Sedona Corp., a customer relationship software firm that caters to small and midsize financial services companies, is making plans to sell its products overseas.

The Limerick, Pa., company has hired Japan Entry Corp. of Massachusetts to distribute its software in the Far East. Sedona has already "identified 15 candidates who are interested in meeting with us," said Marco Emrich, president and chief executive officer.

Sedona ended the second quarter with a sales backlog of $1.034 million. "We were happy to set the foundation for us to transition to become a comprehensive Internet customer relationship management provider," Mr. Emrich said. "We set up the entire infrastructure for the corporation for year 2000 and in preparation for 2001."

The company now has 90 customers, including Cape Cod Bank and Trust Company and Great Northern Bank of St. Michael, Minn. Since January the staff has grown from 27 to 73, including a sales force that has grown from three to 39.

Today Sedona focuses on financial institutions with $5 billion in assets or less, but it plans to begin selling its customer relationship management software to Internet retailers, Mr. Emrich said.

The company's second-quarter revenues increased 21% from the same period last year, to $238,000, but it reported a loss of $2.8 million, or 11 cents a share, compared with a loss of $1.3 million, or six cents a share, last year.

"We're fairly typical of an Internet start-up company - not making money!" said William K. Williams, Sedona's vice president and chief financial officer. "We have a viable concept of the product, which we believe offers unique features to the market. Financial services is fertile ground for customer relationship management."

But Sedona is not a new company. The company went public in 1985 as Scan Graphics, a manufacturer of high-end digital equipment. It started to move into software in 1995, when it acquired a data mining and mapping business from Lockheed Martin Corp. and took the name Sedona.

"Essentially, we were selling components derived from Lockheed Martin," Mr. Williams said.

In April the company completed an acquisition of Acxiom Corp.'s Customer Information Management System, adding 20 to its staff. "We went from being a component provider to being a comprehensive application service provider of customer relationship management solutions," Mr. Williams said.

Sedona's flagship product is Intarsia, a Java-based customer relationship management application for the Internet. In the second quarter the company released Intarsia 2.0, which works with wireless technology. It also announced agreements with E.piphany to customize and integrate its E.5 campaign management application as a new component of Intarsia, and with International Business Machines Corp. to make the software compatible with IBM's AS/400 business platform.

Sedona holds $6 million in cash, Mr. Williams said, and it registered $50 million of securities with the Securities and Exchange Commission. These securities may be sold to fund the expansion plans.

In the last quarter Sedona started to market itself as an outsourcer. The company is now offering an Application Service Provider option, in which an institution would sign a two-year contract and agree to pay a flat monthly fee to lease the software instead of buying it outright. Customers who choose the new option will be linked with an Internet Service Provider, and Sedona will maintain the network and operate the software.

None of Sedona's customers have opted for the ASP yet, and Mr. Williams said it is hard to tell how many will.

"This moves us from the sale of a product to the rental model," he said. "We're just getting started in this space, and we don't know how many of our customers will convert to it or how many new customers will purchase the ASP model."

From a customer standpoint, Mr. Williams said, the ASP option would be cheaper because "the bank doesn't need personnel to operate the software."

Sedona's competitors, Mr. Emrich said, are core banking systems providers like Harland (which recently acquired Concentrex), Harte-Hanks, and Jack Henry & Associates. They do not customer management services, but "because of their relationships with banks, they would be a natural evolution," he said.

Kathleen Khirallah, a senior research analyst at TowerGroup, said Sedona's Intarsia software is "interesting." Though it has been on the market for a while, "Sedona has added development to it in terms of Web and portal capabilities." As a product, it has been "successful," she said, and "now under the ownership of Sedona it is taking it to the next level. It really is strengthening it."

Sedona's stock price closed at $2.50 Friday, unchanged from a week before.


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