<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported): NOVEMBER 2, 2006

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

          PENNSYLVANIA                    0-15864               95-4091769
(State or other jurisdiction of    (Commission File No.)       (IRS Employer
        incorporation)                                      Identification No.)

         1003 WEST NINTH AVENUE
      KING OF PRUSSIA, PENNSYLVANIA                                19406
(Address of principal executive offices)                         (Zip Code)

       Registrant's telephone number, including area code: (610) 337-8400

                                 NOT APPLICABLE
          (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions.

[_]  Written communication pursuant to Rule 425 under the Securities Act (17 CFR
     230.425)

[_]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

[_]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[_]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))


                                        1
<PAGE>

SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On November 2, 2006, Sedona Corporation ("Sedona") entered into certain
agreements related to the consolidation and refinancing of certain indebtedness
and the issuance of additional financing. Certain information regarding such
agreements is set forth in Item 2.03 and is incorporated herein by reference.

Additionally, on November 2, 2006 David R. Vey, the Chairman of the Board of
Directors and a principal shareholder of Sedona ("Vey") executed a Surety
Agreement in favor of the directors of Sedona (the "Surety Agreement"). Sedona
is not a party to the Surety Agreement. Certain information regarding the Surety
Agreement is set forth in Item 8.01 and is incorporated herein by reference.

SECTION 2 - FINANCIAL INFORMATION

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION

As reported in the Quarterly Report on Form 10-QSB filed on August 14, 2006,
Sedona was in the process of negotiating the refinancing of a series of
approximately twenty convertible notes which were issued in favor of Vey. The
notes, which were in the approximate aggregate principal sum of $2,590,000.00,
matured on July 1, 2006, having previously been extended to that date. Further,
Vey had extended certain loans in the approximate amount of $1,075,000.00 in the
second and third quarters of 2006. Sedona and Vey were then also negotiating the
terms of short-term funding from Vey to Sedona. Additionally, Sedona was
negotiating the refinancing of two promissory notes in favor of Oak Harbor
Investment Properties, L.L.C. ("Oak Harbor") for the principal sum of
$1,000,000.00 which also matured on July 1, 2006, having previously been
extended to that date. Vey is a principal of Oak Harbor.

On November 2, 2006, the Board of Directors of Sedona approved the terms of
definitive agreements related to the aforementioned refinancings and additional
short- term financing, and Sedona, Vey, and Oak Harbor executed definitive
agreements with respect to such transactions, as described below.

Refinancing of Certain Notes to Oak Harbor

On October 23, 2006 the Independent Committee of the Board of Directors of
Sedona recommended to the Board of Directors that Sedona consolidate and extend
previously issued promissory notes from Sedona to Oak Harbor. On November 2,
2006 the Board of Directors approved the consolidation and extension of the
maturity date of two outstanding promissory notes totaling the principal sum of
$1,000,000.00 with accrued interest of $40,402.22 (the "Old Oak Harbor Notes")
into a single promissory note. An


                                        2
<PAGE>

Exchange Agreement, dated as of August 17, 2006 was executed by Oak Harbor and
Sedona which provides for the cancellation of the Old Oak Harbor Notes and the
issuance and delivery of a new single promissory note dated as of August 17,
2006 in the principal amount of $1,040,402.22 (the "New Oak Harbor Note"). The
New Oak Harbor Note has a maturity date of May 1, 2009, and requires Sedona to
reduce the principal amount of the note by $250,000 on May 1, 2007, and $250,000
on May 1, 2008, with the outstanding unpaid principal balance and all accrued
but unpaid interest due on maturity. The Old Oak Harbor Notes bore interest at a
rate of seven percent (7%) per year. The New Oak Harbor Note bears interest at a
rate of eight percent (8%) per year.

Refinancing of Certain Convertible Notes to Vey

On October 23, 2006 the Independent Committee of the Board of Directors of
Sedona also recommended to the Board of Directors that Sedona consolidate and
extend the term of several convertible promissory notes previously issued by
Sedona to Vey, totaling the principal sum of $2,590,000.00 with accrued interest
of $101,263.36 into a single secured convertible promissory note. On November 2,
2006, the Board of Directors approved such consolidation and extension, to be
effective October 23, 2006. An Exchange Agreement dated as of October 23, 2006
was executed by Vey and Sedona, which provides for the cancellation of the
outstanding convertible promissory notes (the "Old Vey Convertible Notes") and
the issuance and delivery of a single secured convertible promissory note dated
as of October 23, 2006 in the principal amount $2,691,263.36 (the "New Vey
Convertible Note"). The Old Vey Convertible Notes contained various maturity
dates, which had been previously extended until July 1, 2006, and bore interest
at the rate of eight percent (8%) per year. The Old Vey Convertible Notes
contained provisions allowing Vey, at his option, to convert all or part of the
unpaid principal and accrued but unpaid interest of the Old Vey Convertible Note
into shares of common stock of Sedona, .001 par value per share (the "Shares")
at conversion prices ranging from $0.14 to $0.56 per share. The New Vey
Convertible Note has a maturity date of October 23, 2008, unless theretofore
converted and bears interest at the rate of eight percent (8%) per year, which
interest is due upon maturity. Vey may, at any time and at his option, elect to
convert all or part of the unpaid principal and accrued but unpaid interest of
the New Vey Convertible Note into Shares at a conversion price of $0.14 per
share (the "Conversion Price"). The number of Shares which would be issuable
upon the conversion of the $2,691,263.36 principal balance of the New Vey
Convertible Note presently is 19,223,309. Accrued and unpaid interest may be
paid in cash or, at the election of Vey, in Shares based on the Conversion
Price. The Conversion Price is subject to adjustment under certain
circumstances.

The New Vey Convertible Note provides that in the event Sedona raises new
capital through the sale of equity or debt securities (except for sums provided
by Oak Harbor, its affiliates, or Vey) in an amount equal to or in excess of
$2,000,000.00 (the "Financing"), Sedona may, at its option, exercisable within
ninety (90) days from the date of closing of the Financing, convert up to
$1,210,000.00 of the outstanding principal of the Vey Convertible Note into
Shares by making a cash payment to Vey in the amount of four percent (4%) of the
principal converted. The number of Shares to be issued upon such


                                        3
<PAGE>

conversion shall be equal to the principal balance converted divided by the
conversion price in effect immediately prior to such computation.

The New Vey Convertible Note further provides that Vey may demand prepayment in
full of the outstanding sums due under such note upon the occurrence of either
of the following: (i) Sedona receives funds from any source (including internal
sources such as collections of accounts receivable, as well as any external
sources, such as sales of securities) totaling in excess of $3,500,000.00 after
October 23, 2006; or (ii) Sedona maintains current cash on hand in excess of
$2,000,000.00 for a period exceeding thirty (30) days.

The Registration Rights Agreement between Vey and Sedona, dated as of August 17,
2006 provides that Sedona will use its best efforts to register for resale of
the Shares issuable upon conversion of the New Vey Convertible Note under the
Securities Act of 1933.

Bridge Note with David R. Vey

On October 23, 2006 the Independent Committee of the Board of Directors of
Sedona recommended to the Board of Directors that certain other outstanding
loans from Vey to Sedona be consolidated pursuant to a single promissory note.
These other loans previously bore interest at a rate of eight percent (8%) per
year. On November 2, 2006 the Board of Directors approved the issuance of a
$1,213,952.81 promissory note to Vey, effective October 23, 2006, evidencing and
consolidating certain loans made by Vey to Sedona. A promissory note dated
October 23, 2006 in the principal amount of $1,213,952.81 has been issued and
delivered by Sedona to Vey (the "Bridge Note"). The principal amount of the
Bridge Note reflects the prior loan from Vey to the Company in the principal
amount of $1,075,000 as well as interest and certain related expenses. The
Bridge Note bears interest at a rate of eight percent (8%) per year on the
unpaid principal balance. One half of the principal sum and all accrued interest
is due upon the earlier of: (a) ten (10) business days after the closing or
purchase of debt and/or equity securities of Sedona arranged by a placement
agent on behalf of Sedona in connection with the placement of certain debt of
equity securities; or (b) December 23, 2006. The principal balance remaining
outstanding thereafter together with accrued interest is due October 23, 2007.

In accordance with the provisions of the Bridge Note, on November 2, 2006 Sedona
assigned to Vey all of its right, title and interest in an account receivable
due from ACEncrpyt Solutions, LLC (the "ACE Receivable") with an outstanding
balance of $40,000.00 (the "ACE Balance"). The assignment of the ACE Receivable
was effective as of October 23, 2006. The assignment of the ACE Receivable
reduced the principal of certain outstanding sums owed to Vey by Sedona by the
amount of the ACE Balance (the "Offset"). The Offset was applied to the loans
consolidated into by the Bridge Note prior to the issuance of such note.

Line of Credit with Vey


                                        4
<PAGE>

On October 23, 2006, the Independent Committee of the Board of Directors of
Sedona recommended to the Board of Directors that Sedona obtain a $500,000.00
line of credit from Vey to fund the working capital requirements of Sedona. On
November 2, 2006, the Board of Directors approved the execution of a Term Sheet,
effective as of September 27, 2006, governing the issuance of an uncommitted
line of credit in the principal amount of $500,000.00 from Vey to Sedona (the
"Line of Credit"). Balances outstanding under the Line of Credit are evidenced
by a secured revolving promissory note dated as of September 27, 2006, in an
amount no greater than $500,000.00 from Sedona to Vey (the "Revolving Note").
The Revolving Note will be payable by application of the proceeds of the
receivables of Sedona, together with accrued interest at the rate of eight
percent (8%) per year. Accrued interest on the outstanding principal balance is
scheduled to be paid quarterly. Advances under the Revolving Note are subject to
the approval of Vey, which approval may be withheld at his sole discretion.
Sedona can prepay sums due under the Revolving Note without premium or penalty.
The Revolving Note matures on August 17, 2007, on which date all unpaid sums of
principal and interest will be due.

On September 27, 2006, Sedona made an initial draw on the Line of Credit of
$225,000.00.

Vey and Oak Harbor entered into an Intercreditor Agreement dated as of October
23, 2006, which was acknowledged by Sedona (the "Intercreditor Agreement"). The
Intercreditor Agreement provides that as long as Oak Harbor has not received
notice of default of the New Vey Convertible Note, the Bridge Note, or the
Revolving Note and until such time as the Revolving Note has been satisfied, the
proceeds of the receivables of Sedona will be applied as and when they are
collected to the payment of the principal sums, accrued interest and late
charges due under the Revolving Note.

Security Agreements

The New Oak Harbor Note is secured by substantially all of the assets of Sedona
pursuant to an Amended and Restated Security Agreement dated as of August 17th,
2006 between Sedona and Oak Harbor (the "Amended Security Agreement"). The
Amended Security Agreement amends and restates the Security Agreement between
Oak Harbor and Sedona effective as of January 13, 2003 which granted to Oak
Harbor a lien and security interest in the assets of Sedona (the "Oak Harbor
Security Agreement"). The changes to the Security Agreement were effected by the
Amended and Restated Security Agreement which include: (i) the modification of
the term "Obligations" to mean all of the obligations, indebtedness, and
liabilities of Sedona to Oak Harbor and Vey; (ii) the acknowledgement and
consent of Oak Harbor to the grant of a subordinate security interest in the
assets of Sedona set forth in the Amended Security Agreement (the "Collateral")
to Vey; and (iii) the modification of Appendix A to the Security Agreement to
reflect the current outstanding permitted liens in the Collateral and references
the subordinate security interest to the Collateral granted to Vey pursuant to
the Security


                                        5
<PAGE>

Agreement between Sedona and Vey dated as of October 23, 2006 (the "Vey Security
Agreement").

The New Vey Convertible Note, the Revolving Note, and the Bridge Note are
secured pursuant to the terms and conditions of the Vey Security Agreement.
Pursuant to the terms of the Vey Security Agreement, the New Vey Convertible
Note, the Revolving Note, and the Bridge Note are secured by a lien and security
interest in the Collateral of Sedona subordinate to the security interest of Oak
Harbor.

Cross Defaults Pursuant to the Notes

The New Oak Harbor Note, the Bridge Note, the New Vey Convertible Note and the
Revolving Note (collectively the "Notes") contain cross default provisions.
Consequently an event of default under any of the Notes would constitute an
event of default under each of the Notes. An event of default under the Notes
will also have occurred if a default occurs under any other loan, extension of
credit, security right, instrument, document, agreement or obligation from
Sedona to Vey or Oak Harbor.

Waiver of Conversion Adjustment by Rucks and Mitchell

William J. Rucks ("Rucks") extended a loan to Sedona, which was evidenced by a
convertible promissory note dated May 31, 2006 in the principal amount of
$300,000.00, with a conversion price of $0.20 per share (the "Rucks Convertible
Note"). Charles F. Mitchell ("Mitchell") extended several loans to Sedona which
were evidenced by the following convertible promissory notes: (i) note dated
July 1, 2005 in the principal sum of $250,0000.00; (ii) note dated August 2,
2005 in the principal sum of $250,000.00; (iii) note dated September 30, 2005 in
the principal amount of $500,000.00, and (iv) a note in the amount of
$300,000.00 dated May 31, 2006 (collectively the "Mitchell Notes"). The Notes
designated as (i) (ii) and (iii) each had a conversion price of $0.18 per share,
while the note designated as (iv) had a conversion price of $0.20 per share.

Pursuant to the Rucks Convertible Note and the Mitchell Convertible Note, Rucks
and Mitchell were granted the option to convert the unpaid principal balance and
accrued unpaid interest on their notes into Shares of Sedona. The respective
conversion prices are subject to adjustment under certain circumstances. The
issuance of the New Vey Convertible Note triggered such an adjustment. At the
request of Sedona, Rucks and Mitchell have agreed to waive their rights to have
the conversion price set forth in their respective convertible notes adjusted.
Evidence of such waiver is contained in certain Waivers dated as of October 23,
2006 from Rucks to Sedona and from Mitchell to Sedona, which have been delivered
to them for execution.

Summary Chart of Indebtedness

As a result of the foregoing, the principal amount of various indebtedness of
Sedona to Vey and Oak Harbor are as follows:


                                        6
<PAGE>

<TABLE>
<CAPTION>
PAYEE                   INSTRUMENT                            PRINCIPAL SUM DUE              MATURITY DATE
---------------------   -----------------------------------   ----------------------------   ----------------
<S>                     <C>                                   <C>                            <C>
Oak Harbor Investment   Promissory Note dated as of August    $1,040,402.22                  May 1, 2009
Properties, L.L.C.      17, 2006.

David Vey               Secured Convertible Promissory Note   $2,691,263.36                  October 23, 2008
                        dated as of October 23, 2006.

David Vey               Promissory Note dated as of October   $1,213,952.81                  October 23, 2007
                        23, 2006.

David Vey               Revolving Promissory Note dated as    The lesser of $500,000.00 or   August 17, 2007
                        of September 26, 2007.                the balance of the Revolving
                                                              Promissory Note ($225,000 as
                                                              of November 8, 2006)
</TABLE>

The foregoing summary is not complete and is qualified in its entirety by
reference to the complete text of the individual documents, which are filed as
Exhibits to this Form 8-K and which is incorporated herein by reference in their
entirety.

SECTION 8 - OTHER EVENTS

ITEM 8.01 OTHER EVENTS

At a meeting of the Board of Directors of Sedona, the directors discussed
certain requirements and conditions of Sedona's directors and officers liability
insurance (the "Policy"). The Policy provides for retention of $250,000.00 for
securities claims and $150,000.00 for non-securities claims, which sums are
payable by Sedona (collectively the "Retention Requirement"). At a special
meeting of the Independent Committee of the Board of Directors held on August
29th, 2006, Vey agreed to serve as surety to the directors to guarantee the
obligation of Sedona to pay those sums. Vey's obligations with respect to the
foregoing are set forth in a Surety Agreement, which Vey executed on November 2,
2006. Pursuant to the Surety Agreement, Vey has agreed to serve as surety for
payment of sums payable by Sedona as a result of the Retention Requirement, up
to a maximum of $250,000.00.


                                        7
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: November 8, 2006

                                       SEDONA CORPORATION


                                       By: /s/ MARCO EMRICH
                                           -------------------------------------
                                           Marco Emrich
                                           President and Chief Executive Officer


                                        8
<PAGE>

                               ITEM 9.01 EXHIBITS

10.77   Promissory Note dated August 17, 2006 in the principal amount of
        $1,040,402.22 from Sedona to Oak Harbor.

10.78   Amended and Restated Security Agreement dated August 17, 2006 between
        Sedona and Oak Harbor.

10.79   Exchange Agreement dated August 17, 2006 between Sedona and Oak Harbor.

10.80   Secured Convertible Promissory Note dated October 23, 2006 in the
        principal amount of $2,691,263.36 from Sedona to Vey.

10.81   Registration Rights Agreement dated August 17, 2006 between Vey and
        Sedona.

10.82   Exchange Agreement dated October 23, 2006 between Sedona and Vey.

10.83   Promissory Note dated October 23, 2006 in the principal amount of
        $1,213,952.81 from Sedona to Vey.

10.84   Security Agreement dated October 23, 2006 between Vey and Sedona.

10.85   Revolving promissory note dated September 27, 2006 in the principal
        amount of $500,000.00 from Sedona to Vey.

10.86   Intercreditor Agreement dated October 23, 2006 between Vey and Oak
        Harbor.

10.87   Terms and Conditions Agreement dated September 27, 2006.

10.88   Acknowledgment and Receipt among Sedona, Vey and Oak Harbor.

10.89   Assignment of ACEncrypt receivable by Sedona to Vey.

10.90   Waiver dated as of October 23, 2006 from Rucks.

10.91   Waiver dated as of October 23, 2006 from Mitchell.

99.1    Surety Agreement dated as of November 2, 2006 from Vey.


                                        9
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SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported): NOVEMBER 2, 2006

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

          PENNSYLVANIA                    0-15864               95-4091769
(State or other jurisdiction of    (Commission File No.)       (IRS Employer
        incorporation)                                      Identification No.)

         1003 WEST NINTH AVENUE
      KING OF PRUSSIA, PENNSYLVANIA                                19406
(Address of principal executive offices)                         (Zip Code)

       Registrant's telephone number, including area code: (610) 337-8400

                                 NOT APPLICABLE
          (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions.

[_]  Written communication pursuant to Rule 425 under the Securities Act (17 CFR
     230.425)

[_]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

[_]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[_]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))

                                        1
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On November 2, 2006, Sedona Corporation ("Sedona") entered into certain
agreements related to the consolidation and refinancing of certain indebtedness
and the issuance of additional financing. Certain information regarding such
agreements is set forth in Item 2.03 and is incorporated herein by reference.

Additionally, on November 2, 2006 David R. Vey, the Chairman of the Board of
Directors and a principal shareholder of Sedona ("Vey") executed a Surety
Agreement in favor of the directors of Sedona (the "Surety Agreement"). Sedona
is not a party to the Surety Agreement. Certain information regarding the Surety
Agreement is set forth in Item 8.01 and is incorporated herein by reference.

SECTION 2 - FINANCIAL INFORMATION

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION

As reported in the Quarterly Report on Form 10-QSB filed on August 14, 2006,
Sedona was in the process of negotiating the refinancing of a series of
approximately twenty convertible notes which were issued in favor of Vey. The
notes, which were in the approximate aggregate principal sum of $2,590,000.00,
matured on July 1, 2006, having previously been extended to that date. Further,
Vey had extended certain loans in the approximate amount of $1,075,000.00 in the
second and third quarters of 2006. Sedona and Vey were then also negotiating the
terms of short-term funding from Vey to Sedona. Additionally, Sedona was
negotiating the refinancing of two promissory notes in favor of Oak Harbor
Investment Properties, L.L.C. ("Oak Harbor") for the principal sum of
$1,000,000.00 which also matured on July 1, 2006, having previously been
extended to that date. Vey is a principal of Oak Harbor.

On November 2, 2006, the Board of Directors of Sedona approved the terms of
definitive agreements related to the aforementioned refinancings and additional
short- term financing, and Sedona, Vey, and Oak Harbor executed definitive
agreements with respect to such transactions, as described below.

Refinancing of Certain Notes to Oak Harbor

On October 23, 2006 the Independent Committee of the Board of Directors of
Sedona recommended to the Board of Directors that Sedona consolidate and extend
previously issued promissory notes from Sedona to Oak Harbor. On November 2,
2006 the Board of Directors approved the consolidation and extension of the
maturity date of two outstanding promissory notes totaling the principal sum of
$1,000,000.00 with accrued interest of $40,402.22 (the "Old Oak Harbor Notes")
into a single promissory note. An

                                        2
Exchange Agreement, dated as of August 17, 2006 was executed by Oak Harbor and
Sedona which provides for the cancellation of the Old Oak Harbor Notes and the
issuance and delivery of a new single promissory note dated as of August 17,
2006 in the principal amount of $1,040,402.22 (the "New Oak Harbor Note"). The
New Oak Harbor Note has a maturity date of May 1, 2009, and requires Sedona to
reduce the principal amount of the note by $250,000 on May 1, 2007, and $250,000
on May 1, 2008, with the outstanding unpaid principal balance and all accrued
but unpaid interest due on maturity. The Old Oak Harbor Notes bore interest at a
rate of seven percent (7%) per year. The New Oak Harbor Note bears interest at a
rate of eight percent (8%) per year.

Refinancing of Certain Convertible Notes to Vey

On October 23, 2006 the Independent Committee of the Board of Directors of
Sedona also recommended to the Board of Directors that Sedona consolidate and
extend the term of several convertible promissory notes previously issued by
Sedona to Vey, totaling the principal sum of $2,590,000.00 with accrued interest
of $101,263.36 into a single secured convertible promissory note. On November 2,
2006, the Board of Directors approved such consolidation and extension, to be
effective October 23, 2006. An Exchange Agreement dated as of October 23, 2006
was executed by Vey and Sedona, which provides for the cancellation of the
outstanding convertible promissory notes (the "Old Vey Convertible Notes") and
the issuance and delivery of a single secured convertible promissory note dated
as of October 23, 2006 in the principal amount $2,691,263.36 (the "New Vey
Convertible Note"). The Old Vey Convertible Notes contained various maturity
dates, which had been previously extended until July 1, 2006, and bore interest
at the rate of eight percent (8%) per year. The Old Vey Convertible Notes
contained provisions allowing Vey, at his option, to convert all or part of the
unpaid principal and accrued but unpaid interest of the Old Vey Convertible Note
into shares of common stock of Sedona, .001 par value per share (the "Shares")
at conversion prices ranging from $0.14 to $0.56 per share. The New Vey
Convertible Note has a maturity date of October 23, 2008, unless theretofore
converted and bears interest at the rate of eight percent (8%) per year, which
interest is due upon maturity. Vey may, at any time and at his option, elect to
convert all or part of the unpaid principal and accrued but unpaid interest of
the New Vey Convertible Note into Shares at a conversion price of $0.14 per
share (the "Conversion Price"). The number of Shares which would be issuable
upon the conversion of the $2,691,263.36 principal balance of the New Vey
Convertible Note presently is 19,223,309. Accrued and unpaid interest may be
paid in cash or, at the election of Vey, in Shares based on the Conversion
Price. The Conversion Price is subject to adjustment under certain
circumstances.

The New Vey Convertible Note provides that in the event Sedona raises new
capital through the sale of equity or debt securities (except for sums provided
by Oak Harbor, its affiliates, or Vey) in an amount equal to or in excess of
$2,000,000.00 (the "Financing"), Sedona may, at its option, exercisable within
ninety (90) days from the date of closing of the Financing, convert up to
$1,210,000.00 of the outstanding principal of the Vey Convertible Note into
Shares by making a cash payment to Vey in the amount of four percent (4%) of the
principal converted. The number of Shares to be issued upon such

                                        3
conversion shall be equal to the principal balance converted divided by the
conversion price in effect immediately prior to such computation.

The New Vey Convertible Note further provides that Vey may demand prepayment in
full of the outstanding sums due under such note upon the occurrence of either
of the following: (i) Sedona receives funds from any source (including internal
sources such as collections of accounts receivable, as well as any external
sources, such as sales of securities) totaling in excess of $3,500,000.00 after
October 23, 2006; or (ii) Sedona maintains current cash on hand in excess of
$2,000,000.00 for a period exceeding thirty (30) days.

The Registration Rights Agreement between Vey and Sedona, dated as of August 17,
2006 provides that Sedona will use its best efforts to register for resale of
the Shares issuable upon conversion of the New Vey Convertible Note under the
Securities Act of 1933.

Bridge Note with David R. Vey

On October 23, 2006 the Independent Committee of the Board of Directors of
Sedona recommended to the Board of Directors that certain other outstanding
loans from Vey to Sedona be consolidated pursuant to a single promissory note.
These other loans previously bore interest at a rate of eight percent (8%) per
year. On November 2, 2006 the Board of Directors approved the issuance of a
$1,213,952.81 promissory note to Vey, effective October 23, 2006, evidencing and
consolidating certain loans made by Vey to Sedona. A promissory note dated
October 23, 2006 in the principal amount of $1,213,952.81 has been issued and
delivered by Sedona to Vey (the "Bridge Note"). The principal amount of the
Bridge Note reflects the prior loan from Vey to the Company in the principal
amount of $1,075,000 as well as interest and certain related expenses. The
Bridge Note bears interest at a rate of eight percent (8%) per year on the
unpaid principal balance. One half of the principal sum and all accrued interest
is due upon the earlier of: (a) ten (10) business days after the closing or
purchase of debt and/or equity securities of Sedona arranged by a placement
agent on behalf of Sedona in connection with the placement of certain debt of
equity securities; or (b) December 23, 2006. The principal balance remaining
outstanding thereafter together with accrued interest is due October 23, 2007.

In accordance with the provisions of the Bridge Note, on November 2, 2006 Sedona
assigned to Vey all of its right, title and interest in an account receivable
due from ACEncrpyt Solutions, LLC (the "ACE Receivable") with an outstanding
balance of $40,000.00 (the "ACE Balance"). The assignment of the ACE Receivable
was effective as of October 23, 2006. The assignment of the ACE Receivable
reduced the principal of certain outstanding sums owed to Vey by Sedona by the
amount of the ACE Balance (the "Offset"). The Offset was applied to the loans
consolidated into by the Bridge Note prior to the issuance of such note.

Line of Credit with Vey

                                        4
On October 23, 2006, the Independent Committee of the Board of Directors of
Sedona recommended to the Board of Directors that Sedona obtain a $500,000.00
line of credit from Vey to fund the working capital requirements of Sedona. On
November 2, 2006, the Board of Directors approved the execution of a Term Sheet,
effective as of September 27, 2006, governing the issuance of an uncommitted
line of credit in the principal amount of $500,000.00 from Vey to Sedona (the
"Line of Credit"). Balances outstanding under the Line of Credit are evidenced
by a secured revolving promissory note dated as of September 27, 2006, in an
amount no greater than $500,000.00 from Sedona to Vey (the "Revolving Note").
The Revolving Note will be payable by application of the proceeds of the
receivables of Sedona, together with accrued interest at the rate of eight
percent (8%) per year. Accrued interest on the outstanding principal balance is
scheduled to be paid quarterly. Advances under the Revolving Note are subject to
the approval of Vey, which approval may be withheld at his sole discretion.
Sedona can prepay sums due under the Revolving Note without premium or penalty.
The Revolving Note matures on August 17, 2007, on which date all unpaid sums of
principal and interest will be due.

On September 27, 2006, Sedona made an initial draw on the Line of Credit of
$225,000.00.

Vey and Oak Harbor entered into an Intercreditor Agreement dated as of October
23, 2006, which was acknowledged by Sedona (the "Intercreditor Agreement"). The
Intercreditor Agreement provides that as long as Oak Harbor has not received
notice of default of the New Vey Convertible Note, the Bridge Note, or the
Revolving Note and until such time as the Revolving Note has been satisfied, the
proceeds of the receivables of Sedona will be applied as and when they are
collected to the payment of the principal sums, accrued interest and late
charges due under the Revolving Note.

Security Agreements

The New Oak Harbor Note is secured by substantially all of the assets of Sedona
pursuant to an Amended and Restated Security Agreement dated as of August 17th,
2006 between Sedona and Oak Harbor (the "Amended Security Agreement"). The
Amended Security Agreement amends and restates the Security Agreement between
Oak Harbor and Sedona effective as of January 13, 2003 which granted to Oak
Harbor a lien and security interest in the assets of Sedona (the "Oak Harbor
Security Agreement"). The changes to the Security Agreement were effected by the
Amended and Restated Security Agreement which include: (i) the modification of
the term "Obligations" to mean all of the obligations, indebtedness, and
liabilities of Sedona to Oak Harbor and Vey; (ii) the acknowledgement and
consent of Oak Harbor to the grant of a subordinate security interest in the
assets of Sedona set forth in the Amended Security Agreement (the "Collateral")
to Vey; and (iii) the modification of Appendix A to the Security Agreement to
reflect the current outstanding permitted liens in the Collateral and references
the subordinate security interest to the Collateral granted to Vey pursuant to
the Security

                                        5
Agreement between Sedona and Vey dated as of October 23, 2006 (the "Vey Security
Agreement").

The New Vey Convertible Note, the Revolving Note, and the Bridge Note are
secured pursuant to the terms and conditions of the Vey Security Agreement.
Pursuant to the terms of the Vey Security Agreement, the New Vey Convertible
Note, the Revolving Note, and the Bridge Note are secured by a lien and security
interest in the Collateral of Sedona subordinate to the security interest of Oak
Harbor.

Cross Defaults Pursuant to the Notes

The New Oak Harbor Note, the Bridge Note, the New Vey Convertible Note and the
Revolving Note (collectively the "Notes") contain cross default provisions.
Consequently an event of default under any of the Notes would constitute an
event of default under each of the Notes. An event of default under the Notes
will also have occurred if a default occurs under any other loan, extension of
credit, security right, instrument, document, agreement or obligation from
Sedona to Vey or Oak Harbor.

Waiver of Conversion Adjustment by Rucks and Mitchell

William J. Rucks ("Rucks") extended a loan to Sedona, which was evidenced by a
convertible promissory note dated May 31, 2006 in the principal amount of
$300,000.00, with a conversion price of $0.20 per share (the "Rucks Convertible
Note"). Charles F. Mitchell ("Mitchell") extended several loans to Sedona which
were evidenced by the following convertible promissory notes: (i) note dated
July 1, 2005 in the principal sum of $250,0000.00; (ii) note dated August 2,
2005 in the principal sum of $250,000.00; (iii) note dated September 30, 2005 in
the principal amount of $500,000.00, and (iv) a note in the amount of
$300,000.00 dated May 31, 2006 (collectively the "Mitchell Notes"). The Notes
designated as (i) (ii) and (iii) each had a conversion price of $0.18 per share,
while the note designated as (iv) had a conversion price of $0.20 per share.

Pursuant to the Rucks Convertible Note and the Mitchell Convertible Note, Rucks
and Mitchell were granted the option to convert the unpaid principal balance and
accrued unpaid interest on their notes into Shares of Sedona. The respective
conversion prices are subject to adjustment under certain circumstances. The
issuance of the New Vey Convertible Note triggered such an adjustment. At the
request of Sedona, Rucks and Mitchell have agreed to waive their rights to have
the conversion price set forth in their respective convertible notes adjusted.
Evidence of such waiver is contained in certain Waivers dated as of October 23,
2006 from Rucks to Sedona and from Mitchell to Sedona, which have been delivered
to them for execution.

Summary Chart of Indebtedness

As a result of the foregoing, the principal amount of various indebtedness of
Sedona to Vey and Oak Harbor are as follows:

                                        6
PAYEE                   INSTRUMENT                            PRINCIPAL SUM DUE              MATURITY DATE
---------------------   -----------------------------------   ----------------------------   ----------------
Oak Harbor Investment   Promissory Note dated as of August    $1,040,402.22                  May 1, 2009
Properties, L.L.C.      17, 2006.

David Vey               Secured Convertible Promissory Note   $2,691,263.36                  October 23, 2008
                        dated as of October 23, 2006.

David Vey               Promissory Note dated as of October   $1,213,952.81                  October 23, 2007
                        23, 2006.

David Vey               Revolving Promissory Note dated as    The lesser of $500,000.00 or   August 17, 2007
                        of September 26, 2007.                the balance of the Revolving
                                                              Promissory Note ($225,000 as
                                                              of November 8, 2006)
The foregoing summary is not complete and is qualified in its entirety by
reference to the complete text of the individual documents, which are filed as
Exhibits to this Form 8-K and which is incorporated herein by reference in their
entirety.

SECTION 8 - OTHER EVENTS

ITEM 8.01 OTHER EVENTS

At a meeting of the Board of Directors of Sedona, the directors discussed
certain requirements and conditions of Sedona's directors and officers liability
insurance (the "Policy"). The Policy provides for retention of $250,000.00 for
securities claims and $150,000.00 for non-securities claims, which sums are
payable by Sedona (collectively the "Retention Requirement"). At a special
meeting of the Independent Committee of the Board of Directors held on August
29th, 2006, Vey agreed to serve as surety to the directors to guarantee the
obligation of Sedona to pay those sums. Vey's obligations with respect to the
foregoing are set forth in a Surety Agreement, which Vey executed on November 2,
2006. Pursuant to the Surety Agreement, Vey has agreed to serve as surety for
payment of sums payable by Sedona as a result of the Retention Requirement, up
to a maximum of $250,000.00.

                                        7
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: November 8, 2006

                                       SEDONA CORPORATION

                                       By: /s/ MARCO EMRICH
                                           -------------------------------------
                                           Marco Emrich
                                           President and Chief Executive Officer

                                        8
ITEM 9.01 EXHIBITS

10.77   Promissory Note dated August 17, 2006 in the principal amount of
        $1,040,402.22 from Sedona to Oak Harbor.

10.78   Amended and Restated Security Agreement dated August 17, 2006 between
        Sedona and Oak Harbor.

10.79   Exchange Agreement dated August 17, 2006 between Sedona and Oak Harbor.

10.80   Secured Convertible Promissory Note dated October 23, 2006 in the
        principal amount of $2,691,263.36 from Sedona to Vey.

10.81   Registration Rights Agreement dated August 17, 2006 between Vey and
        Sedona.

10.82   Exchange Agreement dated October 23, 2006 between Sedona and Vey.

10.83   Promissory Note dated October 23, 2006 in the principal amount of
        $1,213,952.81 from Sedona to Vey.

10.84   Security Agreement dated October 23, 2006 between Vey and Sedona.

10.85   Revolving promissory note dated September 27, 2006 in the principal
        amount of $500,000.00 from Sedona to Vey.

10.86   Intercreditor Agreement dated October 23, 2006 between Vey and Oak
        Harbor.

10.87   Terms and Conditions Agreement dated September 27, 2006.

10.88   Acknowledgment and Receipt among Sedona, Vey and Oak Harbor.

10.89   Assignment of ACEncrypt receivable by Sedona to Vey.

10.90   Waiver dated as of October 23, 2006 from Rucks.

10.91   Waiver dated as of October 23, 2006 from Mitchell.

99.1    Surety Agreement dated as of November 2, 2006 from Vey.

                                        9