CONFIDENTIAL OFFERING MEMORANDUM
DATED: JUNE 3, 2003
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| Canterbury Consulting Group, Inc. ("CITI") |
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| (A Commonwealth of Pennsylvania Corporation) |
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SENIOR CONVERTIBLE PROMISSORY NOTES
($35,500 PER NOTE)
(MAXIMUM SALE OF 14 NOTES)
Placement
Price to Discounts and Proceeds to the
Public Commissions Company (1)
-----------------------------------------------------------------------------
Total Maximum $497,000 ----- $497,000
(1) Before the deduction of expenses of this Offering, including, but not
limited to, legal, accounting, consulting and printing expenses, which are
estimated to be approximately $10,000.
Dated: June 3, 2003
PRIVATE PLACEMENT MEMORANDUM
Canterbury Consulting Group, Inc.
A Maximum of $497,000 Senior Convertible Promissory Notes
Canterbury Consulting Group, Inc. (the "Company" or "CITI") is a
corporation organized under the laws of the Commonwealth of Pennsylvania
and a public company trading on the Nasdaq Stock Market under the symbol
"CITI." This Offering of Senior Convertible Promissory Notes is
being made pursuant to Regulation D, Rule 506 or rule 4(2) of the
Securities Act of 1933, as amended (the "Act"), on a best efforts
basis. The Company intends to accept only subscriptions of one $35,500,
7 3/4% senior convertible note per person. All checks or wires are to be
made out to "Canterbury Consulting Group, Inc." and directed to the Company
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The Company reserves the
right to accept or reject subscriptions from any individual or entity at
any time prior to Closing.
No person is authorized to give any information or to make any
representations not contained in this Memorandum, and, if given or made,
any information or representation not contained herein must not be relied
upon as having been authorized by or on behalf of the Company. Neither
delivery of this Memorandum nor any sale of the Shares shall at any time
imply that the information contained herein is correct at any time
subsequent to this date.
This Memorandum does not contain all of the information that would
normally appear in a prospectus for an offering registered under the
Securities Act or that may be necessary to make an informed investment
decision regarding an investment in the Shares. The Company will furnish
or refer to various filings with the SEC as well as additional information
to interested offerees upon request. Purchasers of the Shares will be
required to acknowledge at the time of purchase that they have requested
and received all information necessary to make an informed decision to
Purchase the Shares.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR WITH ANY STATE OR REGULATORY AGENCY UNDER ANY
SECURITIES LAWS OF ANY STATE IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION
PROVIDED IN SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER, AND MAY
NOT BE RESOLD OR TRANSFERRED IN THE ABSENCE OF THE SATISFACTION OF CERTAIN
CONDITIONS, INCLUDING AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS
OR AN OPINION OF COUNSEL OF THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
THIS CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM OFFERS THE COMMON STOCK
ONLY TO INVESTORS WHO QUALIFY AS "INSTITUTIONAL INVESTORS" PROVIDED,
HOWEVER, THAT SHARES MAY BE OFFERED AND SOLD TO "ACCREDITED INVESTORS" AND
A LIMITED NUMBER OF "NON-ACREDITED INVESTORS" (AS SUCH TERMS ARE DEFINED
IN THE SECURITIES ACT OF 1933, AS AMENDED) AT THE WRITTEN CONSENT OF THE
COMPANY. ALL INVESTORS MUST MEET CERTAIN SUITABILITY STANDARDS
ESTABLISHED BY THE COMPANY, SUBJECT TO THE COMPANY'S RIGHT TO REJECT
SUBSCRIPTIONS, IN WHOLE OR IN PART. THE MINIMUM SUBSCRIPTION WILL BE FOR
40,000 SHARES, UNLESS OTHERWISE APPROVED BY THE COMPANY.
THE SHARES OFFERED HEREBY WILL BE SOLD SUBJECT TO THE PROVISIONS OF A
SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT") CONTAINING CERTAIN
REPRESENTATIONS, WARRANTIES, TERMS AND CONDITIONS. ANY INVESTMENT IN THE
SHARES OFFERED ▇▇▇▇▇▇ SHOULD BE MADE ONLY AFTER A COMPLETE AND THOROUGH
REVIEW OF THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT. THE COMPANY
RESERVES THE RIGHT IN ITS DISCRETION TO ACCEPT OR REJECT, IN WHOLE OR
PART, ANY PROPOSED INVESTMENT IN THE SHARES.
THE SHARES AND THIS OFFERING HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE REGULATORY AGENCY, NOR HAS
SUCH COMMISSION OR ANY SUCH AGENCY PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. THESE SECURITIES ARE HIGHLY SPECULATIVE AND SHOULD ONLY BE
PURCHASED BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH
UNDER "RISK FACTORS" BEFORE PURCHASING SUCH SECURITIES.
THE SECURITIES DESCRIBED HEREIN ARE BEING OFFERED PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND APPLICABLE
STATE SECURITIES LAWS RELATING TO TRANSACTIONS NOT INVOLVING A PUBLIC
OFFERING OR SOLICITATION, SUCH EXEMPTIONS LIMIT THE NUMBER AND TYPES OF
INVESTORS TO WHOM THE OFFERING IS MADE AND RESTRICT SUBSEQUENT TRANSFER OF
THE SECURITIES DESCRIBED HEREIN.
THE SECURITIES DESCRIBED HEREIN ARE RESTRICTED WITH RESPECT TO
TRANSFERABILITY AND RESALE. SUCH SECURITIES MAY NOT BE RESOLD OR
OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS, IN THE OPINION OF COUNSEL OF
THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT, OR APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED OR COMPLIANCE IS MADE WITH SUCH
REGISTRATION REQUIREMENTS.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN IN ANY JURISDICTION WHERE,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION
IN SUCH JURISDICTION. EXCEPT AS OTHERWISE INDICATED ▇▇▇▇▇▇, THIS
MEMORANDUM SPEAKS AS OF THE DATE HEREOF. NEITHER THE DELIVERY OF THIS
MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY AFTER THE DATE HEREOF.
THIS MEMORANDUM IS SUBMITTED IN CONNECTION WITH THE OFFERING OF THE
SECURITIES DESCRIBED HEREIN AND MAY NOT BE REPRODUCED OR USED FOR ANY
OTHER PURPOSE. BY ACCEPTING DELIVERY OF THIS MEMORANDUM, EACH POTENTIAL
INVESTOR AGREES THAT HE, SHE OR IT WILL NOT DIVULGE THE CONTENTS HEREOF TO
ANY PERSON OR ENTITY AND WILL RETURN IT (WITH ALL RELATED DOCUMENTS OR
MATERIALS) TO THE COMPANY UPON REQUEST IF SUCH INVESTOR DOES NOT AGREE TO
PURCHASE ANY OF THE SECURITIES. ANY REPRODUCTION OR DISTRIBUTION OF THIS
DOCUMENT WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY IS PROHIBITED.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS MEMORANDUM
AS LEGAL, TAX OR ACCOUNTING ADVICE, BUT SHOULD CONSULT THEIR LEGAL
COUNSEL, ACCOUNTANTS AND BUSINESS ADVISORS ABOUT LEGAL, TAX AND ACCOUNTING
MATTERS CONCERNING AN INVESTMENT IN THE SECURITIES DESCRIBED HEREIN.
CERTAIN PROVISIONS OF VARIOUS DOCUMENTS AND RECORDS ARE BRIEFLY SUMMARIZED
IN THIS MEMORANDUM. SUCH SUMMARIES ARE NOT AND DO NOT PURPORT TO BE
COMPLETE AND REFERENCE MUST BE MADE DIRECTLY TO SUCH DOCUMENTS AND RECORDS
FOR COMPLETE INFORMATION CONCERNING THE RIGHTS AND OBLIGATIONS OF THE
PARTIES. COPIES OF SUCH DOCUMENTS ARE INCLUDED HEREWITH OR ARE AVAILABLE
UPON REQUEST FROM THE COMPANY.
PROSPECTIVE INVESTORS ARE URGED TO READ THIS MEMORANDUM CAREFULLY. ALL
PROSPECTIVE INVESTORS WILL HAVE AN OPPORTUNITY TO TALK WITH
REPRESENTATIVES OF THE COMPANY TO VERIFY ANY OF THE INFORMATION INCLUDED
▇▇▇▇▇▇ AND TO OBTAIN ADDITIONAL INFORMATION REGARDING THE COMPANY. THIS
MEMORANDUM CONTAINS SUMMARIES OF CERTAIN DOCUMENTS. COPIES OF ALL
MATERIAL DOCUMENTS, CONTRACTS AND FINANCIAL STATEMENTS RELATING TO THE
COMPANY WILL BE MADE AVAILABLE TO PROSPECTIVE INVESTORS FOR INSPECTION
DURING NORMAL BUSINESS HOURS UPON REQUEST TO THE COMPANY. THE DELIVERY OF
THIS MEMORANDUM, ATTACHMENTS OR OTHER MATERIALS AT ANY TIME DOES NOT IMPLY
THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION CONTAINED HEREIN OR
THEREIN SINCE THE DATE HEREOF OR THEREOF.
ANY REPRODUCTION OR DISTRIBUTION OF THIS MEMORANDUM, IN WHOLE OR IN PART,
OR THE DIVULGENCE OF ANY OF ITS CONTENTS WITHOUT THE PRIOR WRITTEN
PERMISSION OF THE COMPANY IS PROHIBITED. THIS MEMORANDUM IS FURNISHED FOR
THE SOLE USE OF THE OFFEREE AND FOR THE SOLE PURPOSE OF PROVIDING
INFORMATION REGARDING THE SECURITIES OFFERED HEREBY. NO OTHER USE OF THIS
INFORMATION IS AUTHORIZED. THE DELIVERY OF THIS MEMORANDUM DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES OFFERED
HEREBY NOR AN OFFER TO ANY PERSON IN ANY JURISDICTION IN WHICH AN OFFER
WOULD BE UNLAWFUL. THE OFFEREE, BY ACCEPTING DELIVERY OF THIS MEMORANDUM
AND ANY OTHER MATERIALS DELIVERED IN CONNECTION WITH THIS MEMORANDUM,
AGREES NOT TO COPY THIS MEMORANDUM AND SUCH OTHER MATERIALS AND TO RETURN
IT TOGETHER WITH ALL ATTACHMENTS AND EXHIBITS, TO THE COMPANY IF THE
OFFEREE DOES NOT PURCHASE ANY OF THE SECURITIES.
EXCEPT AS HEREIN DISCUSSED, NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION CONCERNING THE
COMPANY OTHER THAN THOSE CONTAINED IN THIS MEMORANDUM IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. IN MAKING AN INVESTMENT DECISION, INVESTORS
MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED.
ANY ESTIMATES OR FORECASTS AS TO EVENTS THAT OCCUR IN THE FUTURE ARE BASED
UPON THE BEST JUDGMENT OF THE COMPANY'S MANAGEMENT AS OF THE DATE OF THIS
MEMORANDUM.
WHETHER SUCH ESTIMATES OR FORECASTS MAY BE ACHIEVED WILL DEPEND UPON THE
COMPANY ACHIEVING ITS OVERALL BUSINESS OBJECTIVES AND THE AVAILABILITY OF
FUNDS INCLUDING FUNDS FROM THE SALE OF THE SECURITIES OFFERED HEREBY.
THERE IS NO GUARANTEE THAT ANY OF THESE FORECASTS WILL BE ATTAINED.
ACTUAL RESULTS WILL VARY FROM THE FORECASTS AND SUCH VARIATIONS MAY BE
MATERIAL.
THE COMPANY MAY ACCEPT OR REJECT ANY OFFER TO PURCHASE THE SECURITIES
DESCRIBED HEREIN, IN WHOLE OR IN PART, FOR ANY REASON, AND THE COMPANY MAY
WITHDRAW OR CANCEL THE OFFERING WITHOUT NOTICE. AFFILIATES OF THE COMPANY
MAY ACQUIRE SECURITIES IN THIS OFFERING.
THE COMPANY RESERVES THE RIGHT TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS
THAN THE AMOUNT OF SHARES SUCH INVESTOR DESIRES TO PURCHASE.
THE COMPLETION OF EACH PURCHASE AND SALE OF THE SHARES WILL BE AT A PLACE
AND TIME SPECIFIED BY THE COMPANY AND IN ACCORDANCE WITH THE PROVISIONS IN
THE FORM OF THE SUBSCRIPTION AGREEMENT.
STATE NOTICE REQUIREMENTS
NOTICE TO NEW JERSEY RESIDENTS
THIS CONFIDENTIAL OFFERING MEMORANDUM HAS NOT BEEN FILED WITH OR
REVIEWED BY THE NEW JERSEY BUREAU OF SECURITIES PRIOR TO ITS ISSUANCE AND
USE. THE BUREAU OF SECURITIES OF THE STATE OF NEW JERSEY HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
NOTICE TO NEW YORK RESIDENTS
THIS PRIVATE OFFERING MEMORANDUM HAS NOT BEEN REVIEWED BY THE
ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF
THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS
OFFERING. ANY REPRESENTATIONS TO THE CONTRARY IS UNLAWFUL.
NOTICE TO FLORIDA RESIDENTS
IF SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, THE FOLLOWING
PROVISIONS WILL APPLY:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA
SECURITIES ACT IN RELIANCE UPON EXEMPTION PROVISIONS CONTAINED THEREIN.
SS 517.061(11)(A)(5) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT
(THE "FLORIDA ACT") PROVIDES THAT ANY PURCHASER OR SECURITIES IN FLORIDA
WHICH ARE EXEMPTED FROM REGISTRATION UNDER SS 517.061(11) OF THE FLORIDA ACT
MAY WITHDRAW HIS SUBSCRIPTION AGREEMENT AND RECEIVE A FULL REFUND OF ALL
MONIES PAID, WITHIN THREE BUSINESS DAYS AFTER HE TENDERS CONSIDERATION FOR
SUCH SECURITIES. THEREFORE, ANY FLORIDA RESIDENT WHO PURCHASES SECURITIES
IS ENTITLED TO EXERCISE THE FOREGOING STATUTORY RESCISSION RIGHT WITHIN
THREE BUSINESS DAYS AFTER TENDERING CONSIDERATION FOR THE SECURITIES BY
TELEPHONE, TELEGRAM, OR LETTER NOTICE TO THE PRESIDENT AT THE ADDRESS OR
TELEPHONE NUMBER SET FORTH HEREIN. ANY TELEGRAM OR LETTER SHOULD BE SENT
OR POSTMARKED PRIOR TO THE END OF THE THIRD BUSINESS DAY. A LETTER SHOULD
BE MAILED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE ITS
RECEIPT AND TO EVIDENCE THE TIME OF MAILING. ANY ORAL REQUESTS SHOULD BE
CONFIRMED IN WRITING.
AVAILABLE INFORMATION
The information set forth herein should be read together with, and is
qualified in its entirety by reference to the information contained in,
the exhibits hereto and to the following filings with the Securities and
Exchange Commission which can be obtained from the SEC's website -
▇▇▇.▇▇▇.▇▇▇. Prospective investors should access the public filings
delineated below. To the extent that such information is not consistent
with the information set forth herein, the information herein will be
deemed superseded by the information contained in such exhibits.
Canterbury Consulting Group, Inc.'s public filings:
3/10/03 Form 10-K was filed for the fiscal year ended November 30,
2002
4/11/03 Form 10-Q was filed for the quarter ended February 28, 2003
3/18/03 Form 8-K was filed on March 18, 2003 concerning the
termination of employment of the President of
Usertech/Canterbury Corp., a wholly owned subsidiary.
3/18/03 Form 8-K was filed on May 15, 2003 concerning Nasdaq
notification of Company's listing qualification deficiency.
CONFIDENTIALITY
The information contained in this Memorandum is confidential and
proprietary to the Company and is being submitted to prospective investors
solely for such investors' confidential use with the express understanding
that, without the prior written permission of the Company, such
prospective investors will not release this document or discuss the
information contained herein or make reproductions of or otherwise use
this Memorandum for any purpose other than evaluating a potential
investment in the securities described herein. This Memorandum contains
certain financial and other information (incorporated by reference or
otherwise) concerning the Company which is material non-public information
and should be treated as confidential. Receipt and acceptance of this
Memorandum constitutes the recipient's acknowledgment that the information
contained herein will be maintained in strict confidence by the recipient
and will not be disclosed to any third parties.
A prospective investor, by accepting delivery of this Memorandum,
further agrees to promptly return to the Company this Memorandum and any
other documents or information furnished if the prospective investor
elects not to purchase any of the securities described herein or upon
request of the Company.
INDEPENDENT EVALUATION
This Memorandum does not purport to be all-inclusive or to contain all
of the information that a prospective investor may desire in evaluating an
investment in the securities of the Company. Prior to the consummation of
the offer and sale of any of the securities described herein, the Company
will afford prospective investors an opportunity to ask questions of and
receive answers from the Company concerning the terms and conditions of
the securities described herein, the Company or other relevant matters and
to obtain additional information to the extent the Company possesses such
information or can acquire it without reasonable effort or expense. Any
such questions should be directed to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman of the
Board, or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President and Chief Executive Officer, at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇ or by facsimile
at (▇▇▇) ▇▇▇-▇▇▇▇. No person or entity has been authorized to give any
information or to make representations about the Company or the Offering
and, if given or made, any such information or representation by any other
person or entity must not be relied upon as having been authorized by the
Company. Each prospective investor must conduct and rely on his own
evaluation of the Company and the terms of the Offering (including the
merits and risks involved) in making an investment decision with respect
to the securities described herein. Investment in the Shares involves a
high degree of risk. See "RISK FACTORS."
TERMS OF THE OFFERING
General
A maximum of fourteen (14) - 7 3/4% Senior Convertible Notes with
1,400,000 (100,000 shares each note) underlying restricted common shares
("Shares") (par value $.001 per share) to be issued in whole or in part at
conversion at the discretion of each Noteholder) are being offered
"Investors"; provided, however, that offers and sales may be made to
"Accredited Investors" and a limited number of "Non-Accredited Investors"
as those terms are defined in Regulation D and Rule 501 promulgated under
the Securities Act of 1933, as amended (the "Securities Act") upon the
written consent of the Company at a price of $35,500 per Note on a best
efforts basis. The Company reserves the right to reject any subscription,
to accept one subscription over another, and to allocate available Shares
among subscribers as it deems appropriate.
Subscription Payments
The purchase price of the Notes subscribed for must be paid for by
cash, check or wire transfer. All checks or wires are to be made out to
"Canterbury Consulting Group, Inc."
Restrictions on Transferability
The securities described herein are: (i) not registered under the
Securities Act or the securities laws of any state; and (ii) are being
offered and sold in reliance upon exemptions from the registration
provisions of federal and state securities laws. Investors purchasing
such securities will, therefore, not be able to resell or otherwise
transfer such securities in the absence of registration under the
Securities Act or unless an exemption from the registration requirements
thereof is made available. Additionally, all applicable state laws
requiring registration or qualification must also be satisfied before any
resale or transfer of the securities is permitted.
Investor Suitability Standards
The Securities will only be sold to "Institutional Investors" provided,
however, that Securities may be sold to "Accredited Investors" and a limited
number of "Non-Accredited Investors" within the meaning prescribed by
Regulation D and Rule 501 and Rule 506 promulgated under the Securities
Act upon the written consent of the Company.
Each investor will be required to represent that the investment is
suitable for him, that he is purchasing the Securities for investment and not
with a view to a distribution or resale, and that he is purchasing the
Securities for his own account and not for the account of others. The Company
may require additional information with respect to any subscriber.
Subscription information will be used by the Company to determine whether
or not to accept subscriptions and will be kept confidential and not
disclosed except to counsel and, if required, to governmental and
regulatory authorities. The Company reserves the right, in its sole
discretion, to reject any subscription or to accept one subscription over
another.
Plan of Distribution
The Company is offering the Securities described herein on a "best
efforts" basis. The Company reserves the right to accept or reject
subscriptions from any individual or entity at any time prior to closing.
THE OFFERING
Securities Offered: The Company is offering a maximum of fourteen (14)
- 7 3/4% Senior Convertible Notes maturing in 36
months with 1,400,000 shares (100,000
shares for each Note) underlying the Notes if
converted, into restricted common shares to
Institutional Investors (as well as to "Accredited
Investors" and a limited number of "Non-accredited
Investors" as permitted by this Memorandum) pursuant
to this Private Placement Memorandum (this
"Memorandum").
Minimum Purchase: Unless otherwise agreed to by the Company, the
purchase by each prospective investor is one 7 3/4%
Senior Convertible Note ($35,500).
Capital Stock
Outstanding
Prior to Offering: Approximately 1,850,000 shares of Common Stock were
outstanding as of the date of this offering. Upon
completion of the Offering, the Company will
have an additional 1,400,000 shares outstanding if
the maximum Notes are sold and all are converted.
Voting Rights: Each share of Common Stock has one vote when and if
converted.
Risk Factors: An investment in the Securities involves a high degree
of risk and should only be undertaken by investors
able to lose their entire investment. Prospective
investors should review carefully and consider the
factors described under "RISK FACTORS".
Use of Proceeds: The net proceeds to the Company will be used for
working capital.
Registration Rights: None.
RISK FACTORS
Purchase of the securities offered hereby involves a high degree of risk
and must be considered a speculative investment. An investment in the
securities is suitable only for persons of adequate means, who have no need
for liquidity in their investment, who can afford the loss of their entire
investment and who are "Institutional Investors " or who meet the accredited
investor requirements of Regulation D promulgated under the Securities Act
or a limited number of non-accredited investors. Prospective investors
should, prior to any purchase of the Shares, carefully consider the
following risk factors, as well as the other information contained in this
Memorandum, attached hereto as Exhibits and incorporated by reference
herein.
1. WE HAVE NOT BEEN PROFITABLE AND MAY NOT BECOME PROFITABLE, IN WHICH EVENT
OUR BUSINESS WOULD BE ADVERSELY AFFECTED.
We have not been profitable. We may never again be profitable, or, if we
become profitable, we may be unable to sustain profitability.
2. WE FACE SIGNIFICANT COMPETITION.
The market for training and technology consulting services is intensely
competitive. We expect competition in our market to continue to intensify
as a result of increasing market size, greater visibility of the market
opportunity for internet services and minimal barriers to entry. Industry
consolidation may also increase competition. We compete with many types of
companies, including both online and offline companies, and a variety of
internet-based training and networking companies. Many of our existing
competitors, as well as a number of potential new competitors, have longer
operating histories, greater name recognition, larger client bases and
significantly greater financial, technical and marketing resources than we
do. This may allow them to compete more effectively and be more responsive
to industry and technological change than us. We may not be able to compete
successfully and competitive pressures may reduce our revenues and result in
increased losses or reduced profits.
3. OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO RETAIN KEY PERSONNEL.
Our future success is substantially dependent upon the continued service
of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and other executive officers, managers
and directors. The loss of the services of any of these individuals could
have a material adverse affect on our business, although we have employment
agreements for both ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. Competition for
senior management is intense, and we may not be successful in attracting and
retaining key personnel.
4. THE INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, AND ANY
INFRINGEMENT ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, COULD
ADVERSELY AFFECT OUR BUSINESS.
Third parties may infringe or misappropriate our patents, trademarks or
other intellectual property rights, which could have a material adverse
effect on our business, results of operations or financial condition. The
actions we take to protect our trademarks and other proprietary rights may
not be adequate. In addition, the validity, enforceability and scope of
protection of proprietary rights in Internet-related industries is uncertain
and still evolving.
Third parties may assert infringement claims against us. Any claims and
any resulting litigation, should they occur, could subject us to significant
liability for damages. In addition, even if we prevail, litigation could be
time-consuming and expensive to defend, and could result in the diversion of
our time and attention. Any claims from third parties may also result in
limitations on our ability to use the intellectual property subject to these
claims unless we are able to enter into contractual arrangements with the
third parties making these claims, which arrangements may not be available
on commercially reasonable terms.
5. OUR GROWTH WILL DEPEND ON THE GROWTH OF THE ECONOMY.
We depend on continued growth in the economy by businesses and customers.
If the technology sector does not grow or grows more slowly than expected,
the demand for our services and products by current and potential customers
may decline or grow more slowly than anticipated. Even if the economy
grows, there is no guaranty that the technology sector and/or our niche in
that sector will prosper.
6. LAWS AND REGULATIONS PERTAINING TO THE INTERNET MAY ADVERSELY AFFECT
OUR BUSINESS.
There are an increasing number of laws and regulations pertaining to the
Internet. These laws and/or regulations may relate to liability for
information retrieved from or transmitted over the Internet, online content
regulation, user privacy, taxation and the quality of products and services.
Moreover, the applicability to the Internet of existing laws governing
intellectual property ownership and infringement, copyright, trademark,
trade secret, obscenity, libel, employment, personal privacy and other
issues is uncertain and developing. Any new law or regulation pertaining to
the Internet, or the application or interpretation of existing laws, could
decrease the demand for our services, increase our cost of doing business or
otherwise have a material adverse effect on our business, results of
operations and financial condition.
7. WE MAY BE UNABLE TO RESPOND TO TECHNOLOGICAL CHANGE EFFECTIVELY.
Our industry is characterized by rapid technological change, frequent new
service introductions, changing consumer demands and evolving industry
standards and practices. Our inability to anticipate and effectively
respond to these changes on a timely basis would materially adversely affect
our business, results of operations and financial condition. Our future
success will depend, in part on our ability to cost-effectively adapt to
rapidly changing technologies, to enhance existing services and to develop
and introduce a variety of new services to address changing demands of
customers and our clients on a timely basis.
8. ARBITRARY DETERMINATION OF OFFERING PRICE.
Even though the Company's common stock has been trading on the Nasdaq
Small Cap Market in excess of the Offering price, the Offering price of
the Shares was arbitrarily determined by the Company and does not
necessarily bear any relationship to the Company's asset value, net worth
or other established criteria of value.
9. VOTING CONTROL BY MANAGEMENT; POTENTIAL ANTI-TAKEOVER EFFECT.
After giving effect to this offering Management will beneficially own a
substantial number of the outstanding shares. Accordingly, they may, by
themselves, have sufficient shares to be able to approve major corporate
transactions including amending the Certificate of Incorporation of the
Company, the sale of substantially all of the Company's assets, the election
of all of the directors of the Company and to control the Company's change
in control of the Company and may adversely affect at the rights of the
shareholders of the Company. In addition, the Company is subject to the
Delaware statute regulating business combinations which may also hinder or
delay a change or control.
THE COMPANY
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DESCRIPTION OF BUSINESS
Please see the Company's 10-K filing for the fiscal year 2002 pages two
through seven for a detailed description of the business of the Company.
LEGAL PROCEEDINGS
None.
REGISTRATION RIGHTS
None.
USE OF PROCEEDS
If the maximum offering is sold, the Company should receive net
proceeds of approximately $487,000. All proceeds to be used for working
capital.
MANAGEMENT
Please see Form 10-K for the fiscal year ended November 30, 2002 pages 17
through 20.
PRINCIPAL STOCKHOLDERS
Please see Form 10-K for the fiscal year ended November 30, 2002 pages 21
and 22.
DESCRIPTION OF SECURITIES
Common Stock
Holders of shares of Common Stock of the Company are entitled to cast one
vote for each share held at all shareholders meetings for all purposes,
including the election of directors, and to share equally on a per share
basis in such dividends as may be declared by the Board of Directors out of
funds legally available therefore. Upon liquidation or dissolution, each
outstanding share of Common Stock will be entitled to share equally in the
assets of the Company legally available for distribution to shareholders
after the payment of all debts and other liabilities. Shares of Common Stock
are not redeemable, have no conversion rights and carry no preemptive or
other rights to subscribe to or purchase additional shares in the event of a
subsequent offering. All outstanding shares of Common Stock are, and the
shares offered hereby will be when issued, fully paid and non-assessable.
Senior Convertible Promissory Notes
Terms and conditions for the Senior Convertible Promissory Notes being sold
herewith are set forth earlier in this Memorandum.
Non-Cumulative Voting
CITI Common Stock does not have cumulative voting rights which means that
the holders of more than fifty percent of the Common Stock voting for
election of directors can elect one hundred percent of the directors of the
Company if they choose to do so.
SUITABILITY STANDARDS
INVESTMENT IN THE NOTE AND UNDERLYING SECURITIES INVOLVES A HIGH DEGREE OF
RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL RESOURCES WHO
HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT. See "RISK FACTORS".
The Securities lack liquidity as compared with other securities since the
Securities will be restricted by the Subscription Agreement and applicable
federal and state securities laws.
The Securities will be offered or sold only to a subscriber whom the
Issuer believes, based on reasonable grounds after reasonable inquiry, is an
"accredited investor" or to a limited number of "non-accredited investor"
pursuant to Regulation D, Rule 506 or Rule 4(2) of the Securities Act of
1933, as amended ("Act"). An "accredited investor" as defined in Regulation
D [Rule 501 (a) under the Securities Act of 1933 (17 C.F.R. Sec. 230.501
(a)] is, among other things, a natural person whose net worth exceeds
$1,000,000 or a natural person who has had an individual income in excess of
$200,000 in each of the most recent two years and who expects an income in
excess of $200,000 in the current year.
Subscribers' representations will be reviewed to determine the suitability
of prospective purchasers, and the Issuer will have the right to refuse a
subscription for the Securities for any reason in its sole discretion.
Subscriptions will not necessarily be accepted in the order in which
received.
RESTRICTIONS ON TRANSFER
The Securities offered hereby are restricted securities as that term is
defined in the Securities Act of 1933 as amended.
Investment in the Securities offered may be made by persons who do so for
investment purposes only and without a view to resale or further
distribution. This Confidential Offering Memorandum and the Subscription
Agreement provides that no sale will be approved in the absence of a
effective registration or an opinion of counsel satisfactory to the Company
that such transfer qualifies for an exemption. The purchaser of the
securities offered ▇▇▇▇▇▇ agrees to the placement of a legend on the
underlying common stock certificates if and when converted, restricting
transferability and additionally agrees not to sell the securities purchased
unless the Securities are subsequently registered or there is an exemption
available (such as Rule 144) in lieu of Registration.
The Company has agreed to indemnify its officers, Directors and agents
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
METHOD OF SALE OF NOTES
The offering of Notes and underlying Shares will be conducted in reliance
upon exemptions from registration requirements contained in Section 4(2) and
Rule 506 of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act") and pursuant to the relevant state "blue sky" laws for
transactions not involving a public offering. Accordingly, offers and sales
of the Shares will only be made to prospective Investors who satisfy, in the
sole judgment of the Company, all of the following suitability standards:
1. Each Investor must be an "accredited investor" (or a limited number of
"non-accredited investors") as such terms are defined in Rule 501(a) of
Regulation D under the Securities Act.
2. Each Investor must confirm and represent that the Note and underlying
Shares to be purchased are being acquired for investment and not with a view
to distribution.
Before closing any sale of Notes to an Investor, a Subscription Agreement
in the form of Exhibit A hereto, must be executed by such Investor and
delivered to the Company, along with a check or wire, payable to "Canterbury
Consulting Group, Inc." in an amount equal to the purchase price of the Note
being so purchased.
Each prospective Investor should obtain the advice of his attorney, tax
consultant, and business advisor with respect to the legal, tax and business
aspects of the investment prior to subscribing for these securities.
The Company may in its sole discretion accept or reject any potential
Investor's subscription in whole or in part, irrespective of whether such
Investor meets the minimum suitability standards for investing in the
Offering. The Company is under no obligation to accept a potential
Investor's subscription unless and until the Company accepts such
Subscription Agreement at the Closing (as defined in the Subscription
Agreement).
This Offering will terminate on the earlier of the date of receipt by the
Company of good funds and executed Subscription Agreements acceptable to the
Company for all of the Notes being offered or as soon as practical. Upon
receipt of good funds from each Investor and upon acceptance of the
subscription by the Company a closing shall be held. At such Closing, the
Company will cause to be delivered to Investors whose Subscription
Agreements and funds have been accepted by the Company Notes duly
issued and authorized by the Company which represent the amount of debt
which the Company has agreed to sell to such Investors.
EXHIBIT "A"
SUBSCRIPTION AGREEMENT