<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K\A
AMENDMENT NO. 1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: July 9, 1997
SENTO TECHNICAL INNOVATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Utah 0-6425 87-0284979
--------------- --------------------- --------------
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) No.)
311 North State Street
Orem, Utah 84057
----------------------
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (801) 226-3355
<PAGE>
Amendment No. 1
1. This amendment No. 1 to the Current Report on Form 8-K dated September 26,
1997 is being filed by Sento Technical Innovations Corporation, to
provide the financial statements and pro forma financial information.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION.
(a) Financial statements of business acquired:
PAGE
----
Report of Independent Public Accountants F-1
Balance sheet at June 30, 1997 F-2
Income Statement for the year ended June 30, 1997 F-3
Statement of Stockholders' Equity for the year ended June 30, 1997 F-4
Statement of Cash Flows for the year ended June 30, 1997 F-5
Notes to Financial Statements F-6
(b) Pro forma financial information:
Unaudited Pro forma condensed Balance Sheet as of March 31, 1997
for Sento Technical Innovations Corporation and June 30, 1997 for
Australian Software Innovations, Inc. F-14
Unaudited Pro forma condensed Income Statements for the year
ended March 31, 1997 for Sento Technical Innovations Corporation
and June 30, 1997 for Australian Software Innovations, Inc. F-16
Notes to Pro Forma Condensed Financial Data F-17
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
ACN: 050 053 355
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1997
(With Independent Auditors' Report Thereon)
<PAGE>
[MOORE STEPHENS LETTERHEAD]
- --------------------------------------------------------------------------------
Your Reference Our Reference
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF AUSTRALIAN SOFTWARE
INNOVATIONS SERVICES PTY LIMITED
We have audited the special purpose financial statements, being the Income
Statement, Balance Sheet, Statement of Stockholders Equity, Statement of Cash
Flows and notes to and forming part of the financial statements of Australian
Software Innovations Services Pty Limited for the year ended 30 June 1997.
The company's directors are responsible for the financial statements. We have
conducted an independent audit of these financial statements in order to
express an opinion on them to the members of the company.
The financial statements have been prepared in accordance with United States
of America generally accepted accounting principles for inclusion in a report
to be lodged with the Securities Exchange Commission.
Our audit has been conducted in accordance with Australian Auditing Standards
to provide reasonable assurance as to whether the financial statements are
free of material misstatement. Our procedures included examination, on a
test basis, of evidence supporting the amounts and other disclosures in the
financial statements and the evaluation of accounting policies and
significant accounting estimates. These procedures have been undertaken to
form an opinion whether, in all material respects, the financial statements
are presented fairly in accordance with United States of America generally
accepted accounting principles so as to present a view which is consistent
with our understanding of the company's financial position, the results of
its operations and cash flows.
The audit opinion expressed in this report has been formed on the above basis.
In our opinion, the financial statements of Australian Software Innovations
Services Pty Limited are properly drawn up:
(a) so as to present fairly, in all material respects, the financial
position of the company as at 30 June 1997, and the results of operations
and cash flows for the financial year ended on that date of the company;
and
(b) in accordance with United States of America generally accepted
accounting principles.
Signed at Sydney, Australia this 22nd day of September 1997
/s/ MOORE STEPHENS
- -----------------------------
MOORE STEPHENS
CHARTERED ACCOUNTANTS
/s/ DAVID WILLIAMS SINCLAIR
- -----------------------------
DAVID WILLIAMS SINCLAIR
PARTNER
F-1
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
A.C.N. 050 053 355
BALANCE SHEET
AS OF JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF JUNE 29 1997
------------------
<S> <C>
CURRENT ASSETS
Cash 46,912
Accounts Receivable 182,315
Allowance for Doubtful Accounts (12,160)
Unearned Income in Accounts Receivable (37,529)
Export Grants Receivable 53,364
Other Receivables 11,521
Inventories 4,231
--------
Total Current Assets 248,654
NON-CURRENT ASSETS
Loans to Shareholders 185,518
Loans to Related Parties 304,869
Provisions for Related Party Loans (74,510)
Office Equipment 335,684
Motor Vehicles 183,266
Accumulated Depreciation (259,567)
--------
Total Non-Current Assets 675,260
TOTAL ASSETS 923,914
--------
--------
CURRENT LIABILITIES
Accounts Payable 109,784
Bank Overdraft 96,086
Accrued Liabilities 70,604
Deferred Revenues 150,707
Loans Payable - Current 143,733
--------
Total Current Liabilities 570,914
NON-CURRENT LIABILITIES
Loans Payable - Non-Current 113,861
TOTAL LIABILITIES 684,775
--------
STOCKHOLDERS EQUITY
Common Stock - Par Value A$1, 1,000,000
Shares Authorized, 2 Shares Issued 1
Cumulative Translation Adjustment 16,758
Retained Earnings 222,380
--------
Total Stockholders Equity 239,139
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 923,914
--------
--------
</TABLE>
F-2
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
A.C.N. 050 053 355
INCOME STATEMENT
FOR THE YEAR ENDING JUNE 30, 1997
- -------------------------------------------------------------------------------
REVENUES
Software License 873,263
Service Maintenance and Consultancy 466,966
Distribution Fees 550,000
---------
Total Revenues 1,890,229
COST OF SALES
Software Licences 287,549
Maintenance 113,005
---------
Total Cost of Sales 400,554
Gross Profit 1,489,675
OPERATING EXPENSES
General and Adminstrative 754,110
Marketing 929,996
---------
Loss from Operations 194,431
OTHER INCOME (EXPENSE)
Option Fees 130,000
Interest Income 6,217
Export Grant 56,028
Loss on Loan Receivable (78,230)
Interest Expense (37,809)
---------
Total Other Income (Expense) 76,206
Net Loss Before Taxes 118,225
Income Tax Expense 0
NET LOSS 118,225
---------
---------
Net Loss per share 59,113
F-3
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
A.C.N. 050 053 355
STATEMENT OF STOCKHOLDERS' EQUITY
AS OF 30 JUNE, 1997
- -------------------------------------------------------------------------------
Cumulative Total
Common Stock Retained Translation Stockholders
Shares Amount Earnings Adjustment Equity
------ ------ -------- ---------- ------
Balance,
July 1, 1996 2 $1 $340,605 $ - $340,606
Net Income (118,225) 16,758 (101,467)
--------------------------------------
Balance,
June 30, 1997 2 $1 $222,380 $16,758 $239,139
--------------------------------------
--------------------------------------
F-4
<PAGE>
ALINDA INVESTMENT PTY LTD
(ACN: 050 053 355)
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LTD)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1997
- -------------------------------------------------------------------------------
Year ended
June 30, 1997
-------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $(106,534)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortisation 82,954
Provision for doubtful debts 12,767
Provision for related party receivables 78,230
Staff entitlements 9,338
Changes in operating assets and liabilities:
Increase in accounts receivable (93,510)
Increase in other receivables (10,675)
Increase in inventories (4,443)
Decrease in other current assets 656
Increase in accounts payable 72,018
Increase in accrued liabilities 2,178
Increase in deferred revenue 60,383
---------
Total adjustments 209,896
---------
Net cash provided in operating activities 103,362
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (72,076)
Loans advanced during year (102,272)
Repayment of loans received during year 36,997
---------
Net cash used by investing activities (137,351)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowing under line of credit agreement 12,950
Proceeds from finance borrowings 133,546
Principal repayments of long-term debt (65,834)
---------
Net cash provided by financing activities 80,662
EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,361)
NET INCREASE IN CASH 44,312
CASH AT BEGINNING OF YEAR 2,600
---------
CASH AT END OF YEAR 46,912
---------
---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest 37,809
F-5
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
ACN: 050 053 355
NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
DESCRIPTION OF BUSINESS
Alinda Investments Pty Limited a wholly owned subsidiary of Kilat Holdings
Pty Limited (both companies being organized under the laws of Australia)
develops & markets UNIX and Windows NT-based computer management and
performance monitoring software solutions. This software is complemented by
professional consultancy and integration, performance tuning education, and
customized configuration and development services.
Alinda is also the direct Asian distributor for Corel Wordperfect for OpenVMS
and UNIX, Lotus 1-2-3 for OpenVMS, virus detection software from Trend Micro,
and a number of other leading software products for end-user,
Internet/Intranet, and systems management markets.
The Company's customers consist of business and governmental entities,
geographically dispersed throughout Australia, The pacific, Europe, Asia and
the United States.
Revenues from foreign sales for the year ended June 30, 1997 were
approximately sixty four percent of total sales, most of which were from the
United States and the United Kingdom.
INVENTORIES
Inventories consist primarily of computer software disks and supplies from
third party suppliers, which are stated at the lower of cost or market. Cost
is determined using the average cost method.
FIXED ASSETS
Fixed assets are stated at cost. Depreciation of fixed assets is computed on
both the straight-line & declining balance methods over the estimated useful
lives of individual classes of assets. The estimated useful lives of the
individual classes of assets are as follows:
Furniture & equipment 4-8 years
Motor Vehicle equipment 6-7 years
Depreciation expense for fiscal 1997 was $82,954.
F-6
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
ACN: 050 053 355
NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 1997
- ------------------------------------------------------------------------------
REVENUE RECOGNITION
Revenue from the sale of software licenses and associated consultancy and
training services is recognized as the service is performed. Deferred
maintenance revenue consists of payments received on software maintenance
contracts and recorded as revenue over the period of the contract, which is
typically one year.
RESEARCH AND DEVELOPMENT
Research and development costs are expended as incurred.
SOFTWARE DEVELOPMENT COSTS AND PURCHASED SOFTWARE
Statement of Financial Accounting Standards (SFAS) No. 86, ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED,
provides for the capitalization of certain software development costs upon
the establishment of technological feasibility which is defined by the
Company as the completion of a working model of the software. Internal
software development costs incurred to date that are eligible for
capitalization have been immaterial or else would have been fully amortised
by the reporting date.
INCOME TAXES
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and deferred tax liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and deferred tax liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. Deferred Income
taxes arise from timing differences resulting from income and expense
reported for financial accounting and tax purposes. The Company estimates its
deferred tax assets are $100,469 as of June 30, 1997. The Company believes
net deferred tax assets are unlikely to be realized and accordingly has not
recorded any deferred tax assets.
F-7
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PRY LIMITED)
ACN: 050 053 355
NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share is computed based on the
weighted average number of common shares. The number of shares used to compute
net income per common share was 2 shares for the year ended June 30, 1997.
CONCENTRATION OF CREDIT RISK
In the normal course of business, the Company provides unsecured credit terms
to its customers. Accordingly, the Company performs ongoing credit
evaluations of its customers and maintains allowances for possible losses
which, when realized, have been within the range of management's
expectations. The Company has sales to two significant customers. Total sales
to these customers were 12% and 17% respectively during the year.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets, liabilities, revenues, and expenses and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(2) NOTE PAYABLE TO BANK AND LONG-TERM DEBT
The Company has a $149,600 line of credit, at the bank's base rate plus one
and three quarter percent, secured by a mortgage over the director's personal
land and building property. An amount of $96,086 was outstanding at June 30,
1997.
F-8
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
ACN: 050 053 355
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
Long-term debt at June 30, 1997 consisted of the following:
Minimum future payments (capitalized in the financial statements) on
equipment finance. This finance is secured over the equipment, which at
June 30, 1997 has a book value of $191,720
<TABLE>
<CAPTION>
TOTAL
LIABILITY
TYPE MATURITY RATE PAYMENT 1997
---- -------- ---- ------- ---------
<S> <C> <C> <C> <C>
Secured Hire Purchase Feb-99 9.20% 1084.00 $ 36,606
Secured Hire Purchase Mar-98 10.47% 574.66 3,689
Secured Hire Purchase Jun-98 10.30% 694.08 5,870
Secured Hire Purchase May-99 9.83% 165.78 2,580
Secured Hire Purchase Aug-98 11.05% 653.94 7,735
Secured Hire Purchase Oct-97 11.30% 471.54 1,373
Secured Hire Purchase Nov-98 12.40% 1787.79 42,095
Secured Hire Purchase Feb-98 12.05% 1082.74 6,174
Secured Hire Purchase May-99 11.33% 729.33 11,198
Secured Hire Purchase May-98 11.25% 948.39 7,349
Secured Hire Purchase Mar-01 11.95% 381.99 10,276
Secured Hire Purchase Oct-00 11.70% 301.62 7,414
Secured Hire Purchase Dec-00 8.96% 563.84 14,977
Secured Hire Purchase Mar-01 9.81% 631.05 17,518
Secured Hire Purchase May-00 9.20% 365.69 8,232
--------
Total Hire Purchase 183,085
Unsecured Loan Payable Sep-97 8.00% - 74,510
--------
Total Liabilities 257,595
Less: Current Portion 143,733
--------
Long Term Liabilities 113,861
--------
--------
</TABLE>
Aggregate maturities of long-term debt are as follows:
<TABLE>
<S> <C>
1998 $143,735
1999 $ 86,384
2000 $ 17,690
2001 $ 9,787
2002 $ 0
thereafter $ 0
</TABLE>
F-9
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
ACN: 050 053 355
NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 1997
- -------------------------------------------------------------------------------
(3) OPTIONS & LICENSES GRANTED
EXCLUSIVE LICENSE AGREEMENT
Effective July 1, 1996, the company granted an exclusive license and
technical assistance agreement to Sento Technical Innovations Corporation
(Sento), a corporation organized under the laws of the United States. Sento &
related subsidiaries, which maintain their principal office in Orem, Utah,
USA, resells computer software & hardware systems and also provide technical
support to customers throughout the United States and abroad. Under the terms
of the license agreement, the Company granted an exclusive license in North
and South America during a five-year term (which may be extended for up to
three additional five-year periods) to use, market, manufacture, assemble,
test, and modify the Company's SYSMON software program. In consideration of
the grant of the license, the Company received a non-refundable license fee
in the amount of $550,000 and a right to receive royalties from the Sento
group during the term of the license, based upon product and maintenance
revenues generated by the licensee for the use, sale, license, and provision
of technical support and maintenance services attributable to the SYSMON
software. In the event that the licensee fails to meet certain performance
criteria set forth in the license agreement, the Company may terminate the
exclusive nature of the license throughout the remainder of the license term.
Revenues from the license fee and any royalties received are recognized at
the time of receipt. Royalties received from the Sento group of companies
totalled $200,569 during fiscal 1997.
OPTION AGREEMENT
On September 10, 1996, the Company entered into an Option Agreement by and
among the Company, Sento, Kilat Holdings Pty Limited (Kilat), a limited
liability company organized under the laws of Australia and the sole
shareholder of ASI and Eng Lee and Mary Lee, the sole shareholders of Kilat
(the ASI Shareholders). Under the terms of the option agreement, the Company
granted to the Sento group an option, exercisable at the optionee's
discretion any time prior to September 10, 1997, to acquire all or any
portion of the tangible and intangible assets of the Company, as determined
by the optionee.
As consideration for the grant of the option, the Company received from
Sento an option fee in the amount of $130,000. In the event that Sento elects
to exercise the option for the purchase of all the Company's assets, Sento has
agreed to pay to the Company the exercise price of $1,405,000, subject to
certain adjustments to the cash portion of the exercise price to reflect the
profit or loss of ASI for the period from April 30, 1996 through to October
31, 1996. The optionee has also agreed
F-10
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
ACN: 050 053 355
NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 1997
- --------------------------------------------------------------------------------
to assume certain liabilities associated with the assets of the Company to be
acquired by the optionee. The fee received by the Company for the granting of
the option has been recognized as revenue during fiscal 1997. No amount has
been recognized in the financial statements for any amount to be received
upon the future exercise of the option agreement.
(3) LEASES
The Company has operating leases for office space and equipment. The Company
incurred rent expense of $68,977 for the fiscal year 1997. Future minimum
rent payments under existing operating leases are $4,313 in fiscal 1998. No
further committments have been made under any operating leases at June 30,
1997.
(4) RETIREMENT PLAN
The Company has a statutory obligation under the laws of Australia to
contribute certain amounts into a regulated superannuation fund on behalf of
all employees, except where certain excemptions apply. The Company has no
involvement with the management, control or organization of the Fund. The
participants are fully vested at all times in both employee contributions &
statutory employer contributions. Employer contributions of $46,283 has been,
expensed in the financial statements for the fiscal year 1997.
(5) COMMON STOCK
The Company has not issued any options, warrants or other placements over its
common stock to any employees or outside parties during the fiscal year 1997
or as at June 30, 1997.
The Company's Common Stock is not listed on any board, market or exchange in
the United States or abroad.
(6) RELATED PARTY RECEIVABLES
The Company currently has three loans receivables from related parties. The
loan outstanding from a shareholder at June 30, 1997 was $185,517, a net
decrease of $12,567 during the year. In addition, the Company has two loans
outstanding to related affiliates of $162,572 and $142,117, a net increase of
$18,534 and $78,876 respectively. During the year the Company recorded a
provision against the latter loan for $74,510 due to the assessment of the
loan's collectibility.
F-11
<PAGE>
ALINDA INVESTMENTS PTY LIMITED
(FORMERLY AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LIMITED)
ACN: 050 053 355
NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 1997
- ------------------------------------------------------------------------------
(7) SUBSEQUENT EVENTS
On 10th July 1997, Sento Technical Innovations Corporation, a company
organized under the laws of the United States, exercised its option under an
option agreement granted by the Company to purchase all of the Company's
assets directly related to its computer software business & certain
associated liabilities. The assets sold included the following items
recognized in the attached balance sheet: cash, accounts receivable,
inventories & fixed assets (excluding some transportation vehicles). The
amount reflected in these financial statements as at June 30, 1997 for the
assets transfered is $341,311. Liabilities assumed by Sento under the option
exercise includes the following liabilities recognised in the financial
statements: bank line of credit, accounts payable, equipment finance
creditors, employee entitlements, short term loans, and deferred maintenance
revenue. The amount reflected in the financial statements as at June 30, 1997
for these items amounts to $682,612. Assets not reflected in the financial
statements which were also transferred under the option agreement includes:
all the rights of the Company in the intellectual property of the Company's
computer software products, its know how, documentation & development costs in
the computer products, its customer list & marketing material, and the
goodwill associated with the Company's products, reputation, location & name
(which was also subject to the transfer). The Company's ultimate shareholders
have also entered into a non compete deed covering a period of 3 years. The
exercise price received by the company for the transfer of the above assets &
liabilities (excluding the option exercise price of $130,000 previously
received) was $1,153,000.
The Company & its ultimate shareholders have in respect of the asset sale
granted to Sento various warranties, representations & indemnifications
including but not limited to its ownership in the assets sold, the consent of
various third parties to the sale, publicity, exclusivity, cooperation &
restraint of trade.
F-12
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect to the acquisition by the Company of substantially all of the
assets and the assumption of certain liabilities of Australian Software
Innovations (Services) Pty Ltd ("ASI") as described in Item 2 of this current
report on Form 8-K. The following statements have been prepared using the
historical financial statements of the Company, and the historical financial
statements of ASI. The pro forma financial information reflects adjustments
deemed necessary by the Company to give effect to the acquisition as if it
had occurred as of the beginning of the period presented with respect to pro
forma statements of operations data and as of the balance sheet date with
respect to pro forma balance sheet data. The pro forma financial data is
provided for analysis purposes only and does not purport to indicate the
results which actually would have been obtained if the acquisition had been
effected on the dates indicated, or of the results which may be obtained in
the future.
The pro forma financial information is based on the purchase method of
accounting. The pro forma adjustments are described in the accompanying
notes to the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined statement of income combines the
results of the Company for the eleven months ended March 31, 1997 with the
results of ASI for the year ended June 30, 1997. The unaudited pro forma
condensed combined balance sheet shows the combined positions of the Company
and ASI as of March 31, 1997 and June 30, 1997 respectively.
The principal ASI assets acquired by the Company in the ASI acquisition,
consisting primarily of the software products, were subsequently sold to BMC
Software Inc. as described in Item 2 of this current report on Form 8-K. The
sale of the software products is not reflected in the unaudited pro forma
condensed combined balance sheet since it was a subsequent event and will be
reflected in future financial statements issued by the Company. No
adjustment has been made to the unaudited pro forma condensed combined
statement of income to reflect the sale of the software products because ASI
will continue to sell the BMC software line of products which now includes
the ASI software products.
F-13
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION AND
AUSTRALIAN SOFTWARE INNOVATIONS, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Historical Historical Pro Forma
-----------------------------------------------------------
Sento ASI
As of March 31, As of June 30,
1997 1997 Adjustments Combined
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $2,225,338 $46,912 $(1,357,111)(1) $915,139
Accounts Receivable (Net) 3,140,425 132,626 (85,355)(4) 3,187,696
Inventories 155,465 4,231 159,696
Other current assets 241,644 64,885 (64,885)(2) 111,644
(130,000)(6)
Deferred tax assets 98,917 98,917
------------------------------------------ ------------
Total current assets 5,861,789 248,654 (1,637,351) 4,473,092
------------------------------------------ ------------
Fixed assets
Land 36,021 36,021
Building 250,489 250,489
Furniture and equipment 772,321 335,684 1,108,005
Transportation 11,516 183,266 (163,266)(2) 31,516
Acc. depreciation (359,268) (259,567) 61,425 (2) (557,410)
------------------------------------------ ------------
Net fixed assets 711,079 259,383 (101,841) 868,621
------------------------------------------ ------------
Goodwill 1,690,202 (3) 1,690,202
Other assets 476,400 415,877 (415,877)(2) 27,600
(448,800)(6)
------------------------------------------ ------------
$7,049,268 $ 923,914 $ (913,667) $7,059,514
------------------------------------------ ------------
------------------------------------------ ------------
</TABLE>
F-14
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION AND
AUSTRALIAN SOFTWARE INNOVATIONS, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Historical Historical Pro Forma
--------------------------------------------------------------
Sento ASI
As of March 31, As of June 30,
1997 1997 Adjustments Combined
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Liabilities and Stockholders Equity
Current liabilities:
Current portion of long-term debt $8,286 $239,819 $(204,111)(1) $43,994
Accounts payable 2,216,634 109,784 (85,355)(4) 2,241,063
Accrued liabilities 260,274 70,604 (2,163)(2) 328,715
Income taxes payable 132,207 132,207
Deferred maintenance revenue 1,099,849 - 1,099,849
Other deferred revenue 4,959 150,707 155,666
--------------------------------------------- ------------
Total current liabilities 3,722,209 570,914 (291,629) 4,001,494
--------------------------------------------- ------------
Long-term liabilities:
Long-term debt, excl. current portion 208,075 113,861 321,936
Deferred tax liability 5,333 5,333
--------------------------------------------- ------------
Total long-term liabilities 213,408 113,861 - 327,269
--------------------------------------------- ------------
Stockholders' equity
Common stock 1,087,784 1 (1)(2) 1,087,784
Additional paid-in capital 1,595,376 1,595,376
Deferred compensation (100,000) (100,000)
Cumulative translation adjustment 16,758 (16,758)(2) -
Retained earnings 530,491 222,380 (222,380)(2) 147,591
(101,200)(6)
(281,700)(3)
--------------------------------------------- ------------
Total stockholders' equity 3,113,651 239,139 (622,038) 2,730,751
--------------------------------------------- ------------
$7,049,268 $923,914 $(913,667) $7,059,514
--------------------------------------------- ------------
--------------------------------------------- ------------
</TABLE>
F-15
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION AND
AUSTRALIAN SOFTWARE INNOVATIONS, INC.
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENTS
<TABLE>
<CAPTION>
Historical Historical Pro Forma
----------------------------------------------------------
Sento ASI
for 11 months for 12 months
ended March 31, ended June 30,
1997 1997 Adjustments Combined
----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Software licenses and maintenance $8,855,887 $873,263 $ (313,518)(5) $9,415,633
Hardware sales and services 8,753,699 466,966 9,220,665
Distribution fees - 550,000 (550,000)(6) -
----------------------------------------- ------------
Total revenues 17,609,586 1,890,229 (863,518) 18,636,298
----------------------------------------- ------------
Cost of Sales:
Software licenses and maintenance 3,927,280 287,549 (313,518)(5) 3,901,311
Hardware sales and services 7,514,278 113,005 7,627,283
----------------------------------------- ------------
Total cost of sales 11,441,558 400,554 (313,518) 11,528,594
----------------------------------------- ------------
Gross Profit 6,168,028 1,489,675 (550,000) 7,107,704
Operating Expenses
Selling, general and administrative 5,711,061 1,684,106 281,700(3) 7,676,867
Research and development 524,787 524,787
----------------------------------------- ------------
Income (loss) from operations (67,820) (194,431) (831,700) (1,093,951)
Other income (expense):
Interest income 67,769 6,217 73,986
Interest expense (21,878) (37,809) (59,687)
Other income (expense) 60,484 56,028 116,512
Option fees - 130,000 (130,000)(6) -
Loss on Loan receivable - (78,230) (78,230)
----------------------------------------- ------------
Total other income (expense) 106,375 76,206 (130,000) 52,581
----------------------------------------- ------------
Income before taxes 38,555 (118,225) (961,700) (1,041,370)
Income tax expense 16,139 - 16,139
Net Income (loss) $22,416 $(118,225) $(961,700) $(1,057,509)
----------------------------------------- ------------
----------------------------------------- ------------
Net Income (loss) per common share $0.01 $59,113 $(0.24)
----------------------------------------- ------------
----------------------------------------- ------------
</TABLE>
F-16
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following pro forma adjustments have been made to the historical
condensed consolidated balance sheet of Sento Technical Innovations
Corporation to give effect to the acquisition of certain assets and
assumption of certain liabilities of ASI.
(1) To reflect the reduction of cash for the purchase of the assets and
liabilities of ASI, including payment of the bank overdraft assumed by
Sento.
(2) To eliminate assets not acquired and liabilities not assumed by Sento
in connection with the acquisition.
(3) To record Goodwill of $1,971,902 in connection with the acquistion and
to reflect 1 year of amortization of that goodwill on a straight-line
basis over 7 years.
(4) To reflect eliminations of the intercompany accounts payable and
accounts receivable.
(5) To reflect eliminations of the intercompany revenues and cost of goods
sold.
(6) To eliminate the revenues recorded from the distribution fee and
option fee and the assets related to these. An adjustment to retained
earnings was made to reflect the amortization Sento expensed of
$101,200 on the distribution fee.
F-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Amendment No. 1 to Current 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
Date: Sept. 26, 1997
