UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 06425
SENTO TECHNICAL INNOVATIONS CORPORATION
---------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Utah 87-0284979
------------------------------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
311 North State Street
Orem, Utah 84057
---------------------------------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number, Including Area Code: (801) 226-3355
--------------------------------------------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
------- -----
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1997
------------------------------ ---------------------------------
Common capital stock, 5,144,033
$.25 par value
Transitional Small Business Disclosure Format (check one):
Yes No X
---- -----
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION
Quarterly Report on Form 10-QSB
for the Quarter Ended September 30, 1997
INDEX
Part I - Financial Information
ITEM 1.
Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1997 and March 31, 1997
Condensed Consolidated Statements of Operations -
Three and Six Months Ended September 30, 1997 and 1996
Condensed Consolidated Statements of Cash Flows -
Six Months Ended September 30, 1997 and 1996
Notes To Condensed Consolidated Financial Statements
ITEM 2.
Management's Discussion and Analysis or Plan of Operations
Part II - Other Information
ITEM 2.
Changes in Securities and Use of Proceeds
ITEM 4.
Submissions of Matters to Vote of Security Holders
ITEM 6.
Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
SENTO TECHNICAL INNOVATIONS CORPORATION
Condensed Consolidated Balance Sheets
September 30, March 31,
1997 1997
---------------- -----------
ASSETS (Unaudited)
------
Current assets:
Cash $9,297,764 $2,225,338
Accounts receivable, net 3,169,515 3,140,425
Other current assets 71,936 241,644
Current portion of note receivable (Note C) 700,000 --
Deferred tax asset 98,917 98,917
Inventory/Work in Process 720,897 155,465
----------- ------------
Total current assets 14,059,029 5,861,789
Fixed assets net of depreciation (Note D) 887,313 711,079
Other assets (Notes B,C,and E) 775,563 476,400
----------- ------------
$15,721,905 $ 7,049,268
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 2,669,001 $ 2,216,634
Current portion of long-term debt 124,744 8,286
Accrued liabilities 797,400 260,274
Note payable 250,000 ---
Income taxes payable 932,207 132,207
Deferred maintenance revenue 1,289,530 1,099,849
Other deferred revenue (Note C) 756,604 4,959
---------- ----------
Total current liabilities 6,819,486 3,722,209
---------- ----------
Long-term liabilities:
Long-term debt, excluding current portion (Note F) 379,761 208,075
Convertible Bond (Note E) 1,000,000 ---
Deferred tax liability 5,333 5,333
Other payable 100,000 ---
Deferred revenue (Note C) 583,333 ---
---------- ----------
Total long-term liabilities 2,068,427 213,408
---------- ----------
Stockholders' equity:
Common Stock 1,286,009 1,087,784
Additional paid-in capital 4,373,474 1,595,376
Deferred Compensation (75,000) (100,000)
Retained earnings 1,249,509 530,491
---------- ----------
Total stockholders' equity 6,833,992 3,113,651
---------- ----------
$15,721,905 $ 7,049,268
=========== ===========
See accompanying notes to Condensed Consolidated Financial Statements.
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Sept 30, Six Months Ended Sept 30,
1997 1996 1997 1996
---------------------------- -------------------------
NET SALES $4,682,373 $5,215,238 $ 8,666,880 $9,733,677
COST OF GOODS SOLD 3,205,617 3,472,835 5,857,317 6,422,440
---------- ---------- ----------- ----------
GROSS PROFIT 1,476,756 1,742,403 2,809,563 3,311,237
EXPENSES:
Selling, General, and Admin 2,111,133 1,597,232 3,786,795 2,958,547
Research and Development 78 130,494 78,828 273,993
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (634,455) 14,677 (1,056,060) 78,697
OTHER REVENUE AND (EXPENSES) 2,564,531 63,221 2,590,805 74,060
--------- --------- --------- --------
INCOME BEFORE INCOME TAXES 1,930,076 77,898 1,534,745 152,757
PROVISION FOR INCOME TAXES 800,000 10,516 800,250 33,400
---------- ---------- ---------- ---------
NET INCOME $1,130,076 $ 67,382 $ 734,495 $ 119,357
========== ========== ========== =========
NET INCOME (LOSS) $ 0.21 $ 0.01 $ 0.14 $ 0.03
PER SHARE ========== ========== ========= =========
Weighted Average Number of Common
and Common Equivalent Shares
Outstanding 5,346,052 3,949,750 5,346,052 3,949,750
========== ========== ========== ==========
See accompanying notes to Condensed Consolidated Financial Statements.
<PAGE>
Sento Technical Innovations Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended September 30,
1997 1996
-------------------------------
Cash flows from operating activities:
Net income (loss) 734,495 119,357
Adjustments to reconcile net loss to net
cash provided by operating activities:
Adjustment from fiscal year end change (18,442)
Depreciation 57,505 36,687
Amortization of deferred compensation 25,000 ---
Gain on the sale of assets (2,655,110) ---
Decrease (increase) in assets:
Accounts receivable 29,089 (1,472,114)
Other current assets (1,095,724) (115,290)
Other assets (455,987) ---
Increase (decrease) in liabilities:
Accounts payable 452,367 1,486,592
Accrued liabilities 487,127 426,291
Accrued income taxes 800,000 77,485
Deferred revenue 1,524,659 (101,902)
--------- -------
Net cash provided by (used in)
operating activities (96,579) 438,664
--------- ---------
Cash flows from investing activities:
Acquisition of ASI assets (2,311,168) ---
Proceeds from the sale of ASI assets 5,601,400 ---
Purchase of furniture & equipment (74,366) (628,350)
--------- ----------
Net cash provided by
investing activities 3,215,866 (628,350)
--------- --------
Cash flows from financing activities:
Proceeds from issuance of stock 2,926,743 1,592,791
Principal payments on notes payable
and capital leases (138,193) (3,138)
Proceeds from issuance of debt 164,589 ---
Proceeds from issuance of convertible bond 1,000,000 ---
--------- ----------
Net cash provided by (used in)
financing activities 3,953,139 1,589,653
--------- ----------
Net increase in cash 7,072,426 1,399,967
Cash at beginning of period 2,225,338 1,552,806
--------- ---------
Cash at end of period $9,297,764 $2,952,773
========== ==========
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
Cash paid for interest $14,461 $ 31,137
Cash paid for income taxes $ 250 $159,831
See accompanying notes to financial statements.
<PAGE>
SENTO TECHNICAL INNOVATIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
A. BASIS OF PRESENTATION
---------------------
The Condensed Consolidated Balance Sheet as of September 30, 1997, the
Statements of Operations for the three and six month periods ended September
30, 1997 and September 30, 1996, and the Statements of Cash Flows for the six
month periods ended September 30, 1997 and September 30, 1996 have been
prepared by the Company without audit. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. The Condensed Consolidated Balance
Sheet as of March 31, 1997 was derived from the Company's audited Consolidated
Financial Statements of such date.
Operating results for the six months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the Company's
fiscal year ending March 31, 1998. The unaudited condensed consolidated
financial statements of the Company should be read in conjunction with the
consolidated financial statements of the Company and footnotes thereto included
in the Company's Annual Report on Form 10-KSB for the year ended March 31,
1997.
B. AUSTRALIAN SOFTWARE INNOVATIONS ACQUISITION
-------------------------------------------
Effective July 1, 1996, the Company entered into an Exclusive License and
Technical Assistance Agreement ("license agreement") with Australian Software
Innovations Ltd. ("ASI"). Under the terms of the license agreement, the
Company acquired an exclusive license to use, sell, and sublicense ASI's
products in North and South America during a five-year term. The Company paid
ASI $550,000 upon the execution of the license agreement and agreed to pay
royalties during the term of the license agreement. The license fee was
carried as Other Assets and was being amortized over a five-year period until
the rights were sold to BMC (see Note C).
On September 10, 1996, the Company entered into an ASI Option Agreement ("ASI
Option"). Under the terms of the ASI Option, ASI granted to the Company an
option, for one year, to acquire all or any portion of the tangible and
intangible assets of ASI. As consideration for the grant of the ASI Option,
the Company paid to ASI $130,000.
On July 9, 1997, the Company exercised its option under the ASI Option
Agreement. The Company paid a total of $1,487,111 which included the $130,000
paid for the grant of the Option. As part of the exercise of its option, the
Company acquired certain tangible assets of ASI, ASI's goodwill, and all of
ASI's intellectual properties, assumed certain liabilities and obtained from
the principals of ASI a Deed of Restraint of Trade. The Company sold the
intellectual properties and certain other rights to BMC Software, Inc. on July
10, 1997 (See Note C).
C. TECHNOLOGY SALE
---------------
On July 10, 1997, the Company, certain shareholders of the Company, ASI, and
Eng Lee entered into an Asset Purchase and Services Agreement with BMC
Software, Inc. ("BMC") pursuant to which the Company sold the intellectual
properties, and certain other rights it had acquired from ASI for a total of $7
million (See Note B). The BMC purchase price included payment of $4,550,000
for the intellectual property and goodwill of ASI acquired by the Company, as
well as for certain restrictive covenants of the Company and ASI, and
$2,450,000 for the exclusive license for North and South America. Of the $7
million purchase price, BMC withheld $1,400,000 which was place in escrow as
security for certain representations and warranties made by the Company. One-
half of this amount, or $700,000 will be released at the end of twelve months
and one-half will be released at the end of twenty-four months.These amounts
have been recorded as long and short term deferred revenues, short term notes
receivable, and other assets. These amounts will be recognized as related
services to be performed by the Company are completed. The gain on the sale
of these assets is reflected as other income on the Company's Condensed
Consolidated Statement of Operations.
D. OTHER ASSETS
------------
Other Assets are comprised as follows:
Note Receivable from BMC 700,000
Organization Expense (net) 685
Deposits 74,878
-------
$775,563
=======
E. CONVERTIBLE BOND
----------------
In July 1997 the Company sold to Canadian Imperial Holdings, Inc. ("Canadian
Imperial") $1,000,000 of 6% Series A Convertible Bonds. The bonds are
convertible into shares of Sento Common Stock beginning October 6, 1997, at a
conversion price equal to the lesser of 85% of the average closing bid price of
the Sento Common Stock for the five trading days preceding Canadian Imperial's
notice of conversion, or $5.22. In the event the bonds have not been converted
previously, the aggregate principal amount of the bonds, together with accrued
interest, will be converted into shares of Sento Common Stock on July 7, 1999.
The bonds are redeemable by the Company, in its discretion, at any time after
September 5, 1997 at a price equal to 115% of the unpaid principal amounts of
the bonds to be redeemed, plus accrued interest. The warrants are exercisable
until May 31, 1999. The Company has also granted to Canadian Imperial certain
rights to register the shares of Sento Common Stock issuable upon the
conversion of the bonds.
F. COMMON STOCK
------------
In August 1997 the Company completed a private offering in which it sold
unregistered shares of its common stock to certain accredited investors. The
shares were offered in units, at $12.50 per unit, with each unit consisting of
three shares of common stock plus one warrant to buy one share of common stock
for $5.50 before May 31, 1999. A total of 240,000 units were sold for which
$2,904,000 of net cash proceeds were received.
G. EARNINGS PER SHARE
------------------
Earnings per share is computed based on the weighted average number of common
shares and, as appropriate, dilutive common stock equivalents outstanding
during the period. Stock options and warrants are considered to be common
stock equivalents. Fully diluted earnings per share for the six months ended
September 30, 1997 and 1996 were not materially different from primary earnings
per share.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128). SFAS
128 establishes a different method of computing earnings per share than is
currently required under the provision of Accounting Principles Board Opinion
No. 15. Under SFAS 128, the Company will be required to present both basic
earnings per share and diluted earnings per share. Basic earnings per share is
expected to be higher than the currently presented primary earnings per share
as the effect of dilutive stock options will not be considered in computing
basic earnings per share. Diluted earnings per share is expected to be
comparable or slightly lower than the currently presented primary earnings per
share.
SFAS 128 is effective for both interim and annual periods ending after December
15, 1997. Accordingly, the Company plans to adopt SFAS 128 in its fiscal third
quarter and at that time all historical earnings per share data presented will
be restated to conform to the provisions of SFAS 128.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
- -------
Sento Technical Innovations Corporation ("Sento") is the parent of Spire
Technologies, Inc. ("STI"), Spire Systems Incorporated ("SSI"), DewPoint
Distributed Solutions Incorporated ("DewPoint"), Centerpost Innovations Pty.
Ltd ("Centerpost"), and Australian Software Innovations Limited ("ASI")
(collectively, the Company). STI, SSI, and DewPoint are resellers of computer
software and hardware, and also provide technical support for certain software.
The Company's customers consist of business and governmental entities,
geographically dispersed throughout the United States and abroad. Revenues
from foreign sales for the periods ended September 30, 1997 were approximately
eight percent of total sales, most of which were from Europe. As a reseller,
the Company is dependent on third-party suppliers, with over seventy percent of
the Company's revenues derived from products it obtains from three suppliers.
Three Months Ended September 30, 1997 Compared to
Three Months Ended September 30, 1996
- --------------------------------------------------
Net sales for the three months ended September 30, 1997 were $4,682,373,
compared to $5,215,238 for the three months ended September 30, 1996, a
decrease of 10% The decrease in net sales resulted from decreases in both
software product sales and computer hardware sales. Hardware sales were
$1,653,994 for the three months ended September 30, 1997, a 10% decrease from
sales of $1,836,644 for the three months ended September 30, 1996. Software
sales for the three months ended September 30, 1997 were $3,131,129, which was
a decrease of 12 from sales of $3,546,322 for the three months ended September
30, 1997.
The Company's sale to BMC in July 1997 of the Open Aviator product, which
represented over 20% of the Company's software revenues at the time of the
sale, was a material factor in the decrease in revenues. This shortfall in
revenues is expected to continue until the Company is able to add products to
fill the void created by the sale.
Gross margin remained virtually unchanged for the three months ended September
30, 1997 which was 32% of net sales compared to 33% of net sales for the
comparable period in 1996.
Research and development expenses for the three months ended September 30, 1997
were $78, compared to $130,494 for the three months ended September 30, 1996.
This decrease represents the completion of software development on products
which have been released for general sale into the market.
Selling, general and administrative expenses for the three months ended
September 30, 1997 were $2,111,133 compared to $1,597,232 for the three months
ended September 30, 1996. This 32% increase is due to increased legal and
accounting expenses associated with projects relating to financing activities,
costs associated with the sale of the Open Aviator technology to BMC, and
acquisition activities during the quarter. The Company continued to incur
selling and personnel expenses associated with the Open Aviator product line
while the department was being redeployed following the sale to BMC in July
1997.
Six Months Ended September 30, 1997 Compared to
Six Months Ended September 30, 1996
- ------------------------------------------------
Net sales for the six months ended September 30, 1997 were $8,666,880, compared
to $9,733,677 for the six months ended September 30, 1996, a decrease of 11%.
The decrease in net sales resulted from decreases in only software product
sales. Hardware sales for the six months ended September 30, 1997 increased
13% from hardware sales during the first six months of 1996. Software sales
for the six months ended September 30, 1997 declined by 11% from the first six
months of 1996.
Gross margin for the six months ended September 30, 1997 was 33% of sales,
compared to 34% of sales for the comparable period in 1996.
Research and development expenses for the six months ended September 30, 1997
were $78,828, compared to $273,993 for the six months ended September 30, 1996,
a decrease of 71%. New versions of existing software were completed and
released during the period, eliminating new programming and its associated
costs.
Selling, general and administrative expenses for the six months ended September
30, 1997 were $3,786,795 compared to $2,958,547 for the six months ended
September 30, 1996, an increase of 28%. This increase is due to increased
legal and accounting expenses associated with projects relating to financing
activities, costs associated with the sale of the Open Aviator technology to
BMC, and acquisition activities during the period. The Company continued to
incur selling and personnel expenses associated with the Open Aviator product
line while the department was being redeployed following the sale to BMC in
July.
Liquidity and Capital Resources
- -------------------------------
The Company has financed its operations and capital requirements primarily
through cash flow generated from operations, sales of equity securities, and
the sale of a convertible bond.
The Company has a $350,000 line of credit at prime plus two percent, secured by
equipment, expiring May 1, 1999. The total amount outstanding at September 30,
1997 was $181,648.
At September 30, 1997 the cash balance was $9,297,764, compared to $2,225,338
as of March 31, 1997. Working capital increased from $2,139,580 at March 31,
1997 to $7,239,543 at September 30, 1997. The Company's current ratio
increased from 1.57 at March 1997 to 2.06. This increase was due primarily
to the cash received from the proceeds of the private placement, the sale of
the convertible bond, and the sale to BMC of certain assets described above.
Based on anticipated working capital requirements, the Company believes that
existing cash, cash generated from operations, and debt financing and
borrowings under the Company's existing lines of credit will be sufficient to
finance the operations of the Company in the near term. The Company continues
to evaluate opportunities for the license or acquisition of additional
software products as well as the possible acquisition of, or development of
strategic alliances with, other companies which may have products or
distribution channels that are compatible with the business objectives of
the Company.
Factors Affecting Future Results
- --------------------------------
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Statements in
this report regarding the expansion of the Company's operations and any future
acquisition activities are forward-looking statements. Words such as
"expects", "intends", "believes", "anticipates", and "likely" also identify
forward-looking statements. Actual results could differ materially from
those anticipated for a number of reasons, including, among others, increased
competition, a downturn in the market for hardware and software products,
increases in interest rates, and other unanticipated factors. Risk factors,
cautionary statements, and other conditions that could cause actual results
to differ are contained in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-KSB as
amended.
<PAGE>
PART II: OTHER INFORMATION
- ---------------------------
ITEM 2. CHANGES IN SECURITIES
a. As described in Item 4 below, on August 18, 1997, at the Annual
Meeting of Shareholders, a resolution was approved to amend the
Company's Articles of Incorporation to authorize a class of
5,000,000 shares of Preferred Stock and to increase the number
of shares of Common Stock which the Company is authorized to
issue from 8,000,000 to 15,000,000.
c. Convertible Bond.
----------------
Effective July 8, 1997, the Company entered into a Convertible
Bond and Warrant Purchase Agreement with Canadian Imperial
Holdings Inc. ("Canadian Imperial"), pursuant to which the
Company sold to Canadian Imperial a 6% Series A Convertible Bond
in the aggregate principal amount of $1,000,000 (the
"Convertible Bond"). The Convertible Bond is convertible for
share of the Company's common stock (the "Common Stock") at a
conversion price equal to the lesser of (a) 85% of the average
closing bid price of the Common Stock for the five trading days
preceding Canadian Imperial's notice of conversion or (b) $5.22
per share. The conversion of the Convertible Bond may occur at
any time after October 6, 1997, upon the request of Canadian
Imperial, but not later than July 8, 1999. In connection with
the sale of the Convertible Bond, the Company issued to Canadian
Imperial a warrant to purchase up to 30,000 shares of Common
Stock at an exercise price of $5.50 per share. The warrants are
exercisable by Canadian Imperial until May 31, 1999.
The Convertible Bond was sold directly to Canadian Imperial, in
exchange for a cash payment of $1,000,000, without the
participation of any underwriter. The sale of the Convertible
Bond and the associated warrant was effected in reliance upon
the exemption for sales of securities not involving any public
offering, as set forth in Section 4(2) of the Securities Ace of
1933, as amended (the "Securities Act"), based upon
representations and warranties provided by Canadian Imperial to
the Company.
Private Placement of Common Stock and Warrants.
----------------------------------------------
On August 27, 1997, the Company completed a private placement of
240,000 units (the "Units"), each comprised of three shares of
Common Stock and a warrant to purchase one share of Common
Stock, exercisable until May 31, 1999 at an exercise price of
$5.50 per share (the "Private Placement"). The Units were
offered on a "best efforts" basis on behalf of the Company by
the Company's officers (without additional compensation
therefor) and certain independent brokers at an offering price
of $12.50 per Unit. The Private Placement was conducted
pursuant to the terms set forth in a Private Placement
Memorandum of the Company dated May 30, 1997. The total
proceeds of the Private Placement, before payment of offering
expenses and broker compensation, was $3,000,000.
The principal brokers participating in the Private Placement
were C.F. Walker, Neidiger/Tucker/Bruner, Inc., David M.
Berkowitz, and Daniel Kern. In exchange for services rendered
by such broker in connection with the Private Placement, the
Company paid to each participating broker compensation equal to
8% of the aggregate fund paid for Units purchased through such
broker, together with a warrant to purchase one share of Common
Stock for every three Units sold by the broker, at an exercise
price of $5.50 per share. The total compensation paid by the
Company to participating brokers was warrants to purchase 80,000
shares of Common Stock.
The sale of the Units was effected in reliance upon exemptions
for sales of securities not involving any public offering, as
set forth in Section 4(2) of the Securities Act, as well as
reliance upon the exemption set forth in Rule 506 of Regulation
D promulgated under the Securities Act. The Company's reliance
upon such exemptions was based upon representations and
warranties of the purchasers contained in subscription documents
submitted to the Company by each purchaser, as well as the
Company's review of purchaser questionnaires submitted by each
purchaser.
Acquistion of CDG Technologies, Inc.
-----------------------------------
Effective July 1, 1997, the Company entered into an Acquisition
Agreement with CDG Technologies, Inc., a provider of software
distribution and support services based in Framingham,
Massachusetts ("CDG"), and the three shareholders of CDG (the
"Acquisition Agreement"), pursuant to which the Company acquired
all of the capital stock of CDG in exchange for the Company's
issuance of 60,000 shares of Common Stock to the three former
shareholders of CDG. Upon the consummation of the transaction
with CDG, CDG became a wholly-owned subsidiary of the Company.
The Company's issuance of the shares of Common Stock as
contemplated by the Acquisition Agreement was effected in
reliance upon the exemption for sales of securities not
involving any public offering, as set forth in Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act"),
based upon representations and warranties provided by CDG and
the former CDG shareholders in the Acquisition Agreement.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
a. The Company held its Annual Meeting of Shareholders on August
18, 1997 for the purpose of voting on the following proposals:
(i) To elect Gary B. Godfrey, Robert K. Bench, Brian W.
Braithwaite, William A. Fresh, Sherman H. Smith, and Kieth
E. Sorenson as directors of the Company, each to serve
until the next annual meeting of shareholders of the
Company and until their respective successors have been
duly elected and qualified.
(ii) To consider and vote upon a proposal to amend the Company's
Articles of Incorporation to authorize a class of 5,000,000
shares of Preferred Stock and to increase the authorized
number of shares of Common Stock which the Company is
authorized to issue from 8,000,000 to 15,000,000 shares.
(iii)To consider and vote upon a proposal to amend the
Option Plan to increase by 500,000 from 1,000,000 to
1,500,000 the number of shares available for issuance
pursuant to grants under the Option Plan.
(iv) To consider and vote upon a proposal to ratify the
appointment of KPMG Peat Marwick LLP as independent auditor
of the Company for the fiscal year ending March 31, 1998.
Proposal (i) was approved with 2,844,335 shares voted in favor,
58 against.
Proposal (ii) was approved with 2,843,790 shares voted in favor,
458 against, and 87 abstaining.
Proposal (iii) was approved with 2,843,790 shares voted in
favor, 129 against, and 446 abstaining.
Proposal (iv) was approved with 2,843,760 shares voted in favor,
129 against, and 446 abstaining.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
a. Exhibits--Exhibit No. 27 Financial Data Schedule
b. Form 8K/A, filed on September 26, 1997 for the purpose of
providing the financial statements and pro forma financial
statements to Form 8K dated July 9.
Form 8K, dated July 9, 1997 for the purpose of reporting the
exercise of the Option Agreement dated September 10, 1996,
thereby acquiring the assets and certain liabilities of
Australian Software Innovations, Inc.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SENTO TECHNICAL INNOVATIONS CORPORATION
---------------------------------------
(Registrant)
Date: 11-14-97 \s\ Robert K. Bench
--------- ---------------------------------------
Robert K. Bench
Chief Financial Officer
<PAGE>
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<RECEIVABLES> 3,362,964
<ALLOWANCES> (193,449)
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