As filed with the Securities and Exchange Commission on October 21, 1997
Registration No. 333 36251
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
AMENDMENT NO. 1 TO 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, including zip code, and number)
organization) 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 Registration
Securities to be Registered (1) Share (2) Price (2) Fee (3)
Common Stock, $0.25 par value 1,000,000 $4.53 $4,437,500.00 $1,373.00
(1) Includes 280,000 shares which represent the Registrant's estimate of a
presently indeterminate number of shares issuable upon conversion of the
Registrant's 6% Series A Convertible Bond. Reflects an increase in the
number of shares to be registered of 30,000 shares.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based upon the average of the high and low
prices for such stock on October 17, 1997, as reported by the National
Quotation Bureau.
(3) $1,380.00 has been paid previously.
______________________
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
1,000,000 Shares
Common Stock
__________________
This Prospectus relates to 1,000,000 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 of 720,000 shares of Common Stock anD 240,000 warrants to purchase
shares of Common Stock, completed by the Company on August 27, 1997. The
remaining 280,000 Shares represent the Company's estimate 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 $3.64 per share of
Common Stock, assuming conversion thereof on November 1, 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" maintained by the National Association of Securities Dealers ("NASD")
under the symbol "SNTO." On October 17, 1997, the last reported sale price of
the Common Stock, as reported by the National Quotation Bureau, was $4.50 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.
__________________
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 $25,000. 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 October 21, 1997
<PAGE>
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 remon 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.
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, as amended
by Amendment No. 1 to Current Report on Form 8-K/A filed on September
26, 1997.
(d) The Company's Current Report on Form 8-K filed on October 15, 1997,
relating to the acquisition by the Company of all of the outstanding
capital stock of PC Business Solutions, Inc.
(e) Description of the Company's Common Stock contained in a Registration
Statement on Form 10 dated July 24, 1972, as modified and amended by
the Company's Current Report on Form 8-K filed on October 20, 1997.
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 six wholly-owned subsidiaries, Spire Technologies,
Inc., Spire Systems Incorporated, DewPoint Distributed Solutions Incorporated,
Centerpost Innovations Pty. Ltd., CDG Technologies, Inc., and PC Business
Solutions, 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 . . . . . . . . . . . . . 1,000,000 Shares (1)
Common Stock outstanding prior to and
after this offering . . . . . . . . . . 5,674,033 shares (1)(2)
Use of Proceeds . . . . . . . . . . . . . . All proceeds of the offering
will be received by the Selling
Shareholders. See "Use of
Proceeds."
NASDAQ Small Cap Market trading symbol . . SNTO
____________________
(1) Includes 280,000 Shares which represent the Company's estimate of a
presently indeterminate number of Shares issuable upon conversion of the
Company'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
existing securityholders 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 of 720,000 shares of
Common Stock and 240,000 warrants to purchase shares of Common Stock, 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. 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 $3.64 per share of Common
Stock assuming conversion thereof on November 1, 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."
<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 for the year ended
March 31, 1997 were 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, 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 October 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 stls 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,
California, 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. Generally, 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 Company's business
objectives. 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 and technological resources
than the Company. There can be no assurance that the Company will be able
successfully to identify attractive acquisition or strategic alliance
opportunities. Such acquisitions and alliances, if identified and completed,
of which there can be no assurance 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 and financial condition. Accordingly, future
acquisitions and alliances may have an adverse effect on the Company's
operating results and financial condition, 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
Compaght 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 or payments 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 possible 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 October 1, 1997, the
Company had 5,674,033 shares of Common Stock outstanding (including 280,000
Shares which represent the Company's estimate of the presently indeterminate
number of shares issuable upon conversion of the Canadian Bond), of which
1,321,736 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 4,352,297 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. It is possible that the Company may issue or sell
additional shares of Common Stock in connection with future acquisitions or
other operations 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 any of the Shares offered hereby will be sold.
The percentages set forth below have been computed based on the number of
outstanding shares of Common Stock of the Company as of October 1, 1997, which
was 5,674,033 shares of Common Stock, including 280,000 Shares which represent
the Company's estimate of the presently indeterminate number of Shares issuable
upon conversion of the Canadian Bond. 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 the
Company's estimate of the number of shares issuable to Canadian Imperial upon
conversion of the Canadian Bond, assuming conversion on November 1, 1997, at a
conversion price of $3.64 per share of Common Stock, which price is less than
85% of $4.50, the closing market price of the Common Stock as of October 17,
1997. 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 sucintended 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
Beneficially
Beneficial Owned upon
Ownership Completion of
Prior to Offering Offering (1)
Number
of
Number Shares Number Perce
of Percen being of nt
Beneficial Owner Shares t (2) Offered Shares (2)
Canadian Imperial Holdings Inc. 310,000 5.4% 280,000 30,000 *
(3) . . . . . . . . . . . . . .
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). 8,000 * 6,000 2,000 *
Robert C. Broadbent (9) . . . . 12,000 * 9,000 3,000 *
Irwin I. 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 2.4 102,000 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 & Amy 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. Kern (7) . . . . . . 16,000 * 12,000 4,000 *
Kiawah Capital Partners (7) . . 16,000 * 12,000 4,000 *
Mark H. Krysl & Linda A. Krysl,
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. Stock (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 1.1 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 (64) . . . . . . . . . . 1,282,000 21.5 1,000,000 282,000 4.7
__________________________
* 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. There can be no
assurance that any of the Shares offered hereby will be sold.
(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 October 21, 1997, the number of shares of Common
Stock that would be issuable at the end of such period assuming the
exercise thereof.
(3) Includes 280,000 Shares which represent the Company's estimate of the
presently indeterminate number of Shares issuable upon conversion of
the Canadian 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. Mr. Walker has disclaimed beneficial ownership of such shares
and, for purposes of this table, Mr. Walker is not deemed to have
beneficial ownership thereof.
<PAGE>
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 the terms set forth in 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 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, 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 an
estimate by the Company of the number of shares issuable upon conversion of the
Canadian Bond assuming conversion of the Canadian Bond on November 1, 1997, at
a conversion price of $3.64. 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 thedingly, 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 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 interests 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 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, incorporated 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 1,000,000 Shares
the offering made hereby to
give any information or make
any representations not
contained in this Prospectus
and, if given or made, such
information or representation
must not be relied upon as COMMON STOCK
having been authorized by the
Company. This Prospectus does
not constitute an 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 PROSPECTUS
solicitation. Neither the _______________
delivery of this Prospectus
nor any sale made hereunder
shall, under any
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 October 21, 1997
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
anProceeding, 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 interests 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
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 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 Company, as *
amended.
4.2 Bylaws of the Company. *
5 Legal Opinion of Kimball, Parr, Waddoups, 5
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, independent 23
public accountants.
24 Power of Attorney. *
__________________
* Previously filed.
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
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Orem, State of Utah, on
October 21, 1997.
SENTO TECHNICAL INNOVATIONS CORPORATION
By: /s/ GARY B. GODFREY
--------------------
Gary B. Godfrey, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and as of the dates indicated.
Signature Title Date
/s/ GARY B. GODFREY Chairman of the Board October 21, 1997
------------------- and Chief Executive
Gary B. Godfrey Officer (principal
executive officer)
/s/ ROBERT K. BENCH President, Chief October 21, 1997
------------------- Financial Officer and
Robert K. Bench Director (principal
accounting and
financial officer)
/s/ BRIAN W. BRAITHWAITE* Secretary, Treasurer October 21, 1997
------------------------ and Director
Brian W. Braithwaite
/s/ WILLIAM A. FRESH* Director October 21, 1997
--------------------
William A. Fresh
/s/ ENG H. LEE* Director October 21, 1997
--------------
Eng H. Lee
/s/ KIETH E. SORENSON* Director October 21, 1997
---------------------
Kieth E. Sorenson
/s/ SHERMAN H. SMITH* Director October 21, 1997
--------------------
Sherman H. Smith
* By: /s/ ROBERT K. BENCH
-------------------
Robert K. Bench, Attorney-in-Fact
<PAGE>
[LETTERHEAD OF KIMBALL, PARR, WADDOUPS, BROWN & GEE]
October 21, 1997
The Board of Directors of
Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Re: Sento Technical Innovations Corporation
Amendment No. 1 to 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 1,000,000
shares (the "Shares") of the Common Stock of the Company and the filing of
Amendment No. 1 to 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 (currently
estimated by the Company to be not more than 280,000) 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 or any portion thereof.
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 that (b)
after the holder of the Bond has duly converted the Bond and paid the
consideration required for conversion 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 (i) the reference to our firm under "Legal
Matters" in the prospectus which constitutes a part of the Registration
Statement and (ii) the filing of this opinion as an exhibit to the Registration
Statement.
KIMBALL, PARR, WADDOUPS, BROWN & GEE
EXHIBIT 23.2
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.
KPMG Peat Marwick LLP
Salt Lake City, Utah
October 21, 1997
