -
Three and Six Months Ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended September 30, 1996 and 1995 5
Notes To Financial Statements 6
ITEM 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II
ITEM 5
Other Information 9
ITEM 6
Exhibits and Reports on Form 8-K
Signatures
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
SENTO TECHNICAL INNOVATIONS CORPORATION
Consolidated Balance Sheets
September 30, 1996 and April 30, 1996
<TABLE>
September 30, April 30,
1996 1996
------------- ---------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash $2,952,773 $1,552,806
Accounts receivable, net of allowances 3,648,756 2,176,642
Other current assets 123,096 7,806
Deferred tax asset 42,723 42,723
----------- ----------
Total current assets 6,767,348 3,779,977
Fixed assets (Note B)
Land 36,021 36,021
Buildings 250,489 250,489
Furniture and equipment 694,758 526,005
Transportation equipment 11,516 11,516
Accumulated depreciation (292,870) (256,183)
----------- ----------
Net fixed assets 699,915 567,848
Interest in oil and gas properties -- 197,000
Other assets (Note C) 656,597 --
----------- ----------
$8,123,860 $4,544,825
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 6,562 $ 7,721
Accounts payable 2,537,127 1,050,535
Accrued liabilities 914,951 488,660
Income taxes payable 130,200 52,715
Deferred maintenance revenue 1,035,725 1,017,364
Other deferred revenue 99,387 219,650
----------- ----------
Total current liabilities 4,723,952 2,836,645
----------- ----------
Long-term liabilities:
Long-term debt, excluding current portion (Note D) 213,712 215,691
Deferred tax liability 11,582 11,582
----------- ----------
Total long-term liabilities 225,294 227,273
----------- ----------
Stockholders' equity:
Common stock, $.25 par value. Authorized 8,000,000 shares;
issued and outstanding 4,347,914 at September 30, 1996 and
3,891,325 shares at April 30, 1996 (Note E) 1,086,979 972,832
Additional paid-in capital 1,478,644
Retained earnings 608,992 508,075
----------- ----------
Total stockholders' equity 3,174,615 1,480,907
----------- ----------
$8,123,860 $4,544,825
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION
Statement of Operations
(Unaudited)
<TABLE>
Three Months Ended Sept 30, Six Months Ended Sept 30,
------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $5,215,238 $3,033,846 $9,733,677 $6,336,704
COST OF GOODS SOLD 3,472,835 1,669,697 6,422,440 3,586,812
---------- ---------- ---------- ----------
GROSS PROFIT 1,742,403 1,364,149 3,311,237 2,749,892
EXPENSES:
Selling, General, and Admin Exp. 1,597,232 1,164,013 2,958,547 2,298,776
Research and Development 130,494 139,026 273,993 139,026
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) 14,677 61,110 78,697 312,091
OTHER REVENUE AND (EXPENSES) 63,221 (1,104) 74,060 (4,564)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 77,898 60,006 152,757 307,527
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
PROVISION FOR INCOME TAXES 10,516 2,942 33,400 97,000
NET INCOME $ 67,382 $ 57,064 $ 119,357 $ 210,527
NET INCOME PER SHARE $ 0.01 $ 0.02 $ 0.03 $ 0.05
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted Average Number of Common
and Common Equivalent Shares
Outstanding 4,669,712 3,949,750 4,469,426 3,949,750
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
Sento Technical Innovations Corporation
Statements of Cash Flows
(Unaudited)
<TABLE>
Six months ended Sept 30,
--------------------------
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income 119,357 210,527
Adjustments to reconcile net income to net cash provided
by operating activities:
Adjustment from fiscal year end change (18,442) --
Depreciation 36,687 12,743
Decrease (increase) in assets:
Accounts receivable (1,472,114) (536,360)
Other current assets (115,290) 22,640
Increase (decrease) in liabilities:
Accounts payable 1,486,592 562,786
Accrued liabilities 426,291 (341,808)
Income taxes payable 77,485 504,120
Deferred maintenance revenue (101,902) 348,615
Other deferred revenue -- --
----------- ----------
Net cash provided by operating activities 438,664 783,263
----------- ----------
Cash flows from investing activities:
Capital expenditures (628,350) --
Net cash provided by (used in) investing
activities (628,350) --
----------- ----------
Cash flows from financing activities:
Proceeds from issuance of stock 1,592,791 --
Principal payments of long-term debt (3,138) (93,491)
Net cash provided by (used in) financing
activities 1,589,653 (93,491)
----------- ----------
Net increase in cash 1,399,967 689,772
Cash at beginning of year 1,552,806 766,247
----------- ----------
Cash at end of year $ 2,952,773 $1,456,019
----------- ----------
----------- ----------
Supplemental Disclosures of Cash Flow Information
Cash paid for interest $ 31,137 $ 5,613
Cash paid for income taxes $ 159,831 $ 5,792
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
A. BASIS OF PRESENTATION
The balance sheet as of September 30, 1996, the statements of operations
for the three and six month periods ended September 30, 1996 and September
30, 1995, and the statements of cash flows for the six month periods ended
September 30, 1996 and September 30, 1995 have been prepared by the Company
without audit. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
Operating results for the six months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the
Company's fiscal year ending March 31, 1997. The unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB/A for the year ended April 30, 1996.
Management has determined that commencing in fiscal year 1997, a new fiscal
year end of March 31 will be adopted to coincide with the calendar quarter
end. On June 18, 1996, the Company filed a Current Report on Form 8-K to
report this change. The Company has reported the transition to March 31
fiscal year end by filing a Transition Report on Form 10-QSB for the
transition period from May 1, 1996 to June 30, 1996.
B. FIXED ASSETS
Fixed assets are stated at cost. Depreciation of fixed assets is computed
on the straight-line method over the estimated useful lives of individual
classes of assets. The estimated useful lives of the individual classes of
assets are as follows:
Buildings 40 years
Furniture and equipment 3-10 years
Transportation equipment 5 years
C. OTHER ASSETS
Other assets are comprised as follows:
Licensed Technology $531,600
Option to purchase Australian
Software Innovations Pty. Ltd. 118,000
Miscellaneous 6,997
--------
Total Other Assets $656,597
3
<PAGE>
D. NOTES PAYABLE
Long-term debt at September 30, 1996 consisted of the following:
8.25% first mortgage of $120,211 payable in monthly installments of
$1,173, including interest, with final payment of $107,417 due July
15, 1999, secured by the Company's land and building with a book value
of $255,831 at April 30, 1996
8.70% SBA loan of $100,063 payable in monthly installments of $1,078,
including interest, secured by the Company's land and building with a
book value of $255,831 at April 30, 1996
E. COMMON STOCK
On September 30, 1996, the Company sold 10,541 shares of its Common Stock
to its employees pursuant to the Company's Employee Stock Purchase Plan,
from which the Company received proceeds of $31,623. resulting from the
exercise of options in the Employee Stock Purchase Plan. The Company's
adoption of the Employee Stock Purchase Plan was ratified by the Company's
shareholders at the Company's Annual Meeting of Shareholders held on
September 10, 1996. (See Item 4. Submission of Matters to Vote of Security
Holders.)
4
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Sento Technical Innovations Corporation ("Sento" or the "Company") develops,
configures, markets, and distributes industry-leading hardware and software
computing solutions, combined with consulting, training, and support services to
business, government, and educational organizations world-wide through direct
sales and marketing, channel distribution, and industry partners.
The Company, through its four wholly-owned subsidiaries, Spire Technologies,
Inc. ("Spire Technologies"), Spire Systems Incorporated ("Spire Systems"),
DewPoint Distributed Solutions Incorporated ("DewPoint") and Centerpost
Innovations Pty. Ltd., develops and implements system management and office
automation solutions for open and proprietary computing environments, acts as a
"service and value-added reseller" and distributor of software developed by
third parties, resells Digital Equipment Corporation ("Digital") network
computer systems and components on value-added basis and manages value-added
reseller and distribution channels in the Americas, Europe, and Southeast Asia.
The Company offers a wide range of desktop, workstation, client/server and
centralized computing software, systems and peripheral equipment, as well as
channel management and support services for both domestic and international
clientele in a wide variety of industries and computing environments, including
UNIX, Windows NT and Digital Open VMS.
In September 1996, the Company obtained an option to acquire the assets
(including all intellectual property) of Australian Software Innovations
(Services) Pty. Ltd. ("ASI"), a developer of UNIX-based management and
performance monitoring software and provider of software education and
consulting services based in Sydney, Australia. ASI develops and markets
performance monitoring software and provides related technical consulting
services to customers located in Asia, Europe, the United Kingdom and the United
States.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1995.
Net sales for the three months ended September 30, 1996 were $5,215,238,
compared to $3,033,846 for the three months ended September 30, 1995, an
increase of 72%. The increase in net sales resulted from increases in both
software product sales and computer hardware sales. New versions of existing
software, expansion of product lines, and the release of software for new
operating platforms being sold by an expanded sales staff contributed to the
increase in order rates for the Company's software offerings. Increasing
acceptance of Digital's Alpha hardware system contributed substantially to the
increase in hardware sales, which represented 58% of the Company's total
revenues for the three months ended September 30, 1996.
Gross margin for the three months ended September 30, 1996 was 33% of net sales
compared to 45% of net sales for the comparable period in 1995. The decrease in
gross margin resulted principally from two factors: (1) The Company's hardware
sales increased, as a percentage of net sales, faster than the Company's
software sales which carry a higher gross margin. (2) Several of the new
software products added to the Company's existing
5
<PAGE>
software line require higher royalties be paid to the respective
manufacturers than the Company's historical line of software products.
Research and development expenses for the three months ended September 30, 1996
were $130,494, compared to $139,026 for the three months ended September 30,
1995, an increase of 7%. This increase resulted principally from the Company's
expansion into new software product lines and development costs relating to new
products to be introduced in the future.
Selling, general and administrative expenses for the three months ended
September 30, 1996 were $1,597,232, compared to $1,164,013 for the three months
ended September 30, 1995, an increase of 37%. The increase in selling, general
and administrative expenses resulted principally from the Company's formation of
DewPoint, a wholly owned subsidiary responsible for expanding world-wide
distribution of the Company's current product line, the expansion of the
Company's direct sales force, and increased marketing efforts. Selling, general
and administrative expenses also increased as a result of the Company's expanded
operations, legal and accounting expenses relating to the Company's new public
reporting responsibilities, and acquisition activities.
Other income consists primarily of interest received from investments of excess
cash provided by the issuance of shares of Common Stock in a private equity
transaction completed in June 1996. See "Liquidity and Capital Resources."
SIX MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30,
1995
Net sales for the six months ended September 30, 1996 were $9,733,677, compared
to $6,336,704 for the six months ended September 30, 1995, an increase of 54%.
The increase in net sales resulted from increases in both software product sales
and computer hardware sales. New versions of existing software, expansion of
product lines, and the release of software for new operating platforms being
sold by an expanded sales staff contributed to the increase in order rates for
the Company's software offerings. The wide acceptance of Digital's Alpha
hardware system contributed substantially to the increase in hardware revenues
which represented 52% of the Company's total revenues.
Gross margin for the six months ended September 30, 1996 was 34% of net sales,
compared to 43% of net sales for the comparable period in 1995. The decrease in
gross margin resulted principally from two factors: The Company's hardware sales
increased as a percentage of net sales faster than the Company's software sales
which carry a higher gross margin, and several of the new software products
added to the Company's existing software line require higher royalties to be
paid the respective manufactures than the Company's historical line of software
products.
Research and Development expenses for the six months ended September 30, 1996
were $273,993, compared to $139,026 for the six months ended September 30, 1995,
an increase of 97%. The Company recently licensed several software products,
and is, therefore, responsible for the continued development and support of
these products. This increase in expense resulted principally from the
Company's expansion into new software product lines and development costs
relating to products which will be introduced in the future.
Selling, general and administrative expenses for the six months ended
September 30, 1996 were $2,958,547,
6
<PAGE>
compared to $2,298,776 for the six months ended September 30, 1995, an
increase of 29%. The increase in selling, general and administrative
expenses resulted principally from the Company's formation of DewPoint, the
expansion of the Company's direct sales force, and increased marketing
efforts. Selling, general and administrative expenses also increased as a
result of the Company's expanded operations, legal and accounting expenses
relating to the Company's new public reporting responsibilities, and
acquisition activities.
Other income consists primarily of interest received from investments of excess
cash provided by the issuance of Common Stock in a private equity transaction
completed in June 1996. (See Liquidity and Capital Resources.)
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and capital requirements primarily
through cash flow generated from operations, equipment lease financing
facilities, and sales of equity securities. Long term borrowings have been kept
to a minimum and used primarily for the purchase of a building to house a
portion of the Company's operations. In June 1996, the Company obtained
additional cash through a private placement of Common Stock and warrants to
purchase shares of Common Stock which is reflected in the unaudited financial
statements of the Company set forth in Part I, Item I of this report.
Effective June 1, 1996, the Company established two lines of credit with a
commercial bank, one for $1,000,000, secured by trade receivables, which bears
interest at prime plus two percent, expiring June 1, 1997; the other for
$350,000, secured by equipment, which bears interest at prime plus two percent,
expiring May 1, 1999. As of September 30, 1996, the Company had no borrowings
against either line of credit.
At September 30, 1996, the Company's cash balance was $2,952,773, compared to
$1,552,806 as of April 30, 1996. Working capital increased from $943,332 at
April 30, 1996 to $2,043,396 at September 30, 1996. The Company's current ratio
increased from 1.33 at April 1996 to 1.43 at September 30, 1996. This increase
was due primarily to cash generated from operations and the proceeds of a
private placement of units consisting of shares of Common Stock and warrants to
purchase shares of Common Stock, completed by the Company in June, 1996.
The Company increased its investment in equipment during the six months ended
September 30, 1996 by $168,753 in order to expand its capacity. The Company
also increased its investment in licensed technology by $550,000 during the
six-month period.
Based on anticipated working capital requirements, the Company believes that
existing cash, cash generated from operations, and debt financing and borrowings
under the Company's existing lines of credit will be sufficient to finance the
operations of the Company in the near term. The Company continues to evaluate
opportunities for the license or acquisition of additional software products as
well as the possible acquisition of, or development of strategic alliances with,
other companies that have products or distribution channels that are compatible
with the business objectives of the Company. The Company has obtained an
option, which is exercisable until September 10, 1997, to acquire certain assets
of ASI. If the Company exercises the ASI option or identifies and proceeds with
any other acquisition or alliance opportunity, additional capital, in the form
of debt or equity financing, may be required.
7
<PAGE>
FACTORS AFFECTING FUTURE RESULTS
This Quarterly Report on Form 10-QSB contains forward-looking statements with
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Statements in
this report regarding the expansion of the Company's operations and any future
acquisition activities are forward looking statements. Words such as "expects",
"intends", "believes", "anticipates", and "likely" also identify forward looking
statements. Actual result, could differ materially from those anticipated for a
number of reasons, including, among others, increased competition, a downturn in
the market for hardware and software products, increases in interest rates, and
other unanticipated factors. Risk factors, cautionary statements, and other
conditions that could cause actual results to differ are contained in the
Company's filings with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-KSB.
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings
a. None
ITEM 2. Changes in Securities
a. None
ITEM 3. Defaults on Senior Securities
a. None
ITEM 4. Submission of Matters to Vote of Security Holders
a. The Company held its Annual Meeting of Shareholders was held on
Tuesday, September 10, 1996 for the purpose of voting on the
following proposals:
(i) To elect Gary B. Godfrey, Robert K. Bench, Brian W.
Braithwaite, William A. Fresh, and Sherman H. Smith
directors of the Company, each to serve until the next
annual meeting of shareholders of the Company and until
their respective successors have been duly elected and
qualified;
(ii) To consider and vote upon a proposal to amend the Company's
Articles of Incorporation to change the Company's name to
Sento Technical Innovations Corporation;
(iii) To consider and vote upon a proposal to ratify the
adoption of the Spire International Corp. 1996 Employee
Stock Purchase Plan (the "Stock Purchase Plan") and to
authorize and reserve 200,000 shares of the Company's
common stock for issuance under the Stock Purchase
Plan;
(iv) To consider and vote upon a proposal to ratify the
appointment of KPMG Peat Marwick LLP as independent auditor
of the Company for the fiscal year ending March 31, 1997.
Proposal (i) was approved unanimously with 3,837,604 shares voted
in favor.
8
<PAGE>
Proposal (ii) was approved with 3,834,231 shares voted in favor,
15 against, and 3,358 abstaining
Proposal (iii) was approved with 3,832,969 shares voted in favor,
1,202 against, and 3,433 abstaining
Proposal (iv) was approved with 3,836,389 shares voted in favor,
no shares against, and 1,215 abstaining.
Item 5. Other Information
a. None
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits - Exhibit No. 27 Financial Data Schedule (EDGAR)
(b) Form 8K, filed on September 11, 1996 for the purposes of
reporting a change in corporation name to Sento Technical
Innovations Corporation and filing the text of a Special Report
to shareholders.
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 thereunto duly authorized.
SENTO TECHNICAL INNOVATIONS CORPORATION
---------------------------------------
(Registrant)
By /s/ Robert K. Bench
----------------------------------------
Robert K. Bench
President, Chief Financial Officer
9
