As filed with the Securities and Exchange Commission on September 24, 1997
Registration No. 333 ___________
_______________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S 3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________
SENTO TECHNICAL INNOVATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UTAH 311 North State Street 87 0284979
(State or other Orem, Utah 84057 (I.R.S. employer
jurisdiction of (801) 226-3355 identification
incorporation or (Address, included zip number)
organization) code, and telephone
number,
including area code,
of registrant's
principal executive
offices)
______________________
ROBERT K. BENCH
PRESIDENT
SENTO TECHNICAL INNOVATIONS CORPORATION
311 NORTH STATE STREET
OREM, UTAH 84057
(801) 226-3355
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
______________________
COPIES TO:
BRIAN G. LLOYD, ESQ.
ERIC W. PEARSON, ESQ.
KIMBALL, PARR, WADDOUPS, BROWN & GEE
185 SOUTH STATE STREET, SUITE 1300
SALT LAKE CITY, UTAH 84111
(801) 532 7840
______________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective
______________________
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: ___
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: _X_
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: ___
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: ___
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount to Maximum Maximum
be Offering Aggregate Amount of
Title of Each Class of Registered Price Per Offering Price Registration
Securities to be Registered (1) Share (2) (2) Fee
Common Stock, $0.25 par
value . . . . . . . . . . . 970,000 $4.69 $4,549,300.00 $1,380.00
(1) Includes a presently indeterminate number of shares issuable upon
conversion of the Registrant's 6% Series A Convertible Bond.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the last reported sale price for
such stock on September __, 1997, as reported by the National Quotation
Bureau.
______________________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
PROSPECTUS
970,000 SHARES
COMMON STOCK
__________________
This Prospectus relates to 970,000 shares of outstanding common stock,
$0.25 par value (the "Common Stock"), of Sento Technical Innovations
Corporation, a Utah corporation (the "Company"). All of the shares of Common
Stock offered hereby (the "Shares") are to be sold by existing shareholders of
the Company (the "Selling Shareholders"). Substantially all of the Selling
Shareholders acquired 720,000 of the Shares in connection with a private
placement completed by the Company on August 27, 1997. The remaining Shares
consist of a presently indeterminate number of Shares issuable upon conversion,
pursuant to Rule 416 under the Securities Act of 1933, as amended (the
"Securities Act"), of the Company's $1,000,000 6% Series A Convertible Bond (the
"Canadian Bond") acquired from the Company by Canadian Imperial Holdings Inc.
("Canadian Imperial") on July 8, 1997. For purposes of this Prospectus, the
number of Shares beneficially held by Canadian Imperial by virtue of the
Canadian Bond has been computed based on an estimated conversion price of $4.06
per share of Common Stock, assuming conversion thereof on October 7, 1997.
Nonetheless, the number of Shares available for resale hereunder by Canadian
Imperial is subject to adjustment and could materially differ from the estimated
amount depending on the future market price of the Common Stock. See "SELLING
SHAREHOLDERS."
The Company will not receive any of the proceeds from the sale of any shares of
Common Stock hereunder. The Common Stock is quoted on the "Small Cap Market" of
the National Association of Securities Dealers ("NASD") under the symbol "SNTO."
On September 22, 1997, the last reported sale price of the Common Stock, as
reported by the National Quotation Bureau, was $4.625 per share.
__________________
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 5 OF THIS 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 PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER __, 1997
<PAGE>
AVAILABLE INFORMATION
All expenses of this offering will be paid by the Company except for
commissions, fees and discounts of all underwriters, brokers, dealers or agents
retained by the Selling Shareholders. Estimated expenses payable by the Company
in connection with this offering are approximately $25,380. The aggregate
proceeds to the Selling Shareholders from the resale of the Shares will be the
purchase price of the Shares sold less the aggregate agents' commissions and
underwriters' discounts, if any. The Company has agreed to indemnify the
Selling Shareholders against certain liabilities, including liabilities under
the Securities Act.
The date of this Prospectus is September 24, 1997
The Company has filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act a registration statement on Form S-3 (the
"Registration Statement") with respect to the Shares offered hereby. The
Selling Shareholders and any agents, broker-dealers or underwriters that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commission received by, or any
profit realized on the resale of Shares purchase by, any such agents, broker-
dealers or underwriters may be deemed to be underwriting discounts or commission
under the Securities Act.
AVAILABLE INFORMATION
This Prospectus, filed as a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information regarding the Company and the Shares reference is made to the
Registration Statement, including the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to herein are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
its entirety by such reference.
The Company is subject to the informational and reporting requirements of
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information concerning
the Company may be inspected and copied without charge at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may also be obtained from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed fees. The Commission maintains a
Web site that contains reports, proxy statements and other information regarding
registrants at http://www.sec.gov. In addition, the Company intends to furnish
its shareholders with annual reports which include financial statements that
have been audited with a report thereon by its independent accountants.
The Common Stock is quoted on the NASDAQ Small Cap Market. Reports, proxy
statements and other information concerning the Company can be inspected and
copied at the Public Reference Room of the NASD, 1735 K Street, N.W.,
Washington, D.C. 20006.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
(File No. 0-6425) pursuant to the Exchange Act are incorporated into this
Prospectus by reference:
(a) The Company's Annual Report on Form 10-KSB for the eleven months
ended March 31, 1997, filed on June 30, 1997.
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1997, filed on August 15, 1997.
(c) The Company's Current Report on Form 8-K filed on July 29, 1997,
relating to the acquisition by the Company of certain technology and
other assets from Australian Software Innovations (Services) Pty. Ltd.
and the sale by the Company of certain portions of such technology and
assets to BMC Software, Inc., and BMC Software (Cayman) LDC.
(d) Description of the Company's Common Stock contained in a Registration
Statement on Form 10 dated July 24, 1972.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained herein or in a document all or any portion of which
is incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, upon written or oral request of any such person, a copy
of any or all of the foregoing documents (other than exhibits to such documents
which are not specifically incorporated by reference in such documents).
Written requests for such copies should be directed to the Company at 311 North
State Street, Orem, Utah 84057, Attention: Chief Financial Officer. Telephone
requests may be directed to the office of the Chief Financial Officer of the
Company at (801) 226-6222.
PROPRIETARY MARKS
The Company and its subsidiaries offer, sell and utilize many third-party
products represented by registered or common law trademarks, including the
following trademarks: UNIX is a trademark of Novell, Inc. VMS and Open
VMS are trademarks of Digital Equipment Corporation. Windows , Windows
NT and Windows 95 are trademarks of Microsoft Corporation. This
Prospectus also contains trademarks of other companies.
No person has been authorized to give any information or make any
representation other than those contained in, or incorporated by reference into,
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or any Selling
Shareholder. This Prospectus does not constitute an offer to sell or
solicitation of any offer to buy, nor shall there be any sale of the Shares by
anyone, in any state in which such offer, solicitation or sale would be unlawful
prior to registration or qualification of the Shares under the securities laws
of any state, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Neither delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the information herein or the affairs of the Company since the
date hereof.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING
ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THIS PROSPECTUS
CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), THAT INVOLVE RISKS
AND UNCERTAINTIES. PURCHASERS OF ANY OF THE SHARES OF COMMON STOCK (THE "COMMON
STOCK"), PAR VALUE $0.25 PER SHARE, OF THE COMPANY OFFERED HEREBY (THE "SHARES")
ARE CAUTIONED THAT THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM
THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD
CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE FACTORS DISCUSSED HEREIN
UNDER "Risk Factors" AND ELSEWHERE IN THIS PROSPECTUS GENERALLY.
THE COMPANY
Sento Technical Innovations Corporation, a Utah corporation (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 five wholly-owned subsidiaries, Spire
Technologies, Inc., Spire Systems Incorporated, DewPoint Distributed Solutions
Incorporated, Centerpost Innovations Pty. Ltd. and CDG Technologies, Inc.,
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 a value-added basis and manages value-added reseller ("VAR") 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.
Unless the context requires otherwise, all references to the "Company" in
this Prospectus refer to the Company and each of its subsidiaries. The
Company's principal executive offices are located at 311 North State Street,
Orem, Utah 84057, and its telephone number is (801) 226-3355.
THE OFFERING
Common Stock offered by the Selling
Shareholders . . . . . . . . . . . . . 970,000 Shares (1)
Common Stock outstanding prior to and
after this offering . . . . . . . . . . 5,388,002 shares (1)(2)
Use of Proceeds . . . . . . . . . . . . . . All proceeds of the offering
will be received by the Selling
Shareholders. See "USE OF
PROCEEDS."
Small Cap Market trading symbol . . . . . . SNTO
____________________
(1) Includes a presently indeterminate number of Shares issuable upon
conversion of the Registrant's 6% Series A Convertible Bond.
(2) Excludes 1,586,935 shares of Common Stock issuable upon the exercise of
outstanding stock options and warrants granted by the Company.
SELLING SHAREHOLDERS
All of the shares of Common Stock offered hereby are to be sold by certain
shareholders of the Company (the "Selling Shareholders"). Substantially all of
the Selling Shareholders acquired 720,000 of the Shares offered hereby in
connection with a private placement completed by the Company on August 27, 1997
(the "Private Placement"). Canadian Imperial Holdings Inc. ("Canadian
Imperial") will acquire a presently indefinite number of the Shares offered
hereby pursuant to the conversion of the Company s 6% Series A Convertible Bond
(the Canadian Bond ) acquired by Canadian Imperial on July 8, 1997. See
"SELLING SHAREHOLDERS."
<PAGE>
RISK FACTORS
THE FOLLOWING RISK FACTORS CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING
IMPORTANT FACTORS, INCLUDING CERTAIN RISKS AND UNCERTAINTIES, WITH RESPECT TO
SUCH FORWARD-LOOKING STATEMENTS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS. IN
ADDITION, ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE MATTERS APPEARING ELSEWHERE OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THE COMPANY CAUTIONS THE READER
THAT THIS LIST OF FACTORS MAY NOT BE EXHAUSTIVE. AN INVESTMENT IN THE SHARES
BEING OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. BEFORE MAKING A DECISION
TO PURCHASE ANY OF THE SHARES DESCRIBED IN THIS PROSPECTUS, PROSPECTIVE
INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS AS WELL AS THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS.
RELIANCE ON SUPPLIERS. The Company is solely dependent on Digital
Equipment Corporation and authorized distributors of Digital products for its
supply of hardware. In addition, the Company obtains and resells software from
various third-party vendors, many of whom are the Company's sole sources for
such software. Over 70% of the combined revenues of the Company are derived
from products it obtains from three suppliers: Digital, Corel Corporation and
Lotus Development Corporation. If the Company were unable to obtain such
hardware or software products from one of such third-party vendors, the Company
would be required to seek other sources for alternative products. There can be
no assurance that the Company would be able to obtain competitive alternate
sources of supply for such products. The failure of such suppliers to deliver
such items on a timely basis, or the necessity that the Company obtain
replacement products for unavailable suppliers, could adversely affect the
operating results of the Company until alternative sources of supply, if any,
could be arranged. Should these suppliers select a different distribution
channel or fail to renew existing distribution agreements with the Company, the
profitability and ability of the Company to continue in business could be
significantly compromised.
These suppliers could fail to supply hardware or software to the Company
for reasons including but not limited to the following:
* the supplier could go out of business or sell its product line;
* the supplier could change its distribution methods and channels and
cancel agreements with third parties such as the Company or otherwise
fail to renew its agreement with the Company;
* the supplier could increase its product price to the Company thereby
adversely affecting profit margins for such products and the desire of
the Company to continue to represent such products; or
* the Company could fail to meet performance quotas or other standards
contained in certain of its agreements with suppliers, resulting in
termination of the agreements.
Many of the agreements between the Company and third-party suppliers are
verbal in nature and have not been reduced to writing.
CHANGING MARKET. The market for computer products and services is
continually changing. The Company anticipates that the market for office
automation products on server applications will decrease as those functions move
to desk-top computers. Company management has identified the markets for UNIX
and Windows NT operating systems as promising growth potential for the Company;
however, such potential is not yet proven and may not evolve or prove
sufficiently profitable. Company management anticipates that there will be
significant competition for products in the Windows NT market, resulting in
lower margins.
COMPETITION. The market for computer products is competitive, evolving and
subject to rapid technological change. Many of the current and potential
competitors of the Company have longer operating histories, greater name
recognition, larger installed customer bases and significantly greater
financial, technical and marketing resources than the Company. The methods of
competition in the computer products industry include marketing, product
performance, price, service, technology and compliance with various industry
standards, among others. It is possible for companies to be at various times
competitors, customers and collaborators of the Company in different markets.
There can be no assurance that additional products will not be developed in
competition with those sold by the Company. If developed, such products may be
more effective than those sold by the Company. Although the Company continues
to seek new products to complement its existing product lines and, as necessary,
to replace existing products with newer and better products, there can be no
assurance that the Company will be able to do so.
PRODUCT DEVELOPMENT RISK. The information technology industry is
characterized by rapid changes, including frequent new product introductions,
continuing advances in technology and changes in customer requirements and
preferences. The introduction of new technologies could render the Company's
existing products obsolete or unmarketable or require the Company to invest
resources in products that may not become profitable. The development cycle for
the Company's new products may be significantly longer than the Company's
historical product development cycle, resulting in higher development costs or a
loss in market share. There can be no assurance that (i) the Company will be
able to counter competition to its current products; (ii) the Company's future
product offerings will keep pace with the technological changes implemented by
competitors; (iii) the Company's products will satisfy evolving preferences of
customers and prospects; or (iv) the Company will be successful in developing
and marketing products for any future technology. Failure to develop and
introduce new products and product enhancements in a timely fashion could have a
material adverse effect on the Company's financial condition and results of
operations.
SALES AND DISTRIBUTION RISKS. As of September 1, 1997, the Company had 50
employees in its direct sales organization and 5 employees in its marketing
organization, many of whom have been employed by the Company for less than a
year. In order to support sales growth, if any, the Company will need to
maintain the size of its sales and marketing staff, increase the staff's
productivity and continue to develop indirect distribution channels. There can
be no assurance that the Company will be able to leverage successfully its sales
force or that the Company's sales and marketing organization will successfully
compete against the sales and marketing organizations of the Company's current
and future competitors. The Company is in the early stages of developing its
indirect distribution channels in North America, Europe and Southeast Asia.
There can be no assurance that the Company will be able to attract third parties
that will be able to market the Company's products effectively and will be
qualified to provide timely and cost-effective customer support and service.
The Company's distributors and resellers may carry competing product offerings.
There can be no assurance that any distributor or reseller will continue to
represent the Company's products. The inability to recruit and retain important
sales personnel, distributors or resellers could materially adversely affect the
Company's financial condition and results of operations.
MARKETING. The Company markets its products and services through a direct
sales force of approximately 50 persons operating from locations in Utah,
Massachusetts, North Carolina, Australia and the United Kingdom. In addition,
arrangements with third parties, including hardware manufacturers, software
developers, resellers and authorized distributors, are becoming an increasingly
important part of the Company's focus on providing solutions to its customers
and expanding distribution of its products and services through indirect
channels domestically and internationally. The loss of services of certain of
such third-party distributors or resellers could have a material adverse effect
on the business, financial condition and results of operations of the Company.
COLLECTION OF ACCOUNTS. The Company's business of selling hardware and
software products involves certain account collection risks. In the event a
hardware purchaser defaults on its payment obligation, the Company would file a
credit insurance claim; however, the insurer may deny coverage or otherwise fail
to pay. With respect to software sales, a customer who has ordered and received
software from the Company may fail to pay timely for the software, thus creating
a collection problem for the Company. In addition, a distributor may default in
timely payment of amounts owing to the Company.
DEPENDENCE ON KEY PERSONNEL. The success of the Company depends, in large
part, on its ability to attract and retain highly-qualified managerial, sales,
marketing, technical support and product development personnel. The Company has
not entered into employment agreements that require the services of its key
personnel to remain with the Company for any specified period of time. The loss
of the current key personnel of the Company could have a material adverse effect
on the Company. Competition for such personnel is intense, and there can be no
assurance that the Company will be able to attract and maintain all personnel
necessary for the development and operation of its business. The loss of the
services of key personnel or an inability to attract, retain and motivate
qualified personnel could have a material adverse effect on the business,
financial condition and results of operations of the Company.
ACQUISITION RISKS. The Company is currently evaluating, and plans to
continue to evaluate, additional opportunities for the license or acquisition of
additional software products as well as the possible acquisition of, or
development of strategic relations with, other companies who may have products
or distribution channels that are compatible with the business objectives of the
Company. The Company must compete for the acquisition of attractive acquisition
or strategic alliance candidates with numerous other companies, many of whom
have significantly greater financial resources than the Company. There can be
no assurance that the Company will be able to successfully identify acquisition
and strategic alliance opportunities that are appropriate for the Company. Such
acquisitions and alliances could involve the incurrence of additional debt,
amortization expenses related to goodwill and intangible assets or the dilutive
issuance of equity securities, all of which could adversely affect the Company's
operating results. Accordingly, future acquisitions and alliances may have an
adverse effect on the Company's operating results, particularly in the fiscal
quarters immediately following the consummation of such transactions, while the
operations of the acquired or combined business are being integrated into the
Company's operations. There can be no assurance that capital sought by the
Company to pursue such opportunities can be obtained on terms favorable to the
Company, if at all. The failure of the Company to obtain such financing could
restrict its ability to pursue such business opportunities. Further, there can
be no assurance that any particular acquisition or alliance will be successfully
integrated into the Company's operations or will achieve profitability.
CONCENTRATION OF SHARE OWNERSHIP. The current officers and directors of
the Company own beneficially approximately 36% of the issued and outstanding
shares of Common Stock. As a result, the current officers and directors of the
Company possess voting power sufficient to influence significantly the affairs
of the Company. Such concentration of ownership may have the effect of
delaying, deferring or preventing a change in control or management of the
Company. Future sales by current officers and directors of the Company of
substantial amounts of Common Stock, or the potential for such sales, could
adversely affect the prevailing market price for the Common Stock.
ANTI TAKEOVER CONSIDERATIONS. The Company's Articles of Incorporation, as
amended (the "Articles"), the Company's Bylaws, as amended (the "Bylaws"), the
Utah Revised Business Corporation Act and the Utah Control Shares Acquisition
Act each contain certain provisions that may have the effect of inhibiting a
non-negotiated merger or other business combination, including without
limitation provisions granting the Board of Directors of the Company authority,
without further action by the Company's shareholders, to fix the rights and
preferences, and issue shares, of the Company's preferred stock, par value $1.00
per share. These provisions may have the effect of deterring hostile takeovers
or delaying or preventing changes in control or management of the Company,
including transactions in which shareholders might otherwise receive a premium
for their shares over the then-current market prices. In addition, these
provisions may limit the ability of shareholders to approve transactions that
they may deem to be in their best interests.
POTENTIAL SIGNIFICANT FLUCTUATIONS IN QUARTERLY OPERATING RESULTS AND
LENGTHY SALES CYCLE. The value of individual transactions as a percentage of
the Company's quarterly revenues can be substantial, and particular transactions
may generate a substantial portion of the operating profits for a quarter. The
sales of the Company's system management products generally involve significant
education of prospective customers as well as a commitment of resources by both
parties. For these and other reasons, the sales cycle associated with the sales
of these products is typically between six and twelve months and is subject to a
number of significant risks over which the Company has little or no control.
Because the Company's staffing and other operating expenses are based on
anticipated revenue levels, and a high percentage of the Company's expenses are
fixed, delays in the receipt of orders can cause significant variations in
operating results from quarter to quarter. In addition, the Company may expend
significant resources pursuing potential sales that will not be consummated.
The Company also may choose to reduce prices or to increase spending in response
to competition or to pursue new market opportunities, which may adversely affect
the Company's operating results. Accordingly, the Company believes that period-
to-period comparisons of its results of operations may not be meaningful and
should not be relied upon as an indication of future performance. Furthermore,
there can be no assurance that the Company will be able to achieve and sustain
profitability on a quarterly basis.
POSSIBLE VOLATILITY OF STOCK PRICE. The trading price of the Common Stock
could fluctuate widely in response to variations in quarterly operating results,
announcements by the Company or its competitors, industry trends, general
economic conditions or other events or factors. Among other factors, as
described in the preceding paragraph, it is likely that in some future quarters
the Company's operating results will be below the expectations of public market
analysts and investors. Regardless of the general outlook for the Company's
business, the announcement of quarterly operating results below analyst and
investor expectations could have a material and adverse effect on the market
price of the Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of Common
Stock or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock. As of September 1, 1997, the
Company had 5,388,002 shares of Common Stock outstanding, of which 1,315,703
shares are eligible under applicable securities laws for immediate sale in the
public market without restriction, except for any shares purchased by an
"affiliate" of the Company (as that term is defined under the rules and
regulations of the Securities Act) which will be subject to the resale
limitations of Rule 144 under the Securities Act ("Rule 144"). The remaining
approximately 4,072,299 outstanding shares are "restricted securities," as that
term is defined under Rule 144, and may be eligible for sale, subject to certain
restrictions, in the open market pursuant to Rule 144.
POTENTIAL DILUTION. Although the Company has no present intentions of
doing so, it is possible that the Company may sell additional shares of Common
Stock to finance future acquisitions or other operations or development of the
Company. Depending on the consideration provided by purchasers of Common Stock
in such circumstances, such sales may result in immediate and substantial
dilution to the purchasers of Shares hereunder.
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth, as of the date of this Prospectus, the name
of each Selling Shareholder, certain beneficial ownership information with
respect to the Selling Shareholders, and the number of Shares that may be sold
from time to time by each Selling Shareholder pursuant to this Prospectus.
There can be no assurance that the Shares offered hereby will be sold. Unless
otherwise noted, each person named has sole voting and investment power with
respect to the shares of Common Stock indicated. The percentages set forth
below have been computed based on the number of outstanding securities,
excluding treasury shares held by the Company, which was 5,388,002 shares of
Common Stock as of September 1, 1997. Except as otherwise indicated, the
Company believes the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them, subject to community property laws, where applicable. No Selling
Shareholder is offering hereunder any shares of Common Stock issuable by the
Company pursuant to warrants held by such Selling Shareholder.
For purposes of this Prospectus, the number of Shares beneficially owned by
Canadian Imperial by virtue of the Canadian Bond has been computed based on an
estimated conversion price of $4.06 per share of Common Stock, which price is
less than $4.625, the closing market price of the Common Stock as of September
23. The Registration Statement includes, in accordance with Rule 416 under the
Securities Act, an indeterminate number of Shares issuable upon conversion of
the Canadian Bond as a result of the floating rate conversion feature thereof.
The use of such hypothetical conversion price and date is not intended and
should in no way be construed to constitute a prediction as to the future market
price of the Common Stock or an indication of Canadian Imperial s intent to
convert the Canadian Bond on such date.
Shares
Beneficial Beneficially
Ownership Owned upon
Prior to Completion of
Offering Offering (1)
Number
of
Number Shares Number
of Percent being of Percent
Beneficial Owner Shares (2) Offered Shares (2)
Canadian Imperial Holdings Inc. (3) 280,000 5.2% 250,000 30,000 *
American Energy Management Profit
Sharing Plan (4) . . . . . . . . 18,800 * 14,100 4,700 *
Anchor Sales Co. Profit Sharing *
Trust (5) . . . . . . . . . . . 20,000 15,000 5,000 *
Byron B. Barkley Pension/Profit
Sharing Trust (6) . . . . . . . 4,000 * 3,000 1,000 *
William R. Bell (7) . . . . . . . . 16,000 * 12,000 4,000 *
Benson Family Trust (7) . . . . . . 16,000 * 12,000 4,000 *
Delaware Charter Guarantee & Trust,
as Trustee for David M. Berkowitz
IRA (8) . . . . . . . . . . . . 8,000 * 6,000 2,000 *
Glenn G. Bingham (8) . . . . . . . 8,000 * 6,000 2,000 *
Wallace T. Boyack Pension and Profit
Sharing Trust (6) . . . . . . . 4,000 * 3,000 1,000 *
The Robert N. Broadbent & Marie Sue
Broadbent Family Trust . . . . 8,000 * 6,000 2,000 *
Robert C. Broadbent (9) . . . . . . 12,000 * 9,000 3,000 *
Irwin Bronstein (8) . . . . . . . . 8,000 * 6,000 2,000 *
Keith A. Cannon (9) . . . . . . . . 12,000 * 9,000 3,000 *
Gary E. Cansler and Judy K. Cansler,
joint tenants (7) . . . . . . . 16,000 * 12,000 4,000 *
Caribou Bridge Fund, LLC (7) . . . 16,000 * 12,000 4,000 *
Kevin W. Clark (8) . . . . . . . . 8,000 * 6,000 2,000 *
Gene P. Clasen (10) . . . . . . . . 48,000 * 36,000 12,000 *
Wayne T. Clasen (11) . . . . . . . 32,000 * 24,000 8,000 *
David G. Collette (6) . . . . . . . 4,000 * 3,000 1,000 *
Brent L. & Vicki T. Cox, joint
tenants (8) . . . . . . . . . . 8,000 * 6,000 2,000 *
Bruce Cox (8) . . . . . . . . . . . 8,000 * 6,000 2,000 *
Ludene F. Dallimore (8) . . . . . . 8,000 * 6,000 2,000 *
Lyle W. Davis IRA (6) . . . . . . . 4,000 * 3,000 1,000 *
Paul N. Davis (6) . . . . . . . . . 4,000 * 3,000 1,000 *
Steven A. Dawes (11) . . . . . . . 32,000 * 24,000 8,000 *
Delta Financial Resources (12) . . 136,000 2.5 102,000 34,000 *
Robert P. Ellis (8) . . . . . . . . 8,000 * 6,000 2,000 *
J. Neal Ethridge (7) . . . . . . . 16,000 * 12,000 4,000 *
Barton T. Gleave D.D.S. P.C. PSP &
MPPP (11) . . . . . . . . . . . 32,000 * 24,000 8,000 *
Rodney S. Gleave / Kelly W. Gleave
Family Trust (11) . . . . . . . 32,000 * 24,000 8,000 *
Kristine A. Gomichec (8) . . . . . 8,000 * 6,000 2,000 *
Greenfield Financial Corp. (8) . . 8,000 * 6,000 2,000 *
John Hartunian (13) . . . . . . . . 24,000 * 18,000 6,000 *
Kenichi & Anmy Inouye, joint tenants
(6) . . . . . . . . . . . . . . . . 4,000 * 3,000 1,000 *
Irish Shamrock Family Limited
Partnership (6) . . . . . . . . 4,000 * 3,000 1,000 *
Burke L. & Sonja H. Isaacson, joint
tenants (8) . . . . . . . . . . 8,000 * 6,000 2,000 *
Bruce F. Jastremski (8) . . . . . . 8,000 * 6,000 2,000 *
Daniel E. Kem (7) . . . . . . . . . 16,000 * 12,000 4,000 *
Kiawah Capital Partners (7) . . . . 16,000 * 12,000 4,000 *
Mark H. Krysi & Linda A. Krysi,
joint tenants (6) . . . . . . . 4,000 * 3,000 1,000 *
Robert H. Latvala & Mary Jane
Latvala (8) . . . . . . . . . . 8,000 * 6,000 2,000 *
Nolan H. Leavitt (6) . . . . . . . 4,000 * 3,000 1,000 *
Everen Clearing Corp., Custodian for
Clair A. Lewis IRA (7) . . . . . 16,000 * 12,000 4,000 *
MK Resource Inc. (8) . . . . . . . 8,000 * 6,000 2,000 *
M&W, Inc. (9) . . . . . . . . . . . 12,000 * 9,000 3,000 *
Daniel V. McLeod (8) . . . . . . . 8,000 * 6,000 2,000 *
The Mart Warehousing & Storage, Inc.
(7) . . . . . . . . . . . . . . 16,000 * 12,000 4,000 *
James L. Mead (6) . . . . . . . . . 4,000 * 3,000 1,000 *
Michael T. Michelas (8) . . . . . . 8,000 * 6,000 2,000 *
Donald D. & Mary N. Montgomery,
joint tenants (8) . . . . . . . 8,000 * 6,000 2,000 *
Rocky Mountain Artificial Limb &
Brace, Inc. (8) . . . . . . . . 8,000 * 6,000 2,000 *
James C. Ruane (7) . . . . . . . . 16,000 * 12,000 4,000 *
Shoughro Family Trust (7) . . . . . 16,000 * 12,000 4,000 *
Darren G.D. Sivertsen & Sheri Lei
Sivertsen, joint tenants (8) . . 8,000 * 6,000 2,000 *
Jerry Spilsbury (11) . . . . . . . 32,000 * 24,000 8,000 *
Lincoln F. Slock (8) . . . . . . . 8,000 * 6,000 2,000 *
Dale Stonedahl (14) . . . . . . . . 10,480 * 7,860 2,620 *
Delaware Charter Guarantee & Trust,
Trustee for Max C. Tanner Keogh
(7) . . . . . . . . . . . . . . 16,000 * 12,000 4,000 *
Mont E. Tanner (8) . . . . . . . . 8,000 * 6,000 2,000 *
Clemons F. Walker (15) . . . . . . 62,720 1.2 38,040 24,680 *
Ronald J. Walker (8) . . . . . . . 8,000 * 6,000 2,000 *
William F. Warnick (9) . . . . . . 12,000 * 9,000 3,000 *
William P. Watson, Jr. (7) . . . . 16,000 * 12,000 4,000 *
Kerry Garth Weaver (6) . . . . . . 4,000 * 3,000 1,000 *
John J. & Carolyn A. Witkowski (8) 8,000 * 6,000 2,000 *
All Selling Shareholders as a group 1,252,00 282,00
(64) . . . . . . . . . . . . . . 0 22.1 970,000 0 5.0
___________________________
* Represents less than one percent of the outstanding shares of Common
Stock.
(1) Assuming the sale by each Selling Shareholders of all of the Shares
offered hereunder by such Selling Shareholder.
(2) The percentages set forth have been computed without taking into
account any treasury shares held by the Company and, with respect to
those persons holding warrants to purchase Common Stock exercisable
within 60 days of September 24, 1997, the number of shares of Common
Stock that would be issuable at the end of such period assuming the
exercise thereof.
(3) Includes a presently indeterminate number of Shares issuabale upon
conversion of the Candian Bond. Numbers of shares held prior to and
after Offering include shares of Common Stock issuable by the Company
pursuant to presently exercisable warrants for the purchase of 30,000
shares of Common Stock.
(4) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 4,700 shares of Common Stock.
(5) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 5,000 shares of Common Stock.
(6) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 1,000 shares of Common Stock.
(7) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 4,000 shares of Common Stock.
(8) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 2,000 shares of Common Stock.
(9) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 3,000 shares of Common Stock.
(10) Includes 24,000 Shares held by Mr. Clasen and Sherry Clasen as joint
tenants. Numbers of shares held prior to and after Offering include
shares of Common Stock issuable by the Company pursuant to presently
exercisable warrants, held by Mr. Clasen individually and by Mr.
Clasen and Sherry Clasen as joint tenants, for the purchase of 4,000
and 8,000 shares of Common Stock, respectively.
(11) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 8,000 shares of Common Stock.
(12) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 34,000 shares of Common Stock.
(13) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 6,000 shares of Common Stock.
(14) Numbers of shares held prior to and after Offering include shares of
Common Stock issuable by the Company pursuant to presently exercisable
warrants for the purchase of 2,620 shares of Common Stock.
(15) Includes (i) 12,000 Shares held by Clemons F. Walker and Leslie A.
Walker as trustees of the Clemons F. Walker Family Trust and (ii)
24,000 Shares held by the Clemons F. Walker IRA account. Numbers of
shares held prior to and after Offering also include shares of Common
Stock issuable by the Company pursuant to presently exercisable
warrants, held by Mr. Walker individually and by the Clemons F. Walker
IRA account, for the purchase of 4,680 and 8,000 shares of Common
Stock, respectively. Mr. Walker is a shareholder of M&W, Inc. listed
above as holding beneficially 12,000 shares of Common Stock. For
purposes of this table, however, Mr. Walker is not deemed to have
beneficial ownership of such 12,000 shares.
PRIVATE PLACEMENT -- Except for Canadian Imperial, the Selling
Shareholders acquired the Shares offered hereby in connection with the Private
Placement of 720,000 Shares completed by the Company on August 27, 1997. The
Company conducted the Private Placement pursuant to a Private Placement
Memorandum of the Company dated May 30, 1997. The Private Placement consisted
of the offer and sale to such Selling Shareholders of up to 240,000 units (the
"Units") comprised of three Shares each, together with one warrant each for the
purchase of one share of Common Stock, exercisable until May 31, 1999, at an
exercise price of $5.50 per share. The Units were offered on a "best efforts"
basis on behalf of the Company by certain independent brokers at an offering
price per Unit of $12.50. Between May 30, 1997, and August 27, 1997, the
Company accepted subscriptions from the Selling Shareholders (except for
Canadian Imperial) for all of the Units offered in the Private Placement. In
connection with the purchase of Units by Selling Shareholders in the Private
Placement, the Company executed Registration Rights Agreements entitling such
Selling Shareholders to certain incidental, or "piggyback," registration rights
with respect to the Shares acquired thereunder.
CANADIAN BOND -- Pursuant to a Convertible Bond and Warrant Purchase
Agreement (the "Canadian Agreement") dated as of July 8, 1997, between Canadian
Imperial and the Company, Canadian Imperial acquired, for the aggregate purchase
price of $1,000,000, a bond of the Company (the "Canadian Bond") and a warrant
for the purchase of Common Stock (the "Canadian Warrant"). The Canadian Bond
has an "issue price" of $1,000,000 and bears interest at the stated rate of six
percent per annum. The indebtedness evidenced by the Canadian Bond is an
unsecured obligation of the Company ranking PARI PASSU with all other unsecured
and unsubordinated indebtedness of the Company. The Company may redeem the
Canadian Bond at any time after September 6, 1997, in minimum integrals of
$100,000 at a price equal to 115% of the unpaid principal amount to be redeemed,
plus any accrued interest thereon.
The Canadian Bond, including interest on the principal thereof, is
convertible by Canadian Imperial into shares of Common Stock (the Canadian
Shares ) in accordance with the conversion rate set forth in the Canadian Bond,
such conversion to occur (a) at any time after October 6, 1997, in the
discretion of Canadian Imperial or (b) automatically on July 8, 1999. The
conversion price is equal to the lesser of (i) 85% of the average closing bid
price of the Common Stock for the five trading days preceding Canadian
Imperial's notice of conversion or (ii) $5.22 per share. The number of Shares
being offered for resale hereunder by Canadian Imperial is based upon shares
issuable upon conversion of the Canadian Bond at a price of $4.06, assuming
conversion of the Canadian Bond on October 7, 1997. Notwithstanding the
foregoing, Canadian Imperial can convert the Canadian Bond into shares of Common
Stock only to the extent that Canadian Imperial and its affiliates would not
directly or indirectly own, control or have power to vote a number of shares of
Common Stock after such conversion in excess of 4.9% of the then outstanding
shares of Common Stock. Accordingly, due to this limitation and the variable
nature of the conversion price, the actual number of shares to be offered for
resale by Canadian Imperial may materially differ from the number of Shares
indicated in the table above. The use of such hypothetical conversion price and
date is not intended and should in no way be construed to constitute a
prediction as to the future market price of the Common Stock or an indication of
Canadian Imperial s intent to convert the Canadian Bond on such date.
Pursuant to the Canadian Agreement, the Company is obligated to file, within
120 days from July 8, 1997, a registration statement covering the resale of the
Canadian Shares. If such registration statement is not declared effective
within such 120-day period, or if the Company fails to keep the registration
statement effective for the period required by the Canadian Agreement, the
Company becomes obligated to pay Canadian Imperial an amount equal to 3% of the
aggregate principal amount of the Canadian Bond then outstanding for each 30-day
period that the registration statement is not so declared or maintained
effective. The Canadian Warrant entitles Canadian Imperial to the purchase of
30,000 shares of Common Stock for the exercise price of $5.50 per share and is
exercisable until May 31, 1999. Canadian Imperial is a Delaware corporation and
a wholly owned subsidiary of Canadian Imperial Bank of Commerce. This
prospectus relates only to the resale by Canadian Imperial of the Canadian
Shares and not to any other transaction, including without limitation the
issuance by the Company of the Canadian Shares upon the conversion by Canadian
Imperial of the Canadian Bond.
USE OF PROCEEDS
All proceeds from any sale of the Shares offered hereby, less commissions
and other customary fees and expenses, will be paid directly to the Selling
Shareholders selling such Shares. The Company will not receive any proceeds
from the sale of any of the Shares offered hereby.
PLAN OF DISTRIBUTION
The Shares of Common Stock offered hereby will not be offered or sold
through any underwriting syndicate, nor has the Company retained any
underwriter, broker or dealer to facilitate the offer or sale of such Shares.
No underwriting commissions or discounts will be paid by the Company in
connection therewith. Those Selling Shareholders electing to offer or sell
Shares will do so in transactions on the NASDAQ Small Cap Market, in negotiated
transactions or in a combination of such methods of sale, at prices relating to
the prevailing market prices or at negotiated prices. The Selling Shareholders
may effect such transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts or
commissions from the Selling Shareholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions). The Company will receive no proceeds from
the sale of any of the Shares.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available.
INDEMNIFICATION
The Company's Bylaws provide that the Company shall indemnify all
directors and officers of the Company as permitted by the Utah Revised Business
Corporation Act, as amended. Under such provisions, any director or officer,
who in his capacity as such, is made a party to any suit or proceeding, shall be
indemnified if such director or officer acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interest of the
Company and, in the case of a criminal proceeding, he or she had no reasonable
cause to believe his or her conduct was unlawful; provided, however, that no
indemnification may be given a director or officer where the claim or liability
arose out of that person's own negligence or willful misconduct, or if such
person is ultimately adjudged in the proceeding to be liable to the Company or
liable on the basis that he or she derived an improper personal benefit.
In addition, pursuant to the Registration Rights Agreements executed by
the Company and the Selling Shareholders who purchased Shares under the Private
Placement, the Company has agreed to indemnify such Selling Shareholders, and
such Selling Shareholders have agreed to indemnify the Company and its officers,
directors and controlling persons, for certain liabilities which might arise
under the Securities Act in connection with the Registration Statement.
Further, pursuant to the Canadian Agreement, the Company has agreed to indemnify
Canadian Imperial and its directors, officers, controlling persons and
underwriters, and Canadian Imperial has agreed to indemnify the Company and its
officers, directors and controlling persons, for certain liabilities which might
arise under the Securities Act in connection with the Registration Statement.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
LEGAL MATTERS
The validity of the Shares being offered hereby and certain other legal
matters pertaining to the Company are being passed upon for the Company by
Kimball, Parr, Waddoups, Brown & Gee, Salt Lake City, Utah.
EXPERTS
The financial statements of the Company and its subsidiaries as of March 31,
1997 and April 30, 1996 and for the eleven months ended March 31, 1997 and for
the year ended April 30, 1996 have been incorporated by reference in this
Prospectus in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorportated by reference herein and upon the
authority of said firm as experts in accounting and auditing.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED IN
CONNECTION WITH THE OFFERING MADE
HEREBY TO GIVE ANY INFORMATION OR MAKE 970,000 Shares
ANY REPRESENTATIONS NOT CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN COMMON STOCK
OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON OR BY
ANYONE IN ANY JURISDICTION IN WHICH IT
IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF _______________
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY PROSPECTUS
CIRCUMSTANCES, CREATE AN IMPLICATION _______________
THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF.
_______________________
TABLE OF CONTENTS
PAGE
____
Available Information . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . 2
Prospectus Summary . . . . . . 4
Risk Factors . . . . . . . . . 5
Selling Shareholders . . . . . 9
Use of Proceeds . . . . . . . . 12
Plan of Distribution . . . . . 12
Indemnification . . . . . . . 13
Legal Matters . . . . . . . . 13
Experts . . . . . . . . . . . 14
____________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses of the offering, sale and
distribution of the Shares being registered pursuant to this registration
statement (the "Registration Statement"), other than underwriting discounts and
commissions. All of the expenses listed below will be borne by the Company.
All of the amounts shown are estimates, except the SEC registration fees.
AMOUNT
SEC registration fees . . . . . . . . . . . . . $ 1,380
Accounting fees and expenses . . . . . . . . . 3,000
Legal fees and expenses . . . . . . . . . . . . 15,000
Blue sky fees and expenses . . . . . . . . . . 1,000
Miscellaneous expenses . . . . . . . . . . . . 5,000
Total . . . . . . . . . . . . . . . . . . . $25,380
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is a Utah corporation. Reference is made to Sections 16-10a-
902 through 16-10a-907 of the Utah Revised Business Corporation Act, as amended
(the "Act"). Section 16-10a-902 of the Act provides that a corporation may
indemnify any individual who was, is, or is threatened to be made a named
defendant or respondent (a "Party") in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal (a "Proceeding"), because he is or
was a director of the corporation or, while a director of the corporation, is or
was serving at its request as a director, officer, partner, trustee, employee,
fiduciary or agent of another corporation or other person or of an employee
benefit plan (an "Indemnifiable Director"), against any obligation incurred with
respect to a Proceeding, including any judgment, settlement, penalty, fine or
reasonable expenses (including attorneys' fees), incurred in the Proceeding if
his conduct was in good faith, he reasonably believed that his conduct was in,
or not opposed to, the best interests of the corporation, and, in the case of
any criminal Proceeding, he had no reasonable cause to believe his conduct was
unlawful; provided however, that, (i) indemnification in connection with a
Proceeding by or in the right of the corporation is limited to payment of
reasonable expenses (including attorneys' fees) incurred in connection with the
Proceeding and (ii) the corporation may not indemnify an Indemnifiable Director
in connection with a Proceeding by or in the right of the corporation in which
the Indemnifiable Director was adjudged liable to the corporation, or in
connection with any other Proceeding charging that the Indemnifiable Director
derived an improper personal benefit, whether or not involving action in his
official capacity, in which Proceeding he was adjudged liable on the basis that
he derived an improper personal benefit.
Section 16-10a-903 of the Act provides that, unless limited by its
articles of incorporation, a corporation shall indemnify an Indemnifiable
Director who was successful, on the merits or otherwise, in the defense of any
Proceeding, or in the defense of any claim, issue or matter in the Proceeding,
to which he was a Party because he is or was an Indemnifiable Director of the
corporation, against reasonable expenses (including attorneys' fees) incurred by
him in connection with the Proceeding or claim with respect to which he has been
successful.
In addition to the indemnification provisions discussed above, Section
16-10a-905 of the Act provides that, unless otherwise limited by a corporation's
articles of incorporation, an Indemnifiable Director may apply for
indemnification to the court conducting the Proceeding or to another court of
competent jurisdiction. Section 16-10a-904 of the Act provides that a
corporation may pay for or reimburse the reasonable expenses (including
attorneys' fees) incurred by an Indemnifiable Director who is a Party to a
Proceeding in advance of the final disposition of the Proceeding upon the
satisfaction of certain conditions.
Article 9 of the Company's Bylaws provides that the Company shall
indemnify all directors and officers of the Company as permitted by the Act.
Under such provisions, any director or officer, who in his capacity as such, is
made a party to any suit or proceeding, shall be indemnified if such director or
officer acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interest of the Company and, in the case of a
criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful; provided, however, that no indemnification may be given a
director or officer where the claim or liability arose out of that person's own
negligence or willful misconduct, or if such person is ultimately adjudged in
the proceeding to be liable to the Company or liable on the basis that he or she
derived an improper personal benefit. The Bylaws further provide that such
indemnification is not exclusive of any other rights to which such individuals
may be entitled under the Company's Articles, the Bylaws, any agreement, vote of
stockholders or otherwise.
In addition, pursuant to the Registration Rights Agreements executed by
the Company and the Selling Shareholders who purchased Shares under the Private
Placement, the Company has agreed to indemnify such Selling Shareholders, and
such Selling Shareholders have agreed to indemnify the Company and its officers,
directors and controlling persons, for certain liabilities which might arise
under the Securities Act in connection with the Registration Statement.
Further, pursuant to the Canadian Agreement, the Company has agreed to indemnify
Canadian Imperial and its directors, officers, controlling persons and
underwriters, and Canadian Imperial has agreed to indemnify the Company and its
officers, directors and controlling persons, for certain liabilities which might
arise under the Securities Act in connection with the Registration Statement.
Indemnification may be granted pursuant to any other agreement, bylaw, or
vote of shareholders or directors. The Company currently maintains no policy of
director's and officer's insurance for the benefit of the officers and directors
of the Company. The foregoing description is necessarily general and does not
describe all details regarding the indemnification of officers, directors or
controlling persons of the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS.
The following exhibits required by Item 601 of Regulation S B have been
included herewith or have been filed previously with the Commission as indicated
below.
REGULATION
S-B EXHIBIT Exhibit
___________ _______
NO. Description No.
___ ___________ ___
4.1 Articles of Incorporation of the 4
Company, as amended.
4.2 Bylaws of the Company. (1)
5 Legal Opinion of Kimball, Parr, 5
Waddoups, Brown & Gee, counsel to
the Company, as to the legality
of the securities offered.
23.1 Consent of Kimball, Parr,
Waddoups, Brown & Gee (included
in Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP, 23
independent public accountants.
24 Power of Attorney (included on
page II-4 of this Registration
Statement).
__________________
(1) Incorporated by reference to an Annual Report on Form 10-KSB for the
fiscal year ended April 30, 1996 filed by the Company on July 29, 1996, as
amended by Form 10-KSB/A filed with the Securities and Exchange Commission
on August 1, 1996.
ITEM 17. UNDERTAKINGS
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made
hereunder, a post-effective amendment to this Registration
Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the Registration Statement; and
(c) To include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the
securities offered therein, and the offering of the securities at
that time to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake City, State of Utah, on September 24, 1997.
SENTO TECHNICAL INNOVATIONS CORPORATION
By: /s/ GARY B. GODFREY
____________________________________
Gary B. Godfrey, Chairman of the
Board and Chief Executive Officer
<PAGE>
Signature Title Date
_________ _____ ____
/s/ GARY B. GODFREY Chairman of the Board and September 24, 1997
_________________________
Gary B. Godfrey Chief Executive Officer
(principal executive
officer)
/s/ ROBERT K. BENCH President, Chief Financial September 24, 1997
_________________________
Robert K. Bench Officer and Director
(principal accounting and
financial officer)
/s/ BRIAN W. BRAITHWAITE Secretary, Treasurer and September 24, 1997
_________________________
Brian W. Braithwaite Director
/s/ WILLIAM A. FRESH Director September 24, 1997
_________________________
William A. Fresh
/s/ ENG H. LEE Director September 24, 1997
_________________________
Eng H. Lee
/s/ KIETH E. SORENSON Director September 24, 1997
_________________________
Kieth E. Sorenson
/s/ SHERMAN H. SMITH Director September 24, 1997
_________________________
Sherman H. Smith
ARTICLES OF INCORPORATION, AS AMENDED,
OF
SENTO TECHNICAL INNOVATIONS CORPORATION
As of September 22, 1997
ARTICLE I - CORPORATE NAME
The name of the Corporation is SENTO TECHNICAL INNOVATIONS CORPORATION.
ARTICLE II - DURATION
The period of the Corporation's duration shall be perpetual.
ARTICLE III - PURPOSES
The purposes for which the Corporation is organized are: To engage in any
business, investment or other pursuit or activity, whether retail or wholesale,
whether commercial or industrial, or whether mining, milling or manufacturing,
and specifically including the purchase and development of gold, silver,
uranium and other mining properties; and to perform any and all other lawful
acts or purposes as are or may be granted to corporate entities under the laws
of the State of Utah and by any other state or foreign country. The
Corporation may conduct its business anywhere within the State of Utah and may
have branch businesses within the State or in any of the states of the United
States, or in any foreign country, without in any way limiting the foregoing
powers. It is hereby provided that the Corporation shall have power to do any
and all acts and things that may be reasonably necessary or appropriate to
accomplish any of the foregoing purposes from which the Corporation is formed.
ARTICLE IV - CAPITAL STOCK
The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is Twenty Million (20,000,000)
shares, consisting of (i) Fifteen Million (15,000,000) shares of common stock,
par value $0.25 per share (the "Common Stock"), and (ii) Five Million
(5,000,000) shares of preferred stock, par value $1.00 per share (the
"Preferred Stock").
A. COMMON STOCK. Each share of Common Stock shall entitle the
holder thereof to one vote at all meetings of the stockholders.
There shall be no cumulative voting with respect to shares of Common
Stock. There shall be no preemptive rights with respect to shares of
Common Stock. Fully paid Common Stock of the Corporation shall not
be liable to any further call or assessment. Subject to the rights
of holders of Preferred Stock, holders of Common Stock shall be
entitled to receive such dividends and other distributions in cash,
stock or property of the Corporation as may be declared thereon by
the Board of Directors of the Corporation (the "Board") from time to
time. Subject to the rights of holders of Preferred Stock, holders
of Common Stock shall be entitled to receive the net assets of the
Corporation upon its liquidation or dissolution.
B. PREFERRED STOCK. The Preferred Stock may be divided into
and issued from time to time in one or more series as may be fixed
and determined by the Board. The relative rights and preferences of
the Preferred Stock of each series shall be such as shall be stated
in any resolution or resolutions adopted by the Board setting forth
the designation of the series and fixing and determining the relative
rights and preferences thereof (a "Directors' Resolution"). The
Board is hereby authorized to fix and determine the powers,
designations, preferences and relative, participating, optional or
other rights of any such series of Preferred Stock, including,
without limitation, voting powers, full or limited, preferential
rights to receive dividends or assets upon liquidation, rights of
conversion or exchange into Common Stock, Preferred Stock of any
series or other securities, any right of the Corporation to exchange
or convert shares into Common Stock, Preferred Stock of any series or
other securities, or redemption provisions or sinking fund
provisions, as between series and as between the Preferred Stock or
any series thereof and the Common Stock, and the qualifications,
limitations or restrictions thereof, if any, all as shall be stated
in a Directors' Resolution, and the shares of Preferred Stock or any
series thereof may have full or limited voting powers, or be without
voting powers, all as shall be stated in a Directors' Resolution.
Except where otherwise set forth in the Directors' Resolution
providing for the issuance of any series of Preferred Stock, the
number of shares comprising such series may be increased or decreased
(but not below the number of shares then outstanding) from time to
time by like action of the Board. The shares of Preferred Stock of
any one series shall be identical with the other shares in the same
series in all respects except as to the dates from and after which
dividends thereon shall cumulate, if cumulative.
C. REACQUIRED SHARES OF PREFERRED STOCK. Shares of any series
of Preferred Stock that have been redeemed (whether through the
operation of a sinking fund or otherwise) or purchased by the
Corporation, or which, if convertible or exchangeable, have been
converted into, or exchanged for, shares of stock of any other class
or classes or any evidences of indebtedness shall have the status of
authorized and unissued shares of Preferred Stock and may be reissued
as a part of the series of which they were originally a part or may
be reclassified and reissued as part of a new series of Preferred
Stock or as part of any other series of Preferred Stock, all subject
to conditions or restrictions on issuance set forth in the Directors'
Resolution providing for the issuance of any series of Preferred
Stock and to any filing required by law.
ARTICLE V - CAPITALIZATION
The Corporation shall not commence business until at least $1,000.00 has
been received by it as consideration for the issuance of shares.
ARTICLE VI - PLACE OF BUSINESS
The principal place of business and the principal office of the
Corporation shall be in Salt Lake County, State of Utah; branch offices or
other places of business may be established elsewhere in the State of Utah or
without the State of Utah and in the United States or without the United States
as the Board may determine.
ARTICLE VII - BYLAWS
Provisions for the regulation of the internal affairs of the Corporation
will be contained in Bylaws appropriately adopted by the Board in accordance
with the Act.
ARTICLE VIII - NUMBER OF DIRECTORS
The number of directors shall be not less than three nor more than nine.
September ___, 1997
The Board of Directors of
Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Re: SENTO TECHNICAL INNOVATIONS CORPORATION
REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
As counsel to Sento Technical Innovations Corporation, a Utah corporation
(the "Company"), in connection with the resale by certain selling shareholders
of the Company (the "Selling Shareholders") of up to 970,000 shares (the
"Shares") of the Common Stock of the Company and the filing of a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act
of 1933, as amended, for registration of the Shares, we have examined the
originals or certified, conformed or reproduction copies of all such records,
agreements, instruments and documents as we have deemed necessary as the basis
for the opinion expressed herein. In all such examinations, we have assumed
the genuineness of all signatures on original or certified copies and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduction copies. As to various questions of fact relevant to
the opinion hereinafter expressed, we have relied upon certificates of public
officials and statements or certificates of officers or representatives of the
Company and others.
Based upon and subject to the foregoing, we are of the opinion that the
Shares being offered for resale by the Selling Shareholders pursuant to the
Registration Statement will, when sold thereunder, be legally issued, fully
paid and non-assessable.
We hereby consent to the reference to our firm under "Legal Matters" in
the prospectus which constitutes a part of the Registration Statement and the
filing of this opinion as an exhibit to the Registration Statement.
KIMBALL, PARR, WADDOUPS, BROWN & GEE
<PAGE>
September 24, 1997
The Board of Directors of
Sento Technical Innovations Corporation
311 North State Street
Orem, UT 84057
Re: SENTO TECHNICAL INNOVATIONS CORPORATION
REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
As counsel to Sento Technical Innovations Corporation, a Utah corporation
(the Company ), in connection with the resale by certain selling shareholders
of the Company (the Selling Shareholders ) of up to 970,000 shares (the
Shares ) of the Common Stock of the Company and the filing of a Registration
Statement on Form S-3 (the Registration Statement ) under the Securities Act
of 1933, as amended, for registration of the Shares, the Company has requested
our opinion with respect to certain matters set forth herein. A presently
indeterminate number (but not more than 250,000) of the Shares (the Bond
Shares ) will be acquired, prior to resale under the Registration Statement, by
the holder of the Company s $1,000,000 6% Series A Convertible Bond (the
Bond ) upon conversion of the Bond.
In connection with the opinions set forth herein, we have examined the
originals or certified, conformed or reproduction copies of all such records,
agreements, instruments and documents as we have deemed necessary as the basis
for the opinion expressed herein. In all such examinations, we have assumed
the genuineness of all signatures on original or certified copies and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduction copies. As to various questions of fact relevant to
the opinion hereinafter expressed, we have relied upon certificates of public
officials and statements or certificates of officers or representatives of the
Company and others.
Based upon and subject to the foregoing, we are of the opinion that (a)
except for the Bond Shares, the Shares being offered for resale by the Selling
Shareholders pursuant to the Registration Statement will, when sold thereunder,
be legally issued, fully paid and non-assessable, and the (b) after the holder
of the Bond has duly converted the Bond according to the terms thereof, the
Bond Shares being offered for resale by such holder pursuant to the
Registration Statement will, when sold thereafter under the Registration
Statement, be legally issued, fully paid and non-assessable.
We hereby consent to (a) the reference to our firm under Legal Matters
in the prospectus which constitutes a part of the Registration Statement and
(b) the filing of this opinion as an exhibit to the Registration Statement.
KIMBALL, PARR, WADDOUPS, BROWN & GEE
The Board of Directors
Sento Technical Innovations Corporation
We consent to the use of our reports on the financial statements incorporated
herein by reference of Sento Technical Innovations Corporation as of and for
the eleven month period ended March 31, 1997 and the year ended April 30, 1996,
filed on Form 10-KSB, and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
----------------------
Salt Lake City, Utah
September 23, 1997
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated. Each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Gary B.
Godfrey and Robert K. Bench, and each of them, as his true and lawful
attorney in fact and agent, with full power of substitution, to sign on his
behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement or
the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney in fact and agent, or his substitutes, shall do
or cause to be done by virtue hereof.
<PAGE>
