**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, DC 20549**

 

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**Amendment No. 1 to**

 

**FORM 10-KSB**

 

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| **(Mark One)**                                                                                                                                                                                        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ý**                                                                                                                                                                                            | ** ** | **ANNUAL REPORT UNDER  SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.** |
|                                                                                                                                                                                                  |   |   |
| **For the fiscal year ended September 30, 2005**                                                                                                                                                      |
|                                                                                                                                                                                                  |   |   |
| **o**                                                                                                                                                                                                 | ** ** | **TRANSITION REPORT UNDER  SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                                                                                  |   |   |
| **For the transition period from                to              .** |

 

**Commission File Number0-18785**

 

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**STEN CORPORATION**

(Exact nameof small business issuer as specified in its charter)

 
| **Minnesota**                                                    | ** ** | **41-1391803**                     |
|------------------------------------------------------------------|------------|------------------------------------|
| (State or  other jurisdiction of incorporation  or organization) |       | (IRS  Employer Identification No.) |

 

**10275 Wayzata Blvd S,Suite 310, Minnetonka, MN  55305**

(Address ofprincipal executive offices)

 

**(952) 545-2776**

(Issuer’stelephone number)

 

Securities registered under Section 12(b) of theExchange Act:  **None**

Securities registered under Section 12(g) of theExchange Act:

 

**Common stock, Par Value$.01 Per Share**

(Title ofClass)

 

**Three-Year Common StockPurchase Warrant**

(Title ofClass)

 

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

 

Check ifthere is no disclosure of delinquent filers in response to Item 405 ofRegulation S-B contained in this form, and no disclosure will be contained, tothe best of registrant’s knowledge, in definitive proxy of informationstatements incorporated by reference in Part III of this Form 10-KSB or anyamendment to this Form 10-KSB.  ý

 

Indicate bycheck mark whether the Registrant is a shell company (as defined in Rule 12b-2of the Exchange Act):

o  Yes    ý  No

 

State issuer’s revenues for its most recent fiscalyear:   $8,358,447

 

Based uponthe closing price of the issuer’s common stock as reported by The NasdaqCapital Market, the aggregate market value of such common stock held bynon-affiliates of the issuer as of January 15, 2006 was approximately$5,636,709.

 

As of January15, 2006, the issuer had outstanding 2,128,727 shares of common stock, $.01 parvalue.

 

 

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Table of Contents to

Amendment No. 1 to Annual Report on Form 10-KSB

For the Year Ended September 30, 2005

 
| ** **     | ** **                                                                                                        | **Page** |
|----------------|-------------------------------------------------------------------------------------------------------------------|----------|
| ** **     | ** **                                                                                                        | **No.**  |
| **PART III**   |                                                                                                              |     |
|           |                                                                                                              |     |
| ITEM  9.       | DIRECTORS,  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION  16(a) OF THE EXCHANGE ACT | 1        |
| ITEM  10.      | EXECUTIVE  COMPENSATION                                                                                           | 3        |
| ITEM  11.      | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS                  | 5        |
| ITEM  12       | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS                                                                   | 6        |
| ITEM 13.       | EXHIBITS                                                                                                          | 6        |
| ITEM  14.      | PRINCIPAL  ACCOUNTANT FEES AND SERVICES                                                                           | 6        |
|           |                                                                                                              |     |
| **SIGNATURES** |                                                                                                              | 8        |

 

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**Description of Amendment**

 

This Amendment No. 1 to the Annual Report on Form10-KSB of STEN Corporation is being filed to provide the information called forby Items 9-12 and 14 of Part III of Annual Report on Form 10-KSB for the yearended September 30, 2005.  Therefore,Items 9-12 and 14 of Part III are hereby amended to read as follows:

 

**PART III**

 

**ITEM 9.**                  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROLPERSONS;COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT

** **

**INFORMATIONREGARDING DIRECTORS**

** **

**There are currently five members serving on theCompany’s Board of Directors.  The Company’s Articles of Incorporationprovide that the board of directors is classified into three classes, themembers of each class to serve (after an initial transition period) for astaggered term of three years. As the term of each class expires, thesuccessors to the directors in that class will be elected for a term of threeyears. Below is certain biographical and other information regarding theCompany’s directors.**

** **

**Class I Director: Term Expiring After Fiscal2005**

 

Gervaise Wilhelm, age 62.  Ms. Wilhelm has been a director of theCompany since February 2000 and has served on the audit and compensationcommittee for the past two years.  Since2005, she has served as the Chief Executive Officer of Closys Corporation,which develops, tests and manufactures arterial sealing devices.  She also is the managing director ofEndomedical Technologies, a developer of endoscope barrier sheathing products,and has been affiliated with Endomedical Technologies since 1998.  Ms. Wilhelm served as the Chief ExecutiveOfficer of Paradigm Diagnostics, a food safety monitoring company from 2001 to2005 and also served as a director. She is currently a director of ClosysCorporation and Endomedical Technologies

 

### **Class II Directors: Terms Expiring After Fiscal 2006**

 

Kenneth W. Brimmer, age 50.  Mr. Brimmer has been a director of theCompany since February 1998. Mr. Brimmer has been the Company’s Chief ExecutiveOfficer since September 2003.  Mr.Brimmer also has been Chief Manager of Brimmer Company, LLC, a privateinvestment company, since December 2001. Mr. Brimmer was the Chairman and a Director of Active IQ Technologies,Inc. from April 2000 until June 2003 and was its Chief Executive Officer fromApril 2000 until December 2001. Previously, Mr. Brimmer was President of Rainforest Cafe, Inc. fromApril 1997 until April 2000 and he was also its Treasurer from its inception in1995 until April 2000. Prior to that, Mr. Brimmer was employed by GrandCasinos, Inc. and its predecessor from October 1990 until April 1997. Mr.Brimmer currently serves on the board of directors of New York Stock Exchangelisted Landry’s Restaurants, Inc. Mr. Brimmer also is currently a member of theboard of directors of Entrx Corporation, Hypertension Diagnostics, Inc. andSpectre Gaming, Inc. where he serves as Chairman.  Mr. Brimmer served as the Company’s interimChief Executive Officer from October 2000 until November 18, 2000.

 

Gary Copperud, age 47. Mr. Copperud has been a director of the Company since February 1998. Mr.Copperud has been President of the Company’s Burger Time AcquisitionCorporation subsidiary since July 2004. Mr. Copperud has been president/general manager of CMM Properties, LLC,an investment company with holdings in real estate and stocks, located in FortCollins, Colorado, since 1993. Prior to that, Mr. Copperud was self-employed inthe fields of securities and real estate investment and real estatedevelopment.

 

### **Class III Directors: Terms Expiring After Fiscal 2007**

 

Jeffrey A. Zinnecker, age 49.  Mr. Zinnecker was appointed as a director inOctober 2003.  Mr. Zinnecker is presidentand owner of Zinncorp Inc., an information technology consulting company withoffices in Minnesota.  Mr. Zinnecker hasbeen managing Zinncorp since he founded it in 1989.  Prior to that, Mr. Zinnecker was employed asa technology consultant for Northern States Power Company.

 

Allan D. Anderson, age 52.  Mr. Anderson has been a director of theCompany since October 2000.  Mr. Andersonis currently the Chief Financial Officer and a director of Reliafund, Inc.  Reliafund, Inc. is a third-party processingcompany of ACH transactions. In January 2001, Mr. Anderson sold his interest inRiverBend Solutions (“RiverBend”) having served as President since August 2000and as Chief Financial Officer since January 2000. He

 

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was a director of RiverBend from 1995 to 2001. Mr.Anderson was the President of Metropolitan Financial Management, Inc. from 1997to 1999 and served as its Treasurer from 1995 to 1999. He was a director ofMetropolitan Financial Management, Inc. from 1991 to 1999. Prior to joiningMetropolitan, he was the Chief Financial Officer of Pan Am Systems, Inc. from1994 to 1995. Mr. Anderson has a degree in Accounting and worked as a CPA andAudit Manager with Arthur Andersen & Co. from 1976 through 1983.

 

**CORPORATE GOVERNANCE**

 

**Description of Committees of theBoard of Directors**

 

The board of directors has established a CompensationCommittee and an Audit Committee.  Thecomposition and function of these committees are set forth below.

 

*Audit Committee*

 

The Company’s Audit Committee is comprised of Allan D.Anderson (Chair), Gervaise Wilhelm and Jeffrey A. Zinnecker.  The Audit Committee assists the board byreviewing the integrity of the Company’s financial reporting processes andcontrols; the qualifications, independence and performance of the independentauditors; and compliance by the Company with certain legal and regulatoryrequirements.  The Audit Committee hasthe sole authority to retain, compensate, oversee and terminate the independentauditors.  The Audit Committee reviewsthe Company’s annual audited financial statements, quarterly financialstatements and filings with the Securities and Exchange Commission.  The Audit Committee reviews reports onvarious matters, including critical accounting policies of the Company,significant changes in the Company’s selection or application of accountingprinciples and the Company’s internal control processes.  The Audit Committee also pre-approves allaudit and non-audit services performed by the independent auditor.  The Committee acts under a written charterfirst adopted and approved by the board of directors on April 27, 2000 and mostrecently amended on December 11, 2003. During the fiscal year ended September 30, 2005, the Audit Committee metfour times.

 

The board of directors has determined that all membersof the Audit Committee are “independent” directors under the Nasdaq MarketplaceRules and the rules of the Securities and Exchange Commission.  The Company’s board of directors has reviewedthe education, experience and other qualifications of each of the members ofits Audit Committee.  After review, theboard of directors has determined that Mr. Anderson meets the Securities andExchange Commission definition of an “audit committee financial expert.”

 

*Compensation Committee*

 

The Compensation Committee reviews and makesrecommendations to the board concerning salaries, bonus awards and benefits forofficers and key employees.  Members ofthe Compensation Committee are Mr. Allan D. Anderson, Ms. Gervaise Wilhelm andMr. Jeffrey A. Zinnecker.  During fiscalyear ended September 30, 2005, the Compensation Committee met twice.

 

**CODE OF ETHICS AND CODE OF CONDUCT**

 

The Company has adopted a code of ethics relating tofinancial reporting that applies to its principal executive officer, principalfinancial officer, principal accounting officer and controller and otherpersons performing similar functions. This code of ethics is included in the Company’s Code of Ethics filed asExhibit 14.1 to the Company’s Annual Report on Form 10-KSB for thefiscal year ended September 30, 2003 filed with the Securities and ExchangeCommission.

 

The Company has also adopted a code of businessconduct applicable to each of its directors, officers and employees to promotethe ethical handling of conflicts of interest, full and fair disclosure, andcompliance with laws, rules and regulations. This code of conduct is available on the Company’s website atwww.stencorporation.com.

 

**SECTION 16(a) BENEFICIAL OWNERSHIP REPORTINGCOMPLIANCE**

 

Pursuant to Section 16(a) under the SecuritiesExchange Act of 1934, executive officers, directors and 10% shareholders(insiders) of the Company are required to file reports on Forms 3, 4, and 5 oftheir beneficial holdings and transactions in the Company’s common stock.  To the Company’s knowledge, all insiders ofthe Company made timely filings of Forms 3, 4 or 5 with respect to transactionsor holdings during fiscal year 2005.

 

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**ITEM 10.****              EXECUTIVE COMPENSATION**

 

**INFORMATION REGARDING EXECUTIVE OFFICERS**

 

Below is certain biographical and other informationregarding the Company’s Chief Financial Officer, Mark F. Buckrey.  Information regarding Kenneth W. Brimmer, theCompany’s Chief Executive Officer and Gary Copperud, President of the Company’ssubsidiary, Burger Time Acquisition Corporation, is set forth above under“Information Regarding Directors.”

 

Mark F. Buckrey, age 48.  Mr. Buckrey has served as the Chief FinancialOfficer of the Company since August 2002. Mr. Buckrey joined the Company in November 2001 as Controller.  Prior to joining the Company, Mr. Buckrey wasemployed by Birch Bridge Communications, formerly Uniplex Corporation, for morethan 10 years, first as Controller, and then as Vice President.

 

# **EXECUTIVE COMPENSATION**

 

The following table sets forth the cashand non-cash compensation for the years indicated earned by or awarded toKenneth W. Brimmer, the Company’s Chief Executive Officer effective as ofSeptember 23, 2003 (the “Named Executive Officer”).  None of the Company’s other executiveofficers earned or were awarded total cash compensation that exceeded $100,000in fiscal year 2005.

 

**SummaryCompensation Table**

 
| ** **                      | ** ** | ** **                | ** ** | **Annual Compensation** | ** ** | **Long-Term  Compensation** | ** ** | ** **                          | ** ** |
|---------------------------------|------------|---------------------------|------------|-------------------------|------------|-----------------------------|------------|-------------------------------------|------------|
| **Name and Principal Position** | ** ** | **Year Ended  Sept. 30,** | ** ** | **Salary**              | ** ** | **Bonus**                   | ** ** | **Securities  Underlying  Options** | ** ** | **All Other  Compensation** | ** ** |
| ** **                      | ** ** | ** **                | ** ** | ** **              | ** ** | ** **                  | ** ** | ** **                          | ** ** | ** ** | ** ** |
| Kenneth W. Brimmer (1)          |       | 2005                      |       | $                       | 12,000     |                        | $          | —                              |       | — |   | — |   |
| Chief Executive Officer         |       | 2004                      |       | 9,000                   |       | —                      |       | 5,000                               | (2)        | — |   |
|                            |       | 2003                      |       | —                  |       | —                      |       | 5,000                               | (2)        | — |   |
|                                 |            |                           |            |                         |            |                             |            |                                     |            |  |  |  |  |

 

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(1)   Mr. Brimmer began serving as theCompany’s Chief Executive Officer as of September 23, 2003.

(2)   Represents options to purchasecommon stock granted to Mr. Brimmer as a member of the board of directors forservice in the fiscal year noted.

 

No stock option grants were made to theNamed Executive Officer during the fiscal year ended September 30, 2005.

 

Thefollowing table summarizes stock option exercises during the fiscal year endedSeptember 30, 2005 and the total number of options held at the end of fiscalyear 2005 by the Named Executive Officer.

 

**Aggregated Option Exercises in Fiscal Year 2005 and**

**Fiscal Year End Option Values**

 
| ** **          | ** ** | **Shares**   | ** ** | ** **   | ** ** | **Number of Securities Underlying** | ** ** | **Value of Unexercised**      | ** ** |
|---------------------|------------|--------------|------------|--------------|------------|-------------------------------------|------------|-------------------------------|------------|
| ** **          | ** ** | **Acquired** | ** ** | ** **   | ** ** | **Unexercised**                     | ** ** | **In-the-Money**              | ** ** |
| ** **          | ** ** | **on**       | ** ** | **Value**    | ** ** | **Options at Sept. 30, 2005**       | ** ** | **Options at Sept. 30, 2005** | ** ** |
| **Name**            | ** ** | **Exercise** | ** ** | **Realized** | ** ** | **Exercisable**                     | ** ** | **Unexercisable**             | ** ** | **Exercisable** | ** ** | **Unexercisable** | ** ** |
| Kenneth  W. Brimmer |       | —       |       | —       |       | 70,000                              |       | —                        |       | — |   | ~ |   |

 

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(1)   The values have been calculatedbased on the closing bid price of $4.02 for the Company’s common stock as ofSeptember 30, 2005 (before payment of applicable income taxes).  No stock-options held by the Named ExecutiveOfficer were in the money at September 30, 2005.

 

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#### ***EmploymentAgreements***

 

The Company does not have a writtenemployment agreement with Kenneth W. Brimmer, the Company’s Chief ExecutiveOfficer.  However, the Company’s board ofdirectors adopted resolutions providing that Mr. Brimmer will be paid a monthlysalary of $1,000 beginning in January 2004 and an incentive bonus up to$150,000, at the board’s discretion, payable on or about December 15,2004.  The criteria used by the board indetermining the bonus were based on the Company’s performance exceeding thefinancial goals established for the year. In conjunction with the Company’s sale of its medical products businessto Aspen Surgical in November 2004, Mr. Brimmer entered into a consultingagreement with Aspen Surgical pursuant to which Aspen Surgical paid him aconsulting/non-compete fee of $250,000. At the time of the closing of the transaction with Aspen Surgical, Mr.Brimmer and Compensation Committee determined that Mr. Brimmer would forgo anyincentive payment for fiscal 2004.  Mr.Brimmer and the Compensation Committee also agreed that Mr. Brimmer’semployment arrangement would continue for fiscal 2005 and fiscal 2006 on termssimilar to those of fiscal year 2004. Therefore, for fiscal year 2005, Mr. Brimmer was paid a monthly salaryof $1,000 and will be eligible for a discretionary incentive bonus, payable onor about December 15, 2005.  On November15, 2005, the Compensation Committee, along with Mr. Brimmer, determined thatMr. Brimmer would forgo any incentive payment for fiscal 2005 and that he willbe paid a monthly salary of $5,000 beginning in October 2005 and an incentivebonus would be determined at a future date and the bonus would be based onresults in excess of the annual company plan.

 

The Company currently does not have awritten employment agreement with Gary Copperud, who has been President of theCompany’s BTAC subsidiary since July 2004. For his service as President of BTAC, the Compensation Committee hasdetermined that Mr. Copperud will be paid a salary of $1,000 per month, plus anannual discretionary bonus to be paid in December 2005.** **Inconjunction with the Company’s sale of its medical products business to AspenSurgical in November 2004, Mr. Copperud entered into a consulting agreementwith Aspen Surgical pursuant to which Aspen Surgical paid him aconsulting/non-compete fee of $250,000. On November 15, 2005, the Compensation Committee, along with Mr.Copperud, determined that Mr. Copperud would forgo any incentive payment forfiscal 2005 and that he will be paid a monthly salary of $5,000 beginning inOctober 2005 and an incentive bonus would be determined at a future date andthe bonus would be based on results in excess of the annual company plan.

 

### **Director Compensation**

 

The Company has historically paid itsnon-employee directors a fee of $1,000 per quarter and the chairman $1,250 perquarter.  The board, in its discretion,accepted no cash during fiscal year 2004 or 2003.  In November 2004, the Company paid each ofMessrs. Anderson and Zinnecker and Ms Wilhelm, the Company’s independentdirectors, $4,000 representing compensation of $1,000 per quarter for servicein each of the four quarters in calendar year ending December 31, 2004.  In November 2005, the Company paid each ofits independent directors $4,000 representing compensation of $1,000 perquarter for each of the four quarters in calendar year ending December 31,2005.

 

The Company also typically grants eachboard member an option to purchase its common stock for service in the fiscalyear.  On November 28, 2005, each ofMessrs. Anderson and Zinnecker and Ms. Wilhelm received a five-year option topurchase 2,500 shares of the Company’s common stock for board service in fiscalyear 2005.  These options were grantedunder the Company’s 2000 Stock Option Plan. The exercise price of these options is $6.00 per share, the fair marketvalue of the Company’s common stock on the date of grant and the options arefully vested and exercisable as of the date of grant.

 

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**ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

 

The followingtable presents, as of January 15, 2006, certain information regardingbeneficial ownership of the Company’s common stock by (i) each person known bythe Company to beneficially own more than 5% of the outstanding shares ofcommon stock; (ii) each of the directors of the Company; (iii) each NamedExecutive Officer of the Company and (iv) all officers and directors of theCompany as a group. Unless otherwise indicated, the persons listed below havesole voting and investment power with respect to the shares and may be reachedat 10275 Wayzata Blvd S, Suite 310, Minnetonka, MN 55305.

 

**Shares Beneficially Owned**

 
| **Name of Beneficial Owner**                                  | ** ** | **Shares** | ** ** | **Shares Acquirable  within 60 Days (1)** | ** ** | **Total** | ** ** | **Percentage  Beneficially  Owned** | ** ** |
|---------------------------------------------------------------|------------|------------|------------|-------------------------------------------|------------|-----------|------------|-------------------------------------|------------|
| Lyle Berman (2)  130 Cheshire Lane  Minnetonka, MN 55350      |       | 222,222    |       | 0                                         |       | 222,222   |       | 10.4                                | %          |
| Gary A. Dachis (3)  10550 Wayzata Blvd.  Minnetonka, MN 55305 |       | 222,222    |       | 0                                         |       | 222,222   |       | 10.4                                | %          |
| Allan D. Anderson (4)                                         |       | 0          |       | 20,000                                    |       | 20,000    |       | 1                                   | %          |
| Kenneth W. Brimmer (4)(5)                                     |       | 379,415    | (6)        | 147,247                                   | (7)        | 526,662   |       | 23.1                                | %          |
| Gary Copperud (4)(8)                                          |       | 494,735    |       | 194,848                                   |       | 689,583   |       | 29.7                                | %          |
| CMM Properties, LLC                                           |       | 494,735    |       | 129,879                                   |       | 624,614   |       | 27.6                                | %          |
| Jeffrey A. Zinnecker (2)(9)                                   |       | 74,011     |       | 25,887                                    |       | 99,898    |       | 4.6                                 | %          |
| Gervaise Wilhelm (2)                                          |       | 3,800      |       | 20,000                                    |       | 23,800    |       | 1                                   | %          |
| All Current Officers and Directors as a Group (6  persons)    |       | 951,961    |       | 407,982                                   |       | 1,359,943 |       | 53.6                                | %          |

 

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* Less than 1%

(1)   Shares of common stock subject tooptions and warrants that are currently exercisable or exercisable within 60days are deemed to be beneficially owned by the person holding the options andwarrants for computing such person’s percentage, but are not treated asoutstanding for computing the percentage of any other person.

(2)   Based on a Schedule 13G datedNovember 28, 2005 filed by the shareholder and any reports filed by theshareholder subsequent to such date under Section 16 of the Exchange Act of1934, as amended.

(3)   Based on a Schedule 13G datedNovember 25, 2005 filed by the shareholder and any reports filed by theshareholder subsequent to such date under Section 16 of the Exchange Act of1934, as amended.

(4)   Director.

(5)   Named Executive Officer.

(6)   Includes 67,715 sharesbeneficially owned by Mr. Brimmer through his IRA. Includes 235,700 shares overwhich Mr. Brimmer shares voting and dispositive power with his wife. Alsoincludes 72,000 shares beneficially owned by Mr. Brimmer’s wife in her IRA.

(7)   Includes warrants to purchase9,405 shares of common stock beneficially owned by Mr. Brimmer through his IRA.Includes warrants to purchase 63,437 shares held jointly by Mr. Brimmer and hiswife. Includes warrants to purchase 9,405 shares held by Mr. Brimmer’s wifethrough her IRA.

(8)   Includes shares held by CMMProperties, LLC, of which Mr. Copperud is the President.  Mr. Copperud has voting and investmentcontrol over the shares held by CMM Properties, LLC.

(9)   Includes 10,600 shares held byZinncorp, Inc., of which Mr. Zinnecker is the President.  Mr. Zinnecker has voting and investmentcontrol over the shares held by Zinncorp, Inc.

 

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**ITEM 12.  CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS**

** **

### **Burger Time Properties/StanCorp Guarantee**

 

**On May 9, 2005 and May 10,2005, the Company completed a mortgage financing relating to eight parcels ofreal estate used by its wholly owned subsidiary, Burger Time AcquisitionCorporation, (“BTAC”).  On May 9, 2005,BTAC Properties received $995,000 relating to the North Dakota properties andon May 10, 2005, BTAC Properties received $1,060,000 relating to the Minnesotaproperties from Standard Insurance Company (“StanCorp”).  In consideration of these loans, BTACProperties issued two promissory notes to the Lender, one in the amount of$995,000 and one in the amount of $1,060,000. Kenneth W. Brimmer, the Company’s Chief Executive Officer and a directorand Gary C. Copperud, a director of the Company, are also joint and severalborrowers with BTAC Properties on the Notes. Messrs. Brimmer and Copperud did not receive any compensation forjoining as borrowers on the notes.  Theparticipation of Messrs. Brimmer and Copperud in the notes transaction wasapproved by the Company’s Audit Committee.**

 

### **Burger Time Purchase Note Guarantee**

 

On July 1, 2004, the Company completed thepurchase, through BTAC, of substantially all of the assets and certainliabilities of Burger Time Corporation (“Burger Time”) relating to Burger Time’sfast food restaurant business operated under the same name.  In connection with this purchase, GaryCopperud, a director of the Company, personally guaranteed the obligations ofBTAC relating to the purchase.  Theobligations guaranteed by Mr. Copperud in conjunction with BTAC were satisfiedby the Company in November 2004. Mr. Copperud received no consideration fromthe Company or BTAC in exchange for his guaranty, which was approved by theCompany’s Audit Committee.

 

### **Citizen Independent Bank Guarantee**

 

The Company’s indebtedness to CitizensIndependent Bank of Hopkins is guaranteed by Kenneth W. Brimmer, the Company’sChief Executive Officer and a director, and Gary Copperud, a director of theCompany. In exchange for this guaranty, the Company’s Audit Committee approveda grant on December 11, 2003 to each of Mr. Brimmer and Mr. Copperud of afive-year non-qualified option to purchase 50,000 shares from the Company’s2000 Stock Option Plan.  The exerciseprice of these options is $6.00 per share, which was in excess of the fair marketvalue of the Company’s common stock on the date of grant.  The option and the guaranty by Messrs.Brimmer and Copperud were approved by the Company’s Audit Committee.  The obligations guaranteed by Messrs. Brimmerand Copperud were satisfied by the Company in November 2004.

 

**ITEM13. EXHIBITS**

 

31.1         Certification of Chief Executive Officer pursuant to 13a-14 and 15d-14of the Exchange Act

 

31.2         Certification of Chief Financial Officer pursuant to 13a-14and 15d-14 of the Exchange Act

 

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

Virchow, Krause & Company, LLP,independent registered public accounting firm and certified public accountants,served as independent accountants of the Company for the fiscal year endedSeptember 30, 2005. The Company has selected Virchow, Krause & Company, LLPto serve as its auditors for the year ended September 30, 2006.

 

The following is an explanation of thefees billed to the Company by Virchow, Krause & Company, LLP forprofessional services rendered for the fiscal years ended September 30, 2005and September 30, 2004, which totaled $ 135,150 and $121,323, respectively.

 

**Audit Fees**

 

The aggregate fees billed to the Companyfor professional services related to the audit of the Company’s annualfinancial statements, review of financial statements included in the Company’sForm 10-QSB, or other services normally provided by Virchow, Krause &Company, LLP in connection with statutory and regulatory filings or engagementsfor the fiscal years ended September 30, 2005 and September 30, 2004 totaled$115,375 and $79,141, respectively.

 

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### **Audit-Related Fees**

 

The aggregate fees billed to the Companyfor professional services for assurance and related services by Virchow, Krause& Company, LLP that are reasonably related to the performance of the auditor review of the Company’s financial statements and are not reported aboveunder “Audit Fees,” including statutory filings and accountingconsultations.  These services related toaudits of acquisitions required with Form 8-K filings for the fiscal yearsended September 30, 2005 and September 30, 2004 totaled $0 and $34,077,respectively.

 

**Tax Fees**

 

The aggregate fees billed to the Companyby Virchow, Krause & Company, LLP for professional services related to taxcompliance, tax advice, and tax planning, including services related to theCompany’s federal, state, franchise and income tax filings for the fiscal yearsended September 30, 2005 and September 30, 2004 totaled $19,775 and $8,105,respectively.

### ** **

### **All Other Fees**

 

There were no additional fees forprofessional services or products not previously disclosed for fiscal yearsended September 30, 2005 and 2004.

 

**Audit Committee Pre-ApprovalProcedures**

 

The Company has adopted pre-approvalpolicies and procedures for the Audit Committee require the Audit Committee topre-approve all audit and all permitted non-audit engagements and services(including the fees and terms thereof) by the independent auditors, except thatthe Audit Committee may delegate the authority to pre-approve any engagement orservice less than $5,000 to one of its members, but requires that the memberreport such pre-approval at the next full Audit Committee meeting. The AuditCommittee may not delegate its pre-approval authority for any services renderedby the Company’s independent auditors relating to internal controls. Thesepre-approval policies and procedures prohibit delegation of the Audit Committee’sresponsibilities to Company management. Under the policies and procedures, the Audit Committee may pre-approvespecifically described categories of services which are expected to beconducted over the subsequent twelve months on its own volition, or uponapplication by management or the independent auditor.

 

All of the services described above for2005 were pre-approved by the Audit Committee or a member of the Committeebefore Virchow, Krause & Company, LLP was engaged to render the services.

 

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**SIGNATURES**

 

                    In accordance with Section 13 or 15(d) of the Exchange Act, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto authorized on January 27, 2006.

 
|   |   |   |   |   |   |   |   | STEN CORPORATION |
|--------|--------|--------|--------|--------|--------|--------|--------|------------------|
|   |   |   |   |   |   |   |   |             |   |
|   |   |   |   |   |   |   |   | By:              |  /s/ Kenneth W. Brimmer |   |
|   |   |   |   |   |   |   |   |             |       Kenneth W.  Brimmer |
|   |   |   |   |   |   |   |   |             |       Chief Executive  Officer |

 

 

**POWER OF ATTORNEY**

 

In accordancewith the Exchange Act, this report has been signed below by the followingpersons on behalf of the registrant and in the capacities indicated on January27, 2006.

 
| /s/ Kenneth W. Brimmer      |   |   | Director, Chief Executive Officer |
|-----------------------------|--------|--------|-----------------------------------|
| Kenneth W. Brimmer          |   |   | (Principal Executive Officer)     |
|                        |   |   |
| /s/ Mark F. Buckrey         |   |   | Chief Financial Officer           |
| Mark F Buckrey              |   |   | (Principal Financial Officer)     |
|                        |   |   |
| /s/ Gary Copperud **        |   |   | Director                          |
| Gary Copperud               |   |   |                              |
|                        |   |   |                              |
| /s/ Gervaise Wilhelm **     |   |   | Director                          |
| Gervaise Wilhelm            |   |   |                              |
|                        |   |   |                              |
| /s/ Allan D. Anderson **    |   |   | Director                          |
| Allan D. Anderson           |   |   |                              |
|                        |   |   |                              |
| /s/ Jeffrey A. Zinnecker ** |   |   | Director                          |
| Jeffrey A. Zinnecker        |   |   |                              |
|                             |        |        |                                   |  |  |

 

----

| **                                   | By:    | /s/ Kenneth W. Brimmer |   |   |
|--------------------------------------|--------|------------------------|--------|--------|
| Kenneth W. Brimmer, Attorney-In-Fact |   |                   |

 

8

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