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U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

Sento Corporation(Name of small business issuer in its charter)

|Utah                                           |  | 000-06425             |  | 87-0284979                       
|---------------------------------------------- |  | --------------------- |  | ---------------------------------
|(State or other jurisdiction of incorporation) |  | (Commission File No.) |  | (IRS Employer Identification No.)

808 East Utah Valley Drive
American Fork, Utah 84003(Address of principal executive offices, including zip code)

Issuer's
telephone number, including area code: (801) 772-1100

Securities
registered under Section 12(b) of the Exchange Act:

None

Securities
registered under Section 12(g) of the Exchange Act:

Common
Stock, $.25 par value

Check
whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the Issuer was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Check
if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B contained herein, and no disclosure will be contained, to the best of the
Issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. o

State
Issuer's revenues for its most recent fiscal year: $17,495,882

The
aggregate market value of the Common Stock held by non-affiliates of the issuer, based upon the closing sale price of the Common Stock reported by the NASDAQ SmallCap
Market on May 31, 2003, was approximately $3,560,749.

The
number of shares of Common Stock outstanding as of May 31, 2003 was 2,119,485

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Issuer's definitive proxy statement relating to its Annual Meeting of Shareholders are incorporated by reference in Items 9-12 and 15
of Part III of this report.

Transitional
Small Business Disclosure Format (check
one): Yes o    No ý

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TABLE OF CONTENTS



|PART I              
|--------------------
|Item 1.             
|Item 2.             
|Item 3.             
|Item 4.             
|PART II             
|Item 5.             
|Item 6.             
|                    
|                    
|                    
|                    
|Item 7.             
|Item 8.             
|PART III            
|Item 9.             
|Item 10.            
|Item 11.            
|Item 12.            
|Item 13.            
|Item 14.            
|Item 15.            
|SIGNATURES          
|FINANCIAL STATEMENTS

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Statements contained in this Annual Report on Form 10-KSB that are not purely historical are "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. All forward-looking statements involve various risks and
uncertainties. Forward-looking statements contained in this Report include statements regarding the Company's plans to develop and deliver integrated information technology services, market
opportunities and acceptance, expectations, goals, revenues, financial performance, strategies, mission and intentions for the future. Such forward-looking statements are included under Item 1.
"Business," Item 2. "Properties" and Item 6. "Management's Discussion and Analysis or Plan of Operations." All forward-looking statements included in this Report are made as of the date hereof, based
on information available to the Company as of such date, and the Company assumes no obligation to update any forward-looking statement. It is important to note that such statements may not prove to be
accurate and that the Company's actual results and future events could differ materially from those anticipated in such statements. Among the factors that could cause actual results to differ
materially from the Company's expectations are those described under Item 6. "Management's Discussion and Analysis or Plan of OperationsRisks Related to Existing and Proposed Sento
Operations." All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this section and
other factors included elsewhere in this Report.

PART I

Item 1. Description of Business.

Overview

Sento Corporation, Inc. ("Sento" or "Company") designs, implements, and manages high-tech solutions for customer acquisition, customer care,
technical support, and help-desk functions. Using Sento's state-of-the-art Customer Choice® Platform and Customer Contact Solutions Centers,
Sento provides domestic and international support services to
Fortune 1000 companies, multinational companies, product manufacturers, and software publishing companies. Sento's proprietary customer relationship management ("CRM") software and other reporting and
management tools, when integrated with multi-channel communications points such as telephone, internet, chat, email, call-back, and self help, provide leading edge solutions that help
Sento's clients significantly reduce costs and improve customer satisfaction. By outsourcing customer care solutions to Sento, the Company's clients can focus on their core business, lower CRM costs,
reduce headcount, eliminate unnecessary capital expenditures, and improve the experience for the customer.

Sento
believes that the principal factors motivating organizations to pursue outsourced customer contact center services are the desire to provide improved customer satisfaction, an
effort to focus internal organizational resources on the organization's core competencies, reduce costs, a desire for increased efficiency, and a need for new and advanced technology. Organizations
are finding it increasingly difficult and expensive to service all their needs in-house. As a result, "outsourcing" continues to gain favor across the business spectrum.

Many
organizations that currently support their customers in-house, whether in their core business or to facilitate business operations, currently outsource some or all of
their customer contact needs. Business analysts believe that this trend will continue to grow as technology becomes more complex and client resources need to be allocated in the most
cost-effective manner possible.

Background

Sento was formed in 1986 as a value-added reseller ("VAR") and was formerly known as Spire Technologies, Inc. In 1996, Sento executed a share exchange with
an existing public company. Sento is incorporated under the laws of the State of Utah. The Company's Common Stock is traded on the

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NASDAQ
Small Cap Market under the symbol "SNTO". Throughout this Report, the word "client" refers to entities the Company serves, and the word "customer" refers to customers of Sento's clients.

In
1997 and 1998, Sento undertook a strategic transition to focus its efforts on customer contact solutions. Sento constructed a new generation customer contact facility ("Customer
Contact Solutions Center" or "CCSC"). Subsequently, the Company has constructed an additional CCSC in Utah and two CCSCs in Wyoming, one of which the Company does not expect to utilize in the near
term and which is currently available for sale or subletting. In addition, through strategic alliances, Sento has developed CCSCs in Belfast, Ireland, and Delhi, India.

On
May 30, 2001, Sento announced its plans to discontinue the operations of its Training Division to focus on the Company's profitable, higher-growth Customer Contact Solutions
business. The discontinuation of Sento's Training Division operations is in line with the Company's stated objective of reducing operating expenses to concentrate resources and personnel on the
Company's core CCSC business. The Company completed the disposal of its Training Division in August 2001.

Industry Background

The customer contact services industry encompasses a broad spectrum of services and technology used to build long-term relations between clients and
their customers. Sento believes most organizations face a rapidly changing, highly competitive environment in which improved customer contact center services and enhanced customer interactions can be
a significant factor in improving products and services, lowering costs, increasing customer satisfaction, and building competitive advantages.

Many
senior executives and managers recognize the importance of information technology ("IT") in their organizations and the potential benefits of improved customer service. At the same
time, technological changes and the costs and time associated with implementing and utilizing current solutions create tremendous pressure on organizations and their management. As the pace of
advancement accelerates, an organization's ability to evaluate, design, integrate, deploy, and leverage new technology becomes a critical competitive issue. It is also becoming increasingly more
difficult for companies to stay abreast of rapid technological change while maintaining the required operational efficiency of customer contact centers. In addition, heightened reliance on accumulated
customer data to improve product offerings as well as customer satisfaction and loyalty requires functional and pertinent information gathered and analyzed in a timely fashion. An organization's
ability to implement and utilize customer relationship data gathering in a timely and cost-efficient manner may very well be the difference between failure and success.

The
challenge of maintaining an organization's focus on core business areas while attempting to monitor and benefit from rapid changes has prompted more and more organizations to seek
outsourced customer contact center solutions. Organizations lacking this experience and know-how are finding it increasingly difficult and expensive to service all their needs
in-house. As a result, "outsourcing" continues to gain favor across the business spectrum.

Business Strategy

Sento's business strategy is to design, develop, implement, and manage integrated customer contact solutions that enable its clients to effectively use
leading-edge technology and diversified workforce management to improve their business operations and reduce their operating expenses while improving their overall customer satisfaction.
Sento's business strategy is based on the following strategic initiatives:

Diversified Workforce Management Sento's solutions incorporate the ability to allow Sento's clients, partners and
competitors serving the same client account to work from the same software

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platforms
while having the data from disparate locations tracked and recorded by a central data source provided and maintained by Sento. In addition, Sento can provide Sento's clients access to
offshore labor in India and Ireland with the ability for these labor alternatives to utilize the same software and tracking capabilities real time whether domestic or offshore. Sento's proprietary
customer relationship management software ("Recite") gathers information from every phone call, chat, email and self-help transaction regardless of the service provider so long as all are
connected to Sento's solution platform.

Design, Develop, Implement, and Manage Leading Edge Customer Relationship Management and Contact Center Solutions Sento
develops strategies and implements customer contact solutions that can help its clients significantly drive service costs lower while increasing customer choices and satisfaction. Sento's business
strategy employs a suite of options intended to allow its clients' customers to use a variety of contact points depending upon the customer's desire and choice at the time. In some cases, Sento has
assisted its clients in moving expensive phone interactions to more cost-effective Web solutions while maintaining the same or higher levels of service. In other cases, when the client
desires some level of telephone contact with its customers, Sento provides highly skilled and very personable phone agents to enhance both fee-based and free phone interactions. In most
cases, Sento delivers a client selected solution using a combination of telephone and Web solutions.

Intensive Knowledgebase Architecture, Management and Scoring These innovative Web solutions are delivered through Sento's
proprietary "Customer Choice® Platform", that allows customers access to highly effective self-help tools. If a particular issue is not resolved there, customers then proceed
seamlessly to live chat, email, and other live Web services. Sento's unique CRM product records and delivers the customers' Web experience (i.e. the "click stream" and other important information) to
the live agent. This information transfer allows the agent to know immediately where the customer has been on the Website and to speed to resolution whatever need the customer has. By constantly
monitoring customer activity and analyzing positive behavior, Sento can effectively report and improve the overall customer experience. Sento's skill and experience in knowledgebase architecture and
management allows its clients to deliver information to customers in an extremely timely and cost efficient fashion. These Sento tools are available to companies for a licensing fee, even if Sento is
not providing domestic or offshore labor, using an application software provider (ASP) model.

Internal Growth, Partnerships, and Strategic Alliances Sento intends to expand its operations by opening, partnering or
developing strategic alliances with other customer contact facilities in strategic locations throughout the U.S. and foreign countries. The Company's management believes that if Sento successfully
identifies and consummates partnerships with or alliances with additional resources, it will enhance its ability to offer domestic and multinational clients a comprehensive
package of integrated customer contact services. In addition to geographic expansion, Sento will seek to identify and partner with or make alliances with companies that provide complementary services
and solutions and thereby extend the breadth of its service offerings.

Attract and Retain Highly Skilled Phone and Technology Professionals Sento's success will depend on its ability to attract,
train, motivate, and retain highly skilled professionals. Management believes the Company's approach to ongoing training and industry certifications provides an excellent career path marked by
significant opportunities, from entry-level positions to upper-level engineers. Sento's sales, customer care, helpdesk, and technical support centers offer both entry-level employees and seasoned
professionals the prospect of training to enhance their abilities while serving customers across a broad range of vertical markets. Sento also offers its professionals the opportunity for rapid
advancement and expert personal training, as employees can move from one career step to another while remaining within Sento. Sento employees work with leading-edge technologies in a
flexible, entrepreneurial environment that includes ongoing training and development.

Capitalize on Technology Sento's Customer Contact Solutions Centers, which incorporate diversified work force management and
leading-edge solutions, are designed to enable clients to rapidly

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deploy
and quickly capitalize on trends within their customer base. Sento currently owns and operates two Customer Contact Centers in Utah and has another in reserve in nearby Wyoming. In addition,
Sento utilizes contact center resources in India and Ireland. The Company has adopted an approach to technology that combines traditional and proven call center infrastructure and systems with newer
technologies such as voice over IP (VOIP) and hosted Portal Services. The melding of "cutting edge" technologies and proven systems provided by companies such as Nortel Networks, Cisco Systems, and
AT&T enables Sento to provide high levels of economy and efficiency. Sento's technology policy requires that infrastructure be fully scalable, meet or exceed customer needs, and provide adequate
redundancy.

Sento's
Customer Contact Solutions Centers go beyond a traditional telephone-centric customer support facility, incorporating increased customer contact points through nearly any media
type, with intense focus on Internet interactions (e-mail, Web text chat, Internet calls, Web collaboration, Web callback interactions and co-browsing) as well as voice and fax
communication, most with better efficiency than conventional telephone interactions. The increasing utility of the Internet and rising comfort and confidence of the consumer with the Internet are
changing the manner in which businesses communicate and interact with their customers and Sento believes its Customer Choice® Platform and Customer Contact Solutions Centers position Sento
to take advantage of these emerging opportunities.

Services

Sento's integrated Customer Choice® Platform and customer contact solutions are designed to enable its clients to effectively use
leading-edge technology to improve their business processes and operating results. Clients relying upon Sento to provide Customer Choice® Platform and customer contact
solutions have realized significantly reduced costs associated with product/services support, while at the same time increasing customer satisfaction and brand loyalty. Sento achieves these results in
several ways:

Customer Choice® Platform Sento provides to clients a highly robust hosted website on which client specific
information is made available to client customers. This information allows those customers the option of answering questions and resolving problems without ever going to a live person for assistance.
In addition, the Customer Choice® Platform directs customers to information related to live contact (voice, chat or email), if so desired by the customer, which allows the customer to make
an informed choice as to the best possible live contact for him or her at the time. For the client, Sento tracks customer behavior while on the Portal and assists the client in serving customer
service needs more cost-effectively and efficiently.

Fee-Based Solutions Sento provides its clients with a variety of fee-based options. By adopting the
fee-based solution Sento's clients are charging customers for annual service contracts, multi-incident packets, single incidents, or even single minutes of support assistance. This
solution allows Sento's client's customers the added ability to move to the front of the queue at those times when waiting for a free contact is not acceptable. While currently used in the telephone
environment, fee-based services can apply to any type of contact, whether delivered by telephone, chat, email, self-help, or a combination of these. Fee-based
services can be used to route and prioritize interactions, enabling clients to offer multi-tiered service plans (silver, gold, platinum). A dramatic and pragmatic use of fee-based services
highlights the free contact points and helps move customers to self-help and chat, which are more effective and lower-cost alternatives.

Sento
currently bills its clients' customers directly using a credit card or 900-number billing (customers receive an invoice on their telephone bill). In the case of credit
card billing, funds are deposited directly into the clients' merchant accounts. In some cases the revenue generated from these fee-based calls pays for a significant portion of the total
cost of providing support.

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Customer Contact Solutions Sento offers a broad range of customer contact outsourcing services, consisting principally of
customer acquisition, customer care, helpdesk, technical support, and the development and implementation of Web strategies, to induce customers to the Web. Sento uses
advanced systems, including web enabled databases and reporting systems, Internet, local area networks ("LAN"), multi-user systems, Computer-Telephony Integration ("CTI"), CRM, and
Integrated Voice Response ("IVR") technologies, to provide immediate and accurate support, reducing the technology, personnel, and management expenses incurred by Sento's clients.

CTI
combines customer data with voice systems in order to enhance telephony services. For example, automatic number identification ("ANI") allows a caller's history to be retrieved from
the database while the call is routed to the appropriate service representative. In this way, any available contact representative is more fully informed of the customer's contact history and is more
capable of servicing the customer in a fast, professional, and informed manner.

IVR
is an automated telephony system that responds with a voice menu that allows the user to make choices and enter information via the user's telephone keypad or by voice to receive
information and accurately route the call to a service representative. IVR systems are used in Sento's Customer Contact Solutions Centers to enhance the customer experience by assisting in routing the
caller to the appropriate resource as quickly as possible and by limiting the amount of time required by a live agent to complete the interaction.

Most
importantly, Sento's CRM tools allow its clients a view into the activities and behavior of their customers. These robust and rapidly deployable tools are less expensive to deploy
than cumbersome data warehouse systems; they may however, be fully integrated into such systems for deeper analysis. The information gathered and reported using Sento's CRM tools enable Sento's
clients to improve the overall customer experience and to offer products designed to fulfill their customers' needs and desires.



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International Operations.Sento and its clients mutually benefit by distributing some or all customer contacts to offshore
locations. The Company operates in Ireland and India. These offshore locations successfully handle a mix of voice, chat, and email transactions. Other locations are currently under consideration.
These international operations provide the Company's clients with more choices and greater control of their customer relationships. Management believes offshore contact sites also will help Sento to
achieve levels of profitability that could be more difficult to realize in a large domestic urban area.

Significant Clients

Four clients accounted for approximately 70% of the Company's revenues for the year ended March 31, 2003. These four clients accounted for approximately
27%, 20%, 12%, and 11%, respectively of revenues for fiscal 2003. For the year ended March 30, 2002, three clients accounted for approximately 60% of the Company's revenues. These three clients
accounted for approximately 28%, 19%, and 13%, respectively of revenues for fiscal 2002. The largest of these clients terminated its relationship with Sento in April 2002. The loss of this
client has had a significant adverse impact on Sento's operations, and will likely have a significant adverse impact on Sento's revenues and net income until this business is replaced.

Consistent
with industry standards, Sento's contracts are generally cancelable by the client on short-term notice. Sento's loss of a significant amount of business with any
of its key clients could have, and the loss of a substantial amount of business with any of its largest existing technical support clients would have, a material adverse effect on Sento's business,
financial condition,
and results of operations. In addition, Sento's future revenue growth is dependent upon its ability to attract and retain new clients.

Competition

The contact center industry is highly competitive, global in scope, and comprised of a myriad of enterprises and individuals. Methods of competition within the
industry include, but are not limited to, marketing, product performance, price, product differentiation, service, technology, and compliance with industry standards. The Company anticipates that
present and potential competition in the various markets it serves will come from enterprises and individuals of various types, many of which will likely be larger and will have greater resources than
Sento. Firms not now in direct competition with Sento may introduce competing products in the future. It is possible for companies to be at various times competitors, customers, and collaborators in
different markets. Management believes that implementation of the Company's strategy of delivering integrated contact center solutions, powered by the Web, constitutes a competitive
advantage.

As
Sento has completed its transition to the delivery of outsourced Customer Contact Solutions, it has encountered a new range of competitors in the customer contact solutions industry.
The Company faces significant and diverse competition in the customer contact solutions industry from a broad spectrum of international, national, regional and local enterprises. Sento's ability to
compete will be driven by its niche approach, its competencies in leading-edge technologies, its deployment of Web solutions, its strategic and business alliances and its efforts to
aggressively establish a presence in other vertical markets such as health care and the financial sectors.

Given
the extensive market opportunity in the customer contact center space, management believes that the Company's strategy of providing the "best-of-breed"
services, powered by the Web, will provide

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it
with significant competitive positioning to achieve growth and capture market share while reaching profitability objectives. Additionally, banks and other companies in the financial sector are
beginning to recognize the value of outsourced customer contact solutions. Sento expects to direct considerable time and effort to establish a solid presence in this vertical market.

Patents and Proprietary Technology

The Company does not own any patents nor has it submitted any patent applications relating to its products. Sento has a limited number of copyrights and has
obtained licenses to create derivative works relative to copyrights owned by third parties. The ownership of such derivative works vests in the
licensor. Sento is also seeking trade name and trademark protection for certain of its names and marks. Accordingly, Sento's management does not believe that any particular patent or group of patents,
copyrights, trademarks, or trade names is of material importance to the business of Sento as a whole.

Research and Development

Sento competes in an industry that is characterized by rapid technological change. As the needs of Sento's clients change and evolve and as Internet and Web
technologies proliferate, Sento expects to incur additional expense in the development of its improved Customer Choice® Platform, customer contact solutions tools and offerings and in the
integration of Sento's technology with third party platforms and software. In maintaining its competitive edge in technology, Sento will also be dependent on the research and development efforts of
other technology providers and partners.

Employees

Sento maintains a staff of trained personnel to provide support to its clients. The Company enjoys a technically competent employee base, which it gains from
being geographically situated within proximity of two major universities. Sento enhances employees' proficiency through the Company's sophisticated performance management system. Employees receive
positive performance feedback on a daily basis and are given access to training programs including Microsoft Certified Software Engineer, Novell Certification, and operating systems including Windows,
Unix, and Linux. Sento also maintains a highly proficient performance management team responsible for training and monitoring employees. Sento's rapidly expanding Customer Choice® Platform
business has allowed the Company to reduce headcount from that of previous years. However, Sento's software engineer and web developer groups continue to be a major focus within the
organization.

As
of May 31, 2003, Sento had approximately 230 total employees, of which approximately 220 were full-time employees and approximately 10 were part-time
employees. Competition for qualified personnel in Sento's industry is intense. The future success and growth of Sento will depend in large measure upon its ability to attract and retain qualified
management and technical personnel. There can be no assurance that Sento will be able to attract and maintain all personnel necessary for the development and operation of its business nor that it will
be able to train its current employees on new developments in technology. If Sento fails to attract and retain key management and technical personnel, Sento's operations may be adversely impacted.
None of Sento's employees is represented by a labor organization with respect to his or her employment with Sento. Sento has never had a work stoppage, and Sento considers its employee relations
agreeable.

Proprietary Marks

Sento utilizes many third-party products represented by registered or common-law trademarks, including the following trademarks:
(1) Microsoft®, Windows® and MCSE®, which are trademarks of Microsoft; (2) CNE®, which is a trademark of Novell Inc; and
(3) Linux, which is a trademark of Linus Torvalds. This Report also contains trademarks of other companies including Nortel, which is a

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registered
trademark of Nortel Networks; Cisco, which is a registered trademark of Cisco Systems Inc; and AT&T, which is a registered trademark of AT&T Corporation.

Item 2. Description of Property.

Sento's headquarters and initial Customer Contact Solutions Center are located at 808 East Utah Valley Drive, American Fork, Utah. Sento leases approximately
40,000 square feet of space used for its administrative and customer contact solutions operations. The initial lease period will end in August 2005, and has a current monthly base rent of
$36,824, subject to periodic adjustment. Sento's Evanston, Wyoming Customer Contact Solutions Center consists of approximately 33,000 square feet of leased space. The Evanston initial lease period
will end in June 2005, and the monthly base rent is $9,625. Sento's second American Fork, Utah facility houses administrative offices and a Customer Contact Solutions Center, consisting of
approximately 15,300 square feet. The initial lease for this facility will end in June 2005 and the monthly base rent is $17,876. Sento also has a Customer Contact Solutions Center located at
Green River, Wyoming. The Green River facility is approximately 14,000 square feet of space with the option to add an additional 10,000 square feet at any point in the future. The lease commenced in
July 2001with an initial term of seven years. The monthly base rent at the Green River facility is $11,920, which includes real estate taxes, insurance against loss, facility and
property maintenance including electrical, plumbing, HVAC, and ordinary wear. The lessor assumes responsibility for janitorial services, snow, and trash removal.

Item 3. Legal Proceedings.

From time to time, the Company is involved in litigation, most of which is incidental to its business. In the Company's opinion, no litigation to which the
Company currently is a party is likely to have a material adverse effect on the Company's results of operations or financial condition.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Report.

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PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

The Company's Common Stock, par value $.25 (the "Common Stock"), is listed and traded under the symbol "SNTO" on the NASDAQ Small Cap Market maintained by the
National Association of Securities Dealers (the "NASD"). The following table sets forth the range of high and low closing prices for the Common Stock for the periods indicated, as reported by the
NASD. The quotations represent prices in the market between dealers in securities; they do not include retail markup, markdown or commissions, and do not necessarily represent actual transactions.

Quarter Ended

High

LowMarch 31, 2003

$
1.68

$
1.15December 31, 2002

$
2.40

$
1.57September 28, 2002

$
2.92

$
2.00June 29, 2002

$
4.12

$
2.88March 30, 2002

$
5.68

$
2.88December 29, 2001

$
6.08

$
4.12September 29, 2001

$
8.68

$
5.08June 30, 2001

$
11.00

$
6.60


The
Company did not pay or declare dividends on the Common Stock during the fiscal years ended March 31, 2003 and March 30, 2002. The Company currently anticipates that it
will retain all available funds to finance its future growth and business expansion. The Company does not presently intend to pay cash dividends in the foreseeable future.

As
of May 31, 2003, the Company had 2,119,485 shares of Common Stock outstanding, held by 428 shareholders of record, which does not include shareholders whose shares are held in
securities position listings.

Recent Sales of Unregistered Securities

On April 15, 2003, Sento issued an aggregate of $1 million of convertible debentures to 38 purchasers. Each debenture accrues interest at the rate
of 8% per year, is convertible into Sento's Common Stock at $1.75 per share, expires in three years, and has attached warrants with an exercise price of $2.25 to purchase one share of Common
Stock for each $4 of debentures purchased. Those warrants expire on April 15, 2006. Each purchaser was an accredited investor and was provided with a private placement memorandum detailing
Sento's business and financial information, including copies of Sento's Annual Report on Form 10-KSB for the fiscal year ended March 30, 2002 and Sento's Quarterly Reports on
Form 10-QSB for the periods ending June 29, 2002, September 28, 2002, and December 31, 2002. Sento paid commissions of $46,960 to a placement agent in
connection with the sale of the convertible debentures and issued a warrant to purchase 50,000 shares to a finder. Approximately 134,811 shares of Common Stock have been issued upon conversion of such
debentures.

The
securities purchased in the above transactions were restricted securities taken for investment. Certificates for all shares issued in such transactions bore a restrictive legend
conspicuously on their face and stop-transfer instructions were noted respecting such certificates on our stock transfer records. Each of the foregoing transactions was effected in
reliance on the exemption from registration provided in Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D adopted thereunder as transactions not
involving any public offering.

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Item 6. Management's Discussion and Analysis or Plan of Operations.

Overview

Sento Corporation provides the latest in Web-enabled CRM (Customer Relations Management) solutions for a diversified portfolio of organizations. These
services include self-help, live chat, Web collaboration, email, and telephone. Utilizing a tested and proven technology set, Sento provides an enhanced customer experience at a
significant cost reduction when compared to traditional models. Sento deploys a distributed workforce strategy and customer-centric applications to provide the best in customer care and support. Sento
conducts its principal business through its wholly-owned subsidiary Sento Technical Services Corporation.

Sento's
management believes that a significant issue facing the Company is that of excess capacity caused by the loss of its largest customer in April of 2002. Although the
Company has been successful in replacing a portion of the revenue lost, the loss of Sento's largest customer has continued to have a substantial adverse effect on the Company's revenues and has left
the Company with excess capacity to service additional call volume that the Company has not filled as of this time.

Critical Accounting Policies

Sento's significant accounting policies are described in Note 2 to Sento's Consolidated Financial Statements. Those financial statements were prepared in
accordance with accounting principles generally accepted in the United States. Included within these policies are the Company's "critical accounting policies." Critical accounting policies are those
policies that are most important to the preparation of the Company's consolidated financial statements and require management's subjective and complex judgments due to the need to make estimates about
the effect of matters that are inherently uncertain. The Company's critical accounting policies relate to revenue recognition, credit risk and stock-based compensation. The application of these
accounting policies involves the exercise of judgment and the use of assumptions as to future uncertainties, and as a result, actual results could differ materially from these estimates.

The
development and selection of these critical accounting policies have been discussed with the Audit Committee. Such policies are reviewed periodically during each year by the Audit
Committee.

Revenue Recognition.Revenue is generally recognized when persuasive evidence of an arrangement exists, delivery of services
has occurred, the fee is fixed or determinable, and collection of the resulting receivable is reasonably assured. Certain of the Company's customer support services are delivered over a period of
time. Revenue associated with these services is deferred until the customer support is completed and Sento has no remaining obligation to provide further support services.

Credit Risk.In the normal course of business, the Company provides unsecured credit terms to its customers. Accordingly, the
Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses. Except for the significant losses incurred during the fourth quarter of fiscal 2001, the
Company's credit losses have generally been within management's expectations. However, there can be no assurance that the Company's future credit losses will be within management's expectations. In
addition, the Company's revenues and accounts receivable are concentrated in a relatively few number of customers. A significant change in the liquidity or financial position of any one of these
customers or a further deterioration in the economic environment, in general, could have an adverse impact on the collectability of the Company's accounts receivable and the Company's future operating
results.

Stock-Based Compensation.Statement of Financial Accounting Standards No. 123,Accounting for
Stock Based Compensation(SFAS 123) encourages entities to adopt a fair value based method of accounting for stock options or similar equity instruments. However, it
also allows an entity to continue

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measuring
compensation cost for stock based compensation using the intrinsic-value method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees(APB
25). The Company has elected to continue to apply the provisions of APB 25 and provide pro forma
disclosures required by SFAS 123 in the footnotes to the consolidated financial statements. Sento also issues equity-based incentive compensation to non-employees from time to time.
Pursuant to Emerging Issues Task Force (EITF) 96-18,Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring or in Conjunction with
Selling Goods or Services, Sento accounts for these arrangements based on the fair value of the equity instrument issued. The fair value of such instruments is measured each
quarter as the related goods or services are provided. The resulting change in value of the instrument is either charged or credited to income.

Results of Operations

Fiscal 2003 compared to Fiscal 2002

Revenues.Revenues decreased $5,551,000 or 24%, from $23,047,000 for the fiscal year ended March 30, 2002 to
$17,496,000 for the fiscal year ended March 31, 2003. The primary contributors to the reduction in revenue were a reduction in volume from a significant customer in the amount of $2,489,000 for
the fiscal year ended March 31, 2003 when compared to the fiscal year ended March 30, 2002, and the loss of the Company's largest revenue generating client, a major computer OEM, which
asked Sento toward the end of calendar 2001 for a reduction in rates of more than 30%. This client accounted for $6,403,000 or 28%, of revenues for the fiscal year ended March 30, 2002 and
$141,000 or 1% of revenue during the fiscal year ended March 31, 2003. Sento declined the client's requested rate reduction, as did eight other outsource centers that are competitors of Sento,
who also were supplying outsourced call center services to this client. To accept the lower rate would have put the Company into a loss position with this client, although the revenue would have
covered some fixed overhead costs. The Company was able to replace approximately $3,200,000 of the lost revenue discussed above with increased revenue from existing customers and revenue from new
customers during the fiscal year ended March 31, 2003. However, the loss of this large customer will likely continue to have a significant adverse impact on the Company's revenues and operating
results until the business is replaced.

Currently,
the Company has excess capacity available to service additional call volume, particularly in its Evanston, Wyoming facility. This capacity was built to accommodate the needs
of the Company's then existing clients and in anticipation of additional demand for the Company's services. However, with the current economic conditions, it is difficult to predict the Company's
ability to fill this excess capacity with new business in the future. In the event that the Company is unable to fill the unutilized capacity in the Evanston, Wyoming facility, it may have to record
an impairment charge relating to its assets at that facility.

Cost of Sales.Cost of sales decreased 18%, or $3,631,000 from $20,330,000 for the fiscal year ended March 30, 2002 to
$16,699,000 for the fiscal year ended March 31, 2003. This decrease in cost of sales was principally attributable to decreased customer support call volume and a shift from traditional call
center support to Customer Choice® Platform support, which has a lower cost. Gross profit as a percentage of revenues decreased by 7 percentage points, from 12% of revenues during
the fiscal year ended March 30, 2002 to 5% of revenues for the fiscal year ended March 31, 2003. The decrease in gross margin was primarily due to the Company's excess capacity and the
failure to generate sufficient revenue to cover the Company's fixed costs.

The
Company anticipates improving call volume during the year ending March 31, 2004. However, actual call volumes will be subject to a number of factors beyond Sento's control,
including general economic and industry conditions. An increase in call volumes, if achieved, would result in higher coverage of overhead and fixed costs, which would likely result in improved gross
margin percentages.

11

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Selling, General and Administrative Expenses.Selling, general and administrative expenses increased by 25%, or $492,000 from
$1,939,000 for the fiscal year ended March 30, 2002 to $2,431,000 for the fiscal year ended March 31, 2003. This increase was primarily due to increased marketing efforts and increased
expenses associated with the Company's reverse stock split. Management anticipates that selling, general and administrative expenses will increase in future periods as a result of increased selling
efforts to improve revenues.

Interest income.Interest income decreased $67,000 or 62% from $108,000 during the fiscal year ended March 30, 2002 to
$41,000 during the fiscal year ended March 31, 2003. The primary reasons for the decrease are a decline in interest rates and a reduction in the Company's interest bearing account balances.
During fiscal 2003, the Company liquidated its short-term investments.

Other expense, net.Other expense increased by $103,000 from $36,000 during the fiscal year ended March 30, 2002 to
$139,000 during the fiscal year ended March 31, 2003. A significant factor in the increased expense was an increase in loan costs from loan amendments that were executed to provide interim
financing until the Company was able to complete its refinancing of debentures and bank line of credit in April 2003.

Liquidity and Capital Resources

Cash and short-term investment balances increased 31%, or $607,000, from $1,976,000 at March 30, 2002 to $2,583,000 at March 31, 2003.
The primary reasons for the increase in cash and short-term investments, despite the Company's $2,111,000 net loss for the year ended March 31, 2003, was the add-back of
non-cash expense items such as depreciation included in the net loss and the collection of accounts receivable. Due, in part, to the accelerated collection of accounts receivable, as well
as the decline in revenues for the year ended March 31, 2003, accounts receivable declined 19%, or $665,000, from $3,514,000 at March 30, 2002 to $2,849,000 at March 31, 2003, and
working capital decreased 35%, or $569,000, to $1,069,000 at March 31, 2003 from $1,638,000 at March 30, 2002.

The
Company has contractual obligations, including debt agreements and leases that will require the use of substantial amounts of cash. The following table sets forth the Company's
contractual obligations as of March 31, 2003:

Contractual Obligations:

|                                               |  | Payments Due by Period
|---------------------------------------------- |  | ----------------------
|
|Outstanding Credit Line                        |  | $                     
|Long Term Debt (principal only) (1)            |  |                       
|8% Convertible Debentures (2) (principal only) |  |                       
|Capital Leases                                 |  |                       
|Operating Leases                               |  |                       
|                                               |  |                       
|Total Contractual Cash Obligations             |  | $                     
|                                               |  |                       

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12

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In addition to the above contractual obligations, the Company is contingently liable for an equipment lease that was assumed by Echopass Corporation. The total amount of monthly payments
due under this lease through April 2004 is $101,000. The total amount of monthly payments due thereafter under this lease is $18,000.

At
present, management believes the Company is able to meet its current obligations for operations as they come due.

Historically
the Company's primary sources of liquidity have been cash received from sales of assets and cash provided through private sales of equity and debt, as well as borrowings
under a bank line of credit. During the three years ended March 31, 2003, liquidity and cash were also provided by positive cash flow from operations. In addition, the Company has
financed some of the equipment utilized in its business through long-term leasing and loan arrangements. However, leasing and other finance companies have become much more restrictive in
providing financing because of the economic downturn, making it more difficult for the Company to obtain equipment financing. The growth of the Company has consumed substantial amounts of cash, and
the Company may be required to obtain additional financing to sustain current operations. In the event the Company is not able to find additional sources of funding and enter into financing
transactions on reasonable terms, its ability to sustain current operations will be limited, or it may be forced to reduce or suspend its operations. There can be no assurance that the Company will be
able to obtain necessary capital funding on terms favorable to the Company, if at all.

Recently Issued Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146,Accounting for Costs Associated with Exit
or Disposal Activities. SFAS No. 146 replaces Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).SFAS No. 146 requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by SFAS No. 146 include
lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. SFAS No. 146 is
to be applied prospectively to exit or disposal activities initiated after September 30, 2002, with early application encouraged. Management believes there will be no current impact to the
financial statements from adoption of this statement.

In
November 2002, the FASB issued FASB Interpretation (FIN) NO. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of others. FIN No. 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the
obligation it assumes under the guarantee. The disclosure provisions of FIN No. 45 are effective for financial statements of annual periods that end after December 15, 2002. The
provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 15, 2002. The adoption of the recognition and
measurement of FIN No. 45 are not expected to have a material impact on the results of operations and financial position.

In
December 2002, the FASB issued SFAS No. 148,Accounting for Stock-based Compensation-Transition and Disclosure, which amends SFAS No. 123,
Accounting for Stock-Based Compensation, SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more prominent and more frequent disclosure in financial
statements of the effects of stock-based compensation. The transition guidance and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial reports containing condensed financial

13

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statements
for interim periods beginning after December 15, 2002. The Company has adopted SFAS No. 148 for disclosure purposes only.

Risks Related to Existing and Proposed Sento Operations

In addition to other information in this Report, the following are important factors that should be considered carefully in evaluating the Company and its
business.

Volatile Economic Conditions Have Affected and Will Likely Continue to Affect Sento's Operations and Financial
Results.Volatile economic conditions have adversely affected the Company's operations and financial results. The slowing economy has resulted in increased pricing
pressures and lower call volumes from existing clients, and may have limited the Company's ability to attract new clients. These factors have contributed to a decline in the Company's revenues and net
income and have resulted in the Company's excess capacity to service call volumes. A substantial percentage of the Company's expenses is attributable to labor costs associated with staffing Customer
Contact Solutions Centers, which the Company may not be able to reduce on short notice in order to compensate for unexpected shortfalls in call volumes. The Company cannot forecast future fluctuations
in economic conditions, and its operations and financial results may be materially and adversely affected by continued economic volatility.

Dependence on Key Clients.Four clients accounted for approximately 70% of the Company's revenues for the year ended
March 31, 2003. These four clients accounted for approximately 27%, 20%, 12%,
and 11%, respectively of revenues for fiscal 2003. For the year ended March 30, 2002, three clients accounted for approximately 60% of the Company's revenues. These three clients accounted for
approximately 28%, 19%, and 13%, respectively of revenues for fiscal 2002. The largest of these clients terminated its relationship with the Company in April 2002. The loss of this client has
had a significant adverse impact on the Company's operations, and will likely have a significant adverse impact on the Company's revenues and net income until this business is replaced.

Consistent
with industry standards, the Company's contracts are generally cancelable by the client on short-term notice. The Company's loss of a significant amount of
business with any of its key clients could have, and the loss of a substantial amount of business with any of its largest existing technical support clients would have, a material adverse effect on
the Company's business, financial condition, and results of operations. In addition, the Company's future revenue growth is dependent upon its ability to attract and retain new clients.

Liquidity and Capital Resources.At March 31, 2003, the Company had working capital of $1,069,000 (representing a
decline of 35% from March 30, 2002) and a cash and short-term investment balance of $2,583,000 (representing an increase of 31% from March 30, 2002). Future growth,
particularly growth in excess of planned growth, will depend on the Company's ability to obtain financing. The historic growth rate of the Company's Customer Contact Solutions operations (most of
which was in the United States) has consumed substantial amounts of cash. The Company anticipates that future growth of its operations in the United States can be supported with moderate capital
investment by reconfiguring the existing space. This reconfiguration will allow for approximately 350 additional seats without the need for additional real estate. It should be noted that there is
very little capital spending required for growth using offshore partners. The Company may be required to pursue additional funding opportunities to sustain its current operations. In the event the
Company is not able to find such additional sources of funding, its ability to sustain current operations may be limited, or it may be forced to reduce or suspend its operations. There can be no
assurance that the Company will be able to obtain necessary capital funding on terms favorable to the Company, if at all.

Credit Risk.In the normal course of business, the Company provides unsecured credit terms to its customers. Accordingly, the
Company performs ongoing credit evaluations of its customers and

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maintains
allowances for possible losses. Except for the significant losses incurred during the fourth quarter of fiscal 2001, the Company's credit losses have generally been within management's
expectations. However, there can be no assurance that the Company's future credit losses will be within management's expectations. In addition, the Company's revenues and accounts receivable are
concentrated in a relatively few number of customers. A significant change in the liquidity or financial position of any one of these customers or a further deterioration in the economic environment,
in general, could have an adverse impact on the collectability of the Company's accounts receivable and the Company's future operating results.

Risks of Growth Strategy.The Company's business strategy is premised, in part, upon expansion of its operations. Substantial
risks accompany the Company's growth plans. For example, the Company's growth plans are dependent upon its ability to attract and retain new clients and additional business from existing clients. The
Company's failure to attract and retain new clients and additional business from existing clients, or the loss of existing clients, will not only prevent the implementation of its business strategy,
but may continue the current circumstance of excess personnel and physical facilities, which would have a negative impact on the Company's results of operations and financial condition.

The
Company's growth plans are also subject to fluctuations in technology and industry standards, changes in customer requirements and preferences and general economic conditions, among
other factors. Many of these factors are beyond the Company's control. If the Company is incorrect in its assessment of the feasibility of its growth plans, or if circumstances change in a way that
the Company did not foresee or anticipate, the Company may not be able to grow as planned or its growth strategy may have an adverse effect on its business operations and financial condition.

Reliance on a Software Company for Chat and Email applications.The Company contracts with a software company to provide chat
and email tools used with the Company's CRM software, reporting and management services. If this software company fails in its business efforts, the Company may be required to identify and retain one
or more alternate third-party providers of such services and could experience service delays, interruptions or cancellations.

Changing Needs of the Customer Contact Service Market.The customer contact service industry is characterized by rapid
technological change, changes in customer requirements and preferences, and the emergence of new industry standards and practices that could render the Company's existing and proposed products,
services, technology and systems obsolete. To remain competitive, the Company must continually improve the performance, features, and reliability of its products and services, including its existing
customer contact service applications, and develop new products and services that address the increasingly sophisticated and varied needs of its prospective clients. If the Company cannot adapt or
respond in a cost-effective and timely manner to changing industry standards, market conditions, or client's requirements, its business and operating results would suffer and could
negatively impact the Company's financial condition.

The
Company's success may also depend in part on its ability to develop solutions that keep pace with continuing changes in information technology, evolving industry standards, and
changing client requirements. There can be no assurance that the Company will be successful in adequately addressing these developments on a timely basis or that, if these developments are addressed,
the Company will be successful in the marketplace. In addition, there can be no assurance that products or technologies developed by others will not render the Company's services
non-competitive or obsolete. The Company's failure to address these developments could have a material adverse effect on its business and financial condition.

Competition.The market for customer contact services is highly fragmented and very competitive. The customer contact
services industry, however, has begun to experience a degree of consolidation, and the existence of major customer contact center companies has resulted in an additional level of

15

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competition
from service providers that have greater name recognition, larger installed customer bases, and significantly greater financial, technical, and marketing resources than the Company. Over
the past several years, a number of existing companies have enjoyed increasing success and rapid internal growth. Several of these companies have been active in acquiring smaller regional
customer contact services companies and are becoming major competitors with a measurable share of this rapidly expanding market. Also, many major companies provide their own in-house
customer care support and customer training.

The
Company cannot provide any assurance that better and more efficient services will not be provided by new or existing customer contact service providers in competition with the
Company. The services provided by such competitors may be more effective or less expensive than those provided by the Company. There can be no assurance that the Company will improve, refine or
enhance the services it provides.

Competition in Customer Contact Services Market.The customer contact services market is relatively new and intensely
competitive. There are no substantial barriers to entry, and established or new entities may enter this market in the near future. Furthermore, established enterprise software companies, including
IBM, Hewlett-Packard Company, Microsoft Corporation, and similar companies, may leverage their existing relationships and capabilities to offer customer service applications. The Company was a
relatively early entrant in the customer self-services and chat markets. Any delays in market acceptance of internet customer contact service applications in general, or the Company's
proposed products and services in particular, would likely harm the Company's competitive position. Delays would allow the Company's competitors additional time to improve their service or product
offerings, and also provide time for new competitors to develop e-business customer service applications and solicit prospective clients within the Company's target markets. Increased
competition could result in additional pricing pressures, reduced operating margins and loss of market share.

Risk of Emergency Interruption of Customer Contact Solutions Center Operations.The Company's business depends to a large
extent on computer and telecommunications equipment and software systems (both equipment and systems maintained by the Company and equipment and systems maintained by third parties). The Company
cannot provide any assurance that natural disaster, human error, equipment malfunction or inadequacy, or other events would not result in a prolonged interruption in the Company's ability to provide
support services to its clients. The temporary or permanent loss of computer or telephone equipment or systems, through casualty, operating malfunction or otherwise, could have a material adverse
effect on the Company. Property and business interruption insurance may not be adequate to compensate the Company for all losses that it may incur.

Attracting, Training, and Retaining Quality Management and Employees.The Company's success will depend, in large part, on
its ability to attract, retain and train highly qualified technical, managerial and marketing personnel with the required expertise. The Company has not entered into employment agreements that require
the services of any of its key managerial or technical personnel to remain with the Company for any specified period of time. There can be no assurance that the Company will be able to attract and
maintain the personnel necessary for the development and operation of its business or that it will be able to train its current employees on new developments in technology. Specifically, the loss of
any key personnel or an inability to attract, retain, train or motivate qualified personnel could have a material adverse effect on the Company's business, financial condition and results of
operations.

In
addition, the Company's total employee count has fluctuated from approximately 585 as of March 31, 2000 to a high of approximately 953 as of December 31, 2000, and has
decreased to approximately 230 as of May 31, 2003. The support required for one of the Company's largest clients is seasonal. There is, therefore, a necessity for very rapid increases in
employees and subsequent

16

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decreases
in the number of employees as the requirements for support change. The Company cannot provide any assurance that its current management team can successfully manage the Company's rapidly
evolving business, and any failure to do so could have a material adverse effect upon the Company's operating results.

During
the time period beginning July 2000 and continuing to date, the Company has partnered and continues to partner with offshore entities that supply Customer Contact Center
services on a contract basis to the Company. Currently there are approximately 186 agents in these offshore contracted Customer Contact Centers. Managing the quality of services rendered to the
Company's clients is further complicated by the remote location and language and cultural differences of agents supplying these services, and there can be no assurance that the Company can adequately
manage these remote agents. The lack of proper management of these offshore agents or the delivery of low-quality services by such agents could have a material adverse effect upon the
Company's operating results.

Dependence on Industry Trend to Outsource Services.The Company's business depends in large part on the trend within the IT
industry to outsource certain services. The Company cannot provide any assurance that this trend will continue or that, if the trend continues, it will continue at the same rate of growth. The failure
of this trend to continue could have a material adverse effect on the Company's business, financial condition, and results of operations.

Potential Significant Fluctuations in Quarterly Results.The value of individual transactions can constitute a substantial
percentage of the Company's quarterly revenue, and particular transactions may generate a substantial portion of the operating profits for a quarter. Because the Company's staffing and other operating
expenses are based on anticipated revenue levels, and a high percentage of its expenses are fixed, delays in the receipt of orders can cause significant variations in operating results from quarter to
quarter. In addition, the Company may expend significant resources pursuing potential sales that will not be consummated. The Company also may choose to reduce prices or to increase spending in
response to competition or to pursue new market opportunities, which may adversely affect its operating results.

In
particular, the Company's quarterly revenues from its Customer Contact Solutions Center operations are potentially volatile. Such revenues are principally a function of the number of
support requests received by the Company, and the time spent on such requests. Consequently, the Company's profitability may be adversely affected if the Company receives fewer support requests than
anticipated or the time spent in resolving inquiries is greater than anticipated.

For
the reasons identified above, management believes that period-to-period comparisons of the Company's results of operations may not be meaningful and that no
one should rely upon them as an indication of future performance. Furthermore, the Company cannot provide any assurance that it will be able to achieve or sustain profitability on a quarterly basis.

Volatility of Stock Price.The trading price of the Company's Common Stock has fluctuated widely in response to variations in
quarterly operating results, announcements by the Company or its competitors, industry trends, general economic conditions or other events or factors. Such fluctuations, as well as fluctuations in the
trading volume of the Common Stock, may continue in the future. Regardless of the general outlook for the Company's business, the announcement of quarterly operating results below analyst and investor
expectations could have a material and adverse effect on the market price of the Common Stock.

The
Company received a de-listing notice from Nasdaq on September 17, 2002, due to the bid for the Company's Common Stock being below $1.00, the minimum bid price for
continued listing on the Nasdaq Small Cap Market. However, the Company was able to obtain an extension after a hearing before a Nasdaq Listing Qualification Panel that was held on October 24,
2002. In addition, the Company's shareholders voted in favor of amending the Company's amended and restated articles of

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incorporation
to effect a one-for-four reverse split of the outstanding shares of the Company's Common Stock. The reverse split became effective November 25, 2002 and
the bid for the Company's Common Stock has remained above $1.00 since that time.

The
Company values its listing on the Small Cap Market, and will seek to remain in compliance with the applicable listing qualification standards; however, the price of the Common Stock
is determined by a number of factors, including general economic and market conditions, industry trends and public perception, many of which are beyond the Company's control. If the bid price for the
Common Stock
does not remain above $1.00 on a consistent basis, the Company may lose its listing privileges on the Nasdaq Small Cap Market, and may be forced to find another forum for trading of its Common Stock.

Anti-Takeover Considerations.The Company's Articles of Incorporation and Bylaws, the Utah Revised Business
Corporation Act, and the Utah Control Shares Acquisition Act each contain certain provisions that may have the effect of inhibiting a non-negotiated merger or other business combination.
The Company's Articles of Incorporation grant to the Board of Directors the authority, without further action by the Company's shareholders, to fix the rights and preferences of, and issue shares of
preferred stock. These provisions may deter hostile takeovers or delay or prevent changes in control of the Company or changes in the Company's management, including transactions in which shareholders
might otherwise receive a premium for their shares over the then-current market prices. In addition, these provisions may limit the ability of shareholders to approve transactions that
they may deem to be in their best interests.

Common Stock Eligible for Future Sale.Sales of substantial amounts of the Common Stock or the perception that such sales
could occur, could have a negative impact on the prevailing market prices for the Common Stock. As of May 31, 2003, the Company had 2,119,485 shares of Common Stock outstanding, substantially
all of which were eligible as of such date under applicable securities laws for immediate sale in the public market without restriction, except for any shares purchased by any "affiliate" of the
Company (as that term is defined under the rules and regulations of the Securities Act) which will be subject to the resale limitations of Rule 144 under the Securities Act or any successor
rule ("Rule 144").

Dividends.Dividends are payable on the Common Stock when, as and if declared by the Company's Board of Directors. No
dividend has been declared or paid on the Common Stock to date. At present the Company intends to retain any future earnings for use in its business and therefore does not anticipate paying any
dividends on the Common Stock in the foreseeable future.

Item 7. Financial Statements.

The financial statement information required by Item 7 is included on pages F-1 to F-19.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None

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PART III        Items 9, 10, 11 and 12

These items are incorporated by reference to the Company's definitive proxy statement relating to the Company's 2003 Annual Meeting of Shareholders.

Item 13. Exhibits and Reports on Form 8-K.



|Number |  | Description                                                                                                              |  | Incorporated
by Reference |  | Filed
Herewith
|------ |  | ------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- |  | --------------
|3.1    |  | Articles of Incorporation, as amended                                                                                    |  | (1)                       |  |               
|3.2    |  | Articles of Amendment of the Articles of Incorporation of Sento Corporation                                              |  | (2)                       |  |               
|3.3    |  | Bylaws                                                                                                                   |  | (3)                       |  |               
|10.1   |  | Sento Corporation 1999 Omnibus Stock Incentive Plan                                                                      |  | (4)                       |  |               
|10.2   |  | Sento Corporation 1996 Employee Stock Purchase Plan (Amended and Restated)                                               |  | (4)                       |  |               
|10.3   |  | Form of Warrant                                                                                                          |  | (4)                       |  |               
|10.4   |  | Silicon Valley Bank Amended and Restated Loan and Security Agreement, dated as of April 28, 2000.                        |  | (4)                       |  |               
|10.5   |  | Form of 7% Convertible Subordinated Debentures                                                                           |  | (4)                       |  |               
|10.6   |  | Lease Agreement, dated January 1, 2000, between the Company and K.E.B. Enterprises LP                                    |  | (4)                       |  |               
|10.7   |  | Lease Agreement, dated May 24, 2000, between the Company and Abinadi, Inc.                                               |  | (4)                       |  |               
|10.8   |  | Business Lease with Wyoming Financial Properties Inc.                                                                    |  | (5)                       |  |               
|10.9   |  | Loan agreement between Sento Corporation and Wyoming Industrial Development Corporation dated January 12, 2000.          |  | (6)                       |  |               
|10.10  |  | Modification of promissory note with a blended rate (USDA Loan Identification No. 59-021-087028497) dated April 9, 2001. |  | (6)                       |  |               
|10.11  |  | U.S. Small Business Administration Note (SBA loan No. GP-452368 40 08-CAS) dated June 4, 2001                            |  | (6)                       |  |               
|10.12  |  | Modification of Promissory Note with a Blended Rate (SBA loan No. GP-452368 40 08-CAS) dated March 28, 2002              |  | (7)                       |  |               
|10.13  |  | Equipment Lease with NTFC Capital Corporation                                                                            |  | (7)                       |  |               
|10.14  |  | Lease agreement between the Company and Pracvest LLC                                                                     |  | (8)                       |  |               
|10.15  |  | Loan and security agreement between the Company and Silicon Valley Bank dated April 15, 2003                             |  |                           |  | (9)           
|10.16  |  | Warrant to Purchase Stock issued to Silicon Valley Bank dated April 15, 2003                                             |  |                           |  | (9)           
|10.17  |  | Form of 8% Convertible Subordinated Debentures                                                                           |  |                           |  | (9)           
|10.18  |  | Form of Warrant to purchase shares of Common Stock                                                                       |  |                           |  | (9)           
|10.19  |  | Equipment lease with General Electric Capital Corporation dated April 30, 2002                                           |  |                           |  | (9)           
|       |  |                                                                                                                          |  |                           |  |               

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|10.20 |  | First Amendment to Sento Corporation 1999 Omnibus Stock Incentive Plan |  |  |  | (9)
|----- |  | ---------------------------------------------------------------------- |  |  |  | ---
|21    |  | Subsidiaries of the Registrant                                         |  |  |  | (9)
|23    |  | Consent of Ernst & Young LLP                                           |  |  |  | (9)
|99.1  |  | Certification of the Company's Chief Executive Officer                 |  |  |  | (9)
|99.2  |  | Certification of the Company's Principal Financial Officer             |  |  |  | (9)

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Item 14. Controls and Procedures.

Within the 90 days prior to the date of filing this Annual Report on Form 10-KSB, an evaluation was performed under the supervision and
with the participation of the Company's management, including the Chief Executive Officer and the Senior Vice President of Finance, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14). Based upon the evaluation, the Company's management, including the Chief
Executive Officer and Senior Vice President of Finance, concluded that, as of the date of that evaluation, the disclosure controls and procedures were effective in timely alerting them to material
information relating to the Company required to be included in the Company's periodic SEC filings. Subsequent to the date of that evaluation, there have been no significant changes in the internal
controls or in other factors that could significantly affect internal controls, nor were any corrective actions required with regard to significant deficiencies and material weaknesses.

Item 15. Principal Accountant Fees & Services.

This item is incorporated by reference to the Company's definitive proxy statement relating to the Company's 2003 Annual Meeting of Shareholders.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on June 26, 2003.

| |  | SENTO CORPORATION
| |  | -----------------
| |  | By:              

In
accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on
June 26, 2002.

|Signature                             |  | Capacity in Which Signed                                                                                     
|------------------------------------- |  | -------------------------------------------------------------------------------------------------------------
|                                      |  |                                                                                                              
|/s/GARY B. FILLERGary B. Filler       |  | Chairman of the Board of Directors                                                                           
|/s/PATRICK F. O'NEALPatrick F. O'Neal |  | President, Chief Executive Officer and Director (Principal executive officer)                                
|/s/KIETH E. SORENSONKieth E. Sorenson |  | Director                                                                                                     
|/s/KIM A. COOPERKim A. Cooper         |  | Director                                                                                                     
|/s/ERIC OLAFSONEric Olafson           |  | Director                                                                                                     
|/s/STANLEY J. CUTLERStanley J. Cutler |  | Senior Vice President of Finance and Secretary (Principal financial officer and Principal accounting officer)

21

---

CERTIFICATIONS *

I,
Patrick F. O'Neal, certify that:

1.     I
have reviewed this annual report on Form 10-KSB of Sento Corporation;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

Date:
June 26, 2003

| |  | /s/PATRICK F. O'NEALPatrick F. O'Neal
President and Chief Executive Officer
| |  | ---------------------------------------------------------------------------

22

---

I,
Stanley J. Cutler, certify that:

1.     I
have reviewed this annual report on Form 10-KSB of Sento Corporation;

2.     Based
on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.     Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.     The
registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.     The
registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent function):



6.     The
registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

Date:
June 26, 2003

| |  | /s/STANLEY J. CUTLERStanley J. Cutler
Senior Vice President of Finance and Secretary
| |  | ------------------------------------------------------------------------------------

23

---



Report of Independent Auditors

The Board of Directors and Shareholders
Sento Corporation and Subsidiary

We
have audited the accompanying consolidated balance sheets of Sento Corporation and subsidiary as of March 31, 2003 and March 30, 2002, and the related consolidated
statements of operations, stockholders' equity and comprehensive income (loss) and cash flows for the years then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sento Corporation and subsidiary at
March 31, 2003 and March 30, 2002, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States.

| |  | /s/ Ernst & Young LLP
| |  | ---------------------

April 23,
2003

F-1

---



Sento Corporation and Subsidiary        Consolidated Balance Sheets

|                                           |                                                                                                                            | March 31
2003 |            | March 30
2002 |  
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------- | ------------- | ---------- | ------------- | -
|Assets                                     |                                                                                                                            |               |            |               |  
|Current assets:                            |                                                                                                                            |               |            |               |  
|                                           | Cash and cash equivalents                                                                                                  |               | $          | 2,583,337     |  
|                                           | Short-term investments                                                                                                     |               |            |              |  
|                                           | Accounts receivable, less allowance for doubtful accounts of $77,000 in 2003 and $120,000 in 2002                          |               |            | 2,848,863     |  
|                                           | Prepaid expenses                                                                                                           |               |            | 167,466       |  
|                                           | Other current assets                                                                                                       |               |            | 52,625        |  
|                                           |                                                                                                                            |               |            |               |  
|Total current assets                       |                                                                                                                            |               | 5,652,291  |               |  
|Property and equipment, net                |                                                                                                                            |               | 4,130,921  |               |  
|Other assets                               |                                                                                                                            |               | 321,521    |               |  
|                                           |                                                                                                                            |               |            |               |  
|Total assets                               |                                                                                                                            | $             | 10,104,733 |               | $
|                                           |                                                                                                                            |               |            |               |  
|Liabilities and stockholders' equity       |                                                                                                                            |               |            |               |  
|Current liabilities:                       |                                                                                                                            |               |            |               |  
|                                           | Accounts payable                                                                                                           |               | $          | 1,728,768     |  
|                                           | Accrued salaries and payroll taxes                                                                                         |               |            | 460,769       |  
|                                           | Accrued liabilities                                                                                                        |               |            | 788,969       |  
|                                           | Deposits on 2003 debenture offering                                                                                        |               |            | 225,000       |  
|                                           | Line of credit                                                                                                             |               |            | 304,492       |  
|                                           | Current portion of long-term debt and capital leases                                                                       |               |            | 944,499       |  
|                                           | Current portion of convertible debt                                                                                        |               |            | 84,179        |  
|                                           | Deferred revenue and customer deposits                                                                                     |               |            | 46,453        |  
|                                           |                                                                                                                            |               |            |               |  
|Total current liabilities                  |                                                                                                                            |               | 4,583,129  |               |  
|                                           | Long-term debt and capital leases, net of current portion                                                                  |               |            | 888,825       |  
|                                           | Convertible debt, net of current portion                                                                                   |               |            | 1,202,821     |  
|                                           |                                                                                                                            |               |            |               |  
|Total long-term liabilities                |                                                                                                                            |               | 2,091,646  |               |  
|Commitments and contingencies              |                                                                                                                            |               |            |               |  
|Stockholders' equity:                      |                                                                                                                            |               |            |               |  
|                                           | Common stock, $.25 par value, 50,000,000 shares authorized; issued and outstanding 2,099,810 in 2003 and 2,093,193 in 2002 |               |            | 524,953       |  
|                                           | Additional paid-in capital                                                                                                 |               |            | 11,919,653    |  
|                                           | Accumulated other comprehensive loss                                                                                       |               |            |              |  
|                                           | Accumulated deficit                                                                                                        |               |            | (9,014,648    | )
|                                           |                                                                                                                            |               |            |               |  
|Total stockholders' equity                 |                                                                                                                            |               | 3,429,958  |               |  
|                                           |                                                                                                                            |               |            |               |  
|Total liabilities and stockholders' equity |                                                                                                                            | $             | 10,104,733 |               | $
|                                           |                                                                                                                            |               |            |               |  

See accompanying notes.

F-2

---

Sento Corporation and Subsidiary        Consolidated Statements of Operations

|                                              |                                             | Year Ended |           
|--------------------------------------------- | ------------------------------------------- | ---------- | ----------
|
|Revenue, net                                  |                                             | $          | 17,495,882
|Cost of sales                                 |                                             |            | 16,699,235
|                                              |                                             |            |           
|                                              | Gross profit                                |            |           
|Selling, general, and administrative expenses |                                             |            | 2,430,973 
|                                              |                                             |            |           
|                                              | Income (loss) from operations               |            |           
|Interest income                               |                                             |            | 41,132    
|Interest expense                              |                                             |            | (378,875  
|Other expense, net                            |                                             |            | (139,279  
|                                              |                                             |            |           
|                                              | Income (loss) from continuing operations    |            |           
|                                              | Gain on disposal of discontinued operations |            |           
|                                              |                                             |            |           
|                                              | Net income (loss)                           |            | $         
|                                              |                                             |            |           
|Income (loss) per share  basic               |                                             |            |           
|                                              | Continuing operations                       |            | $         
|                                              | Discontinued operations                     |            |           
|                                              |                                             |            |           
|Net income (loss)                             |                                             | $          | (1.01     
|                                              |                                             |            |           
|Income (loss) per share  diluted             |                                             |            |           
|                                              | Continuing operations                       |            | $         
|                                              | Discontinued operations                     |            |           
|                                              |                                             |            |           
|Net income (loss)                             |                                             | $          | (1.01     
|                                              |                                             |            |           

See accompanying notes.

F-3

---



Sento Corporation and Subsidiary        Consolidated Statement of Stockholders' Equity and Comprehensive Income (Loss)

|                                               |                                           | Common Stock |   |   |         |   |   |            |   | Accumulated
Other
Comprehensive
Income (Loss) |         |   |  
|---------------------------------------------- | ----------------------------------------- | ------------ | - | - | ------- | - | - | ---------- | - | --------------------------------------------- | ------- | - | -
|
|
|Balances at March 31, 2001                     |                                           | 2,131,071    |   | $ | 532,768 |   | $ | 12,280,360 |   | $                                             | (31,165 | ) | $
|Purchase and cancellation of common stock      |                                           | (44,550      | ) |   | (11,138 | ) |   | (406,161   | ) |                                               |        |   |  
|Revaluation of warrants issued for services    |                                           |             |   |   |        |   |   | (11,938    | ) |                                               |        |   |  
|Amortization of deferred compensation          |                                           |             |   |   |        |   |   |           |   |                                               | 31,165  |   |  
|Exercise of stock options                      |                                           | 1,198        |   |   | 300     |   |   | 8,086      |   |                                               |        |   |  
|Employee stock purchases                       |                                           | 5,474        |   |   | 1,368   |   |   | 22,282     |   |                                               |        |   |  
|Comprehensive income:                          |                                           |              |   |   |         |   |   |            |   |                                               |         |   |  
|                                               | Net income                                |              |  |   |         |  |   |            |  |                                               |         |  |  
|                                               | Unrealized losses on securities           |              |  |   |         |  |   |            |  |                                               |         |  |  
|                                               |                                           |              |   |   |         |   |   |            |   |                                               |         |   |  
|Net comprehensive income                       |                                           |             |   |   |        |   |   |           |   |                                               |        |   |  
|                                               |                                           |              |   |   |         |   |   |            |   |                                               |         |   |  
|Balances at March 30, 2002                     |                                           | 2,093,193    |   |   | 523,298 |   |   | 11,892,629 |   |                                               |        |   |  
|Revaluation of warrants issued for services    |                                           |             |   |   |        |   |   | 7,131      |   |                                               |        |   |  
|Purchase and cancellation of fractional shares |                                           | (161         | ) |   | (40     | ) |   | (311       | ) |                                               |        |   |  
|Employee stock purchases                       |                                           | 6,778        |   |   | 1,695   |   |   | 20,204     |   |                                               |        |   |  
|Comprehensive loss:                            |                                           |              |   |   |         |   |   |            |   |                                               |         |   |  
|                                               | Net loss                                  |              |  |   |         |  |   |            |  |                                               |         |  |  
|                                               | Change in unrealized losses on securities |              |  |   |         |  |   |            |  |                                               |         |  |  
|                                               |                                           |              |   |   |         |   |   |            |   |                                               |         |   |  
|Net comprehensive loss                         |                                           |             |   |   |        |   |   |           |   |                                               |        |   |  
|                                               |                                           |              |   |   |         |   |   |            |   |                                               |         |   |  
|Balances at March 31, 2003                     |                                           | 2,099,810    |   | $ | 524,953 |   | $ | 11,919,653 |   | $                                             |        |   | $
|                                               |                                           |              |   |   |         |   |   |            |   |                                               |         |   |  

See accompanying notes.

F-4

---

Sento Corporation and Subsidiary        Consolidated Statements of Cash Flows

|                                                     |                                                                                          | Year Ended                                   |                                       
|---------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | --------------------------------------
|
|Cash flows from operating activities:                |                                                                                          |                                              |                                       
|                                                     | Net income (loss)                                                                        |                                              | $                                     
|                                                     | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                              |                                       
|                                                     |                                                                                          | Gain on disposal of discontinued operations  |                                       
|                                                     |                                                                                          | Depreciation and amortization                |                                       
|                                                     |                                                                                          | Amortization of deferred compensation        |                                       
|                                                     |                                                                                          | Provision for losses on accounts receivable  |                                       
|                                                     |                                                                                          | Loss on sale of short term investments       |                                       
|                                                     |                                                                                          | Net loss on disposal of assets               |                                       
|                                                     |                                                                                          | Revaluation of warrants issued for services  |                                       
|                                                     |                                                                                          | Accretion on debenture for warrant           |                                       
|                                                     |                                                                                          | Changes in operating assets and liabilities: |                                       
|                                                     |                                                                                          |                                              | Accounts receivable                   
|                                                     |                                                                                          |                                              | Prepaid expenses and other assets     
|                                                     |                                                                                          |                                              | Accounts payable                      
|                                                     |                                                                                          |                                              | Accrued liabilities                   
|                                                     |                                                                                          |                                              | Deferred revenue and customer deposits
|                                                     |                                                                                          |                                              |                                       
|                                                     |                                                                                          |                                              |                                       
|Cash flows from investing activities:                |                                                                                          |                                              |                                       
|                                                     | Capital expenditures                                                                     |                                              |                                       
|                                                     | Proceeds from sale of assets                                                             |                                              |                                       
|                                                     | Principal payments received on note receivable                                           |                                              |                                       
|                                                     | Proceeds from sale of short-term investments                                             |                                              |                                       
|                                                     | Purchase of short-term investments                                                       |                                              |                                       
|                                                     |                                                                                          |                                              |                                       
|                                                     |                                                                                          |                                              |                                       
|Cash flows from financing activities:                |                                                                                          |                                              |                                       
|                                                     | Proceeds from issuance of long-term debt and line of credit                              |                                              |                                       
|                                                     | Proceeds received from debenture offering                                                |                                              |                                       
|                                                     | Principal payments on long-term debt, capital leases, and credit line                    |                                              |                                       
|                                                     | Proceeds from exercise of stock options                                                  |                                              |                                       
|                                                     | Proceeds from employee stock purchase plan                                               |                                              |                                       
|                                                     | Repurchase of fractional shares                                                          |                                              |                                       
|                                                     | Repurchase of common stock                                                               |                                              |                                       
|                                                     |                                                                                          |                                              |                                       
|                                                     |                                                                                          |                                              |                                       
|Net (decrease) increase in cash and cash equivalents |                                                                                          |                                              | 1,535,606                             
|Cash and cash equivalents at beginning of year       |                                                                                          |                                              | 1,047,731                             
|                                                     |                                                                                          |                                              |                                       
|Cash and cash equivalents at end of year             |                                                                                          | $                                            | 2,583,337                             
|                                                     |                                                                                          |                                              |                                       

See accompanying notes.

F-5

---

Sento Corporation and Subsidiary        Supplement to Consolidated Statements of Cash Flows

|                                                                        |                                                                                                  | Year Ended
|----------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ----------
|
|Supplemental disclosures of cash flow information                       |                                                                                                  |           
|Cash paid for:                                                          |                                                                                                  |           
|                                                                        | Interest                                                                                         |           
|Supplemental disclosures of noncash investing and financing activities: |                                                                                                  |           
|                                                                        | Assets acquired under capital lease                                                              |           
|                                                                        | Capitalized cost of software developed for internal use                                          |           
|                                                                        | Note received on sale of equipment                                                               |           
|                                                                        | Net loss on disposal of equipment charged against accrued loss from disposal of business segment |           
|                                                                        | Cancellation of treasury shares                                                                  |           

See accompanying notes.

F-6

---



Sento Corporation and Subsidiary        Notes to Consolidated Financial Statements        March 31, 2003

1. Description of Business

Sento Corporation provides the latest in Web-enabled CRM (Customer Relations Management) solutions for a diversified portfolio of organizations. These
services include self-help, live chat, Web collaboration, email, and telephone. Sento deploys a distributed workforce strategy and customer-centric applications to provide customer care
and support. Sento conducts its principal business through its wholly-owned subsidiary Sento Technical Services Corporation.

In
May 2001, the Company's management and Board of Directors reached a decision to discontinue the Company's Training Division segment. The results of operations for the Training
Division have been reflected as a discontinued operation in the accompanying financial statements (see Note 4).

2. Significant Accounting Policies

Principles of Consolidation

The accompanying financial statements include the consolidated financial statements of Sento and its wholly-owned subsidiary (collectively, the Company). All
significant intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with original maturities of three months or less to be cash equivalents.

Short-term investments

The Company classifies all of its short-term investments as available-for-sale securities. Such short-term
investments consist of corporate bonds and an adjustable rate government income fund (mutual fund) which are stated at market value, with unrealized gains and losses on such securities reflected as
other comprehensive income (loss) in stockholders' equity. Realized gains and losses on short-term investments are included in earnings and are derived using the specific identification
method for determining the cost of securities. All securities available for sale at March 30, 2002 were sold during fiscal 2003. The Company has no short-term investments as of
March 31, 2003.

Revenue Recognition

Revenue generally is recognized when persuasive evidence of an arrangement exists, delivery of services has occurred, the fee is fixed or determinable, and
collection of the resulting receivable is reasonably assured.

Property and Equipment

Property and equipment are stated at cost. Depreciation of fixed assets is computed on the straight-line method over the estimated useful lives of
individual classes of assets. Leasehold improvements are depreciated over the shorter of the remaining lease term or the useful life of the improvements. The estimated useful lives of equipment and
furniture are three to ten years. Major

F-7

---

replacements,
which extend the useful lives of equipment, are capitalized and depreciated over the remaining useful lives. Normal maintenance and repair items are expensed as incurred.

Research and Development

Research and development costs are expensed as incurred. In accordance with Statement of Position 98-1,Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use, the Company capitalized approximately $41,000 of such costs in fiscal 2002 associated with major enhancements
to its technology. No such costs were capitalized during fiscal 2003.

Common Stock

On November 14, 2002, the shareholders of the Company's common stock approved a one-for-four reverse split of the Company's common
stock. The record date of the reverse split was November 25, 2002. All references to common stock, additional paid in capital, accumulated deficit, common shares outstanding, average number of
common stock shares outstanding, stock options, warrants to purchase common stock and per share amounts in these consolidated financial statements and notes to consolidated financial statements prior
to the record date of the reverse stock split have been restated to reflect the reverse stock split on a retroactive basis.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and deferred tax liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and deferred tax
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and deferred tax liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Net Income (Loss) Per Common Share

Basic income (loss) per share is computed in accordance with Financial Accounting Standards Board Standards No. 128,Earnings Per
Share. Basic net income (loss) per share is computed as net income or loss divided by the weighted average number of common shares outstanding for the period. Diluted net
income (loss) per share reflects the potential dilution that could occur from common shares issueable through stock options, warrants, and other convertible securities, if dilutive.

F-8

---

Net Income (Loss) Per Common Share (continued)

The following table sets forth the calculation of basic and diluted net income (loss) per share:

|                                                                       |                         | Year Ended
|---------------------------------------------------------------------- | ----------------------- | ----------
|
|Net income (loss)                                                      |                         | $         
|                                                                       |                         |           
|Denominator for basic net income per share  weighted average shares   |                         |           
|Dilutive common stock options and warrants                             |                         |           
|                                                                       |                         |           
|Denominator for diluted net income per share  weighted average shares |                         |           
|                                                                       |                         |           
|Basic income (loss) per share:                                         |                         |           
|                                                                       | Continuing operations   |           
|                                                                       | Discontinued operations |           
|                                                                       |                         |           
|Net income (loss)                                                      |                         | $         
|                                                                       |                         |           
|Diluted income (loss) per share:                                       |                         |           
|                                                                       | Continuing operations   |           
|                                                                       | Discontinued operations |           
|                                                                       |                         |           
|Net income (loss)                                                      |                         | $         
|                                                                       |                         |           

Stock-Based Compensation

The Company has adopted the footnote disclosure provisions of Statement of Financial Accounting Standards No. 123,Accounting for
Stock Based-Compensation(SFAS 123). SFAS 123 encourages entities to adopt a fair value based method of accounting for stock options or similar equity
instruments. However, it also allows an entity to continue measuring compensation cost for stock-based compensation using the intrinsic-value method of accounting prescribed by Accounting Principles
Board Opinion No. 25,Accounting for Stock Issued to Employees(APB 25). The Company has elected to continue to apply the provisions of APB 25
and provide pro forma footnote disclosures required by SFAS 123, which has been determined as if the Company had accounted for its employee stock options under the fair value method.

The
fair value of each option grant is estimated on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions:
2003expected dividend yield of zero percent, risk-free interest rate of 3.3 percent, expected life of 5 years, and expected stock-price volatility of
66 percent; 2002expected dividend yield zero percent, risk-free interest rate of 4.5 percent, expected life of 5 years, and expected stock-price
volatility of 90 percent.

The
Company applies APB 25 in accounting for options issued under the Plan. Had the Company determined compensation cost based on the fair value at the grant date for its stock options
under

F-9

---

SFAS 123,
the Company's net income (loss) would have been changed to the pro forma amounts indicated below:

2003

2002Net income (loss)

As reported

$
(2,111,348
)
$
560,756Pro forma


(2,697,532
)

(191,058
)Basic income (loss) per share

As reported


(1.01
)

0.27Pro forma


(1.28
)

(0.09
)Diluted income (loss) per share

As reported


(1.01
)

0.27Pro forma


(1.28
)

(0.09
)


The
full impact of calculating compensation cost for stock options under SFAS 123 may not be representative of the effects on reported net income (loss) for future years.

Comprehensive Income (loss)

Comprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes certain changes in
equity of the Company that are excluded from net income (loss). Other comprehensive loss during fiscal 2002 included unrealized losses on securities available for sale.

Concentration of Credit Risk

In the normal course of business, the Company provides unsecured credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of
its customers and maintains allowances for possible losses. Four customers accounted for 70% of revenues for the year ended March 31, 2003. These four customers accounted for 27%, 20%, 12%, and
11%, respectively of fiscal 2003 revenue. For the year ended March 30, 2002, three customers accounted for 60% of revenues. These three customers accounted for 28%, 19%, and 13%, respectively
of fiscal 2002 revenues.

Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets, liabilities, revenues, and expenses and the
disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with generally accepted accounting principles. Actual results could differ from those
estimates.

Reclassifications

Certain items in the 2002 consolidated financial statements have been reclassified to conform to the 2003 presentation.

Financial Instruments

The carrying value of accounts receivable, accounts payable, accrued expenses, and debt approximate their estimated fair value. The Company derives the fair value
of its short-term investments based on quoted market prices.

F-10

---

Advertising

Advertising costs are expensed as incurred. Advertising costs amounted to $61,588 and $101,096 in fiscal 2003 and 2002, respectively.

3. Short-term investments

Short-term investments consisted of the following as of March 30, 2002:

Cost

Unrealized
Losses

Fair
ValueMutual funds (adjustable rate government fund)

$
817,483

$
5,581

$
811,902Corporate bonds


139,811


23,191


116,620Total short-term investments

$
957,294

$
28,772

$
928,522


All
short-term investments were sold in fiscal 2003. The total realized loss from sale of short-term investments during fiscal 2003 was $11,618.

4. Discontinued Operations

On May 23, 2001, the Company reached a decision to discontinue the operations of its Training Division, which had historically been presented as a separate
business segment. Pursuant to generally accepted accounting principles, the estimated costs of discontinuing this segment was reflected in the Company's 2001 consolidated financial statements. Upon
the completion of the disposal in fiscal 2002, the excess of the estimated and accrued costs above the actual costs of discontinuing this segment ($102,786) was recorded as a gain on disposal of
discontinued operations.

5. Property and Equipment

Property and equipment consisted of the following as of March 31, 2003 and March 30, 2002:

2003

2002Leasehold improvements

$
1,606,415

$
1,586,478Furniture, fixtures, equipment and software


7,018,964


7,031,4968,625,379


8,617,974Less accumulated depreciation


(4,494,458
)

(3,391,717
)$
4,130,921

$
5,226,257


Depreciation
for the fiscal 2003 and fiscal 2002 years was $1,701,336 and $1,602,055, respectively.

F-11

---



6. Notes Payable and Capital Leases

As of March 31, 2003, the Company had an outstanding balance of $304,492 under an existing credit line. As discussed in note 12, this credit line
was replaced as part of a new loan agreement dated April 15, 2003, between the Company and a bank. The new loan agreement includes a revolving credit line and two term loans. Under the credit
line, the Company can borrow up to $2,500,000 or 75% of eligible accounts receivable, after taking into account reserves that are based primarily on outstanding balances of the first of the two term
loans. The line of credit accrues interest at 2% over the bank's prime rate (4.25% as of April 15, 2003) and matures on April 15, 2004.

The
first term loan was extended to refinance the Company's existing equipment financing term debt with the bank. The loan is limited to the remaining principal balance on existing term
loans with the bank. The loan calls for monthly principal and interest payments over 18 months and accrues interest at 8%. The second term loan was extended to refinance a portion of the
Company's existing convertible debt. The second term loan is in the amount of $300,000 and calls for monthly principal and interest payments over three years. This loan accrues interest at 8%.
The new loan agreement calls for the Company to maintain certain profitability and net worth covenants. The Company was in compliance with all debt covenants at March 31, 2003.
Long-term debt classifications included in the accompanying financial statements reflect the above refinancing.

The
Company also issued a warrant to the bank, in connection with obtaining the above credit facilities, to purchase 60,000 shares of Common Stock at $1.79 per share. The stock purchase
warrant became exercisable on the date of issuance (April 15, 2003) and expires April 15, 2008. Substantially all of the assets of the Company serve as collateral for the above line of
credit and loans.

F-12

---

Long-term
debt, including capital lease obligations, consist of the following as of March 31, 2003 and March 30, 2002:

|                                                                                                                                                                     |  | 2003 |           | 2002 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | -
|10.4% note payable in monthly installments totaling $3,217, including interest, secured by equipment                                                                 |  | $    |          |      | $
|7.5% note payable in monthly installments totaling $601, including interest, secured by equipment                                                                    |  |      |          |      |  
|6.0% note payable in monthly installments totaling $25,131, including interest, secured by furniture and equipment                                                   |  |      | 476,118   |      |  
|6.7% note payable in monthly installments totaling $1,973, including interest, secured by equipment                                                                  |  |      | 28,013    |      |  
|Various notes payable to a bank, refinanced on April 15, 2003 into one 8% note, payable in monthly installments totaling $33,835, secured by furniture and equipment |  |      | 610,031   |      |  
|                                                                                                                                                                     |  |      |           |      |  
|Total installment notes payable                                                                                                                                      |  |      | 1,114,162 |      |  
|Present value of net minimum capital lease payments                                                                                                                  |  |      | 719,162   |      |  
|                                                                                                                                                                     |  |      |           |      |  
|Total long-term debt and capital leases                                                                                                                              |  |      | 1,833,324 |      |  
|Less current portion                                                                                                                                                 |  |      | (944,499  | )    |  
|                                                                                                                                                                     |  |      |           |      |  
|Long-term debt and capital leases, net of current portion                                                                                                            |  | $    | 888,825   |      | $
|                                                                                                                                                                     |  |      |           |      |  

Capitalized
leases are for equipment. Future minimum capital lease payments, excluding taxes, insurance and other costs as of March 31, 2003 were:

Fiscal Year2004

$
326,2132005


327,8202006


169,588Total minimum capital lease payments


823,621Less amounts representing interest


(104,459
)Present value of net minimum capital lease payments

$
719,162


Aggregate
maturities of installment notes payable are $682,349 in fiscal 2004 and $431,813 in fiscal 2005.

F-13

---

7. Convertible Debt

In February 2000, the Company issued $1,287,000 of 7% convertible subordinated debentures in $1,000 units consisting of one $990 debenture and warrants to
purchase 100 shares of common stock. Pursuant to the original terms of the debenture, in January 2001, the interest rate on the debentures increased to 8%. In February 2003, the
debentures became due and payable, and the associated warrants expired. As discussed in note 12, in April 2003, the Company completed a refinancing of the debentures which included a new
loan agreement with a bank (note 6) and the issuance of new debentures whereby all of the February 2000 debentures were repaid or exchanged for new convertible subordinated debentures.
The classification of convertible debt in the accompanying financial statements as of and for the year ended March 31, 2003, is presented to reflect the effect of the refinancing.

8. Income Taxes

As of March 31, 2003 and March 30, 2002, the Company had federal and state net operating loss carryforwards of approximately $7,465,000 and
$4,570,000 respectively. The net operating loss and credit carryforwards will expire at various dates beginning in 2020 through 2024, if not utilized.

Income
tax expense (benefit) consists of:

Current

Deferred

TotalYear ended March 31, 2003:Federal

$


$


$
State








$


$


$
Year ended March 30, 2002:Federal

$


$


$
State








$


$


$



Actual
income tax expense differs from the "expected" tax expense (computed by applying the U.S. federal corporate income tax rate of 34% to income before income taxes) as follows:

Year EndedMarch 31
2003

March 30
2002Computed "expected" tax (benefit) expense

$
(717,858
)
$
190,657Increase (decrease) in income taxes resulting from:State income taxes, net of federal tax benefit


(85,532
)

22,717Change in valuation allowance


838,000


(161,000
)Nondeductible meals and entertainment and other


9,234


12,559Other


(43,844
)

(64,933
)Income tax (benefit) expense

$


$



F-14

---

Significant
components of the Company's deferred tax assets and liabilities for federal and state income taxes as of March 31, 2003 and March 30, 2002 are as follows:

|                          |                                   | 2003 |            | 2002      |  
|------------------------- | --------------------------------- | ---- | ---------- | --------- | -
|Deferred tax assets:      |                                   |      |            |           |  
|                          | Net operating loss carryforwards  |      | $          | 2,997,000 |  
|                          | Deferred and accrued compensation |      |            | 62,000    |  
|                          | Intangible assets                 |      |            | 137,000   |  
|                          | Accrued liabilities               |      |            | 83,000    |  
|                          | Excess capital losses             |      |            |          |  
|                          | Other, net                        |      |            | 56,000    |  
|                          |                                   |      |            |           |  
|Deferred tax assets       |                                   |      | 3,335,000  |           |  
|Deferred tax liabilities: |                                   |      |            |           |  
|                          | Property and equipment            |      |            | (272,000  | )
|                          |                                   |      |            |           |  
|Net deferred tax assets   |                                   |      | 3,063,000  |           |  
|Valuation allowance       |                                   |      | (3,063,000 | )         |  
|                          |                                   |      |            |           |  
|Total                     |                                   | $    |           |           | $
|                          |                                   |      |            |           |  

The
net valuation allowance increased (decreased) by $838,000 and ($138,000) during the years ended March 31, 2003 and March 30, 2002, respectively.

The
valuation allowance increased by $0 and $23,000 in the years ended March 31, 2003 and March 30, 2002, respectively, related to excess tax benefits resulting from
stock option exercises. If and when the Company is able to utilize these excess tax benefits in future periods, the reduction in the valuation allowance will be credited directly to additional
paid-in capital.

9. Operating Leases

The Company has non-cancelable operating leases for office space. The Company incurred rent expense of $883,648 and $843,027 for the years
ended March 31, 2003 and March 30, 2002, respectively. Future minimum rent payments under existing non-cancelable operating leases are $914,940 in fiscal 2004, $925,986 in
fiscal 2005, $493,285 in fiscal 2006, $143,040 in fiscal 2007, $143,040 in fiscal 2008 and $35,760 thereafter.

In
addition to the non-cancelable leases for office space, the Company is contingently liable for an equipment lease that was assumed by Echopass Corporation. The lease calls
for monthly payments of $15,130 through June 2003 and monthly payments of $6,140 thereafter, through June 2004.

10. Retirement Plan

The Company has a qualified defined contribution retirement plan under Section 401(k) of the Internal Revenue Code. The plan covers all employees who meet
minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pretax basis. In addition, employer contributions are made at the discretion of the
Board of Directors. Participants

F-15

---

are
fully vested at all times in employee contributions. Employer contributions vest over a six-year period. No employer contributions were made during fiscal years ended 2003 and
2002.

11. Common Stock

Stock Options

The Company has adopted a stock option plan (the "Plan") pursuant to which the Company's Board of Directors may grant stock options to officers and key employees.
The Plan authorizes grants of options to purchase up to 875,000 shares of authorized but unissued common stock. Stock options are granted with an exercise price not less than the stock's fair market
value at the date of grant. All stock options granted to employees have ten-year terms; stock options granted to non-management members of the Board of Directors generally have
a five-year term. The number of shares granted, vesting period, and price per share are determined by the Board of Directors. Stock options vest over three or four years. At
March 31, 2003, there were 284,217 additional shares available for grant under the Plan.

Stock
option activity under the Plan, relating to qualified and nonqualified options during the periods indicated is as follows:

|                                         |  | Year ended March 31, 2003 |   | Year ended March 30, 2002
|---------------------------------------- |  | ------------------------- | - | -------------------------
|
|Balance outstanding at beginning of year |  | 566,445                   |   | $                        
|Granted                                  |  | 41,525                    |   |                          
|Exercised                                |  |                          |   |                          
|Forfeited                                |  | (168,125                  | ) |                          
|                                         |  |                           |   |                          
|Balance outstanding at end of year       |  | 439,845                   |   |                          
|                                         |  |                           |   |                          
|Exercisable at end of year               |  | 246,416                   |   | $                        
|                                         |  |                           |   |                          

F-16

---

The
following table summarizes information about stock options outstanding at March 31, 2003:

|Exercise
Price |  | Number
Outstanding
at
March 31, 2003 |  | Weighted-Average
Remaining
Contractual Life |  | Weighted-Average
Exercise Price |       | Number Exercisable
at
March 31, 2003 |         | Weighted-Average
Exercise Price
|-------------- |  | ------------------------------------ |  | ------------------------------------------- |  | ------------------------------- | ----- | ------------------------------------ | ------- | -------------------------------
|$1.65  2.20   |  | 24,875                               |  | 9.47                                        |  | $                               | 1.99  |                                      |        |                                
|2.88           |  | 72,710                               |  | 8.97                                        |  |                                 | 2.88  |                                      | 42,570  |                                
|3.72           |  | 96,250                               |  | 8.30                                        |  |                                 | 3.72  |                                      | 36,928  |                                
|3.88  6.00    |  | 58,900                               |  | 6.88                                        |  |                                 | 5.21  |                                      | 33,915  |                                
|6.60           |  | 3,636                                |  | 8.29                                        |  |                                 | 6.60  |                                      | 1,667   |                                
|7.00           |  | 73,277                               |  | 5.55                                        |  |                                 | 7.00  |                                      | 70,760  |                                
|8.32  9.24    |  | 48,114                               |  | 6.90                                        |  |                                 | 8.50  |                                      | 29,719  |                                
|9.52  19.24   |  | 35,333                               |  | 4.36                                        |  |                                 | 14.18 |                                      | 29,836  |                                
|21.76          |  | 1,250                                |  | 7.06                                        |  |                                 | 21.76 |                                      | 626     |                                
|25.00          |  | 25,500                               |  | 1.90                                        |  |                                 | 25.00 |                                      | 395     |                                
|               |  |                                      |  |                                             |  |                                 |       |                                      |         |                                
|               |  | 439,845                              |  | 6.98                                        |  |                                 | 6.90  |                                      | 246,416 |                                
|               |  |                                      |  |                                             |  |                                 |       |                                      |         |                                

Stock Warrants

Outstanding warrants to purchase shares of the Company's common stock, as of April 15, 2003, are as follows (this table has been updated from
March 31, 2003 to reflect the refinancing discussed in note 12):

Number of warrants

Exercise price

Expiration date2,500

$
17.00

May 200394,688


10.00

May 200415,000


8.48

December 2004250,500


2.25

April 2006

(issued April 15, 2003)37,500


1.60

April 2006

(issued April 15, 2003)12,500


2.25

April 2006

(issued April 15, 2003)60,000


1.79

April 2008

(issued April 15, 2003)472,688


As
of March 31, 2003, warrants outstanding were as follows: 2,500 with an exercise price of $17.00, 107,188 with an exercise price of $10.00, 15,000 with an exercise price of
$8.48, and 15,000 with an exercise price of $6.40.

Warrants Issued for Services

In fiscal 2002, Sento issued 15,000 warrants in exchange for consulting services. These warrants have been accounted for pursuant to Emerging Issues Task Force
(EITF) Issue No. 96-18. Accordingly, the warrants are periodically revalued based on the then fair market value of the underlying common stock during the performance period.

F-17

---

Employee Stock Purchase Plan

The Company has adopted a stock purchase plan under which 125,000 shares of common stock are reserved for future issuance to employees of the Company. The purpose
of the stock purchase plan is to provide a method whereby employees of the Company may acquire a proprietary interest in the Company through the purchase of shares of common stock. The stock purchase
plan is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. As of March 31, 2003, the Company had sold 49,838 shares to employees of
the Company under this plan.

12. Subsequent Events

On April 15, 2003, the Company completed a refinancing of its convertible subordinated debentures. The refinancing included the issuance of new convertible
subordinated debentures and the issuance of a new $300,000, 8% term loan with a bank that was used to pay down a portion of the Company's existing debentures. In total, the Company issued 1,002 units
at $1,000 each, consisting of one $990 debenture and warrants to purchase 250 shares of the Company's common stock at $2.25 per share. The debentures are convertible at any time into shares of the
Company's common stock at $1.75 per share. The debentures mature on April 15, 2006, and the exercise period for the warrants expire on the same date. Each existing debenture holder had the
ability to exchange all or part of his/her old debentures for the new debentures. New debentures totaling $991,980 were issued, including the exchange of $531,630 in existing debentures. The Company
also issued warrants to a finder for 50,000
shares of common stock that expire April 15. 2006, 37,500 of which are exercisable at $1.60 per share, and 12,500 of which are exercisable at $2.25 per share.

On
April 23, 2003, the Company's Board of Directors approved an employee stock option exchange program ("Exchange Program"), pursuant to which the Company granted options to
purchase 313,592 shares of the Company's common stock at an exercise price of $1.60 per share in exchange for options to purchase 377,342 shares of the Company's common stock at exercise prices in
excess of $2.00 per share. The new options issued under the Exchange Program are subject to variable plan accounting in accordance with FASB Interpretation No. 44 "Accounting for Certain
Transactions Involving Stock Compensation" ("Interpretation 44"). Under variable plan accounting, the Company is required to recognize compensation expense in its consolidated statements of operations
for any increase in the market price of the Company's common stock above $1.60 (the market price at April 23, 2003 which was the effective date of the exchange). This compensation must be
recorded on quarterly basis until the new options issued under the Exchange Program are exercised, forfeited or expire unexercised. The impact of the new options issued under the Exchange Program on
the Company's consolidated financial statements will depend on quarterly fluctuations in the Company's common stock price and the dates of exercises, forfeitures or cancellations of the new options by
employees. Moreover, because the precise amount of compensation expense will depend on the market price of the Company's common stock at the end of each quarterly period, the Company will not be able
to forecast in advance the amount of compensation expense that it will incur in any future period.

13. Related Party Transactions

In March of 1999, Sento entered into a consulting agreement with GT Investments, a company that is wholly owned by Gary B. Filler, Sento's Chairman. Under
the agreement, Sento pays GT

F-18

---

Investments
a monthly fee for services provided by Mr. Filler. The total expense incurred by Sento under its arrangement with GT Investments during the years ended March 31, 2003
and March 30, 2002 was $66,000 and $97,738, respectively. The consulting agreement is cancelable by either party at any time.

14. Recently Issued Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146,Accounting for Costs Associated with Exit
or Disposal Activities. SFAS No. 146 replaces Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).SFAS No. 146 requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by SFAS No. 146 include
lease termination costs and certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after September 30, 2002,
with early application encouraged. Management believes there will be no current impact to the financial statements from adoption of this statement.

In
November 2002, the FASB issued FASB Interpretation (FIN) NO. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of others. FIN No. 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the
obligation it assumes under the guarantee. The disclosure provisions of FIN No. 45 are effective for financial statements of annual periods that end after December 15, 2002. The
provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 15, 2002. The adoption of the recognition and
measurement of FIN No. 45 are not expected to have a material impact on the results of operations and financial position.

In
December 2002, the FASB issued SFAS No. 148,Accounting for Stock-based Compensation-Transition and Disclosure, which amends SFAS No. 123,
Accounting for Stock-Based Compensation, SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require more prominent and more frequent disclosure in financial
statements of the effects of stock-based compensation. The transition guidance and annual disclosure provisions of SFAS No. 148 are effective for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002.
The Company has adopted SFAS No. 148 for disclosure purposes only.

F-19

---