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**SECURITIES AND EXCHANGE COMMISSION****WASHINGTON, DC 20549**

**FORM 10-Q**

|                                                      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR        15 (d) OF THE SECURITIES EXCHANGE    ACT OF 1934 |
|------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                                 |                                                                                                    |
| For the quarterly period ended September    30, 2004 |
|                                                 |                                                                                                    |
|                                                      | TRANSITION REPORT PURSUANT TO SECTION 13    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934             |

For the transition period from               to

Commission file number 0-15864

SEDONA Corporation(Exact name of registrant as specified in its charter)

| PENNSYLVANIA                    |   | 95-4091769     |
|---------------------------------|--------|---------------------|
|                                 |
| (State or other jurisdiction of |   |  (IRS Employer |
| incorporation or organization)  |   | Identification No.) |

| 1003 W. 9th Avenue,        SecondFloor, King of Prussia, PA |   | 19406      |
|-------------------------------------------------------------|--------|------------|
|                                                             |
|  (Address of principal executive offices)              |   | (Zip Code) |

| Registrant’s telephone number,    including area code (610) 337-8400. |
|----------------------------------------------------------------------------|

                       Indicate    by check mark whether the registrant is an accelerated file (as defined inRule 12b-2 of the Exchange Act). YES    NO .

                      At November 15, 2004, there were 83,443,163 shares outstanding of the registrant’s common stock, par value $0.001 per share.

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**SEDONA CORPORATION AND SUBSIDIARIES**

|                                      |   |                                                                            |   |   |
|-------------------------------------------|--------|---------------------------------------------------------------------------------|--------|--------|
| PART      I.   FINANCIAL INFORMATION |   | INDEX  PAGE                                                                     |
|                                      |   |                                                                            |   |   |
|                                      |   |                                                                            |   |   |
| Item 1.                                   |   | Consolidated Financial Statements                                               |   |   |
|                                      |   |                                                                            |   |   |
|                                      |   | Consolidated    Balance Sheets – September 30, 2004 (Unaudited)            |   | 4      |
|                                      |   |      and December 31, 2003                             |   |   |
|                                      |   |                                                                            |   |   |
|                                      |   | Consolidated    Statements of Operations – (Unaudited)                     |   | 5      |
|                                      |   |      three    months ended September 30, 2004 and 2003 |   |   |
|                                      |   |                                                                            |   |   |
|                                      |   | Consolidated Statements    of Operations – (Unaudited)                     |   | 6      |
|                                      |   |      nine    months ended September 30, 2004 and 2003  |   |   |
|                                      |   |                                                                            |   |   |
|                                      |   | Consolidated    Statements of Cash Flow – (Unaudited)                      |   | 7      |
|                                      |   |      nine months ended September 30, 2004 and 2003     |   |   |
|                                      |   |                                                                            |   |   |
|                                      |   | Notes to Consolidated    Financial Statements –                            |   | 8-12   |
|                                      |   |      September 30, 2004                                |   |   |
|                                      |   |                                                                            |   |   |
| Item 2.                                   |   | Management’s Discussion and Analysis of                                    |   | 12-13  |
|                                      |   | Financial Condition and Results of Operations                                   |   |   |
|                                      |   |                                                                            |   |   |
| Item 3.                                   |   | Quantitative and Qualitative Disclosure about Market Risk                       |   | 13     |
|                                           |   |                                                                            |   |   |
| Item 4.                                   |   | Controls and Procedures                                                         |   | 14     |
|                                      |   |                                                                            |   |   |
| PART II.   OTHER    INFORMATION      |   |                                                                            |
|                                      |   |                                                                            |   |   |
| Item 1 through Item 6.                    |   |  15                                                                        |
|                                      |   |                                                                            |   |   |
| SIGNATURE PAGE                            |   |  16                                                                        |
|                                      |   |                                                                            |   |   |
| EXHIBIT INDEX                             |   |  17                                                                        |
|                                      |   |                                                                            |   |   |
| CERTIFICATIONS                            |   |  18-25                                                                     |

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**NOTE ON FORWARD-LOOKING STATEMENTS**

This Form 10-Q contains forward-looking    statements within the meaning of Section 27A of the Securities Act of 1933,    as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.    Forward-looking statements are statements other than historical information    or statements of current condition. Some forward-looking statements may be    identified by use of terms such as “believes”,“anticipates”, “intends”,    or “expects”. These forward-looking statements relate to the plans,    objectives, and expectations of SEDONA Corporation (the “Company” or “SEDONA”)    for future operations. In light of the risks and uncertainties inherent in    all forward-looking statements, the inclusion of such statements in this    Form 10-Q should not be regarded as a representation by the Company or any    other person that the objectives or plans of the Company will be achieved    or that any of the Company’s operating expectations will be realized.    The Company’s revenues and results of operations are difficult to forecast    and could differ materially from those projected in the forward-looking statements    contained herein as a result of certain factors including, but not limited    to, dependence on strategic relationships, ability to raise additional capital,    ability to recruit and retain qualified professionals, customer acquisition    and retention, and rapid technological change. These factors should not be    considered exhaustive; the Company undertakes no obligation to release publicly    the results of any future revisions it may make to forward-looking statements    to reflect events or circumstances after the date hereof or to reflect the    occurrence of unanticipated events. 

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**SEDONA CORPORATION AND SUBSIDIARIES****CONSOLIDATED BALANCE SHEETS***(In thousands, except share and per share data)*

| ** **                                                                                                                                                                                             |   |   | **September 30,**                 |   |   | **December 31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------|--------|--------|------------------|--------|
|                                                                                                                                                                                                   |   |        |
| ** **                                                                                                                                                                                             |   |   | **2004**                          |   |   | **2003**         |   |
|                                                                                                                                                                                                   |   |        |
|                                                                                                                                                                                                   |   |   | (unaudited)                       |   |   |             |   |
| **Assets**                                                                                                                                                                                             |   |   |                              |   |   |             |   |
| Current assets:                                                                                                                                                                                        |   |   |                              |   |   |             |   |
|      Cash and cash equivalents                                                                                                                                                |   | $      |      185 |   | $      | 59               |   |
|      Accounts receivable, net of allowance for doubtful accounts of $13 and $13 at        September 30, 2004 and December 31, 2003, respectively     |   |   | 74                                |   |   | 179              |   |
|      Accounts receivable, related party                                                                                                                                       |   |   | 110                               |   |   | —           |   |
|      Prepaid expenses and other current assets                                                                                                                                |   |   | 45                                |   |   | 138              |   |
|                                                                                                                                                                                                   |   |        |
| Total current assets                                                                                                                                                          |   |   | 414                               |   |   | 376              |   |
|                                                                                                                                                                                                   |   |   |                              |   |   |             |   |
|      Property and equipment, net of accumulated depreciation and amortization                                                                                                 |   |   | 28                                |   |   | 66               |   |
|      Software development costs, net of accumulated amortization of $697 and $3,531        at September 30, 2004 and December 31, 2003, respectively |   |   | 20                                |   |   | 351              |   |
|      Non-current assets – other                                                                                                                                          |   |   | 25                                |   |   | 39               |   |
|                                                                                                                                                                                                   |   |        |
| Total non-current assets                                                                                                                                                                               |   |   | 73                                |   |   | 456              |   |
|                                                                                                                                                                                                   |   |        |
| Total assets                                                                                                                                                                                           |   | $      |      487 |   | $      | 832              |   |
|                                                                                                                                                                                                   |   |        |
|                                                                                                                                                                                                   |   |   |                              |   |   |             |   |
| **Liabilities and stockholders’ equity/(deficit)**                                                                                                                                               |   |   |                              |   |   |             |   |
| Current liabilities:                                                                                                                                                                                   |   |   |                              |   |   |             |   |
|      Accounts payable                                                                                                                                                         |   | $      |      124 |   | $      | 425              |   |
|      Accrued expenses and other current liabilities                                                                                                                           |   |   | 619                               |   |   | 665              |   |
|      Deferred revenue                                                                                                                                                         |   |   | 111                               |   |   | 314              |   |
|      Current maturities of long-term debt                                                                                                                                     |   |   | 8                                 |   |   | 20               |   |
|      Short-term debt- debentures                                                                                                                                              |   |   | 2,615                             |   |   | 1,697            |   |
|                                                                                                                                                                                                   |   |        |
| Total current liabilities                                                                                                                                                                              |   |   | 3,477                             |   |   | 3,121            |   |
|                                                                                                                                                                                                   |   |   |                              |   |   |             |   |
| Long-term debt, less current maturities                                                                                                                                                                |   |   | 953                               |   |   | 953              |   |
| Interest payable                                                                                                                                                                                       |   |   | 104                               |   |   | 46               |   |
|                                                                                                                                                                                                   |   |        |
| Total long-term liabilities                                                                                                                                                                            |   |   | 1,057                             |   |   | 999              |   |
|                                                                                                                                                                                                   |   |        |
| Total liabilities                                                                                                                                                                                      |   |   | 4,534                             |   |   | 4,120            |   |
|                                                                                                                                                                                                   |   |   |                              |   |   |             |   |
| Stockholders’ equity/(deficit):                                                                                                                                                                  |   |   |                              |   |   |             |   |
| Class A convertible preferred stock                                                                                                                                                                    |   |   |                              |   |   |             |   |
|      Authorized shares – 1,000,000 (liquidation preference $2,500)                                                                                                       |   |   |                              |   |   |             |   |
|      Series A, par value $2.00, Issued and outstanding shares – 500,000                                                                                                  |   |   | 1,000                             |   |   | 1,000            |   |
|      Series H, par value $2.00, Issued and outstanding shares – 1,500                                                                                                    |   |   | 3                                 |   |   | 3                |   |
| Common stock, par value $0.001                                                                                                                                                                         |   |   |                              |   |   |             |   |
|      Authorized shares -175,000,000, Issued and outstanding shares –83,443,163                                                                                           |   |   |                              |   |   |             |   |
|      and 61,131,513 in 2004 and 2003, respectively                                                                                                                            |   |   | 83                                |   |   | 61               |   |
|      Additional paid-in-capital                                                                                                                                               |   |   | 61,281                            |   |   | 60,048           |   |
|      Accumulated deficit                                                                                                                                                      |   |   | (66,414                           | )      |   | (64,400          | )      |
|                                                                                                                                                                                                   |   |        |
| Total stockholders’ equity/(deficit)                                                                                                                                                             |   |   | (4,047                            | )      |   | (3,288           | )      |
|                                                                                                                                                                                                   |   |        |
| Total liabilities and stockholders’ equity/(deficit)                                                                                                                                             |   | $      |      487 |   | $      | 832              |   |
|                                                                                                                                                                                                   |   |        |
| *See accompanying notes.*                                                                                                                                                                              |   |   |                              |   |   |             |   |

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**SEDONA CORPORATION AND SUBSIDIARIES****CONSOLIDATED STATEMENTS OF OPERATIONS***(In thousands, except share and per share data)*(Unaudited)

|                                                                                  |   | **Three Months Ended**              |   |
|---------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                  |   | **September 30,**                   |   |
|                                                                                  |        |
|                                                                                  |   | **2004**                            |   |   | **2003** |   |
| **Revenues:**                                                                         |        |
|      Product licenses                                        | $      |      27    |   | $ |      555 |   |
|      Services (including related party fees of $110 in 2004) |   | 183                                 |   |   | 67 |   |
|                                                                                  |        |
| *Total revenues*                                                                      |   | 210                                 |   |   | 622 |   |
|                                                                                  |   |                                |   |   |   |   |
| **Cost of revenues:**                                                                 |   |                                |   |   |   |   |
|      Product licenses                                        |   | 82                                  |   |   | 187 |   |
|      Services                                                |   | 19                                  |   |   | 23 |   |
|                                                                                  |        |
| *Total cost of revenues*                                                              |   | 101                                 |   |   | 210 |   |
|                                                                                  |        |
| *Gross profit*                                                                        |   | 109                                 |   |   | 412 |   |
|                                                                                  |   |                                |   |   |   |   |
| **Expenses:**                                                                         |   |                                |   |   |   |   |
|      General and administrative                              |   | 333                                 |   |   | 573 |   |
|      Sales and marketing                                     |   | 103                                 |   |   | 114 |   |
|      Research and development                                |   | 275                                 |   |   | 228 |   |
|                                                                                  |        |
| *Total operating expenses*                                                            |   | 711                                 |   |   | 915 |   |
|                                                                                  |        |
| *Loss from operations*                                                                |   | (602                                | )      |   | (503 | ) |
|                                                                                  |   |                                |   |   |   |   |
| **Other income (expense):**                                                           |   |                                |   |   |   |   |
|      Debenture expense                                       |   | —                              |   |   | (358 | ) |
|      Interest expense                                        |   | (69                                 | )      |   | (56 | ) |
|                                                                                  |        |
| *Total other (expense)*                                                               |   | (69                                 | )      |   | (414 | ) |
|                                                                                  |        |
| Net loss                                                                              |   | (671                                | )      |   | (917 | ) |
| Preferred stock dividends                                                             |   | (68                                 | )      |   | (76 | ) |
|                                                                                  |        |
| Net loss applicable to Common Stockholders                                            | $      |      (739  | )      | $ | (993 | ) |
|                                                                                  |        |
|                                                                                  |   |
| Basic and diluted net loss per    share applicable to common shares                   | $      |      (0.01 | )      | $ | (0.02 | ) |
|                                                                                  |        |
|                                                                                  |   |                                |   |   |   |   |
| Basic and diluted weighted average common shares outstanding                          |   | 83,302,786                          |   |   | 55,329,012 |   |
|                                                                                  |        |
| *See accompanying notes.*                                                             |   |                                     |   |   |  |   |

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**SEDONA CORPORATION AND SUBSIDIARIES****CONSOLIDATED STATEMENTS OF OPERATIONS***(In Thousands, except share and per share data)*(Unaudited)

|                                                                                                                  |   | **Nine Months Ended**                |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                                  |   | **September 30,**                    |   |
|                                                                                                                  |        |
|                                                                                                                  |   | **2004**                             |   |   | **2003** |   |
| **Revenues:**                                                                                                         |        |
|      Product licenses                                                                        | $      |      342    |   | $ |      948 |   |
|      Services (including related party fees of $410 and $475 in 2004 and 2003, respectively) |   | 562                                  |   |   | 439 |   |
|                                                                                                                  |        |
| *Total revenues*                                                                                                      |   | 904                                  |   |   | 1,387 |   |
|                                                                                                                  |   |                                 |   |   |   |   |
| **Cost of revenues**                                                                                                  |   |                                 |   |   |   |   |
|      Product licenses                                                                        |   | 331                                  |   |   | 558 |   |
|      Services                                                                                |   | 45                                   |   |   | 91 |   |
|                                                                                                                  |        |
| *Total cost of revenues*                                                                                              |   | 376                                  |   |   | 649 |   |
|                                                                                                                  |        |
| *Gross profit*                                                                                                        |   | 528                                  |   |   | 738 |   |
|                                                                                                                  |   |                                 |   |   |   |   |
| **Expenses:**                                                                                                         |   |                                 |   |   |   |   |
|      General and administrative                                                              |   | 1,106                                |   |   | 1,542 |   |
|      Sales and marketing                                                                     |   | 285                                  |   |   | 262 |   |
|      Research and development                                                                |   | 855                                  |   |   | 631 |   |
|                                                                                                                  |        |
| *Total operating expenses*                                                                                            |   | 2,246                                |   |   | 2,435 |   |
|                                                                                                                  |        |
| *Loss from operations*                                                                                                |   | (1,718                               | )      |   | (1,697 | ) |
|                                                                                                                  |   |                                 |   |   |   |   |
| **Other income (expense):**                                                                                           |   |                                 |   |   |   |   |
|      Debenture expense                                                                       |   | (123                                 | )      |   | (938 | ) |
|      Interest expense                                                                        |   | (173                                 | )      |   | (137 | ) |
|                                                                                                                  |        |
| *Total other (expense)*                                                                                               |   | (296                                 | )      |   | (1,075 | ) |
|                                                                                                                  |        |
| Loss from operations before provision for income                                                                      |   | (2,014                               | )      |   | (2,772 | ) |
| Preferred stock dividends                                                                                             |   | (232                                 | )      |   | (227 | ) |
|                                                                                                                  |        |
| Net loss applicable to Common Stockholders                                                                            | $      |      (2,246 | )      | $ |      (2,999 | ) |
|                                                                                                                  |        |
| Basic and diluted net loss per share applicable to common shares                                                      | $      |      (0.03  | )      | $ |      (0.06 | ) |
|                                                                                                                  |        |
| Basic and diluted weighted average common shares outstanding                                                          |   | 77,156,476                           |   |   | 53,852,859 |   |
|                                                                                                                  |        |
| *See accompanying notes.*                                                                                             |   |                                 |   |   |   |   |

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**SEDONA CORPORATION AND SUBSIDIARIES****CONSOLIDATED STATEMENTS OF CASH FLOW***(In thousands, except share and per share data)*(Unaudited)

|                                                                           |   |   | **Nine Months Ended**                |   |
|--------------------------------------------------------------------------------|--------|--------|--------------------------------------|--------|
|                                                                           |   |   | **September 30,**                    |   |
|                                                                           |   |        |
| **Operating activities:**                                                      |   |   | **2004**                             |   |   | **     2003** |   |
|                                                                           |   |        |
| Net loss                                                                       |   | $      |      (2,014 | )      | $ |      (2,772 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:    |   |   |                                 |   |   |   |   |
|      Depreciation                                     |   |   | 38                                   |   |   | 137 |   |
|      Software amortization                            |   |   | 331                                  |   |   | 558 |   |
|      Gain on the sale of property                     |   |   | —                               |   |   | (4 | ) |
|      Accretion of discount on convertible note        |   |   | 123                                  |   |   | 938 |   |
|      Charge for option and warrant based compensation |   |   | 12                                   |   |   | 23 |   |
|      Shares issued for legal and consulting           |   |   | 78                                   |   |   | — |   |
|      Shares issued for 401k stock contribution        |   |   | 56                                   |   |   | 82 |   |
| Changes in operating assets and liabilities:                                   |   |   |                                 |   |   |   |   |
|      Accounts receivable                              |   |   | (5                                   | )      |   | (555 | ) |
|      Change in restricted cash                        |   |   | —                               |   |   | 238 |   |
|      Prepaid expenses and other current assets        |   |   | 93                                   |   |   | 121 |   |
|      Other non-current assets                         |   |   | 14                                   |   |   | (21 | ) |
|      Accounts payable and accrued expenses            |   |   | (289                                 | )      |   | (1,223 | ) |
|      Deferred revenue and other liabilities           |   |   | (203                                 | )      |   | (73 | ) |
|                                                                           |   |        |
| Net cash used in operating activities                                          |   |   | (1,766                               | )      |   | (2,551 | ) |
|                                                                           |   |   |                                 |   |   |   |   |
| **Investing activities:**                                                      |   |   |                                 |   |   |   |   |
| Purchase of property and equipment                                             |   |   | —                               |   |   | (21 | ) |
| Proceeds from the sale of property and equipment                               |   |   | —                               |   |   | 11 |   |
|                                                                           |   |        |
| Net cash used in investing activities                                          |   |   | —                               |   |   | (10 | ) |
|                                                                           |   |   |                                 |   |   |   |   |
| **Financial activities:**                                                      |   |   |                                 |   |   |   |   |
| Issuance of convertible note                                                   |   |   | 995                                  |   |   | 1,765 |   |
| Repayments of long-term obligations                                            |   |   | (12                                  | )      |   | (43 | ) |
| Proceeds from the issuance of common stock, net                                |   |   | 809                                  |   |   | 756 |   |
| Proceeds from exercise of common stock warrants, net                           |   |   | 100                                  |   |   | 190 |   |
| Repayment of note payable-related party                                        |   |   | —                               |   |   | (62 | ) |
|                                                                           |   |        |
| Net cash provided by financing activities                                      |   |   | 1,892                                |   |   | 2,606 |   |
|                                                                           |   |        |
| Net increase in cash and cash equivalents                                      |   |   | 126                                  |   |   | 45 |   |
| Cash and cash equivalents, beginning of period                                 |   |   | 59                                   |   |   | — |   |
|                                                                           |   |        |
| Cash and cash equivalents, end of period                                       |   | $      |      185    |   | $ |      45 |   |
|                                                                           |   |        |
| *See accompanying notes.*                                                      |   |   |                                      |   |   |  |   |

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Note #1: General

The accompanying consolidated financial    statements are unaudited and include the accounts of SEDONA Corporation and    subsidiaries (the “Company”).  All significant intercompany transactions    and balances have been eliminated. 

The consolidated financial statements included herein for the nine months ended September 30, 2004 and 2003 are unaudited.  In the opinion of Management, all adjustments (consisting of normal recurring accruals) have been made which are necessary to present fairly the financial position of the Company in accordance with accounting principles generally accepted in the United States. The results of operations experienced for the nine month period ended September 30, 2004 are not necessarily indicative of the results to be experienced for the year ended December 31, 2004.

The Company believes that, if it can generate funds from operations and additional sales of securities or other types of financing, such funds will be sufficient to meet the Company’s working capital requirements over the period through the third quarter of 2005.  In addition to the net loss of approximately ($2,014,000) realized during the nine months ended September 30, 2004, the Company incurred substantial net losses of approximately ($4,212,000) and ($6,001,000) during the years ended December 31, 2003 and 2002, respectively.  If additional financing is required in the period through the third quarter of 2005, such funding may not be readily available.  These factors raise substantial doubt about the Company’s ability to continueas a going concern.  The Company’s plans include expanding the sale and acceptance of its current and future strategic alliance partnerships; targeting new application solutions; and seeking additional debt or equity financing in addition to aggressive cost containment measures.  

The statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.  Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to such rules and regulations.  The accompanying notes should therefore be read in conjunction with the Company’s December 31, 2003 annual financial statements on Form 10-K and Form 10-K/A filed on March 30, 2004 and April 29, 2004 and May 11, 2004, respectively.  Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

The Company applies Accounting Principles    Board Opinion No. 25, “Accounting for Stock Issued to Employees” and    related interpretations to account for its stock option plans. The Company    grants options for common stock to its employees and directors at an option    price equal to the fair market value of the stock at the date of grant. Accordingly,    the Company does not record stock-based compensation expense for these options.    The Company’s stock option plans are more fully described in the Company’s    Annual Report on Form 10-K for fiscal year 2003.

The following table illustrates the effect on net earnings, net earnings per basic common share and net earnings per diluted common share, as if compensation cost for all options had been determined based on the fair market value recognition provision of a Statement of Financial Accounting Standards (“SFAS”) No.123,“Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accounting for Stock –Based Compensation-Transition and Disclosure”:

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|                                                                                                                                                                         | **Nine months ended September 30,** |                                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|--------------------------------------|
| *(In thousands)*                                                                                                                                                             |                                | **2004**                             |   |   |   | **2003** |   |
|                                                                                                                                                                         |                                     |
| Net loss applicable to common stockholders                                                                                                                                   | $                                   |      (2,246 | ) |   | $ | (2,999 | ) |
| Deduct:  Total stock-based employee    expense determined under the fair value    based method          for all awards, net of related tax benefits |                                | (45                                  | ) |   |   | (707 | ) |
|                                                                                                                                                                         |                                     |                                      |  |   |  |  |  |
| Pro-forma net loss applicable to common stockholders                                                                                                                         | $                                   |      (2,291 | ) |   | $ | (3,706 | ) |
|                                                                                                                                                                         |                                     |                                      |  |   |  |  |  |
| Basic and diluted loss per common share                                                                                                                                      | $                                   |      (0.03  | ) |   | $ | (0.06 | ) |
| Pro-forma, basic and diluted loss per common share                                                                                                                           | $                                   |      (0.03  | ) |   | $ | (0.07 | ) |

As the Company incurred losses in 2004 and 2003, the effect of stock options, warrants and convertible securities were anti-dilutive and were therefore not included in the calculation of diluted earnings per share.

Note #2:  Property and Equipment *(In thousands*)

Property and equipment consists of:

| *(In thousands)*                               |                                   |                                |   |                            |   |   |   |
|------------------------------------------------|----------------------------------------|-------------------------------------|--------|---------------------------------|--------|--------|--------|
|                                           |                                   |                                |   |                            |   |   |   |
|                                           | **Nine months endedSeptember 30,2004** |                                |   | **Year endingDecember 31,2003** |   |
|                                           |                                        |
| Machinery and equipment                        | $                                      |      1,005 |   |                            | $      | 1,005  |   |
| Equipment under capital lease                  |                                   | 105                                 |   |                            |   | 209    |   |
| Furniture and fixtures                         |                                   | 3                                   |   |                            |   | 46     |   |
| Leasehold improvements                         |                                   | 33                                  |   |                            |   | 40     |   |
| Purchased software for internal use            |                                   | 177                                 |   |                            |   | 193    |   |
|                                           |                                        |
|                                           |                                   | 1,323                               |   |                            |   | 1,493  |   |
| Less accumulated depreciation and amortization |                                   | (1,296                              | )      |                            |   | (1,427 | )      |
|                                           |                                        |
|                                           | $                                      |      27    |   |                            | $      | 66     |   |
|                                           |                                        |

Note #3:  Stockholders’ Equityand Other Financing Activities

During the first quarter of 2004, the Company issued 19,424 shares of its Common Stock to a consultant in lieu of $10,000 cash compensation for investor relation services rendered.  The Company also issued 35,130 shares of its Common Stock to an attorney in lieu of $18,300 cash compensation for services rendered in relation to the litigation filed by the Company on May 5, 2003.  (See Note 9 to the Consolidated Financial Statements).

In January 2004, the Company issued 1,702,128 shares of its Common Stock to investors in exchange for cash proceeds from a private placement of $800,000.   The Company also issued to the same investors 851,064 two-year warrants to purchase shares of its Common Stock at $0.70 per share.

During the first quarter, the Company received $100,000 and issued 200,000 shares of its Common Stock from the exercise of 200,000 Common Stock warrants.

In March 2004, the Company issued 20,000,000 shares of its Common Stock to Mr. David Vey who elected to convert $200,000 of convertible debentures issued in January and March 2003 into the Company’s Common Stock.

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During the second quarter of 2004, the Company issued 7,225 shares of its Common Stock to a consultant in lieu of $2,500 cash compensation for investor relation services rendered to the Company.  The Company also issued 14,455 shares of its Common Stock to an attorney in lieu of $6,100 cash compensation for services rendered in relation to the litigation filed by the Company on May 5, 2003. 

A total of 59,916 shares of the Company’s Common Stock were issued to employees for shares purchased through the Employee Stock Purchase Plan.

On June 4, 2004, the Company issued an 8% convertible debenture to Mr. David R. Vey and received proceeds of $500,000.  The debenture matures on June 3, 2005 and is convertible at any time at the option of the holder into 1,423,533 shares of Common Stock until that date.

During the third quarter of 2004, the Company issued 35,739 shares of its Common Stock to a consultant in lieu of $10,000 cash compensation for investor relation services rendered.  The Company also issued 105,717 shares of its Common Stock to an attorney in lieu of $30,500 cash compensation for services rendered in relation to the litigation filed by the Company on May 5, 2003.   In August 2004, the Company issued its Common Stock pursuant to its employee 401(k) plan, whereby certain contributions are matched by the Company in company stock valued at $56,000, resulting in the issuance of 131,916 shares of Common Stock.

During the third quarter of 2004, the Company issued two 8% convertible debentures to Mr. David R. Vey and received proceeds of $495,000.  The debentures mature on July 7, 2005 and September 15, 2005, respectively and are convertible at any time, at the option of the holder, into 1,885,157 shares of Common Stock until such dates.  Subsequent to September 30, 2004, the Company issued an 8% convertible debenture to Mr. David R. Vey and received proceeds of $100,000.  The debenture matures on October 8, 2005 and is convertible at any time, at the option of the holder, into 476,190 shares of Common stock.

All of the securities issued in the preceding transactions were sold in reliance upon Rule 506 of regulation D involving only sales to accredited investors.

The Company ceased to declare preferred stock dividends as of January 1, 2001 on the issued and outstanding series of its Class A Convertible Preferred Stock. Cumulative but undeclared dividends at September 30, 2004 equaled $981,854 or $1.96 per share.  To the extent such dividends are declared and paid they will then be reflected appropriately in the Company’s financial statements.

Note #4:  Major Customers

Revenues generated from four major alliance partners, ACEncrypt, a related party, Fidelity Information Services, Fiserv and Open Solutions Inc., accounted for 97% of total revenues earned in the quarter ended September 30, 2004.

Note #5:  Related Party Transactions

In September 2003, the Company signed a technology licensing agreement with ACEncrypt Solutions, LLC.  The President of ACEncrypt Solutions, LLC, Victoria Looney, is a member of the Board of Directors of SEDONA Corporation.  David R. Vey, Chairman of the Board of Directors of SEDONA Corporation also has a financial interest in ACEncrypt Solutions.  The total fee for the license agreement is $1,000,000, which includes delivery of the current version of Intarsia, plus the cost of other contract defined milestones related to the development of derivative products for the health insurance market.  The Company recognized $475,000 of revenue from this transaction in the third quarter of 2003.  Contract milestones two, three and four were completedduring the second and third quarters of 2004 and the Company recognized an additional $410,000 from their completion.   The balance of the contract revenue has been deferred until delivery of the remaining milestones.  At September 30, 2004, accounts receivable reflects $110,000 in services related to the completion of milestone four, the invoice is due and payable thirty days from invoice date.

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Note #6:  Supplemental Disclosures of Cash Flow Information

|                                       |   | **Nine months ended   September 30,** |   |
|--------------------------------------------|--------|---------------------------------------|--------|
|                                       |        |                                  |
|                                       |   | **2004**                              |   |   | **2003** |   |
|                                       |        |                                       |   |  |  |   |
| Cash paid during period for interest       | $      | 2,230                                 |   | $ | 13,000 |   |
| Conversion of Director liability to equity |   | —                                |   | $ | 211,000 |   |
| Conversion of debenture to common stock    | $      | 200,000                               |   |   | — |   |

Note #7:  Contingencies

In June 2000, the Company entered into a contract with a software vendor to incorporate a component of that vendor’s software into SEDONA’s Intarsia TM.  By April 2001, Management determined that the project had become infeasible due to the lack of support by the vendor and the vendor’s unwillingness to meet certain contract commitments.  The Company notified the vendor of its concerns on several occasions and ultimately delivered a notice of breach to the vendor, as required for the termination of the underlying contract.  As the vendor failed to respond or cure the breach within the time permitted under the agreement, the Company considers the contract to be terminated in accordance with its terms and has concluded that itis not appropriate to continue to accrue certain minimum royalty payments under the contract.  Should the dispute end unfavorably, it would result in minimum royalty payments of $2,850,000 due to the vendor.

In January 2004, the Company notified one of its consultants, Hunter A. Carr, that per his May 6, 2003 litigation support agreement and database participation agreement, the consultant had not performed his duties noted therein, and is in default of the contracts.  The Company is in the process of trying to resolve the dispute and has suspended payments to the consultant starting in December 2003, pending satisfactory resolution of the matter.  Per the agreements, the Company was obligated to pay $14,910 per month under the litigation support agreement and $6,900 per month under the database participation agreement.  

No actions other than matters involved in the ordinary course of business are currently known by Management and such other matters are believed by Management not to have material significance.

Note #8:  CIMS Transaction

In April 2000, the Company consummated    a transaction to purchase the Customer Information Management Systems (CIMS)    business unit of Acxiom Corporation for total potential consideration of    $4,350,000. Five-year warrants amounting to an aggregate of $550,000 were    issued, $1,300,000 (with face value of $1,500,000) was paid in preferred    stock, a minimum of $1,000,000 due in October 2003 (the “Required Payment”),    or earlier, if certain performance hurdles were met, and the remaining $1,500,000    will be paid contingent on the performance of the business unit acquired    (“the Contingent Payment”).   Through March 2004, the Company had    paid $47,000 related to the Required Payment. There was no contingent payment    of $1,500,000 due based on performance of the business unit acquired. The    performance period for both the Required Payment and the Contingent Payment    expired in April 2003.  

In November 2003, the Company restructured the agreement with Acxiom.  The Company has issued a promissory note for the $953,000 Required Payment, at an interest rate of 8% per annum.  All unpaid principal and interest are due no later than May 26, 2006.  The restructured terms include: extension of the conversion date of the Series H Preferred Stock by thirty-six months, until April 1, 2006; payment of trade payables due totaling $132,000, which are accrued net of a credit due back to the Company of $78,000, all of which has been paid; and agreement to provide $262,000 worth of services to Acxiom, if requested by Acxiom.  The Company believes that there is a remote possibility that the Company may have to provide future services related to thisagreement.

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Note # 9:  Litigation

On May 5, 2003, SEDONA filed a civil action lawsuit against numerous defendants in the United States District Court for the Southern District of New York. The Company seeks damages from the defendants named, and other defendants yet to be named, in the complaint for allegedly participating in the manipulation of the Company’s common stock, fraud, misrepresentation, failure to exercise fiduciary responsibility, and/or failure to adhere to SEC trading rules and regulations, tortuous interference, conspiracy and other actions set forth in the complaint, but not limited to enforcement of settlement date and affirmative determination. As this is an on-going action, no adjustments have been made to the financial statements related to this matter.

PART I. FINANCIAL INFORMATION

**Item 1.**       **Financial Statements**

See Consolidated Financial Statements beginning on page 4.

**Item 2.**       **Management’s Discussion and Analysis of Financial Condition and Results of Operations**

SEDONA is a software application and services provider that develops and markets web-based, vertical Customer Relationship Management (CRM) solutions to small and mid-size businesses (SMBs). The Company’s CRM application solution, Intarsia, enables SMBs to increase the profitability of their customer portfolio and enhance shareholder value. The Company has strategically targeted small to mid-size financial services organizations as the first vertical market to introduce its leading CRM application solution including community and regional banks, credit unions and insurance companies.

In an effort to rapidly and cost effectively capture a major share of the SMB market, SEDONA adopted an indirect distribution channel strategy. The Company licenses its CRM technology to Third Party Alliance Partners (TPAP), who market, sell, distribute and support SEDONA’s technology either as a component of its TPAP total solution or as a standalone offering.

SEDONA has successfully signed OEM    and reseller agreements with several leading software and services providers    for the financial services market, such as EastPoint Technologies, signed    in January 2004 and continues to work on broadening its distribution channels,    thus expanding its market penetration both domestically and internationally.

During the second quarter of 2004, SEDONA began to expand its direct sales efforts through a network of experienced independent sales representatives.   Each sales representative will have a pre-established sales territory and will be paid on a commission only basis.

Results of Operations

The following discussion and analysis should be read in conjunction with the Company’s Consolidated Financial Statements and the notes related thereto for the three months ended September 30, 2004 and 2003:

Total revenues for the three months ended September 30, 2004 and 2003 were $210,000 and $622,000, respectively.  Revenue from license fees and royalties totaled $27,000 and $555,000 in the third quarter of 2004 and 2003, respectively.  The decrease in revenue from license fees was due to a decrease in the acquisition of third party alliance partners.  During the third quarter of 2004 the Company recognized $183,000 in services revenue compared to $67,000 during the same quarter in 2003.  The net increase in services revenue was primarily due to the additional related party revenue recorded from ACEncrypt Solutions.  For the nine month period ended September 30, 2004 and 2003, total revenues were $904,000 and $1,387,000, respectively.

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Total cost of revenues decreased to $101,000 for the three months ended September 30, 2004 from $210,000 for the three months ended September 30, 2003, due mainly to a decrease in the amortization expense of capitalized software.  For the nine month period ended September 30, 2004 and 2003, total cost of revenues decreased to $376,000 and $649,000, respectively.  The decrease is a direct result of decreased amortization costs.  While total costs decreased during the fiscal year ending September 30, 2004, gross profit increased.  For the nine month period ended September 30, 2004, gross margin percentage increased to 58% compared to 53% for the same period in 2004.  

Total operating expenses decreased to $711,000 in the third quarter of 2004, from $915,000 in the year earlier period, principally reflecting savings in general insurance, and litigation legal expenses.  For the nine-month period ended September 30, 2004, total operating expenses decreased to $2,246,000 compared to $2,435,000 for the same period in 2003 principally due to savings from relocation, litigation legal expenses and listing fees.  

Other expenses in the three months ended September 30, 2004 decreased to $69,000 from $414,000 in the three months ended September 30, 2003, reflecting a decrease in the non-cash convertible note discount accretion associated with convertible notes.  The results of operations for the nine-month period ended September 30, 2004 and 2003 resulted in other expenses of $296,000 and $1,075,000, respectively.  The decrease is a direct result of decreased accretion expense related to convertible notes.

Liquidity and Capital Resources 

At September 30, 2004, cash and cash equivalents increased to $185,000 compared to the December 31, 2003 amount of $59,000.   For the nine months ended September 30, 2004, the cash flows from operating activities resulted in a net use of cash of $1,766,000 compared to $2,551,000 for the same months in 2003.  This use of cash was primarily due to payments of payroll, accounts payable and accrued expenses. 

The cash flows from investing activities during the nine-month period ended September 30, 2003 resulted in the use of cash of $21,000 to fund the purchase of equipment offset by $11,000 in proceeds from the sale of obsolete equipment.  There were no investing activities in the nine-month period ended September 30, 2004.

For the nine months ended September 30, 2004, the cash flows from financing activities resulted in net cash provided by financing activities of $1,892,000.  The principal increase in cash was due to proceeds from the issuance of convertible notes totaling $995,000 as well as an $800,000 private placement stock sale.  The Company also recognized $100,000 from the exercise of 200,000 common stock warrants.  For the nine months ended September 30, 2003, the cash flow from financing activities totaled $2,606,000.  The increase was principally due to $1,765,000 in proceeds from the issuance of convertible notes, $756,000 in proceeds from the issuance of common stock and $190,000 from the exercise of common stock warrants. 

**Item 3.**     **Quantitative and Qualitative Disclosure About Market Risk**

The Company invests its cash in variable rate money market securities, which are not subject to interest rate or market risk.

From time to time the Company also has issued fixed-rate debt and preferred stock, which is convertible into its Common Stock at a predetermined conversion price. Convertible debt has characteristics that give rise to both interest-rate risk and market risk because the fair value of the convertible security is affected by both the current interest-rate environment and the price of the underlying Common Stock.  For the nine month period ended September 30, 2004 and the year ended December 31, 2003, the Company’s convertible debt, on an if-converted basis, was not dilutive and, as a result, had no impact on the Company’s net income per share –(assuming dilution).  In future periods, the debt may be converted, or the if-converted methodmay be dilutive and net income per share –(assuming dilution) would be reduced.

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**Item 4.**     **Controls and Procedures**

The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as defined pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934), based on their evaluation of such controls and procedures as of the end of the period covered by this report, are effective to ensure that information required to be disclosed by the Company in the reports it files under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to the Company’s Management, including its ChiefExecutive Officer and its Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal controls over financial reporting identified in connection with Management’s evaluation that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

|   | Item 1. |  Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |    | On May 5, 2003, SEDONA filed a civil action        lawsuit against numerous defendants in the United States District Court        for the Southern District of New York. The Company seeks damages from        the defendants named, and other defendants yet to be named, in the complaint        for allegedly participating in the manipulation of its common stock,        fraud, misrepresentation, failure to exercise fiduciary responsibility,        and/or failure to adhere to SEC trading rules and regulations, tortuous        interference, conspiracy and other actions set forth in the complaint,    but not limited to enforcement of settlement date and affirmative determination. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |    | During the third quarter of 2004, the Company issued 35,739 shares of its Common Stock to a consultant in lieu of $10,000 cash compensation for investor relation services rendered.  The Company also issued 105,717 shares of its Common Stock to an attorney in lieu of $30,500 cash compensation for services rendered in relation to the litigation filed by the Company on May 5, 2003.   In August 2004, the Company issued its Common Stock pursuant to its employee 401(k) plan, whereby certain contributions are matched by the Company in company stock valued at $56,000, resulting in the issuance of 131,916 shares of Common Stock.                                                     |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |    | During the third quarter of 2004, the Company issued two 8% convertible debentures to Mr. David R. Vey and received proceeds of $495,000.  The debentures mature on July 7, 2005 and September 15, 2005, respectively and are convertible at any time, at the option of the holder, into 1,885,157 shares of Common Stock until such dates.  Subsequent to September 30, 2004, the Company issued an 8% convertible debenture to Mr. David R. Vey and received proceeds of $100,000.  The debenture matures on October 8, 2005 and is convertible at any time, at the option of the holder, into 476,190 shares of Common stock.                                                                        |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |    | All of the securities issued in the preceding transactions were sold in reliance upon Rule 506 of regulation D involving only sales to accredited investors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

|   | Item 4. | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                             |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                            |
|   |    | At the Company’s Annual Meeting of Stockholders held on August 27, 2004, the shareholders of the Company elected seven directors to the Company and approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 125,000,000 to 175,000,000.   |
|   |    |                                                                                                                                                                                                                                                                                                                            |
|   |    | All of the nominees were elected to serve on the Board of Directors at the meeting.  The voting results for the election of directors was as follows:                                                                                                                                                                           |
|   |    |                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|   |    | Name                                                                                                                                                                                                                                                                                                                                      |   | For |   | Against |
|   |    | David R. Vey                                                                                                                                                                                                                                                                                                                              |   | 72,424,943 |   | 2,036,620 |
|   |    | Marco A. Emrich                                                                                                                                                                                                                                                                                                                           |   | 71,980,519 |   | 2,481,044 |
|   |    | Victoria V. Looney                                                                                                                                                                                                                                                                                                                        |   | 72,464,143 |   | 1,997,420 |
|   |    | Jack A. Pellicci                                                                                                                                                                                                                                                                                                                          |   | 72,327,543 |   | 2,134,020 |
|   |    | James C. Sargent                                                                                                                                                                                                                                                                                                                          |   | 72,416,343 |   | 2,045,220 |
|   |    | Scott C. Edelman                                                                                                                                                                                                                                                                                                                          |   | 72,298,693 |   | 2,162,870 |
|   |    | Roger W. Scearce                                                                                                                                                                                                                                                                                                                          |   | 72,298,393 |   | 2,172,170 |
|   |    |                                                                                                                                                                                                                                                                                                                            |
|   |    | The vote approving the amendment to the Company’s Articles of Incorporation was 70,237,121 shares for, 4,171,667 shares against and 52,775 abstained.                                                                                                                                                                     |

|   |    |                                                                                                                                                                                                                                                                                                                      |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Item 6. | Exhibits and Reports on Form 8-K                                                                                                                                                                                                                                                                                          |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | (a) Exhibits:                                                                                                                                                                                                                                                                                                             |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | Exhibit 10.55* – Convertible note by the Company in favor of David R. Vey, dated July    7, 2004                                                                                                                                                                                                                     |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | Exhibit 10.56* – Convertible note by the Company in favor of David R. Vey, dated September    15, 2004                                                                                                                                                                                                               |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | Exhibit 10.57* – Convertible note by the Company in favor of David R. Vey, dated October    8, 2004                                                                                                                                                                                                                  |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | Exhibit 31.1*  –  Certification of Principal        Executive Officer pursuant to Section 302 of the                                  Sarbanes-OxleyAct of 2002     |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | Exhibit 31.2*  –  Certification of Principal        Financial Officer pursuant to Section 302 of the                             Sarbanes-OxleyAct of 2002     |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | Exhibit 32.1*  –  Certification        of Principal Executive Officer pursuant to Section 906 of the                                  Sarbanes-Oxley    Act of 2002 |
|   |    |                                                                                                                                                                                                                                                                                                                      |
|   |    | Exhibit 32.2*  –  Certification of Principal        Financial Officer pursuant to Section 906 of the                                  Sarbanes-OxleyAct of 2002     |

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|   |   | (b)  Reports on Form 8-K: The        Company furnished a Current Report on Form 8-K on August 30, 2004 in        addition to a press release regarding its Annual Meeting of Stockholders        held on August 27, 2004. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|                                                     |   | SEDONA CORPORATION                                                                                                                                                                                                                                                                                                              |
|----------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                     |   |                                                                                                                                                                                                                                                                                                                            |
|                                                     |   |                                                                                                                                                                                                                                                                                                                            |
|                                                     |   |                                                                                                                                                                                                                                                                                                                            |
| DATE:      November    15, 2004      |   | /S/ Marco A. Emrich                                        Marco A. EmrichPresident and Chief Executive Officer    |
|                                                     |   |                                                                                                                                                                                                                                                                                                                            |
| DATE:      November    15, 2004 |   | /S/ Anita M. Primo                                        Anita M. PrimoVice President and Chief Financial Officer |

 

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**EXHIBIT INDEX**

| Exhibit No.    |                                      Description |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |                                                                                                                                                                                                                                      |
| Exhibit 10.55* | Convertible note by the Company in favor of David R. Vey dated July 7, 2004                                                                                                                                                               |
|           |                                                                                                                                                                                                                                      |
| Exhibit 10.56* | Convertible note by the Company in favor of David R. Vey dated September 15, 2004                                                                                                                                                         |
|           |                                                                                                                                                                                                                                      |
| Exhibit 10.57* | Convertible note by the Company in favor of David R. Vey dated October 8, 2004                                                                                                                                                            |
|           |                                                                                                                                                                                                                                      |
| Exhibit 31.1*  | Certification of Principal Executive Officer    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                 |
|           |                                                                                                                                                                                                                                      |
| Exhibit 31.2*  | Certification of Principal Financial Officer    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                 |
|           |                                                                                                                                                                                                                                      |
| Exhibit 32.1*  | Certification of Principal Executive Officer    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                 |
|           |                                                                                                                                                                                                                                      |
| Exhibit 32.2*  | Certification of Principal Financial Officer    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                 |

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