As filed with the Securities and Exchange Commission
on October 14, 1999
Registration No. 333-71457
==============================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
SEDONA CORPORATION
(FORMERLY SCAN-GRAPHICS, INC.)
(Exact name of Registrant as specified in its charter)
Pennsylvania 95-4091769
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
---------------
649 North Lewis Road, Suite 220
Limerick, Pennsylvania 19468
(610) 495-3003
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of Registrant's
Principal Executive Offices)
MARCO A. EMRICH
President, Chief Executive Officer
Sedona Corporation
649 North Lewis Road, Suite 220
Limerick, Pennsylvania 19468
(610) 495-3003
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
Copies to
ROBERT B. MURPHY, ESQ.
Schnader Harrison Segal & Lewis LLP
1300 Eye Street, N.W., 11th Floor East
Washington, D.C. 20005-3314
202-216-4200
----------------
Approximate Date of Proposed Sale to the Public: From
time to time after this 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
- --------------------------------------------------------------
Title of each class Proposed Maximum
of securities Amount to be Offering Price
to be registered Registered Per Share*
- ------------------ ------------ ------------------
Common Stock, par 4,918,211 $3.00/$1.97
value $.001 per
share
- --------------------------------------------------------------
- -------------------------------------
Proposed maximum Amount of
aggregate Registration
offering price* Fee**
- ---------------- ------------
$11,597,586 $3,224.13
- -------------------------------------
* Estimated under Rule 457(c) solely for the purpose of
calculating the registration fee, based upon the closing
prices as reported on the Nasdaq SmallCap Market on January
27, 1999 of $3.00 for 1,853,1170 shares of common stock
($1,545.50 fee amount), and $1.97 on October 12, 1999 for
3,065,094 shares of common stock ($1,678.63 fee amount).
*** A fee of $1,545.50 was previously paid.
----------------
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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
==============================================================
<PAGE>
PROSPECTUS
SEDONA CORPORATION
(formerly Scan-Graphics, Inc.)
4,918,211 Shares
Common Stock
----------------
The selling shareholders, listed on pages ____, may offer
from time to time 4,918,211 shares of our common stock under
this prospectus. Of the 4,918,211 shares,
- 1,759,500 shares are issuable or have been issued
under the terms of warrants held by certain
employees and contractors,
- 914,263 shares have been issued or are issuable,
pursuant to the terms of warrants issued in
connection with the restructuring of the terms of
our series E preferred stock, and the subsequent
repurchase of our series E preferred stock and
partial repurchase of the warrants issued in
connection with the restructuring of the series
E preferred stock as described in the Recent
Developments section on page __; and
- 2,244,448 shares have been issued, or are issuable
pursuant to the terms of warrants issued, under that
certain private placement of certain units of our
securities consisting of shares and warrants.
No underwriter is being used in connection with this
offering of common stock. The selling shareholders may offer
and sell their shares to or through broker-dealers, who may
receive compensation in the form of discounts, concessions or
commissions from the selling shareholders, the purchasers of
the shares, or both. We will not receive any of the proceeds
from the sale of shares.
Our common stock is traded on the Nasdaq SmallCap Market
under the symbol "SDNA"(formerly "SCNG"). On October __,
1999, the closing bid price of one share of our common stock
was $_____.
--------------------
Investing in our common stock involves a high degree of
risk. You should carefully read and consider the "risk
factors" beginning on page __.
--------------------
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of
these securities or passed upon the adequacy or accuracy of
this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is October_, 1999.
<PAGE>
We have not authorized anyone to provide you with
information or to represent anything to you not contained in
this prospectus. You must not rely on any unauthorized
information or representations. The selling stockholders are
offering to sell, and seeking offers to buy, only the shares
of our common stock covered by this prospectus, and only under
circumstances and in jurisdictions where it is lawful to do
so. The information contained in this prospectus is current
only as of its date, regardless of the time of delivery of
this prospectus or of any sale of the shares.
You should read carefully the entire prospectus, as well
as the documents incorporated by reference in the prospectus,
before making an investment decision. All references to "we,"
"us" or the "Company" in this prospectus means Sedona
Corporation and its subsidiaries, except where it is clear
that the term means only the parent company.
TABLE OF CONTENTS
Page
----
Forward-Looking Statements....................
The Company...................................
Recent Developments...........................
Risk Factors..................................
Use of Proceeds...............................
Selling Shareholders..........................
Plan of Distribution..........................
Legal Matters.................................
Experts.......................................
Where You Can Find More Information...........
Information Incorporated By Referenced........
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus
discuss future expectations, contain projections of results of
operation or financial condition or state other
"forward-looking" information. Such statements can be
identified by the use of "forward-looking" terminology, such
as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. These statements are
subject to known and unknown risks and uncertainties and other
factors that could cause our actual results to differ
materially from those contemplated by the statements. Factors
that might cause such a difference include, but are not
limited to, those discussed in "risk factors" beginning on
page __.
<PAGE>
THE COMPANY
Sedona Corporation develops, markets and supports
enterprise scale knowledge management software components that
provide non-technical business users with the ability to
intuitively access, query, visualize and analyze information
critical to making optimal business decisions.
Our products are built upon a modern technology
foundation including:
- intranet and Internet compatibility,
- flexible, platform neutral technology that supports
relational databases for Oracle Corporation as well
as other leading database, content and application
providers, and
- systems support for integration with Windows 95,
Windows 98 and Windows NT.
Our products are designed to scale to meet the needs of large
organizations deploying thousands of users with very large
data storage and retrieval requirements. Our applications are
designed to be highly configurable, allowing for customized
industry-specific and company-specific system deployments as
well as cross-industry functional applications including
customer relationship management, supply chain management,
strategic decision support, and enterprise resource planning.
In the area of customer relationship management, for
example, our technology permits users of databases integrated
with our software to quickly extract focused geographical
business, customer and marketing information in response to
individually tailored queries. With real-time on-line visual
access to plotted geographical data, users may make informed
decisions to react to changing market conditions and the
changing needs of customers.
Our objective is to establish and maintain a leadership
position in the market for business intelligence visually
enabled software whether used by internet-based applications,
data warehousing content providers or enterprise
line-of-business applications. Our strategy is to:
- provide differentiating components to high-end
enterprise applications in a broad range of
industries,
- extend our advanced technology position, achieve
universally successful customer implementations of
our partner applications,
- expand our sales and support capacity, and
- continue to leverage our strategic alignment with
key product and marketing providers such as Oracle
Corporation and Axciom Corporation as well as other
database, application and content vendors.
Our principal executive offices are located at 649 North
Lewis Road, Limerick, Pennsylvania 19468, and our telephone
number is (610) 495-3003.
<PAGE>
RECENT DEVELOPMENTS
Equity Transactions
On September 16, 1999, we completed the repurchase of all
of our Class A, Series E convertible preferred stock, par
value $1,000, plus one-third of certain associated warrants to
purchase shares of our common stock exercisable at $2.25 per
share, and one-third of certain associated warrants to
purchase shares of our common stock exercisable at $4.00 per
share. The purchase price for each share of our Series E
preferred stock and such associated warrants equaled 110% of
the principal amount of each share of our Series E preferred
stock plus all of the dividends that had accrued through
September 15, 1999. All of the shares underlying the
remaining 914,263 warrants exercisable at $4.00 per share are
being registered for resale under this prospectus.
We funded the majority portion of the repurchase of our
Series E preferred stock, with the proceeds of a private
placement of $2,376,487 of certain units of our securities.
Each 'unit' sold in the private placement consisted of 50,000
shares of our common stock and warrants to purchase 44,444
shares of our common stock at an exercise price of $2.25 per
share. All of such shares of our common stock, as well as the
shares of common stock issuable upon the exercise of such
warrants, are being registered for resale under this
prospectus.
On August 25, 1999, we sold 1,142,858 shares of our
common stock through a negotiated partial exercise of an
outstanding warrant by its holder and realized total net
proceeds of approximately $2,000,000. The outstanding warrant
originally permitted the holder to acquire 2,100,000 shares of
our common stock at an exercise price of $4.00 per share.
After considering our needs for working capital and additional
funds that were required to repurchase the Series E preferred
stock described above, we negotiated with the warrant holder
to permit partial exercise of the warrant at an exercise price
of $1.75 per share. The portion of the proceeds not used to
repurchase the Series E preferred stock will be used for our
working capital needs.
Disposition of Assets
On July 16, 1999, we completed the sale of the assets of
our Technology Resource Centers to Diversified Technologies,
Inc. Also, during July 1999, our Board of Directors decided
to sell our Tangent Imaging Systems division. On September
17, 1999, we completed the sale of Tangent to Colortrac, Inc.
As a result of these transactions which were reported in a
Form 8-K filing on October 4, 1999, substantially all of our
revenue generating operations have been sold.
With the completion of these two sales, we are now wholly
focused on the development of our internet-based business
intelligence software products.
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors
as well as other information contained in this prospectus or
in documents to which we refer you before deciding to invest
in shares of our common stock.
The Value of Our Shares May Increase or Decrease
- ------------------------------------------------
If you invest in our common stock you will have an equity
ownership interest in our company. As one of our
shareholders, you may be subject to risks inherent in our
business. The performance of your shares will reflect the
performance of our business relative to our competition,
general economic and market conditions and industry
conditions. The value of your investment may increase or
decrease and could result in a loss.
We Have Had A History of Operating Losses
- -----------------------------------------
Our company has a history of losses. We incurred net
operating losses in recent years. As of June 30, 1999, we had
an accumulated deficit of $30,250,000 and stockholders' equity
of $2,865,000. We have attempted to improve our results from
operations and financial condition by:
- transitioning from a hardware-based company to an
Internet-based business intelligence software
provider;
- selling the assets of our Technology Resource
Centers and our Tangent Imaging Systems divisions to
allow focused expansion of our core software unit;
- raising additional capital through the private
placement of our securities;
- repurchasing all of our remaining Series E preferred
stock;
- developing strategic product alliances with several
key database and database access providers;
- expanding sales distribution channels for our
products; and
- introducing new products into the market.
We are uncertain to what degree the marketplace has
accepted or will accept our current products or will accept
our new products. If our current and future products fail to
gain suitable acceptance, we believe it is unlikely that we
will be able to reverse our operating loss trend or assure you
future profitability.
This Offering May Depress Our Stock Price
- -----------------------------------------
Under this prospectus, the selling shareholders are
offering shares representing approximately 17.80% of our
outstanding common stock as of September 30, 1999. We
anticipate that each selling shareholder will offer its shares
of common stock at the time and in the manner as the selling
shareholder feels is appropriate. Sales of a substantial
number of shares of common stock in the public market by the
selling shareholders may decrease the prevailing market price
for our common stock and could impair our ability to raise
capital through the sale of our equity securities.
The Exercise of Other Warrants or Options May
Depress Our Stock Price
- ---------------------------------------------
As of September 30, 1999, there were outstanding:
- additional warrants (other than those offered under
this prospectus) to purchase 5,984,069 shares of
our common stock of which 5,216,066 shares were
immediately exercisable. Those outstanding
warrants are exercisable at prices ranging from
approximately $0.38 to $4.00 per share. The
weighted average exercise price of all outstanding
warrants as of September 30, 1999, was
approximately $2.56 per share; and
- options to purchase 2,023,611 shares of our common
stock, of which 802,778 shares were immediately
exercisable. All of these options were issued to
our officers, directors, employees and contractors
and are exercisable at prices ranging from
approximately $0.47 to $4.00 per share. The
weighted average exercise price of all options
outstanding as of September 30, 1999 was
approximately $2.28 per share.
While outstanding warrants or options are exercisable,
the holders of those securities have the opportunity to profit
if the market price of our common stock exceeds the exercise
price of the warrants or the options. Sales of a substantial
number of shares of common stock in the public market by
holders of warrants or options may decrease the prevailing
market price for our common stock and could impair our ability
to raise capital through the future sale of our equity
securities.
The Conversion of the Series B and Series F Preferred
Stock May Depress Our Stock Price
- -----------------------------------------------------
As of September 30, 1999, there were outstanding:
- 1,000 shares of our Series B preferred stock.
Beginning on April 1, 2000, the holders of our
Series B preferred stock can convert their shares
into shares of our common stock at the lower of
$2.30 or the average last trade price for the 25
days preceding the date on which the holder desires
to convert; and
- 1,000 shares of our Series F preferred stock.
Beginning on May 24, 2000, holders of our Series F
preferred stock can convert their shares into
shares of our common stock at the lower of $1.41 or
the average last trade price for the twenty-five
days preceding the date on which the holder
desires to convert.
When conversion price for each share is "in the money,"
the holders of Series B or Series F preferred stock,
respectively, have the opportunity to profit because the
market value of our common stock exceeds the value of the
Series B or Series F preferred stock, respectively, from which
it could be converted. Sales of a substantial number of
shares of common stock in the public market by holders of the
Series B or Series F preferred stock may decrease the
prevailing market price for our common stock and could impair
our ability to raise capital through the future sale of our
equity securities.
We Cannot Offer You Any Assurance That An Active
Trading Market Will Continue
- ------------------------------------------------
Prior to the date of this prospectus, our common stock
has had an active trading market. We can offer you no
assurance that such a market will continue indefinitely. If
there is no active trading market, you may not be able to sell
your shares in a timely manner, at an acceptable price, or at
all.
Our Stock Price May Continue to be Volatile
- -------------------------------------------
The market price for our common stock has been and may
continue to be volatile. Stock prices may fluctuate in
response to a number of events and factors. Rapid
technological innovation and change is characteristic of
internet-based products and applications software and may
yield wide fluctuation in our stock price. In addition, the
stock market in general and the market prices for related
companies have experienced extreme volatility. These broad
market and industry fluctuations may adversely affect the
price of our stock regardless of our operating performance.
Therefore, the value of your stock may vary widely within a
particular period or from period to period.
We Do Not Anticipate Paying Dividends on Our Common Stock
- ---------------------------------------------------------
We have not paid any cash dividends on our common stock
and we do not anticipate doing so in the foreseeable future.
Because you would receive no income due to your share
ownership, the value of your shares is borne solely by the
market price. We cannot assure you that this practice will
not adversely affect the prevailing market price for our
common stock or that our common stock will be attractive to
all types of investors.
We May Require Additional Capital That May Not Be Available
- -----------------------------------------------------------
We will not receive any of the proceeds from the sale of
shares by the selling shareholders. If warrant holders
exercise some or all of the warrants, we would receive the net
proceeds upon such exercises. To conduct our operations as
currently contemplated for a period of at least one year, we
may require certain additional financing, either from the
proceeds of the exercise of currently outstanding warrants
and/or other financing activities. Therefore, we are actively
pursuing various sources of asset based loans and new equity
infusions to provide additional funding.
In addition, we may need to raise substantial additional
funds to support our long-term growth. Therefore, we may,
from time to time, seek additional funding through public or
private sales of our securities, including equity securities.
Our failure to obtain any necessary financing may force
us to reduce our expenditures and/or sell assets or
proprietary rights to generate sufficient operating funds. In
addition, we can offer you no assurance that any of the
outstanding warrants will be exercised, that other additional
financing will be available to us at all or on terms
acceptable to us, or that we can reduce our expenditures or
sell assets or proprietary rights without having a material
adverse effect on our business.
Net Operating Loss Carryforwards (NOLs) of Federal
and State Income Tax
- --------------------------------------------------
As of December 31, 1998, we had federal net operating
loss carryforwards for federal income tax purposes aggregating
approximately $24.1 million. In addition, we had state net
operating loss carryforwards for state income tax purposes
aggregating approximately $5.2 million. NOLs may be used,
subject to certain restrictions, to offset taxable income
obtained in future years to decrease or eliminate certain
federal or state taxes that otherwise would be required to be
paid on such taxable income. The federal NOLs, if unused,
will expire between 1999 and 2018. The state NOLs will expire
between 2005 and 2008.
At December 31, 1998, the related deferred tax asset
amounted to approximately $8.7 million and had been entirely
offset by a valuation allowance of $8.7 million because we
believe that sufficient uncertainty exists whether we will be
able to realize any of it. As discussed above, we have taken
steps that we believe will improve our results of operations,
but the product acceptance and the potential market for our
new products is uncertain. Thus, we can offer you no
assurance that we will be able to reverse our operating loss
trend and be able to utilize our NOLs.
Certain Limitations on the Use of Net
Operating Loss Carryforwards
- -------------------------------------
Section 382 of the Internal Revenue Code of 1986 imposes
an annual limitation on the amount of taxable income that may
be offset by net operating loss carryforwards of a corporation
if the losses giving rise to the NOLs were incurred before a
change in ownership. Our use of the NOLs to offset future
taxable income will be limited by Section 382 of the Internal
Revenue Code and may be further limited by other provisions of
that code. We believe that this offering will not trigger a
change in ownership under Section 382. However, the Internal
Revenue Service may dispute the amount of the NOLs. In
addition, it may disagree with our interpretation of how
Section 382 applies to limit our use of the NOLs, or may
contend that limitations contained in the code, other than
those discussed above, apply to limit our available NOLs.
Therefore, we can give no assurances with respect to the
existence or potential use of the NOLs.
Our Technology May Become Obsolete
- ----------------------------------
We maintain continuous research and development programs
to maintain our software products as technically strong
competitive offerings to the market for each product. For the
years 1998, 1997 and 1996 we have incurred research and
development expenses of approximately $1,191,000, $1,327,000
and $744,000, which amounted to 19.3%, 27.5%, and 14.7% of our
total revenues. With our focus solely on expanding our
software products and components, we intend to continue and
possibly increase our proportionate on-going research
and development efforts. However, our competitors may develop
technologies and products that are more attractive than any
that we are developing and marketing or that would render
certain of our technologies and products obsolete or
noncompetitive.
We Experience Intense Competition
- ---------------------------------
The internet software and business intelligence and
software industries are extremely competitive. We compete
with a number of companies many of which have substantially
greater financial and marketing resources. We cannot assure
you that various competition may not limit our ability to
maintain and increase our market position for our various
products or otherwise adversely affect our business.
In addition, we have only recently begun to compete in
the business intelligence software market and we cannot offer
any assurance to you that we can successfully compete with the
more established competitors in that market.
We Depend on Key Personnel
- --------------------------
We depend upon the efforts, ability and experience of
several key members of our management for the successful
operation and development of our business. In addition, we
believe that our future success will depend in large part upon
our ability to attract and retain technically qualified key
personnel who possess backgrounds in engineering, software
development, production and marketing. We can offer you no
assurance that we will be able to retain key employees. If we
lose the services of one or more key employees we could
experience a material adverse effect on our business.
Uncertainty of Future Operating Results
- ---------------------------------------
Our net revenue and operating results may fluctuate
significantly because of a number of factors, many of which
are outside of our control. These factors include:
- level of product and price competition;
- length of our sales cycle;
- the size and timing of individual license
transactions;
- delay or deferral of customer implementations of
our products;
- success in expanding our customer support
organization, direct sales force and indirect
distribution channels;
- timing of new product introductions and product
enhancements;
- appropriate mix of products and services sold;
- activities of and acquisitions by competitors;
- timing of new hires; and
- our ability to develop and market new products and
control costs.
One or more of the foregoing factors may cause our
operating expenses to be disproportionately high during any
given period or may cause our operating results to fluctuate
significantly. Based on the preceding factors, we may
experience a shortfall in revenue or earnings or otherwise
fail to meet public market expectations, which could
materially adversely affect our business, financial condition
and the market price of our common stock.
Reliance on Strategic Relationships
- -----------------------------------
We have established strategic relationships with a number
of organizations that we believe are important to our sales,
marketing and support activities and the implementation of our
products. We believe that our relationships with these
organizations provide marketing and sales opportunities for
our sales force and expand the distribution of our products.
These relationships allow us to keep pace with the
technological and marketing developments of major software
vendors and provide us with technical assistance for our
product development efforts.
In particular, we have established non-exclusive
strategic relationships with companies such as Oracle
Corporation and Acxiom Corporation. The Company has also
entered into significant relationships with other application
and content providers. Any deterioration of our relationship
with these companies could have a material adverse effect on
our business and results of operations. Our failure to
maintain existing relationships, or to establish new
relationships in the future, could have a material adverse
effect on our business, results of operations and financial
condition.
Our current and potential customers may also have to rely
on third-party system integrators to develop, deploy and/or
manage our applications. If we do not adequately train a
sufficient number of system integrators or, if these
integrators do not have or devote the resources necessary to
implement our products, our business, operating results and
financial condition could be materially and adversely
affected.
Dependence on the Internet
- --------------------------
Our applications communicate through public and private
networks over the Internet. The success of our products may
depend, in part, on our ability to develop products which are
compatible with the Internet. We cannot predict with any
assurance whether the Internet will be a viable commercial
marketplace or whether the demand for Internet-related
products and services will increase or decrease in the future.
The increased commercial use of the Internet could require
substantial modification and customization of our products and
the introduction of new products. We may not be able to
effectively migrate our products to the Internet or
successfully compete in the Internet-related products and
services market.
Critical issues concerning the commercial use of the
Internet, including security, reliability, cost, ease of use,
accessibility, quality of service and potential tax or other
government regulation, remain unresolved and may affect the
use of the Internet as a medium to support the functionality
of our products and usage of our software. If these critical
issues are not favorably resolved, our business, operating
results and financial condition could be materially and
adversely affected.
Risk Associated with New Versions and New Products; Rapid
Technological Change
- ---------------------------------------------------------
The software market in which we compete is characterized
by:
- rapid technological change;
- frequent introductions of new products;
- changing customer needs; and
- evolving industry standards.
To keep pace with technological developments, evolving
industry standards and changing customer needs, we must
support existing products and develop new products. We may not
be successful in developing, marketing and releasing new
products or new versions of the our applications that respond
to technological developments, evolving industry standards or
changing customer requirements. We may also experience
difficulties that could delay or prevent the successful
development, introduction and sale of these enhancements. In
addition, these enhancements may not adequately meet the
requirements of the marketplace and may not achieve any
significant degree of market acceptance. If release dates of
any future products or enhancements to an application are
delayed, or if these products or enhancements fail to achieve
market acceptance when released, our business, operating
results and financial condition could be materially and
adversely affected. In addition, new products or enhancements
by our competitors may cause customers to defer or forgo
purchases of our products, which could have a material adverse
effect on our business, financial condition and results of
operations.
Risk of Product Defects
- -----------------------
Software products frequently contain errors or failures,
especially when first introduced or when new versions are
released. Although we conduct extensive product testing during
product development, we may be forced to delay the commercial
release of products until the correction of software problems.
We could lose revenues as a result of software errors or
defects.
Our products are intended for use in applications that
may be critical to a customer's business. As a result, we
expect that our customers and potential customers will have a
greater sensitivity to product defects than the market for
software products generally. Testing errors may also be found
in new products or releases after commencement of commercial
shipments, resulting in loss of revenue or delay in market
acceptance, damage to our reputation, or increased service and
warranty costs, any of which could have a material adverse
effect upon our business, operating results and financial
condition.
Limited Protection of Proprietary Information;
Risks of Infringement
- ----------------------------------------------
We rely primarily on a combination of copyright, trade
secret and trademark laws, confidentiality procedures and
contractual provisions to protect our proprietary rights. We
also believe that the technological and creative skills of our
personnel, new product developments, frequent product
enhancements, name recognition and reliable product
maintenance are essential to establishing and maintaining a
technology leadership position. We seek to protect our
software, documentation and other written materials under
trade secret and copyright laws, which afford only limited
protection. Others may develop technologies that are similar
or superior to our technology or design around our technology.
Despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy aspects of our
products or to obtain and use information what we regard as
proprietary. Policing unauthorized use of our products is
difficult. In addition, the laws of some foreign countries do
not protect our proprietary rights as fully as do the laws of
the United States. Our means of protecting our proprietary
rights in the United States or abroad may not be adequate.
We have entered into agreements with customers which
require us to place our application source code into escrow.
Such agreements generally provide that such parties will have
a limited, non-exclusive right to use such code if:
- there is a bankruptcy proceeding by or against us;
- we cease to do business; or
- we fail to meet our support obligations.
Although we do not believe that we are infringing any
proprietary rights of others, third parties may claim that we
have infringed their intellectual property rights.
Furthermore, former employers of our former, current or future
employees may assert claims that such employees have
improperly disclosed to us the confidential or proprietary
information of such former employers. Any such claims, with or
without merit, could:
- be time consuming to defend;
- result in costly litigation;
- divert management's attention and resources;
- cause product shipment delays; and
- require us to pay money damages or enter into
royalty or licensing agreements.
A successful claim of product infringement against us and our
failure or inability to license or create a workaround for
such infringed or similar technology may materially and
adversely affect our business, operating results and financial
condition.
We license certain software and obtain geographic content
from third parties. These third-party software licenses and
agreements may not continue to be available to us on
acceptable terms. The loss of, or inability to maintain, any
of these software licenses or agreements could result in
shipment delays or reductions. Any such loss or inability
could materially adversely affect our business, operating
results and financial condition.
Year 2000 Risks
- ---------------
While we believe that most of our currently developed and
actively marketed products are Year 2000 compliant for
essentially all functionality, our software products could
contain errors or defects relating to Year 2000. We believe
that the current versions of our products are Year 2000
compliant. We have completed an assessment of our computer
systems and software and are modifying or replacing portions
of our software so that our operating systems will function
properly with respect to dates in the Year 2000 and
thereafter. We are currently evaluating system interfaces
with third-party systems, such as our key vendors and system
integrators, for Year 2000 functionality.
The Year 2000 project cost is not expected to be
material. In addition, we believe that, with modifications to
existing software and conversions to new software, the Year
2000 issue will not pose significant operational problems for
our computer systems. However, if such modifications and
conversions are not made, or are not completed in a timely
manner, the Year 2000 issue could have a material adverse
impact on our operations. Additionally, the systems of other
companies with which we do business may not address any
Year 2000 problems on a timely basis, which could have an
adverse effect on our systems or business transactions. We
believe that our exposure on Year 2000 issues is not material
to our business as a whole.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the
shares of our common stock by the selling shareholders. If
any or all of the warrants held by the selling shareholders
are exercised, we intend to use the net proceeds for product
development, sales and marketing expenses, working capital and
general corporate purposes. Temporarily, we may invest the
net proceeds from the exercise of the warrants, if any, in
high grade short term interest bearing investments.
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth information regarding the
beneficial ownership of our common stock held by the selling
shareholders as of September 30, 1999, the number of shares
being registered to permit sales from time to time by such
selling shareholders, and the total beneficial ownership of
shares of our common stock if all shares so registered should
be sold by the selling shareholders. Beneficial ownership is
determined by the rules of the SEC, and includes voting or
investment power of the shares beneficially owned. All shares
are beneficially owned, and sole voting and investment power
is held by the person named, unless otherwise noted. Assuming
the sale of all shares listed under "Number of Shares of
Common Stock to be Offered." It also assumes that none
of the selling shareholders sell securities which are
beneficially owned by them and are not listed in such column
or purchase or otherwise acquire additional shares of our
common stock or securities convertible into or exchangeable
for our common stock.
TOTAL NUMBER OF
COMMON STOCK SHARES OF COMMON STOCK
OWNED BEFORE COMMON STOCK OWNED AFTER
NAME THE OFFERING TO BE OFFERED THE OFFERING
- ----- ------------ ------------- ------------
NUMBER PERCENT
------ -------
Richard Bruce
Rabinowitz 6,093(1) 2,886 3,207 *
American Friends of
Tiferet Tiberias
Institutions, Inc. 54,815(1) 25,965 28,850 *
Milwaukee Kollel, Inc. 54,815(1) 25,965 28,850 *
Wayne Saker 36,543(1) 17,310 19,233 *
Keren MYCB Elias, Inc. 54,815(1) 25,965 28,850 *
Leonard J. Adams 36,543(1) 17,310 19,233 *
The Jerusalem Fund 72,123(1) 25,965 46,158 *
Herman & Nanni
Bodenheimer 52,390(1) 13,156 39,234 *
Gabriel Bodenheimer 8,770(1) 4,154 4,616 *
Thomas Meyer 18,280(1) 8,659 9,621 *
Charles Kushner 182,717(1) 86,550 96,167 *
Richard Stadtmauer 73,087(1) 34,620 38,467 *
Murray Kushner 109,630(1) 51,930 57,700 *
Josh Berkowitz 9,137(1) 4,328 4,809 *
Michael Kule 3,654(1) 1,731 1,923 *
Rita Folger 53,851(1) 17,310 36,541 *
Vavel Corp. 109,630(1) 51,930 57,700 *
Karfunkel Family
Foundation, Inc. 53,851(1) 17,310 36,541 *
Jules Nordlicht 302,909(1) 77,895 225,014 1.03
ACE Foundation 538,513(1) 173,100 365,413 1.68
Huberfeld/Bodner
Family Foundatio 142,231(1) 44,141 98,090 *
Abraham Elias 27,408(1) 12,983 14,425 *
Millennium PartnersLP 365,433(1) 173,100 192,333 *
Charles Soltis(2) 5,000(1) 5,000 0 *
Barry Maser(3) 20,000(4) 10,000 10,000 *
George Griffin(5) 150,000(1) 150,000 0 *
Michael G. Cunniff(6) 30,000(1) 12,000 18,000 *
Osprey Partners(7) 747,083(1) 232,500 514,583 2.36
Laurence L.
Osterwise(8) 1,438,888(1) 888,888 550,000 2.52
Marco Emrich(9) 725,000(4) 525,000 200,000 *
C&F Global
Enterprises, Inc.(10)246,874(1) 30,000 216,874 *
G3 Capital, LLC (11) 472,220(1) 472,220 0 *
Steve Ficyk (12) 50,800(1) 35,000 15,800 *
David S. Hirsch (13) 389,017(4) 60,000 329,017 1.51
Jared A. Davis 47,222(1) 47,222 0 *
A. David Davis 23,611(1) 23,611 0 *
Robert DiSilvestro 47,222(1) 47,222 0 *
Shane Tritsch 23,611(1) 23,611 0 *
Michael D. Theye 23,611(1) 23,611 0 *
Todd C. Tritsch 23,611(1) 23,611 0 *
Michael L.
O'Shaughnessy 23,611(1) 23,611 0 *
Sol-Rich Capital
Group, LLC 141,666(1) 141,666 0 *
Alan L. Scott 47,222(1) 47,222 0 *
Todd R. Ricker 9,444(1) 9,444 0 *
Paul K. Nguyen 9,444(1) 9,444 0 *
Vu Phat Lam 9,444(1) 9,444 0 *
Josh Adler 9,444(1) 9,444 0 *
Anthony J. Suraci &
Donna S. Suraci 94,444(1) 94,444 0 *
M. Jay Walkingshaw 23,611(1) 23,611 0 *
Joseph Matarazzo 14,167(1) 14,167 0 *
William J. Ritger 241,388(1) 188,888 52,500 *
Claudia H. O'Donnell 141,666(1) 141,666 0 *
Terrell H. Spraggins &
Patricia E. Spraggins 94,444(1) 94,444 0 *
A. Judson Hill &
Kathryn V. Hill 37,778(1) 37,778 0 *
David C. Brown 94,444(1) 94,444 0 *
Robert K. Brooks 47,222(1) 47,222 0 *
Security Trust Company FBO
J. Glen McLeod IRA 47,222(1) 47,222 0 *
Allen B. Aker, MD 188,888(1) 188,888 0 *
Security Trust Company FBO
Paul H. Dragul IRA 47,222(1) 47,222 0 *
Nelson G. Griffin 9,444(1) 9,444 0 *
Toan D. Bui 9,444(1) 9,444 0 *
Bert D. Siegel & Marion
Lee Siegel JT TEN 141,666(1) 141,666 0 *
- ---------------------------------------
* Represents beneficial ownership of one percent or less of
the outstanding shares of common stock.
(1) Includes shares issuable upon exercise of
outstanding warrants.
(2) Charles Soltis provides certain business development
consulting services to us.
(3) Barry Maser provides certain business development
consulting services to us.
(4) Includes shares issuable upon exercise of outstanding
warrants, and of outstanding options.
(5) Mr. Griffin provides certain management consulting
services to us.
(6) Mr. Cunniff provides certain management consulting
services to us.
(7) Osprey Partners provides certain management
consulting services to us.
(8) Mr. Osterwise is our Chairman of the board of
Directors.
(9) Mr. Emrich is our President, Chief Executive Officer
and a Director.
(10) C&F Global Enterprises, Inc. provides certain
management consulting services to us.
(11) G3 Capital, LLC provides certain management
consulting services to us.
(12) Mr. Ficyk provides certain management consulting
services to us.
(13) Mr. Hirsch is a Director.
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling
shareholders. The shares being registered are owned or may be
acquired by the selling shareholders upon exercise of
warrants. Selling shareholders, as used in this prospectus,
includes donees, pledgees, transferees or other successors in
interest who may receive shares received from a named selling
shareholder after the date of this prospectus. The selling
shareholders may offer their shares of our common stock at
various times in one or more of the following transactions:
- in ordinary broker's transactions on Nasdaq or any
national securities exchange on which our common
stock may be listed at the time of sale;
- in the over-the-counter market;
- in private transactions other than in the
over-the-counter market;
- in connection with short sales of other shares of
our common stock in which shares are redelivered to
close out positioning;
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and
exchange-traded call options, in hedge transactions
and in settlement of other transactions in
standardized or over-the-counter options; or
- in a combination of any of the above transactions.
The selling shareholders may sell their shares at market
prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated price or at fixed
prices.
The selling shareholders may use broker-dealers to sell
their shares. If this happens, broker-dealers will either
receive discounts or commissions from the selling
shareholders, or they will receive commissions from purchasers
of shares for whom they acted as agents.
Selling shareholders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule
144 under the Securities Exchange Act. Shareholders must meet
the criteria and conform to the requirements of that rule.
The selling shareholders and the broker-dealers to or
through whom sale of the shares may be made could be deemed to
be "underwriters" within the meaning of the Securities
Exchange Act, and their commissions or discounts and other
compensation received in connection with such sales may be
regarded as underwriters' compensation.
The selling shareholders have not advised us of any
specific plans for the distribution of the shares covered by
this prospectus. When and if we are notified by any of the
selling shareholders that any material arrangement has been
entered into with a broker-dealer or underwriter for the sale
of a material portion of the shares covered by this
prospectus, a prospectus supplement or post-effective
amendment to the registration statement will be filed setting
forth:
- the name of the participating broker-dealer(s) or
underwriters,
- the number of shares involved,
- the price or prices at which such shares were sold
by the selling shareholders,
- the commissions paid or discounts or concessions
allowed by the selling shareholders to such
broker-dealers or underwriters, and
- other material information.
We have advised the selling shareholders that the
anti-manipulation rules promulgated under the Securities
Exchange Act, including Regulation M, may apply to sales of
the shares offered by the selling shareholders.
We have agreed to pay all costs relating to the
registration of the shares. Any commissions or other fees
payable to broker-dealers in connection with any sale of the
shares will be borne by the selling shareholders or other
party selling such shares.
LEGAL MATTERS
The validity of the shares of common stock offered will
be passed upon for us by Schnader Harrison Segal & Lewis LLP.
EXPERTS
The consolidated financial statements and schedules of
Sedona Corporation at December 31, 1998, and for the year then
ended, incorporated by reference herein this Prospectus and
Registration Statement have been audited by Ernst & Young LLP,
independent auditors, and at December 31, 1997, and for each
of the two years in the period then ended, by BDO Seidman,
LLP, independent certified public accountants, as set forth in
their respective reports of such firms incorporated by
reference elsewhere herein, and are included in reliance upon
such reports given on the authority of such firms as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Sedona is subject to the informational requirements of
the Securities Exchange Act of 1934. We file annual,
quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document
we file at the SEC's public reference rooms at the SEC's
principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 (you may obtain operation information
for this public reference room by calling 1-800-SEC-0330) and
at the SEC's regional offices at Seven World Trade Center,
13th Floor, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Our
SEC filings are also available to the public from the SEC's
website at "http://www.sec.gov". In addition, any of our SEC
filings may also be inspected and copied at the offices of The
Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington,
D.C. 20006.
We have filed with the SEC a registration statement on
Form S-3 regarding the common stock offered by this
prospectus. You should be aware that this prospectus does not
contain all of the information set forth or incorporated by
reference in that registration statement and its exhibits and
schedules, certain portions of which have been omitted as
permitted by the SEC rules. For further information about our
company and our common stock, we refer you to the registration
statement and its exhibits and schedules. You may inspect and
obtain the registration statement, including exhibits,
schedules, reports and other information filed by our company
with the SEC, as set forth in the preceding paragraph.
Statements contained in this prospectus concerning the
contents of any document we refer you to are not necessarily
complete and in each instance we refer you to the applicable
document filed with the SEC for more complete information.
The SEC allows us to "incorporate by reference" the
information we file with them, which means that we can
disclose important information to you by referring to those
documents. The information incorporated by reference is
considered to be part of this prospectus, and the information
that we file at a later date with the SEC will automatically
update and supersede this information. We incorporate by
reference the documents listed below as well as any future
filings we make with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934:
(a) Our Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
(b) Our Quarterly Report on Form 10-Q for the period
ended March 31, 1999.
(c) Our Quarterly Report on form 10-Q for the period
ended June 30, 1999.
(d) All other reports under Section 13(a) or 15(d) of
the Securities Exchange Act, since the end of our fiscal year
ended December 31, 1998.
(e) The description of our common stock which is
contained in our registration statement on Form 8-B filed
under the Securities Exchange Act, including any amendment or
reports filed for the purpose of updating such description.
You may request a copy of these filings, at no cost, by
writing or telephoning us at the following address:
Sedona Corporation
649 North Lewis Road
Limerick, PA 19468
Attention: Michael A. Mulshine, Corporate Secretary
(610) 495-3003
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution*
SEC Registration fee....................$ 3,224.13
Printing fees........................... 1,000.00
Accounting fees......................... 20,000.00
Legal fees.............................. 25,000.00
Miscellaneous........................... 5,000.00
Total................................$54,224.13
=========
_____________________
* Estimated, except for SEC Registration fee. No portion
of these expenses will be borne by the selling shareholders.
Item 15. Indemnification of Directors and Officers.
The Pennsylvania Business Corporation Law of 1988, as
amended (the "BCL"), permits a corporation to indemnify its
directors and officers against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by them in connection with
any pending, threatened or completed action or proceeding, and
permits such indemnification against expenses (including
attorney's fees) incurred by them in connection with any
pending, threatened or completed derivative action, if the
director or officer has 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 corporation and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her
conduct was unlawful. Pennsylvania law requires that a
corporation indemnify its directors and officers against
expenses (including attorney's fees) actually and reasonably
incurred by them in connection with any action or proceeding,
including derivative actions, to the extent that such person
has been successful on the merits or otherwise in defense of
the action or in defense of any claim, issue or matter
therein. Furthermore, Pennsylvania law provides that expenses
incurred in defending any action or proceeding may be paid by
the corporation in advance of the final disposition upon
receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined
that the director or officer is not entitled to be indemnified
by the corporation.
In Pennsylvania, the statutory provisions for
indemnification and advancement of expenses are non-exclusive
with respect to any other rights, such as contractual rights
or under a by-law or vote of shareholders or disinterested
directors, to which a person seeking indemnification or
advancement of expenses may be entitled. Such contractual or
other rights may, for example, under Pennsylvania law, provide
for indemnification against judgments, fines and amounts paid
in settlement incurred by the indemnified person in connection
with derivative actions. Pennsylvania law permits such
derivative action indemnification in any case except where the
act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted
willful misconduct or recklessness.
The provisions of Article VII of the Company's By-laws
require or authorize indemnification of officers and directors
in all situations in which it is not expressly prohibited by
law. At the present time, the limitations on indemnification
would be dictated by the BCL and related legislation, which
prohibit indemnification where the conduct is determined by a
court to constitute willful misconduct or recklessness.
Subject to these statutory limitations, the By-laws
specifically authorize indemnification against both judgments
and amounts paid in settlement of derivative suits. These
provisions also authorize indemnification for negligence or
gross negligence and for punitive damages and certain
liabilities incurred under the federal securities laws. The
By-laws also prohibit indemnification attributable to receipt
from the Company of a personal benefit to which the recipient
is not legally entitled.
Under the indemnification provisions of the By-laws a
person who has incurred an indemnifiable expense or liability
would have a right to be indemnified, and that right would be
enforceable against the Company as long as indemnification is
not prohibited by law. To the extent indemnification is
permitted only for a portion of a liability, the By-laws also
require the Company to indemnify such portion.
Section 7.03 of the By-laws provides that the financial
ability of a person to be indemnified to repay an advance of
indemnifiable expenses is not a prerequisite to the making of
the advance.
Section 7.06 of the By-laws provides that any dispute
concerning a person's right to indemnification or advancement
of expenses thereunder will be resolved only by arbitration by
three persons, each of whom is required to have been a
director or executive officer of a corporation whose shares,
during at least one year of such service, were listed on the
New York Stock Exchange or the American Stock Exchange or were
quoted on the NASDAQ system. The Company also is obligated to
pay the expenses (including attorney's fees) incurred by any
person who is successful in the arbitration. The arbitration
provisions effectively waive the Company's right to have a
court determine the unavailability of indemnification in cases
involving willful misconduct or recklessness.
Section 7.07 of the By-laws provides that in
circumstances in which indemnification is held to be
unavailable, the Company must contribute to the liabilities to
which a director or officer may be subject in such proportion
as is appropriate to reflect the intent of the
indemnification provisions of the By-laws. Since the
foregoing provisions purport to provide partial relief
to directors and officers in circumstances in which the law or
public policy is construed to prohibit indemnification,
substantial uncertainties exist as to the enforceability of
the provisions in such circumstances.
Section 7.10 of the By-laws also contains provisions
stating that the indemnification rights thereunder are not
exclusive of any other rights to which the person may be
entitled under any statute, agreement, vote of shareholders or
disinterested directors or other arrangement.
All future directors and officers of the Company
automatically would be entitled to the protections of the
indemnification provisions of the By-laws at the time they
assume office.
Pennsylvania law permits a corporation to purchase and
maintain insurance on behalf of any director or officer of the
corporation against any liability asserted against the
director or officer and incurred in such capacity, whether or
not the corporation would have the power to indemnify the
director or officer against such liability. The directors
and officers of the Company are currently covered as insureds
under a directors' and officers' liability insurance policy.
Item 16. Exhibits.
Number Description
4.1 Form of Private Placement Purchase Agreement
(Incorporated by reference to Exhibit 4.5 to
the Company's Registration Statement on Form
S-3, File No. 333-03719).
4.2 Form of Private Placement Purchase Agreement
for Units consisting of Convertible Notes
and Warrants. (Incorporated by reference to
Exhibit 4.4 to the Company's Registration
Statement on Form S-3, File No. 333-31983.)
4.3 Warrant to purchase 2,100,000 shares of
Common Stock dated April 8, 1997, issued to
Broad Capital Associates, Inc.(Incorporated
by reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-3, File No.
333-31983.)
4.4 Form of Warrant to purchase shares of Common
Stock.(Incorporated by reference from
Exhibit 4.0 to the Company's Quarterly
Report on Form 10-Q for the three months
ended March 31, 1998.)
4.5 Certificate of Designation of the Class A
Preferred Stock, Series E, par value $1,000
per share. (Incorporated by reference from
Exhibit 4.0 to the Company's Quarterly
Report on Form 10-Q for the three months
ended March 31, 1998.)
4.6* Warrant to Purchase 957,142 shares of Common
Stock dated June 1, 1997, as amended August
25, 1999.
4.7** Form of Subscription Agreement for Units
consisting of Common Stock and Warrants.
4.8** Form of Warrant to Purchase shares of
Common Stock issued pursuant to the Private
Placement of Units (included as Appendix B
to Form of Subscription Agreement for Units
filed as Exhibit 4.7 herewith.
5.1** Opinion of Schnader Harrison Segal & Lewis
LLP.
23.1** Consent of BDO Seidman, LLP.
23.2** Consent of Ernst & Young LLP.
23.3 Consent of Schnader Harrison Segal & Lewis
LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on signature
page)
- ---------------
* To be filed by amendment.
** Filed herewith.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement;
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that the undertakings set forth in
paragraphs (i) and (ii) above do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d)of the
Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered hereby which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for
the purpose of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant
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
registrant 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 of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act
of 1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Township of Limerick,
Montgomery County, Commonwealth of Pennsylvania, on October
13, 1999.
SEDONA CORPORATION
By:/s/ MARCO A. EMRICH
-------------------------
Marco A. Emrich
President, Chief
Executive Officer
Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed by the
following persons in the capacities and on the dates stated.
Signature Title Date
--------- ----- ----
/s/ LAURENCE L. OSTERWISE Chairman of October 13, 1999
- ------------------------- the Board of
Laurence L. Osterwise Directors
/s/ MARCO A. EMRICH President, Chief October 13, 1999
- ------------------------- Executive Officer
Marco A. Emrich and Director
(Principal Executive Officer)
/s/ WILLIAM K. WILLIAMS Vice President October 13, 1999
- ------------------------- and Chief Fin-
William K. Williams ancial Officer
(Principal Financial and Accounting Officer)
/s/ R. BARRY BORDEN* Director October 13, 1999
- -------------------------
R. Barry Borden
/s/ MICHAEL A. MULSHINE* Director and October 13, 1999
- ------------------------- Secretary
Michael A. Mulshine
/s/ DAVID S. HIRSCH* Director October 13, 1999
- -------------------------
David S. Hirsch
Director October , 1999
- -------------------------
James C. Sargent
Director October , 1999
- -------------------------
Jack A. Pellicci
/s/ ROBERT M. SHAPIRO* Director October 13, 1999
- -------------------------
Robert M. Shapiro
Director October , 1999
- -------------------------
James T. Womble
By: /s/ LAURENCE L. OSTERWISE
-------------------------
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
4.1 Form of Private Placement Purchase Agreement.
(Incorporated by reference to Exhibit 4.5 to
the Company's Registration Statement on Form
S-3, File No. 333-03719).
4.2 Form of Private Placement Purchase Agreement
for Units consisting of Convertible Notes and
Warrants. (Incorporated by reference to
Exhibit 4.4 to the Company's Registration
Statement on Form S-3, File No. 333-31983.)
4.3 Warrant to purchase 2,100,000 shares of Common
Stock dated April 8, 1997, issued to Broad
Capital Associates, Inc.(Incorporated by
reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-3, File No.
333-31983.)
4.4 Form of Warrant to purchase shares of Common
Stock. (Incorporated by reference from Exhibit
4.0 to the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1998.)
4.5 Certificate of Designation of the Series A
Preferred Stock, Series E, par value $1,000 per
share.(Incorporated by reference from Exhibit 4.0
to the Company's Quarterly Report on Form 10-Q
for the three months ended March 31, 1998.)
4.6* Warrant to Purchase 957,142 shares of Common
Stock dated June 1, 1997, as amended August 25,
1999.
4.7** Form of Subscription Agreement for certain Units
consisting of Common Stock and Warrants.
4.8** Form of Warrant to Purchase shares of Common
Stock issued pursuant to the Private Placement of
Units (included as Appendix B to Form of
Subscription Agreement for Units filed as Exhibit
4.7 herewith)
5.1** Opinion of Schnader Harrison Segal & Lewis LLP
23.1** Consent of BDO Seidman, LLP.
23.2** Consent of Ernst & Young LLP.
23.3 Consent of Schnader Harrison Segal & Lewis LLP
(included in Exhibit 5.1).
24.1 Power of Attorney (contained on signature page)
- ---------------
* To be filed by amendment.
** Filed herewith.
EXHIBIT 4.6
FORM OF
SUBSCRIPTION AGREEMENT
Sedona Corporation
649 North Lewis Road, 2nd Floor
Limerick, Pennsylvania 19468
Gentlemen:
Subject to the terms and conditions hereof, the undersigned
hereby irrevocably subscribes for units (the
"Units") as specified in Appendix A at a price of $100,000 per
Unit, which is payable as described in Section 3 hereof.
Each Unit consists of (i) 50,000 shares of the Common Stock,
par value $.001 per share (the "Common Stock") of Sedona
Corporation, a Pennsylvania corporation, and (ii) a warrant to
acquire 44,444 shares of Common Stock at an exercise price
of $2.25 per share (the "Warrant"). The undersigned
acknowledges that the Units, if issued by the Company, will be
subject to restrictions on transfer pursuant to the Securities
Act, state law and this Agreement.
1. Acceptance of Subscription and Issuance of Units. It is
understood and agreed that the Company shall have the sole
right, at its complete discretion, to accept or reject this
subscription, in whole or in part, for any reason and that the
same shall be deemed to be accepted by the Company only when
it is signed by a duly authorized officer of the Company and
delivered to the undersigned at or prior to any Closing
referred to in Section 2 hereof. Notwithstanding anything in
this Agreement to the contrary, the Company shall have no
obligation to issue any of the Units to any person who is a
resident of a jurisdiction in which the issuance of Units to
him would constitute a violation of the securities, "blue sky"
or other similar laws of such jurisdiction (collectively
referred to as the "State Securities Laws").
2. Closing. Upon receipt and acceptance by the Company
hereof, a closing (the "Closing") shall promptly take place
at the offices of the Company or other place as determined by
the Company and the subscription proceeds received herewith
shall be paid over to the Company and certificates
representing the Common Stock portion of the Unit, along with
Warrant certificates representing the Warrant portion of the
Unit, will be delivered to the undersigned.
3. Payment for Units. Payment for the Units shall be
received by the Company from the undersigned by cash, wire
transfer, cashier's check, bank draft or postal money order
payable in United States dollars, in an amount as set forth in
Appendix A hereto upon execution of this Subscription
Agreement. The Company shall deliver or arrange for delivery
of certificates representing the Common Stock portion of the
Unit, along with Warrant certificates representing the Warrant
portion of the Unit, sold to the undersigned at Closing.
4. Additional Shares of Common Stock. The Company agrees
to issue additional shares of Common Stock to the undersigned
in accordance with the following provisions: On the date that
is six (6) months from the date of Closing, the Company will
compute the average closing price of the Common Stock for the
prior twenty (20) trading days (the "Average Closing Price").
In the event that the Average Closing Price is less than $2.00
per share, the Company will then issue additional shares of
Common Stock to the undersigned such that the additional
shares of Common Stock, when added to the original number of
shares of Common Stock acquired by the undersigned through the
purchase of the Units hereunder, and then multiplied by the
Average Closing Price will equal dollar amount indicated in
Appendix A. Notwithstanding the foregoing, for purposes of
determining the number of additional shares of Common Stock to
be issued to the undersigned, if any, the Average Closing
Price shall never be lower than $1.50. To the extent that the
actual Average Closing Price is below $1.50, for purposes of
computing the number of additional shares of Common Stock to
be issued to the undersigned, the Average Closing Price shall
be deemed to be $1.50.
5. Registration Rights. In connection with the issuance
of the Units, the Company will include the shares of the
Common Stock portion of the Units, along with the shares of
Common Stock underlying the Warrant, on a pre-effective
amendment to its registration statement on Form S-3 (File No.
333-71457) which was filed with the United States Securities
and Exchange Commission on January 29, 1999. The Company will
use its reasonable best efforts to cause such registration
statement to be declared effective within thirty (30) days of
the Closing.
6. The Warrants. The following is a description of the
Warrant component of the Unit:
a. The Warrants are exercisable at any time at an
exercise price of $2.25 per share. The Warrants expire
on March 15, 2002. The Warrants provides the Company with a
call provision such that the Warrant may be called (and
thereby redeemed by the Company) at an increasing stock price
of $6.00 for the first third of the Warrant, $8.00 for the
second third of the Warrant and $10.00 for the final third of
the Warrants. . In the event the Company elects to call for
the exercise of any of the Warrants, the holder shall have up
to 30 days to exercise those Warrants that are subject
to the call, after which time any such 'called' Warrants, if
not exercised, will become canceled on the books of
the Company. A form of the Warrants is attached to this
Subscription Agreement as Appendix B. The undersigned is
directed to the form of Warrants for a more complete
description of the terms thereof.
7. Representations and Warranties of the Company. As of a
Closing, the Company represents and warrants to the
undersigned that:
(a) The Company is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth
of Pennsylvania, with full power and authority to conduct its
business as it is currently being conducted and to own
its assets; and has secured any other authorizations,
approvals, permits and orders required by law for the conduct
by the Company of its business as it is currently being
conducted;
(b) The Company has duly authorized the issuance and
sale of the Units upon the terms of their offer by all
requisite corporate action.
(c) The Common Stock portion of the Unit, and the Common
Stock issued in connection with the exercise of the Warrant,
if any, when issued and paid for, will represent validly
authorized, duly issued and fully paid and nonassessable
shares of Common Stock, and the issuance thereof will not
conflict with the Company's Articles of Incorporation or
Bylaws nor with any outstanding warrant, option, call,
preemptive right or commitment of any type relating to the
Company's capital stock.
(d) No representation or warranty by the Company in this
Agreement, and no statement by an officer of the Company
contained in any document, certificate or other writing
furnished to the undersigned in connection with the
transactions contemplated hereby, when taken as a whole,
contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements herein or
therein not misleading in light of the circumstances in which
they are made.
8. Representations, Warranties and Covenants of the
Undersigned. The undersigned hereby represents and warrants
to and covenants with the Company and each officer, director,
and agent of the Company that:
(a) General
(i) The undersigned has all requisite authority to enter
into this Agreement and to perform all the obligations
required to be performed by the undersigned hereunder; and
(ii) The undersigned is a resident of the state set forth
on the signature page hereto and is not acquiring the Units as
an agent or otherwise for any other person.
(b) Information Concerning the Company
(i) The undersigned has received or has had access to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, and its Quarterly Reports on Form 10-Q for
the three months ended March 31, 1999 and for the three and
six months ended June 30, 1999 and Definitive Proxy Materials.
The undersigned has not been furnished any offering literature
other than the foregoing and has relied only on the
information contained therein.
(ii) The undersigned has been given the opportunity to
ask questions and to obtain any information necessary to make
an informed investment decision with respect to the Units and
has been furnished all such information so requested.
(iii) The undersigned understands that, unless he
notifies the Company in writing to the contrary at or before
Closing, all the undersigned's representations and warranties
contained in this Agreement will be deemed to have been
reaffirmed and confirmed as of Closing, taking into account
all information received by the undersigned.
(iv) The undersigned understands that the purchase of the
Units involves elements of substantial risks.
(v) The undersigned understands that no federal or state
agency has passed upon the Units or made any finding or
determination concerning the fairness or advisability of this
investment.
(vi) The undersigned understands that estimates,
projections and certain other information are forward looking
statements which, by their nature, involve significant
elements of subjective judgment and analysis that may or may
not be correct; that there can be no assurance that such
projections or goals will be attained.
(c) Status of Undersigned
(i) The undersigned has such knowledge, skill and
experience in business, financial and investment matters so
that he is capable of evaluating the merits and risks of an
investment in the Units. To the extent necessary, the
undersigned has retained, at his own expense, and relied upon,
appropriate professional advice regarding the investment, tax
and legal merits and consequences of this Agreement and owning
the Units.
(ii) The undersigned is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. The
undersigned agrees to furnish any additional information
requested to assure compliance with applicable federal and
state securities laws in connection with the purchase and sale
of the Units. The undersigned acknowledges that he has
completed the Confidential Purchase Questionnaire and
Accredited Investor Certificate which are attached as Appendix
C and that the information contained therein is complete and
accurate as of the date thereof and is hereby affirmed as of
the date hereof.
(d) Transfer Restrictions
(i) The undersigned is acquiring the Units solely for
his own beneficial account, for investment purposes, and not
with a view to, any distribution of the Units. The
undersigned understands that the Units, when issued, were not
registered under the Securities Act nor any State Securities
Laws by reason of specific exemptions under the provisions
thereof which depend in part upon the investment intent of the
undersigned and of the other representations made by the
undersigned in this Agreement. The undersigned understands
that the Company is relying upon the representations and
agreements contained in this Agreement (and any supplemental
information) for the purpose of determining whether this
transaction meets the requirements for such exemptions.
(ii) The undersigned understands that the Units are
"restricted securities" under applicable federal securities
laws and that the Securities Act and the rules of the
Securities and Exchange Commission (the "Commission") provide
in substance that the undersigned may dispose of the Units (or
any portion of the Units) only pursuant to an effective
registration statement under the Securities Act or an
exemption therefrom.
(iii) The undersigned acknowledges that the Company has
the right in its sole and absolute discretion to abandon this
private placement at any time prior to the completion of the
offering and to return the previously paid subscription price
of the Units without deduction or interest thereon, to the
respective subscribers.
(iv) The undersigned has not used any person as a
"Purchaser Representative" within the meaning of Regulation D
to represent it in determining whether it should purchase the
Units.
(v) The undersigned agrees and covenants to execute such
further agreements, instrument or documents as the Company may
in its discretion deem necessary or desirable.
9. Conditions to Obligations of the Undersigned and the
Company. The obligations of the undersigned
to purchase and pay for the number of Units specified herein
and of the Company to sell the Units are subject to the
satisfaction at or prior to a Closing of the following
conditions precedent: the representations and warranties of
the Company contained in Section 4 hereof and of the
undersigned contained in Section 5 hereof shall be true and
correct on and as of Closing in all respects with the same
effect as though such representations and warranties had been
made on and as of the date of Closing.
10. Obligations Irrevocable. The obligations of the
undersigned hereunder shall be irrevocable, except
with the consent of the Company.
11. Legend.
(a) Each certificate representing the Common Stock
portion of the Unit along with each Warrant certificate
representing the Warrant portion of the Unit (sold pursuant to
this Agreement) will be imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), NOR ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER
UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH
SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL,
SUCH REGISTRATION UNDER THE SECURITIES ACT AND OTHER
APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
(b) Each such certificate shall also bear such other
legends as may be required by the applicable State Securities
Laws.
12. Brokers. Subscriber has not entered into any agreement
to pay any broker's or finder's fee to any Person with respect
to this Agreement or the transactions contemplated hereby.
13. Waiver, Amendment. Neither this Agreement nor any
provisions hereof shall be modified, changed, discharged or
terminated except by an instrument in writing, signed by the
party against whom any waiver, change, discharge or
termination is sought.
14. Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by either the Company
or the undersigned without the prior written consent of
the other party.
15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.
16. Section and Other Headings. The section and other
headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or
interpretation of this Agreement.
17. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
together shall be deemed to be one and the same agreement.
18. Notices. All notices and other communications provided
for herein shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid:
(a) If to the Company, to it at the following address:
Sedona Corporation
649 North Lewis Road, 2nd Floor
Limerick, Pennsylvania 19468
Attn: Chief Financial Officer
(b) If to the undersigned, to him at the address set
forth on the signature page hereto;
or at such other address as either party shall have specified
by notice in writing to the other.
19. Binding Effect. The provisions of this Agreement shall
be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, legal representatives,
successors and assigns.
20. Survival. All representations, warranties and covenants
contained in this Agreement shall survive (i) the acceptance
of the subscription by the Company, (ii) changes in the
transactions, documents and instruments which are not material
or which are to the benefit of the undersigned, and (iii) the
death or disability of the undersigned.
21. Notification of Changes. The undersigned hereby
covenants and agrees to notify the Company upon
the occurrence of any event prior to a Closing of the purchase
of the Shares pursuant to this Agreement which would
cause any representation, warranty, or covenant of the
undersigned contained in this Agreement to be false or
incorrect.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement this day of
1999.
INVESTOR:
Signature
Print Name
Number and Street
City, State and Zip
Subscriber's Social Security
or Tax Identification Number
Signature of Co-owner if applicable
If Joint Ownership, check one (all parties must sign above):
( ) Joint Tenants with ( ) Tenants in Common
Right of Survivorship
( ) Community Property
If Fiduciary or Corporation, check one:
( ) Trust ( ) Estate ( ) Power of Attorney
( ) Corporation
SEDONA CORPORATION
Subscription accepted as of the _______
day of ____________, 1999.
By:
Marco Emrich, President
<PAGE>
APPENDIX A
CONSIDERATION TO BE DELIVERED
Number of Units Amount to be Paid
$
<PAGE>
Appendix B
Form of the Warrants
Number: WCXXXX_____
**XX,XXX** Shares
SEDONA CORPORATION
Incorporated under the laws of the Commonwealth of
Pennsylvania
COMMON STOCK PURCHASE WARRANTS
This Certifies that ___________________ (the "holder") is the
owner of XX,XXX Common Stock Purchase Warrants (the
"Warrants"), each Warrant giving the holder the right to
purchase one (1) fully paid and non-assessable share of
Common Stock, $.001 par value, of SEDONA Corporation (the
"Company") at any time through March 15, 2002, (the
"expiration date") at an exercise price of $2.25 per Warrant.
These Warrants provide the Company with a call provision
such that these Warrants may be called (and thereby redeemed
by the Company) at an increasing stock price of $6.00
for the first third of the Warrants, $8.00 for the second
third of the Warrants and $10.00 for the final third of the
Warrants.
In the event the Company elects to call for the exercise of
any of the warrants, the holder shall have up to 30 days to
exercise those warrants that are subject to the call, after
which time any such 'called' warrants, if not exercised, will
become canceled on the books of the Company.
As of Midnight of the exercise date, any unexercised Warrants
issued herein will automatically and without notice terminate
and become null and void, unless extended by action of the
Board of Directors. Any exercise of these Warrants shall be
in writing, addressed to the Secretary of the Corporation at
its principal place of business, using the form attached
hereto, and shall be accompanied by payment in full by check.
In the event, at the time of exercise of the Warrants, there
does not exist a Registration Statement on an appropriate Form
under the Securities Act of 1933, as amended (the "Act"),
which Registration Statement shall have become effective and
shall be current with respect to the underlying shares being
purchased, and in the opinion of counsel to the Company such
underlying shares will upon issuance be "restricted"
securities within the meaning of Rule 144 under the Act, you
will represent and warrant to the Company (i) that, upon
exercise of the Warrants, you are purchasing the underlying
shares for investment only and not with a view to the resale
or distribution thereof and (ii) that any subsequent resale or
distribution of any such underlying shares shall be made
either pursuant to (x) a Registration Statement on an
appropriate Form under the Act, which Registration Statement
shall have become effective and shall be current with respect
to the underlying shares being sold, or (y) a specific
exemption from the registration requirements of the Act, but
in claiming such exemption, you shall, prior to any offer for
sale or sales of such underlying shares, obtain a favorable
written opinion from counsel for, or approved by the Company,
as to the applicability of such exemption.
In Witness Whereof, the said Corporation has caused this
Certificate to be signed by its authorized officers, and its
Corporate Seal, to be hereunto affixed this __th day of
______, 1999.
__________________________________________________
Secretary/President
(Apply Corporate Seal)
<PAGE>
APPENDIX C
CONFIDENTIAL PURCHASER QUESTIONNAIRE
SEDONA CORPORATION
(A Pennsylvania corporation)
Sedona Corporation
649 North Lewis Road, 2nd Floor
Limerick, Pennsylvania 19468
Gentlemen:
The information contained herein is being furnished to you in
order for you to determine whether the undersigned's
Subscription Agreement to purchase Units ("Units") consisting
of (i) shares of the Common Stock, par value $.001 per share
(the "Common Stock") of Sedona Corporation, a Pennsylvania
corporation, and (ii) warrants to acquire shares of Common
Stock at an exercise price of $2.25 per share from SEDONA
CORPORATION (the "Company"), may be accepted by you in light
of the requirements of Section 4(2) of the Securities Act of
1933, as amended (the "Act") and Regulation D promulgated
thereunder, and an exemption contained in the securities
laws of certain states. The undersigned prospective investor
(the "Investor") understands that the information is
needed in order to satisfy various suitability requirements,
including the requirement that you must have reasonable
grounds to believe that the Investor is an "Accredited
Investor," as defined in Rule 501 of Regulation D (which in
the case of a partnership investor, requires each partner to
be an Accredited Investor), and that the Investor has
knowledge and experience in financial and business affairs
such that the Investor is capable of evaluating the merits
and risks of the proposed investment. The Investor
understands that (a) you will rely on the information
contained herein for purposes of such determination, (b) the
Units distributed in connection therewith are issued under the
Act in reliance upon the exemption from registration afforded
by Section 4(2) of the Act and Regulation D promulgated
thereunder and under the securities laws of any state in
reliance upon a similar exemption and (d) this Questionnaire
is not an offer of Shares or any other securities.
The Investor understands that, although this Questionnaire and
the responses provided herein will be kept confidential, you
may need to present it to such parties as you deem advisable
in order to establish the applicability under any federal or
state securities laws of an exemption from registration.
In accordance with the foregoing, the following
representations and information are hereby made and
furnished:
(Please answer all questions. If the answer to any question
is "None" or "Not Applicable," please so state. Each partner
of a partnership Investor must submit a completed
Questionnaire.)
Full Name:
Age:
Occupation:
Citizenship:
Number of Dependents:
Residential Address:
Street
Telephone
City State
Zip Code
Business Address:
Firm Name
Street
Telephone
City State
Zip Code
Please indicate your preferred mailing address:
( ) Residential ( ) Business
1. (a) Was your individual net income (that is,
not including the income of your spouse) in excess of $200,000
in 1997 and 1998?
Yes _______ No_______
(b) Do you anticipate that your individual net
income will exceed $200,000 in 1999?
Yes _______ No_______
(c) Was your joint income (that is, including your
income and the income of your spouse) in excess of $300,000 in
1997 and 1998?
Yes _______ No_______
(d) Do you anticipate that your joint income will
exceed $300,000 in 1999?
Yes _______ No_______
2. Is your current net worth (including your primary
residence) in excess of $1,000,000?
Yes _______ No_______
3. Please describe your experience as an investor
(including amount invested) in securities, particularly
investments in nonmarketable and tax-incentive securities such
as real estate, equipment leasing, or oil and gas.
4. Have you invested in other private placements of
securities?
Yes _______ No_______
If yes, please list and describe:
I understand that the Company will be relying on the accuracy
and completeness of my responses to the foregoing questions
and the Investor represents and warrants to the Company as
follows:
(i) The answers to the above questions are complete
and correct and may be relied upon by the Company in
determining whether the Investor is an Accredited Investor and
whether the offering is exempt from registration under the
Act, and any other exemption provided by applicable state
securities law;
(ii) I will notify the Company immediately of any
material change in any statement made herein occurring prior
to the closing of any purchase by me of the Shares; and
(iii) I have sufficient knowledge and experience in
financial matters to evaluate the merits and risks of the
prospective investment, and am able to bear the economic risk
of the investment and currently could afford a complete loss
of such investment.
IN WITNESS WHEREOF, the Investor has executed this
Confidential Purchaser Questionnaire this _____ day of
_____________, 1999, and declares that it is truthful and
correct.
(Check One)
____ Individual(s)* X
Signature of Prospective Investor
____ Trust**
Print Investor Name
and Title (if applicable)
____ Partnership *** X
Signature of Prospective Co-Investor
____ Corporation ****
Print Co-Investor Name
and Title (if applicable)
__________________
* For unmarried individuals, please provide a signed
Confidential Purchaser Questionnaire for each individual.
** If a custodian, trustee or agent, please include
trust, agency or other agreement and a certificate authorizing
investment and as to legal existence of the trust.
*** If a partnership, please provide a certified
copy of partnership agreement and any amendments. If a
limited partnership, please provide, in addition, a
certificate of limited partnership as currently in effect.
**** If a corporation, please include articles of
incorporation and bylaws as amended and currently in effect,
certified corporate resolution or other document authorizing
investment, certificate of incumbency of officers and
certified or audited financial statements for the preceding
three fiscal years.
<PAGE>
ACCREDITED INVESTOR CERTIFICATE
The undersigned Investor hereby certifies that he is an
Accredited Investor as that term is defined in Regulation D
adopted pursuant to the Securities Act of 1933 (the "Act").
The specific category(s) of Accredited Investor applicable to
the undersigned is checked below.
_____ a. an individual whose individual
net worth, or joint net worth with that individual's spouse,
exceeds $1,000,000 (including the value of homes, home
furnishings and personal automobiles);
_____ b. an individual who had an
individual income in excess of $200,000 in 1997 and 1998 or
joint income with that person's spouse in excess of $300,000
in each of those years and who reasonably expects to reach the
same income level in 1999. For purposes of this offering,
individual income shall equal adjusted gross income, as
reported in the investor's federal income tax return, less any
income attributable to a spouse or to property owned by the
spouse, and as may be further adjusted in accordance with the
rules, regulations, and releases of the Commission;
_____ c. a bank as defined in Section
3(a)(2) of the Securities Act of 1933, as amended (the "Act"),
or a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Act, whether acting in
its individual or fiduciary capacity; an insurance company as
defined in Section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 (the "1940
Act") or a business development company as defined in Section
2(a)(48) of the 1940 Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958; or an employee benefit plan within the meaning of Title
I of the Employee Retirement Income Security Act of 1974
("ERISA"), if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of ERISA, which is
either a bank, savings and loan association, insurance company
or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or if a
self-directed plan, with investment decisions made solely by
persons that are accredited investors;
_____ d. a private business development
company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940;
_____ e. an organization described in
Section 501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the Shares, with
total assets in excess of $5,000,000;
_____ f. an individual who is a
director or executive officer of the Company; or
_____ g. an entity in which all of the
equity owners are accredited investors as set forth above.
IN WITNESS WHEREOF, the undersigned has executed this
Accredited Investor Certificate this day of
, 1999.
Signature
Printed Name
<PAGE>
EXHIBIT 5.1
SCHNADER HARRISON SEGAL & LEWIS LLP
1300 I STREET, N.W.
SUITE 1100 EAST LOBBY
WASHINGTON, D.C. 20005
202-216-4200
TELECOPIER 202-775-8741
October 13, 1999
Sedona Corporation
649 North Lewis Road, Suite 220
Limerick, Pennsylvania 19468
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as counsel to Sedona Corporation a
Pennsylvania corporation (the "Company"), in connection with
the registration of shares of the Company's Common Stock, par
value $.001 per share (the "Shares" and, with respect to those
Shares to be issued upon the exercise of the warrants referred
to in the Registration Statement, the "Warrant
Shares"),pursuant to a Registration Statement on Form S-3(the
"Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as
amended. Such Shares and Warrant Shares will be sold from
time to time by the shareholders named in the Registration
Statement (the "Selling Shareholders").
As counsel for the Company, we have examined originals or
copies, certified or otherwise identified to our satisfaction,
of such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary
for the purposes of rendering this opinion. In our
examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us
as originals and the conformity with the originals of all
documents submitted to us as copies. As to various questions
of fact material to such opinion, we have relied, to the
extent we deemed appropriate, upon representations, statements
and certificates of officers and representatives of the
Company and others.
Based upon the foregoing, we are of the opinion that the
Shares and Warrant Shares to be registered for sale by the
Selling Shareholders have been duly authorized by the Company,
with respect to the Shares, are validly issued, fully paid and
nonassessable and, with respect to the Warrant Shares, when
issued, delivered and paid for in accordance with the terms of
the warrants, will be, validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to
the Registration Statement, and we consent to the use of our
name under the caption "Legal Matters" in the Prospectus
forming a part of the Registration Statement.
Very truly yours,
/s/ SCHNADER HARRISON SEGAL & LEWIS LLP
<PAGE>
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
Sedona Corporation
Limerick, Pennsylvania
We hereby consent to the incorporation by reference into the
Registration Statement of Form S-3 (No. 333-71457) of our
report dated March 13, 1998, except for Note 14 which is dated
March 27, 1998, relating to the consolidated balance sheet as
of December 31, 1997 and the related statements of operations,
stockholders' equity, and cash flows and schedule for each in
the two years in the period then ended of Sedona Corporation
(formerly Scan-Graphics, Inc.) included in the Company's
Annual Report on Form 10-K for the year ended December 31,
1998.
We also consent to the reference to us under the caption
"Experts" in the Prospectus.
/s/ BDO SEIDMAN, LLP
Philadelphia, Pennsylvania
October 13, 1999
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3 No.
333-71457) and related Prospectus of Sedona Corporation for
the registration of 4,918,211 shares of its common stock and
to the incorporation by reference therein of our report dated
March 31, 1999, with respect to the consolidated financial
statements and schedule of Sedona Corporation included in its
Annual Report (Form 10-K) for the year ended December 31,
1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young, LLP
Philadelphia, Pennsylvania
October 13, 1999
