UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Sentex Sensing Technology, Inc.
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(Name of Issuer)
Common stock, no par value
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(Title of Class of Securities)
817268-10-5
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(CUSIP Number)
Arthur Lundberg, Esq., Baker & Hostetler LLP, 3200 National City Center,
Cleveland, OH 44114 (216) 621-0200
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 19, 2006
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.ss.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 817268-10-1 13D Page 2 of 8
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (ENTITIES ONLY).
CPS Capital, Ltd. 34-1781380
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
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7 SOLE VOTING POWER
48,019,814
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NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY -----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 48,019,814
WITH -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
48,019,814
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
46.28%
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14 TYPE OF REPORTING PERSON*
OO (Limited Liability Company)
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 817268-10-1 13D Page 3 of 8
AMENDMENT NO. 2 TO
SCHEDULE 13D
This Amendment No. 2 to Schedule 13D amends and supplements the Schedule 13D, as
amended by Amendment No. 1 thereto (the "Schedule 13D"), filed by CPS Capital
Ltd. ("CPS") with respect to its ownership of Common Stock, without par value
(the "Common Stock"), of Sentex Sensing Technology, Inc. ("Sentex"), to report
the entering into by Sentex, Robert S. Kendall, the chairman and president of
CPS ("Mr. Kendall"), and certain other parties of agreements that may result in
a disposition of the Common Stock held by CPS reported in the Schedule 13D and a
change in control of Sentex.
The following items are the Schedule 13D are amended and supplemented as
follows:
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 2 to Schedule 13D relates to Common Stock of Sentex,
the principal executive offices of which are located at 1801 East 9th Street,
Cleveland, Ohio 44114.
ITEM 2. IDENTITY AND BACKGROUND.
The reporting person, CPS Capital, Ltd. ("CPS"), an Ohio limited liability
company, operates as a hedge fund. Its business address is 1801 East 9th Street,
Cleveland, Ohio 44114. Its principal office is located at the same address.
The information required by Item 2 with respect to the executive officers
and controlling persons of CPS is as follows:
(i) Mr. Kendall is the chairman and president of CPS.
(ii) William Sprow is the chief financial officer and controller of CPS.
All of the persons named above are citizens of the United States.
None of the persons named above has been convicted of any criminal offense
(excluding traffic violations or similar misdemeanors) during the past five
years.
None of the persons named above has been a party during the past five
years to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding been or is subject to a
judgment, decree or final order finding violations of or enjoining future
violations of or prohibiting or mandating activities subject to federal or state
securities laws.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of this filing is to report the entering into by Sentex, Mr.
Kendall and certain other parties of agreements that may result in a disposition
of the Common Stock held by CPS reported in the Schedule 13D and a change in
control of Sentex.
CUSIP No. 817268-10-1 13D Page 4 of 8
On July 19, 2006, Sentex and Security IT Vision, Inc., an Oregon corporation
("SecITV"), entered into an exclusive distribution agreement (the "Distribution
Agreement").
The Distribution Agreement gives Sentex, effective as of the Closing (as defined
below), the exclusive world-wide rights over the fifty-year term of the
agreement to market SecITV technology to end users in the biometric and security
product arena based on Fingerprint Identification, Face Recognition and Voice
Recognition technology. The exclusive distribution rights were granted in
exchange for 69,082,924 shares of Common Stock issued to SecITV or its
affiliates and 27,000,000 shares of Common Stock issued to the Financial
Advisors (as defined below) and other terms and conditions set forth in a share
issuance and corporate governance agreement (the "SICG Agreement") entered into
on July 19, 2006 among Sentex, SecITV, Henrik Rubinstein, who directly and
indirectly owns SecITV, Mr. Kendall, who is also the president and significant
shareholder of Sentex, Balmoral Financial Services Company ("Balmoral") and
Viewpoint Technology, Inc. ("Viewpoint" and together with Balmoral, the
"Financial Advisors").
Pursuant to the SICG Agreement, at the Closing, Sentex will issue the 69,082,924
shares of Common Stock, at the direction of SecITV, to 1st Management Finance,
Inc., a 90% shareholder of SecITV wholly-owned by Mr. Rubinstein ("1stMF"). Such
shares will represent approximately 35% of the issued and outstanding shares of
Common Stock (taking into account the issuance of shares to the Financial
Advisors described below), based on the number of shares outstanding on the date
hereof. 1stMF will have demand registration rights with respect to up to
100,000,000 shares of Common Stock that it receives and piggyback registration
rights with respect to its shares of Common Stock, as well as any shares of
Common Stock issued to other SecITV afilliates under the SICG Agreement, in any
registration statement that Sentex files, in each case, for specified periods
after the Closing.
The SICG Agreement also provides for additional financing and management
arrangements for Sentex involving Mr. Kendall, Mr. Rubinstein and the Financial
Advisors. At the Closing, Sentex will issue 15,000,000 shares of Common Stock to
Balmoral and 12,000,000 shares of Common Stock to Viewpoint in exchange for the
services provided by the Financial Advisors to SecITV and Sentex. The Financial
Advisors will then hold approximately 14% of the issued and outstanding Common
Stock (taking into account the issuance of shares to 1stMF described above),
based on the number of shares outstanding on the date hereof. In addition, the
Financial Advisors have committed to raise additional funding for Sentex on a
best-efforts basis. Of this additional funding, $600,000 is to be raised through
the sale of 10,000,000 shares of Common Stock held by CPS (and indirectly by Mr.
Kendall), subject to the approval of Mr. Kendall's bank, which holds the shares
as collateral. The proceeds from this sale will be paid to Sentex in exchange
for its agreement to issue 10,000,000 shares of Common Stock to Mr. Kendall by
November 16, 2006.
Within 180 days of the Closing, Mr. Kendall will also have the right to sell
40,000,000 of the shares of Common Stock beneficially owned by him through CPS
(which includes the 10,000,000 replacement shares discussed above), also subject
to his bank's approval, either to Mr. Rubinstein or to other investors, as
arranged by Mr. Rubinstein through a private transaction or a registered resale
arrangement, for a purchase price of $0.05 per share, or an aggregate of
$2,000,000. If such shares are sold to Mr. Rubinstein or entities affiliated
with him, Mr. Rubinstein would then control approximately 52% of the issued and
outstanding shares of Sentex (based on the number of shares of Common Stock
outstanding on the date hereof and assuming the issuance of the shares to the
Financial Advisors and an additional 10,000,000 shares are issued to Mr.
Kendall). Alternatively, Mr. Kendall may in his sole discretion decide to retain
the 40,000,000 shares for an additional 18 months and instead sell them at a
price of $0.08 per share, for an aggregate purchase price of $3,200,000, at such
later date. Mr. Kendall and/or CPS will retain ownership of approximately
8,000,000 additional shares.
CUSIP No. 817268-10-1 13D Page 5 of 8
Mr. Kendall will also contribute $4,000,000 of the debt owed to him by Sentex,
which debt will be sold to investors as arranged by SecITV for proceeds to be
used by Sentex as working capital. After Mr. Kendall's 40,000,000 shares have
been sold as discussed above, the remaining $3,500,000 of Sentex debt held by
Mr. Kendall will be distributed on a monthly basis over a three-year period
among Messrs. Kendall and Rubinstein and the Financial Advisors.
Under the SICG Agreement, following the Closing, Mr. Rubinstein will be the
president and Mr. Kendall will be the treasurer of Sentex, the parties agree to
elect Messrs. Rubinstein and Kendall as its sole directors and Mr. Kendall will
enter into an employment agreement with Sentex (the "Employment Agreement")
pursuant to which he will serve as the chairman of the board until the earlier
to occur of his death, permanent disability, sale of his 40,000,000 shares (at
which time Mr. Rubinstein will become Sentex's chief executive officer), or
conviction of a crime resulting in at least one year of incarceration. In
addition, if not terminated earlier, Mr. Kendall will retire from Sentex not
later than the end of the second fiscal year following the Closing. Mr.
Kendall's annual base salary is still subject to negotiation. The Employment
Agreement will also provide for a one-year non-compete and confidentiality
obligations.
The shares of Common Stock to be issued to each of SecITV (or its affiliates)
and the Financial Advisors are expected to placed into escrow as soon as
practicable and released at the Closing. The closing of the transactions
contemplated by the Distribution Agreement and the SICG Agreement (the
"Closing") will occur following receipt by the parties of all necessary
approvals and submission of all required governmental filings, including the
filing of a definitive information statement with the Securities and Exchange
Commission. The transactions contemplated by the Distribution Agreement and the
SICG Agreement have been approved by the parties' boards of directors and by a
majority of the Sentex shareholders in an action by written consent. The
information statement will also be mailed to Sentex shareholders who did not
approve the transactions by written consent.
The foregoing descriptions of the Distribution Agreement and the SICG Agreement
are qualified in their entirety by the full text of the Distribution Agreement
and the SICG Agreement, which are filed as Exhibits A and B, respectively, and
are incorporated by reference herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date hereof, CPS beneficially owned 47,719,814 shares
of Common Stock, which represents 46% of the outstanding shares of Common Stock
as of the date hereof, based on 103,764,911 shares of Common Stock then
outstanding.
As of the date hereof, Mr. Kendall beneficially owned 300,000 shares
of Common Stock, which represents .29% of the outstanding shares of Common Stock
as of the date hereof, based on 103,764,911 shares of Common Stock then
outstanding.
As of the date hereof, none of the other persons named in Item 2 of
this Schedule 13D beneficially owned any shares of Common Stock.
(b) As of the date hereof, CPS had the sole voting and dispositive
power with respect to all 47,719,814 shares.
As of the date hereof, Mr. Kendall had the sole voting and
dispositive power with respect to the 300,000 shares held directly by him and
also with respect to the 47,719,814 shares held by CPS, as its chairman and
president.
CUSIP No. 817268-10-1 13D Page 6 of 8
(c) Other than the transactions reported above, none of the persons
named in Item 2 hereof has effected during the past 60 days any transaction in
the Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
The information set forth under Item 4 hereof is incorporated by reference
herein.
Other than the agreements disclosed herein, there are no contracts,
arrangements, understandings, relationships or agreements between CPS and any
other person with respect to shares of Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Each of the Distribution Agreement and the SICG Agreement have been filed
as an Exhibit hereto.
CUSIP No. 817268-10-1 13D Page 7 of 8
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
CPS CAPITAL, LTD.
Date: August 3, 2006 By: /s/ Robert S. Kendall
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Robert S. Kendall
Chairman and President
CUSIP No. 817268-10-1 13D Page 8 of 8
EXHIBIT INDEX
Exhibit Description
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Exhibit A Exclusive Distribution Agreement executed on June 5, 2006
(to take effect as of the date of the SICG Agreement) by and
among Sentex Sensing Technology, Inc. and Security IT Vision,
Inc. (incorporated by reference to the Current Report on Form
8-K filed by Sentex Sensing Technology, Inc. on July 25,
2006).
Exhibit B Share Issuance and Corporate Governance Agreement dated July
19, 2006 by and among Sentex Sensing Technology, Inc.,
Security IT Vision, Inc., Robert Kendall, Henrik Rubinstein,
Balmoral Financial Services Company and Viewpoint Technology,
Inc. (incorporated by reference to the Current Report on Form
8-K filed by Sentex Sensing Technology, Inc. on July 25,
2006).