-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M/TV4SpKpi+GLcPKpkuObAfwbm3oc3IX9DYvPB6uD4NCjyBtKsHv5uhOlI24bfK+ 5Mv7ulHcFjwy+6gzzgI5uw== 0001012287-97-000029.txt : 19970716 0001012287-97-000029.hdr.sgml : 19970716 ACCESSION NUMBER: 0001012287-97-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970715 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CANTERBURY INFORMATION TECHNOLOGY INC CENTRAL INDEX KEY: 0000794927 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 232170505 STATE OF INCORPORATION: PA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15588 FILM NUMBER: 97640642 BUSINESS ADDRESS: STREET 1: 1600 MEDFORD PLZ STREET 2: RTE 70 & HARTFORD RD CITY: MEDFORD STATE: NJ ZIP: 08055 BUSINESS PHONE: 6099530044 MAIL ADDRESS: STREET 1: 1600 MEDFORD PLZ CITY: MEDFORD STATE: NJ ZIP: 08055 FORMER COMPANY: FORMER CONFORMED NAME: CANTERBURY CORPORATE SERVICES INC DATE OF NAME CHANGE: 19940323 FORMER COMPANY: FORMER CONFORMED NAME: CANTERBURY EDUCATIONAL SERVICES INC /PA/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CANTERBURY PRESS INC DATE OF NAME CHANGE: 19870615 10-Q 1 FORM 10-Q FOR QUARTER ENDING 5/31/97 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: Commission File Number: May 31, 1997 0-15588 CANTERBURY INFORMATION TECHNOLOGY, INC. FORMERLY CANTERBURY CORPORATE SERVICES, INC. (Exact name of registrant as specified in its charter) Pennsylvania 23-2170505 (State of Incorporation) (I.R.S. Employer Identification No.) 1600 Medford Plaza Route 70 & Hartford Road Medford, New Jersey 08055 (Address of principal executive office) Telephone Number: (609) 953-0044 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No _____ _____ The number of shares outstanding of the registrant's common stock as of the date of the filing of this report: 16,201,469 shares. FORM 10-Q PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements CANTERBURY INFORMATION TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEET ASSETS May 31, 1997 November 30, (Unaudited) 1996 Current Assets: Cash $ 453,444 $ 440,178 Accounts receivable net of allowance for doubtful accounts of $1,839,000 and $1,685,000 3,574,083 3,142,024 Notes receivable 864,001 978,582 Prepaid expenses and other assets 860,742 641,645 Deferred income tax benefit 1,228,000 1,228,000 ___________ ___________ Total Current Assets 6,980,270 6,430,429 Property and equipment at cost, net of accumulated depreciation and amortization of $3,664,000 and $3,305,000 2,654,376 2,752,430 Goodwill net of accumulated amortization of $1,378,000 and $1,178,000 9,049,124 8,914,086 Notes receivable 8,713,562 9,092,943 Other assets 309,817 275,131 ___________ ___________ Total Assets $27,707,149 $27,465,019 =========== =========== See Accompanying Notes FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEET LIABILITIES AND SHAREHOLDERS' EQUITY May 31, 1997 November 30, (Unaudited) 1996 Current Liabilities: Accounts payable - Trade $ 165,323 $ 230,000 Accrued expenses 332,955 374,859 Income taxes payable 490,855 424,845 Unearned tuition income 1,048,732 1,198,991 Current portion, long-term debt 2,295,857 2,230,715 ___________ ___________ Total Current Liabilities 4,333,722 4,459,410 Long-term debt 3,749,938 4,718,793 Deferred income tax liability 1,728,000 2,028,000 Shareholders' Equity: Common stock, $.001 par value, 50,000,000 shares authorized; 16,201,000 and 15,054,000 issued outstanding 16,201 15,054 Additional paid in capital 15,938,011 14,840,642 Retained earnings 2,266,312 1,728,155 Treasury stock (325,035) (325,035) ___________ __________ Total Shareholders' Equity 17,895,489 16,258,816 ___________ __________ Total Liabilities and Shareholders' Equity $ 27,707,149 $ 27,465,019 ============ ============ See Accompanying Notes FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF INCOME The following Consolidated Statements of Income for the three-month and six-month periods ended May 31, 1997, and May 31, 1996, are unaudited, but the Company believes that all adjustments (which consist only of normal recurring accruals) necessary for a fair presentation of the results of operations for the respective periods have been included. Quarterly results of operations are not necessarily indicative of results for the full year. Three months ended Six months ended May 31, May 31, (Unaudited) (Unaudited) 1997 1996 1997 1996 Net revenues $4,188,853 $4,378,813 $7,363,132 $7,607,949 Costs and expenses 1,826,953 2,068,134 3,373,089 3,241,303 __________ __________ __________ __________ Gross profit 2,361,900 2,310,679 3,990,043 4,366,646 Selling 495,834 558,049 965,316 978,186 General and administrative 1,113,523 1,272,210 2,052,004 2,100,600 Provision for doubtful accounts 76,738 100,526 154,568 176,312 __________ __________ __________ __________ Total operating expenses 1,686,095 1,930,785 3,171,888 3,255,098 Other (income)/expenses Interest income (147,488) (65,593) (308,096) (139,637) Interest expense 127,339 171,748 248,521 367,973 Other (11) (3,112) 10,573 (15,294) __________ __________ __________ __________ Income before provision for income taxes and discontinue operation 695,965 276,851 867,157 898,506 Provision for income taxes 264,000 117,000 329,000 349,000 Income from continuing __________ __________ __________ __________ operations 431,965 159,851 538,157 549,506 Discontinued operation Income from discontinued operation net of income taxes of $18,000 and $235,000 - 24,969 - 368,424 __________ __________ __________ __________ Net income $ 431,965 $ 184,820 $ 538,157 $ 917,930 ========== ========== ========== ========== Net income per common share and common share equivalents: Primary: Income from continuing operations $ .03 $ .01 $ .04 $ .04 Discontinued operation - - - .03 _________ _________ _________ _________ Net income per share $ .03 $ .01 $ .04 $ .07 ========= ========= ========= ========= Common and common share equivalents (weighted average): Primary 15,931,000 14,360,600 15,606,000 13,944,100 See Accompanying Notes FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MAY 31, 1997 AND MAY 31, 1996 May 31, May 31, 1997 1996 Cash flows from operating activities: Cash received from customers $ 6,626,246 $ 6,357,316 Cash paid to suppliers and employees (6,442,766) (6,138,936) Interest received 308,096 139,637 Interest paid (248,521) (367,973) ___________ ___________ Net cash provided by operating activities $ 243,055 $(9,956) Cash flows from investing activities: Capital expenditures (261,331) (273,579) Collection on notes receivable 497,221 422,179 ___________ ___________ Net cash provided by/(used in) investing activities 235,890 148,600 Cash flows from financing activities: Principal payments on long-term debt (98,436) (313,645) Proceeds from revolving credit facility - 100,000 Repayment of revolving credit facility - (389,000) Proceeds from long-term debt 113,473 337,643 Proceeds from exercise of stock options and warrants - 11,150 Proceeds from issuance of common stock, net 438,034 1,163,786 Repayment on term loan (918,750) (1,037,500) Payment of dividends on preferred stock - (7,376) Purchase of treasury stock - (13,000) ___________ ___________ Net cash used in financing activities (465,679) (147,942) Net cash used in discontinued operation - (632,482) Net increase/(decrease) in cash 13,266 (641,780) Cash at beginning of period 440,178 1,471,702 ------------ ----------- Cash at end of period $ 453,444 $ 829,922 ============ =========== See Accompanying Notes FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MAY 31, 1997 AND MAY 31, 1996 May 31, May 31, 1997 1996 Reconciliation of income from continuing operations to net cash provided by operating activities: Income from continuing operations $ 538,157 $ 549,506 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 559,275 $490,078 Provision for doubtful accounts 154,568 176,312 Deferred income tax benefit (300,000) (460,792) Change in operating assets and liabilities: Increase in accounts receivable (358,792) (713,753) Increase in prepaid expenses (161,675) (185,166) Increase in other assets (34,686) (143,805) Increase/(decrease) in accounts payable (32,519) 17,127 Decrease in accrued expenses (37,024) (37,173) Increase/(decrease) in unearned tuition income (150,259) 80,710 Increase in income taxes payable 66,010 217,000 ___________ __________ Total adjustments (295,102) (559,462) ___________ __________ Net cash provided by/(used in) operating activities $ 243,055 $ (9,956) =========== ============ See Accompanying Notes FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All material intercompany transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at May 31, 1997, and revenues and expenses for the six months ended May 31, 1997. The ultimate outcome and actual results could differ from the estimates and assumptions used. Revenue Recognition The Company's computer software training segment records revenue at the time an individual attends the training class. The Company's software development segment records revenue at the time of shipment of product to its clients. The Company's management training segment records revenue based on performance of seminars to its clients. The Company's vocational training segment records tuition revenues ratably over the term of the courses which run for approximately two to eight weeks. Receivables for students' tuition are recorded as of the students' first day of class attendance. Unearned tuition income represents revenue to be recognized over the term of the courses. Statement of Cash Flows For purposes of the Statement of Cash Flows, cash refers solely to demand deposits with banks and cash on hand. Depreciation and Amortization The Company depreciates and amortizes its property and equipment for financial statement purposes using the straight-line method over the estimated useful lives of the property and equipment (useful lives of leases or lives of leasehold improvements and leased property under capital leases, whichever is shorter). For income tax purposes, the Company uses accelerated methods of depreciation. Amortization of Intangible Assets Goodwill is being amortized over twenty-five years using the straight-line method. FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Deferred Income Taxes The Company utilizes the liability method to account for income taxes. This method gives consideration to the future tax consequences associated with the differences between financial accounting and tax bases of assets and liabilities. Earnings Per Share Earnings per share is computed using the weighted average common shares outstanding during the year and includes the dilutive effect of common stock equivalents (options). Accounting Changes In October 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") 123, "Accounting for Stock-Based Compensation." SFAS 123 is effective for fiscal years beginning after December 15, 1995. SFAS 123 provides companies with a choice to follow the provisions of SFAS 123 in determining stock based compensation expense or to continue with the provisions of APB 25, "Accounting for Stock Issued to Employees." The Company will continue APB 25 and will provide the pro forma disclosures as required by SFAS 123 in the November 30, 1997 notes to the consolidated financial statements. The Company does not expect that adoption of SFAS 123 will have a material effect on its consolidated financial statements. 2. Acquisition On May 5, 1997, the Company acquired the business of ATM Technologies, Inc. of Houston, Texas for $500,000 of Canterbury restricted common stock and the opportunity to earn an additional $840,000 in Canterbury restricted common stock after the first year based on achievement of certain pretax earnings levels. Based on the market price of Canterbury stock as of the purchase date, 457,143 shares were issued to the previous owners of ATM. The results of operations are insignificant and do not materially change actual historical reported results for the six months ended May 31, 1996. Based on this fact, no pro forma information is presented for that period. 3. Segment Reporting The Company is organized into four operating segments: computer software training, management training, software development and vocational training. The computer software training segment trains corporate workers and managers as an authorized training center for Microsoft, Lotus, Borland, WordPerfect, Aldus and Apple on DOS, Windows and Macintosh platforms. The management training segment conducts corporate seminars in management and team development, selling and negotiating, interpersonal communication, executive development and organizational problem solving. The software development segment specializes in the development, marketing and distribution of document imaging and tracking software. The Company's vocational training segment develops, markets and teaches courses that focus upon job-related skills in vocations such as word processing specialist, computer operator, tractor trailer driver, bartender, phlebotomy technician and electrocardiography technician. Its clients are individuals who wish to seek employment, corporations who need to hire these individuals, as well as other corporations that hire Canterbury on a direct basis to train its existing employees. FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Selected financial information for each segment, which includes an allocation of corporate expenses, is as follows: Six Months Income Capital Depreciation & Ended 5/31/97 Revenues Before Taxes Assets Expenditures Amortization Computer Software Training $5,694,388 $ 468,616 $ 3,147,963 $261,331 $243,944 Software Development 183,559 30,277 208,106 - 359 Management Training 781,984 278,454 291,110 - 241 Vocational Training/Corporate 703,201 89,810 24,059,970 - 314,731 __________ _________ ___________ ________ ________ $7,363,132 $ 867,157 $27,707,149 $261,331 $559,275 ========== ========= =========== ======== ======== Six Months Income Capital Depreciation & Ended 5/31/96 Revenues Before Taxes Assets Expenditures Amortization Computer Software Training $5,782,715 $551,025 $ 2,925,020 $273,579 $ 215,238 Software Development - - - - - Management Training 798,399 349,953 287,851 - 577 Vocational Training/Corporate 1,026,835 (2,472) 20,434,998 - 274,263 __________ ________ ___________ ________ _________ $7,607,949 $898,506 $23,647,869 $273,579 $490,078 ========== ======== =========== ======== ======== 4. Discontinued Operation On November 30, 1996 the Company sold Landscape Maintenance Services, Inc., which comprised its business maintenance services segment. The proceeds of the sale consisted of both cash and notes totalling $4,500,000. The note bears interest at 8% per annum and is secured by substantially all assets and business of the buyer. The results of operations has been reported as a discontinued operation and the financial statements for the quarter ended May 31, 1996 have been restated to reflect the discontinuation of the business maintenance services segment. The following is a summary of the results of operations of the Company's business maintenance services segment. Six Months ended May 31, 1996 Revenue $ 6,565,360 Income from operations (net of taxes of $235,000) 368,424 Cost and expenses for this discontinued segment include approximately $530,000 representing allocated costs from corporate for the six months ended May 31, 1996. FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The net assets of discontinued operation were as follows: May 31, 1996 Current Assets $ 2,480,316 Current liabilities (1,638,841) Property, plant and equipment, net 800,452 Other, net (167,099) ___________ Total $ 1,474,828 =========== 5. Property and Equipment Property and equipment consists of the following: May 31, November 30, 1997 1996 Land, buildings and improvements $ 725,910 $ 725,910 Equipment 3,811,128 3,262,009 Furniture and fixtures 1,188,229 1,184,741 Leased property under capital leases and leasehold improvements 593,480 884,756 ___________ ___________ 6,318,747 6,057,416 Less: accumulated depreciation and amortization (3,664,371) (3,304,986) ___________ ___________ Net property and equipment $ 2,654,376 $ 2,752,430 =========== =========== 6. Long-Term Debt May 31, November 30, 1997 1996 Long-term obligations consist of: Term loan $ 2,712,500 $ 3,631,250 Revolving credit line 2,774,620 2,774,620 Capital lease obligations 558,675 543,638 ___________ ___________ 6,045,795 6,949,508 Less: Current maturities (2,295,857) (2,230,715) ___________ ___________ $ 3,749,938 $ 4,718,793 =========== =========== During 1996 the Company and its primary lender, Chase Manhattan Bank, instituted litigation, each claiming that the other party violated the terms of the credit agreement. As a result, the debt was declared in default. In February, 1997, the litigation was settled and all outstandings with Chase were restructured and become due on December 31, 1997. The Company and Chase agreed that all alleged defaults under the previous agreements were permanently waived and the Company would use its best efforts to replace Chase during 1997. FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The Company is in the process of replacing Chase as its primary lender and is confident that this refinancing should be completed before December, 1997. Based on this assumption, the Company is continuing to classify a significant portion of the bank debt as long term. The projected maturities of the debt beyond December, 1997 cannot be readily determined at this time. The Company agreed to make principal payments against the term loan throughout 1997. The first payment of $919,000 was made in April, 1997; $518,750 was paid in June and $518,750 is to be paid during September, 1997. The revolving credit facility will remain at $2,774,600 until December 31, 1997, with no additional borrowings or repayments scheduled during Fiscal 1997. The capital leases will be paid as usual on a monthly basis, with any remaining balance due on December 31, 1997. Interest rates on all outstanding debt will remain at the same rate as before the restructuring. The term loan interest rate is LIBOR plus 3% or the Bank's prime rate plus 1/2%. The revolving credit facility carries an interest rate of LIBOR plus 2 1/2% or the Bank's prime rate of interest. The Company has the right to choose which rate is to be utilized on a periodic basis. The 30 day LIBOR rate at May 31, 1997 was 5.69%. As of May 31, 1997, the Company was in compliance with or has received a waiver on all of the debt covenants relating to both the term loan and the revolving credit facility. The long-term debt is secured by substantially all of the assets of the Company. Aggregate maturities on long-term debt for the next five years, exclusive of obligations under capital leases, are approximately $5,487,120, $0, $0, $0 and $0 respectively. The carrying value of the long-term debt approximates its fair value. 7. Capital Leases Capital lease obligations are certain equipment leases which expire from October, 1998 to June, 2001. Future payments under capitalized leases together with the present value, calculated at the respective leases' implicit interest rate of approximately 10.5% to 11% at their inception, are as follows: Year ending November 30, 1997 $160,750 Year ending November 30, 1998 244,236 Year ending November 30, 1999 190,864 Year ending November 30, 2000 28,248 Year ending November 30, 2001 8,525 ________ Total minimum lease payments 632,623 Less amount representing interest (73,948) ________ Present value of long-term obligations under capital leases $558,675 ======== FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) Item 2. Management's Discussion of Financial Condition and Results of Operations Liquidity and Capital Resources Working capital at May 31, 1997 was $2,646,000. During 1996 the Company and its primary lender, Chase Manhattan Bank, instituted litigation, each claiming that the other party violated the terms of the credit agreement. As a result, the debt was declared in default. In February, 1997, the litigation was settled and all outstandings with Chase were restructured and become due on December 31, 1997. The Company and Chase agreed that all alleged defaults under the previous agreements were permanently waived and the Company would use its best efforts to replace Chase during 1997. The Company is in the process of replacing Chase as its primary lender and is confident that this refinancing should be completed before December, 1997. Management believes that positive cash flow contributions from the Company's operating segments will be sufficient to cover cash flow requirements for Fiscal 1997. There was no material commitment for capital expenditures as of May 31, 1997. Inflation was not a significant factor in the Company's financial statements. Cash flow from continuing operations for the six months ended May 31, 1997 was $243,000, an increase of $253,000 over the previous year. This increase was attributed to higher interest income and lower interest expense. In February, 1997, the Company raised $434,782, net of applicable costs, through a Regulation D Private Placement of its common stock to one accredited investor at a price of $1.00 per share. This equity was used for general working capital purposes. Results of Operations Revenues Revenues for the three months ended May 31, 1997 decreased by $189,000 (4%) to $4,189,000 from the same period last year. For the six months ended May 31, 1997, revenues decreased by $235,000 (3%). These decreases were attributable to reduction in the vocation training segment. Costs and Expenses Costs and expenses for the three months ended May 31, 1997 decreased by $241,000 (12%) over the same three-month period in 1996. This reduction was the result of lower delivered revenues in the vocational training segment, as well as overall cost reductions in the other operating segments. For the six month period ending May 31, 1997, costs and expenses increased by $132,000 (4%), due to higher expenses in the first quarter of the year associated with the computer training segment in the form of additional facilities and personnel costs. Selling expense for the three-month period ended May 31, 1997 decreased by $62,000 (11%) over the previous year due to lower commissions paid on lower revenues as well as a reduction in total sales force and territorial realignment for the computer training segment. FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) General and administrative costs also decreased for the three-month period ended May 31, 1997 versus the same three months in 1996. The reduction of $159,000 (12%) was related to reduced personnel related costs was the main reason for the decrease during the quarter. Interest income for the quarter ended May 31, 1997 increased by $82,000 (126%) over the same period in 1996. This increase is due to the note receivable income generated by the sale of the discontinued operation (business maintenance services). Interest expense deceased by $45,000 (26%) for the quarter ended May 31, 1997, and $120,000 (34%) for the six months ended May 31, 1997 versus the comparable periods in Fiscal 1996 due to a reduction in the principal balance of the Company's term loan. As of the date of this report the term loan balance has been reduced by over $6,100,000 since its inception in June, 1994. PART II - OTHER INFORMATION Item 1 Legal Proceedings See Footnote 6 to the Financial Statements Item 2 Changes in Securities None Item 3 Defaults Upon Senior Securities None Item 4 Submission of Matters to a Vote of Security Holders None As a subsequent event, the Company held its Annual Meeting of Stockholders on June 12, 1997, wherein the shareholders voted for the following Directors: Stanton M. Pikus, Kevin J. McAndrew, Jean Z. Pikus, Alan Manin, Stephen Vineberg, Paul Shapiro and Frank A. Cappiello by at least 96.88% of the vote. The shareholders also ratified Ernst & Young, LLP as the Company's Indpendent Public Auditors (98.78%). 98.78% of the shareholders voted to approve the name change of the Company to Canterbury Information Technology, Inc. by amending its Certificate of Incorporation. Item 5 Other Information As a subsequent event, in June, 1997, the Company raised $431,000, net of applicable costs through the Private Placement of Class D, non-trading Convertible Preferred Stock to two accredited investors at a price of $1.00 per share of Convertible Preferred Stock. The Convertible Preferred Stock converts into common stock, par value $.001 per share of the Company at a 20% discount to the Market Price at a rate of 1/3 of the Preferred Stock five days following the effective date of a registration statement for the common shares (to be filed within 60 days after the Private Placement is complete), 1/3 thirty days after the first conversion date and the remaining 1/3 thirty days after the second conversion date. The equity raised in this Private Placement was used for general working capital purposes. Item 6 Exhibits and Reports on Form 8-K (a) Exhibits: None Reports on Form 8-K: None. As a subsequent event, a Form 8-K was filed on June 20, 1997 to report the Amendment to the Certificate of Incorporation to change the Company's name to Canterbury Information Technology, Inc. FORM 10-Q CANTERBURY INFORMATION TECHNOLOGY, INC. SIGNATURES 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. CANTERBURY INFORMATION TECHNOLOGY, INC. (Registrant) By:/s/ Stanton M. Pikus _____________________________________ Stanton M. Pikus President (Chief Executive Officer and duly authorized signer) By:/s/ Kevin J. McAndrew _____________________________________ Kevin J. McAndrew, C.P.A. Chief Operating Officer, Executive Vice President (Chief Financial Officer and duly authorized signer) July 15, 1997 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000794927 CANTERBURY INFORMATION TECHNOLOGY, INC. 1 NOV-30-1997 MAR-01-1997 MAY-31-1997 3-MOS 453,444 0 5,413,083 1,839,000 0 6,980,270 6,318,747 (3,664,371) 27,707,149 4,333,722 0 0 0 16,201 17,879,288 27,707,149 7,363,132 7,363,132 3,373,089 3,017,320 (297,523) 154,568 248,521 867,157 329,000 538,157 0 0 0 538,157 0.04 0.04
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