Registration No: 333-116077
Prospectus Supplement to the Prospectus dated February 17, 2006
CONSORTIUM SERVICE MANAGEMENT GROUP, INC.
25,000,000 Shares of common stock
THIS SUPPLEMENT IS PART OF THE PROSPECTUS AND MUST ACCOMPANY THE PROSPECTUS TO
SATISFY PROSPECTUS DELIVERY REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS
AMENDED
The sole purpose of this Prospectus Supplement dated February 17, 2006 is
to supplement certain information set forth in the Prospectus dated June 2,
2004.
The prospectus relates to the sale of up to 25,000,000 shares of our
common stock by Cornell Capital Partners, L.P. ("Cornell Capital") that is
currently a stockholder of Consortium Service Management Group, Inc.. All of the
shares of common stock are being offered for sale by the selling stockholder at
prices established on the OTC Bulletin Board during the term of this offering.
These prices will fluctuate based on the demand for the shares of common stock.
Our common stock is quoted on the OTC Bulletin Board under the symbol "CTUM."
The last reported sale price of our common stock on the OTC Bulletin Board was
$0.275 per share on February 16, 2006. The selling stockholders are:
Cornell Capital Partners, L.P., which has already sold 13,865,775 shares
of our common stock acquired pursuant to a Standby Equity Distribution Agreement
with us and 1,516,638 shares of our common stock under a convertible debenture
that we issued to Cornell Capital for fees in connection with the issuance of
that debenture and up to an additional 9,132,056 shares of our common stock
which may be acquired pursuant to the Standby Equity Distribution Agreement.
Newbridge Securities Corporation, an unaffiliated registered broker-dealer
that advised us in connection with the Standby Equity Distribution Agreement.
Newbridge was paid a $10,000 placement agent fee, which payment was made in
shares of our common stock.
Cornell Capital is an "underwriter" within the meaning of the Securities
Act of 1933 in connection with the sale of common stock pursuant to the Standby
Equity Distribution Agreement. Cornell Capital will pay Consortium Service
Management Group, Inc. 95% of the market price of our common stock. The 5%
discount on the purchase of the common stock to be received by Cornell Capital
will be an underwriting discount. In addition, Cornell Capital Partners, L.P. is
entitled to retain 5% of the proceeds raised by us under the Standby Equity
Distribution Agreement.
These securities are speculative and involve a high degree of risk.
Please refer to "Risk Factors" beginning on page 4.
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With the exception of Cornell Capital, which is an "underwriter" within
the meaning of the Securities Act of 1933 in connection with the sale of our
common stock under the Standby Equity Distribution Agreement, no underwriter or
any other person has been engaged to facilitate the sale of shares of common
stock in this offering. This offering shall terminate on the earlier of 60 days
after Cornell Capital has advanced $10 million or June 2, 2006, 24 months after
the date this registration statement was declared effective. None of the
proceeds from the sale of stock by the selling stockholders will be placed in
escrow, trust or any similar account.
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved of these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus Supplement is February 17, 2005.
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Description of Business
CARBON DIOXIDE SEPARATOR
The following language is added to the Prospectus as the last paragraphs under
this heading:
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