Attached files
As Filed with the Securities and Exchange Commission on January 28, 2013
Registration No. 333-184611
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Arrow Cars International Inc.
(Name of small business issuer in its charter)
Florida 7510 99-0374918
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
Calle del Escritor Herrera Santaolalla, No. 2
Churriana, Malaga, Spain 29140
Telephone (0034) 952623297
(Address and telephone number of registrant's principal executive offices)
Jeremy D. Harris
President
Calle del Escritor Herrera Santaolalla, No 2
Churriana, Malaga, Spain 29140
Telephone (0034) 952623297
(Name, address and telephone number of registrant's agent for service)
Copies to:
David E. Wise, Esq.
Law Offices of David E. Wise, P.C.
9901 IH-10 West, Suite 800
San Antonio, Texas 78230
Telephone: (210) 558-2858
Facsimile: (210) 579-1775
Email: Wiselaw@verizon.net
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. [ ] _________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ] _________________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ] _________________
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filed or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
CALCULATION OF REGISTRATION FEE
=======================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered (1) per Share ($) Price ($)(2) Registration Fee($)
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Shares of Common Stock,
par value $0.001 12,500,000 $ .40 $5,000,000 $682.00
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(1) 12,500,000 shares are being offered by a direct offering at the price of
$.40 per share.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457 (a) of the Securities Act, based upon the maximum
fixed price of the direct offering.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED __________, 2013
PROSPECTUS
ARROW CARS INTERNATIONAL INC.
SHARES OF COMMON STOCK
$.40 PER SHARE
12,500,000 SHARES MAXIMUM - 2,500,000 SHARES MINIMUM
Arrow Cars International Inc. ("Company") is offering on a best-efforts
basis a maximum of 12,500,000 shares of its common stock at a price of $.40 per
share. The shares are offered on a self-underwritten, "best efforts," directly
through our officers and directors. The shares will be offered at a fixed price
of $.40 per share for a period not to exceed 180 days from the date of this
prospectus. There is no minimum number of shares required to be purchased by an
investor. We intend to open a standard bank checking account at Wells Fargo Bank
to be used only for the deposit of funds received from the sale of shares in
this offering. The foregoing account is not an escrow, trust or similar account.
It is merely a separate account under our control where we have segregated your
funds. As a result, creditors could attach the funds.
We are offering a minimum of 2,500,000 up to a maximum of 12,500,000 shares
of our common stock in a direct public offering on a best efforts basis, without
any involvement of underwriters or broker-dealers. The offering price is $.40
per share. In the event that 2,500,000 shares are not sold within 180 days, all
money received by us will be promptly returned to you without interest or
deduction of any kind. In the event that the maximum of 12,500,000 shares of our
common stock are sold prior to 180 days after the date of our prospectus, we
will terminate this offering. The maximum time during which shares may be sold
pursuant to this offering is 180 days from the date of our prospectus. We will
not extend this offering beyond such 180 day period. See "Use of Proceeds" and
"Plan of Distribution."
No commission or other compensation related to the sale of the shares will
be paid to our officers and directors. Our officers and directors will not
register as a broker-dealer with the Securities and Exchange Commission in
reliance on Rule 3a4-1 of the Securities Exchange Act. The intended methods of
communication include, without limitation, telephone and personal contact. For
more information, see the section titled "Plan of Distribution" herein.
No officer and director of the issuer or any affiliated parties thereof
will purchase shares in this offering.
Any investment in the shares offered herein involves a high degree of risk.
You should only purchase shares if you can afford a complete loss of your
investment.
Prior to this offering, there has been no public market for our common
stock. In the event that we sell at least the minimum number of shares in this
offering, of which there is no assurance, we intend to have our shares of common
stock quoted on the Over the Counter Bulletin Board operated by the Financial
Industry Regulatory Authority ("FINRA"). There is no assurance that our shares
will ever be quoted on the Over the Counter Bulletin Board.
We are an "emerging growth company" as that term is defined in the
Jumpstart Our Business Startups Act of 2012 ("JOBS Act") and, as such, may elect
to comply with certain reduced public company reporting requirements for future
filings. Please refer to our discussions under "Summary of Our Offering" on page
5 and "Risk Factors" on page 7.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" STARTING
AT PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Underwriting
Number of Offering Discounts and Proceeds to
Shares Price Commissions the Company
------ ----- ----------- -----------
Per Share 1 $ .40 $0.00 $ .40
Maximum 12,500,000 $ .40 $0.00 $5,000,000
Minimum 2,500,000 $ .40 $0.00 $1,000,000
We do not intend to use this offering prospectus before the effective date
of our registration statement.
The date of this prospectus is ___________________, 2013.
Page No.
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SUMMARY OF OFFERING 3
RISK FACTORS 7
TAX CONSIDERATIONS 14
USE OF PROCEEDS 14
DETERMINATION OF OFFERING PRICE 15
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES 15
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 16
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF DEVELOPMENT STAGE ACTIVITIES 20
BUSINESS 30
MANAGEMENT 36
EXECUTIVE COMPENSATION 38
PRINCIPAL SHAREHOLDERS 39
DESCRIPTION OF SECURITIES 40
CERTAIN RELATIONSHIPS AND TRANSACTIONS 41
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION 42
EXPERTS 42
LEGAL MATTERS 42
AVAILABLE INFORMATION 42
FINANCIAL STATEMENTS 42
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SUMMARY OF OUR OFFERING
You should read the following summary together with the more detailed
business information, financial statements and related notes that appear
elsewhere in this prospectus. In this prospectus, unless the context otherwise
denotes, references to "we," "us," "our," "Arrow Cars" and "Company" are to
Arrow Cars International Inc. and our wholly-owned subsidiary, Arrow Cars SL.
OUR BUSINESS
We were incorporated on March 8, 2012, in the State of Florida. On April 4,
2012, we acquired 100% of the shares of Arrow Cars SL, a Spanish corporation,
pursuant to a Plan and Agreement of Reorganization ("Reorg Plan"). Pursuant to
the Reorg Plan, we issued a total of 27,000,000 restricted shares of common
stock to three shareholders of Arrow Cars SL. We exchanged 8,982 shares of our
common stock for each one (1) registered share of Arrow Cars SL. The 27,000,000
shares of common stock issued under the Reorg Plan were issued to the following
persons in the amounts set forth opposite their respective names:
Jeremy Dean Harris 17,550,000 shares
Nicholas Paul Hill 5,400,000 shares
Sergio Perez Conejo 4,050,000 shares
Total Shares Issued 27,000,000 shares
We have three business models, which provide varying solutions for the
difficulties in acquiring a vehicle for both business and personal use.
Model No. 1 - "AutoOasis - Easy Car Leasing"
Under our brand name "AutoOasis - Easy Car Leasing," Arrow Cars provides
rental vehicles for long term use (28 days minimum lease) as an alternative to
conventional methods of vehicle acquisition (i.e., leasing, purchasing via bank
or manufacturer loans, or conventional auto rental). We do not conduct credit
score checks or require credit card payments, so our clients, who are unwilling
or unable to raise financing can still drive a modern, safe, economical vehicle,
which may be exchanged for a new vehicle every 12 months. Model No. 1 is
designed for the customer who does not want to own the vehicle so the customer
does not own the leased vehicle at the end of the rental period.
Model No. 2 - "AutoOasis - Rent to Own"
After the vehicle has been leased for between 12 and 36 months under our
AutoOasis - Easy Car Leasing program, the vehicle is then transferred to our
"AutoOasis - Rent to Own" program. Customers choosing to use our AutoOasis -
Rent to Own service make an initial deposit of approximately 30% of the vehicle
value, followed by 36 monthly payments. One of our more popular vehicle models
is the Skoda Fabia 1.4 TDI. Our current "Easy Car Leasing" 28 day rental rate
for an economy group vehicle like the Skoda Fabia 1.4 TDI is $526. The AutoOasis
- Rent to Own monthly rental rate for the same group of vehicles over 36 months
is $316 , including insurance of approximately $54 per month and maintenance of
approximately $68 per month. The monthly maintenance expenses will obviously
vary depending on mileage, wear and tear of a particular vehicle. Once the 36
month Rent to Own contract has expired, ownership of the vehicle is transferred
to the customer. We do not conduct credit score checks or require credit card
payments, so our clients, who are unwilling or unable to obtain financing, can
still drive a modern, safe, economical vehicle while participating in our
AutoOasis - "Rent to Own" program.
Model No. 3 - "Try Before You Buy"
We also offer a "Try Before You Buy" service whereby a customer who is
interested in one of our AutoOasis Rent to Own vehicles can rent the car they
are interested in for a 28 day trial period. If the customer is happy with the
vehicle after the 28 day trial period, then the customer can "Rent to Own" it.
If after the 28 day trial period, the customer does not like the vehicle, then
the customer can simply return the vehicle to us. We believe our "Try Before You
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Buy" program increases the "peace of mind" for our customers in making a major
financial decision and helps to maximize our fleet utilization by reducing the
"down time" of each vehicle.
CURRENT OPERATIONS
We are based on the Costa del Sol, Spain and our client base spreads north
and east to Madrid and Costa Blanca, Spain. We call our car rental program,
"AutoOasis Easy Car Leasing." We currently have a fleet of 124 vehicles, 84 of
which are deployed in our long term rental business and 40 of which are deployed
in our rent-to-own business. We call our rent to own program, "AutoOasis Rent to
Own." Our long term rental fleet consists primarily of vehicles from the current
and immediately preceding model years. We purchase our vehicles through auto
dealers and finance our vehicle acquisitions through a number of credit
facilities.
Once the vehicles in our AutoOasis Easy Car Rental program are between one
and three years old , we deploy them to our AutoOasis Rent to Own program where
we sell them under a rent to own contract of 36 months duration (with no credit
checks and the option to return the car, if necessary, without penalty if the
contract purchaser's circumstances change, such as when the customer can no
longer meet the monthly payments due to lack of employment or their own
business' poor performance. In any case, the customer can return the vehicle at
any time and for any reason without penalty.
Our Rent to Own program offers us additional benefits:
1. Allows us to maintain a modern fleet of rental cars, while providing
us the ability to dispose of older vehicles at better prices than we
would likely realize as trade-in value or from sales to third parties
In Spain, trade in values are lower than retail values.
2. Provides another income stream due to the financing, insurance and
maintenance profit realized from the Rent to Own contracts.
Our long term rentals range from four weeks (28 days). Our long term
contracts are generally 28 day renewal contracts. We rent our cars for $420 to
$800 per four weeks depending on car size and available options, as well as
length of the rental contract. Since 2005, the average long term rental for our
cars has been seven months. Since acquiring our own fleet in July 2009, the
average 28 day rental amount for our cars has been $495 and our average fleet
utilization has been 92%.
Our car rental fleet consists of cars manufactured by Seat (Leon, Ibiza,
Altea and Exeo) and Skoda (Fabia). Seat and Skoda are owned by VAG (Volkswagen
Audi Group) and are assembled in the country of the brand origin. Our Kangoo
cars are manufactured by Renault. Our Doblo and Panda cars are manufactured by
Fiat.
HOW DOES AUTOOASIS "EASY CAR LEASING" WORK?
1) The customer chooses their preferred vehicle.
2) The customer provides us with (a) current driving permit, (b) valid
passport and (c) proof of address.
3) A $200 security deposit is paid along with the first 28 day rental
payment (payment in advance before taking the vehicle).
4) The customer either (a) returns the vehicle at the end of the contract
or (b) renews the contract for another 28 day period and so on for as
long as the customer's wishes (payment is taken before a new rental
contract is executed).
The customer can exchange for a larger, smaller or more economical vehicle
at any time, according to their requirements (subject to availability).
All insurance costs, maintenance costs, and a replacement vehicle (in the
event of a breakdown or accident) are included in the rental price. The customer
DOES NOT OWN the car at the end of the contract.
HOW AUTOOASIS "RENT TO OWN" WORKS?
1) The customer chooses their preferred vehicle.
2) A 30% deposit (of the value of the car) is paid upfront; the balance
is paid in 36 monthly installments - THE DEPOSIT ACTS AS A "FILTER,"
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CONFIRMING THE CLIENT CAN (A) AFFORD THE CAR AND (B) GAIN "PRIDE OF
OWNERSHIP," INSURING THE CLIENT WILL TREAT THE CAR WITH RESPECT.
3) To be sure the vehicle is correctly insured, full insurance is
provided by Arrow Cars at the customer's expense. The customer can
choose to pay either annually or monthly (another income stream).
4) To be sure the vehicle is correctly maintained, servicing and repairs
are undertaken by Arrow Cars at the customer's expense. Payment for
maintenance, servicing and repairs is either due when a service is
performed or monthly in advance by signing a service schedule contract
(another income stream to us).
5) Upon receipt of the final payment, ownership of the vehicle is
transferred to the customer.
6) Once the Rent to Own contract has expired, the customer can choose to
return the vehicle and pick up another car from the AutoOasis Rent to
Own fleet and begin the rent to own process again. The value of
vehicles returned to us from the Rent to Own program will be
determined according to the mileage, condition, age, market value and
cost of repairs, etc. The value of the returned vehicle will be used
to offset the deposit required to begin a new Rent to Own contract. If
the value of the returned vehicle is less than the initial 30% deposit
required for the Rent to Own program, the customer will have to make
up the difference by paying additional cash. If the value of the
returned vehicle is greater than the initial 30% deposit, the extra
amount will be deducted from the Rent to Own contract by either
reducing the total contract period or reducing monthly rental amounts,
whichever the customer desires. The returned car will be restored to a
saleable condition and be "resold" under a new Rent to Own contract.
For our fiscal year ended December 31, 2011 and 2010, we realized a net
loss of $318,607 and $97,053 respectively. For the nine month period ended
September 30, 2012 and September 30, 2011, we realized a net loss of $38,535,
and $217,218, respectively.
Our monthly "burn rate," the amount of expenses we expect to incur on a
monthly basis, is approximately $56,250 during the 180 days during which this
offering will be made. We will fund these expenses from our normal operations.
In order to complete our plan of operations, we estimate that $1,000,000 in
gross funds from this offering will be required. The source of such funds is
anticipated to be the gross proceeds from this offering. If we fail to generate
$1,000,000 from this offering, we may not be able to fully carry out our plan of
operations.
Assuming we raise the minimum amount of $1,000,000 in this offering, we
believe we can satisfy our cash requirements during the next 12 months and begin
to implement our business plan, but at a slower pace than if we raise the
maximum amount in this offering.
Assuming we raise the maximum amount of $5,000,000 in this offering, we
believe we can fully implement our business plan.
EMERGING GROWTH COMPANY STATUS
We are an "emerging growth company," as defined in the JOBS Act. For so
long as we are an "emerging growth company," we may take advantage of certain
exemptions from various reporting requirements that are applicable to other
public companies that are not "emerging growth companies," including, but not
limited to, not being required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding advisory
"say-on-pay" votes on executive compensation and shareholder advisory votes on
golden parachute compensation.
Under the JOBS Act, we will remain an "emerging growth company" until the
earliest of:
* The last day of the fiscal year during which we have total annual
gross revenues of $1 billion or more;
* The last day of the fiscal year following the fifth anniversary of the
completion of this offering;
* The date on which we have, during the previous three-year period,
issued more than $1 billion in non-convertible debt; and
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* The date on which we are deemed to be a "large accelerated filer"
under the Securities Exchange Act of 1934 ("Exchange Act"). We will
qualify as a large accelerated filer as of the first day of the fiscal
year after we have (i) more than $700 million in outstanding common
equity held by our non-affiliates and (ii) been public for at least 12
months. The value of our outstanding common equity will be measured
each year on the last day of our second fiscal quarter.
Section 107 of the JOBS Act provides that we may elect to utilize the
extended transition period for complying with new or revised accounting
standards and such election is irrevocable if made. As such, we have made the
decision to use the extended transition period for complying with new or revised
accounting standards under Section 102(b)(1) of the JOBS Act. Please refer to
our discussion on page 7 under "Risk Factors" of the effect on our financial
statements of such election.
We believe the proceeds from the offering will allow us to operate for at
least twelve months, whether the minimum or maximum is raised. However, the
extent of our operations will be less if we only raise the minimum. Our
principal and executive offices are located at Calle del Escritor Herrera
Santaolalla , No. 2, Churriana, Malaga, Spain 29140.
Our telephone number is (0034) 952623297. Our corporate website is
www.autooasiseurope.com.
Our fiscal year end is December 31.
THE OFFERING
Following is a brief summary of this offering:
Securities being offered: A minimum of 2,500,000 shares of common stock and
a maximum of 12,500,000 shares of common stock
Offering price per share: $.40
Offering period: The shares are being offered for a period not to
exceed 180 days. In the event we do not sell the
minimum of 2,500,000 shares before the expiration
date of the offering, all funds raised will be
promptly returned to the investors, without
interest or deduction.
Net proceeds to our Approximately $1,000,000 assuming the minimum
company: number of shares is sold. Approximately,
$5,000,000, assuming the maximum number of shares
is sold.
Use of proceeds: We intend to use the proceeds to pay for offering
expenses, the implementation of our business plan
and for working capital.
Number of shares outstanding
before the offering: 30,450,000
Number of shares outstanding
after the offering if the
minimum 2,500,000 shares
are sold: 32,950,000
Number of shares outstanding
after the offering if all
12,500,000 shares are sold: 42,950,000
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RISK FACTORS
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK AND YOU SHOULD
BE ABLE TO BEAR THE COMPLETE LOSS OF YOUR INVESTMENT. YOU SHOULD CAREFULLY
CONSIDER THE RISKS DESCRIBED BELOW, THE OTHER INFORMATION IN THIS PROSPECTUS AND
THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN WHEN EVALUATING OUR COMPANY AND
OUR BUSINESS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS COULD
BE HARMED. IN SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND
INVESTORS COULD LOSE ALL OR A PART OF THE MONEY PAID TO BUY OUR COMMON STOCK.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus may be considered
forward-looking statements. The forward-looking statements contained herein are
subject to known assumptions and other factors that may cause our actual
results, performance or achievements to be materially different from those
expressed or implied by any such forward-looking statements. Forward-looking
statements include information concerning our future financial performance,
business strategy, projected plans and objectives. These statements may be
identified by the fact that they do not relate to historical or current facts
and may use words such as "believes," "expects," "anticipates," "will,"
"should," "could," "may," "would," "intends," "projects," "estimates," "plans,"
and similar words, expressions or phrases. The following important factors and
assumptions could affect our future results and could cause actual results to
differ materially from those expressed in such forward-looking statements:
* the high level of competition in the vehicle rental industry and the
impact such competition may have on pricing and rental volume;
* an increase in our fleet costs as a result of an increase in the cost
of new vehicles, disruption in the supply of new vehicles, and/or a
decrease in the price at which we dispose of used vehicles either in
the used vehicle market or under repurchase or guaranteed depreciation
programs;
* any reduction in travel demand, including any reduction in airline
passenger traffic;
* any weakness in economic conditions generally;
* our ability to continue to achieve and maintain cost savings and
successfully implement our business strategies;
* our ability to obtain financing for our operations, including the
funding of our vehicle fleet;
* an occurrence or threat of terrorism, pandemic disease, natural
disasters or military conflict in the locations in which we operate;
* our dependence on third-party distribution channels, third-party
suppliers of other services and co-marketing arrangements with third
parties;
* our ability to accurately estimate our future results;
* a major disruption in our communication networks or information
systems;
* our exposure to uninsured claims in excess of historical levels;
* our failure or inability to comply with laws, regulations or
contractual obligations or any changes in laws, regulations or
contractual obligations, including with respect to personally
identifiable information;
* any impact on us from the actions of our licensees, dealers and
independent contractors;
* substantial increases in the cost, or decreases in the supply, of
fuel, vehicle parts, energy, labor or other resources on which we
depend to operate our business;
* risks related to tax obligations and the effect of future changes in
accounting standards;
* risks related to future acquisitions or investments that we may
pursue, including any incurrence of incremental indebtedness to help
fund such transactions and our ability to promptly and effectively
integrate any acquired businesses; and
* other business, economic, competitive, governmental, regulatory,
political or technological factors affecting our operations, pricing
or services.
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We operate in a continuously changing business environment and new risk
factors emerge from time to time. New risk factors, factors beyond our control,
or changes in the impact of identified risk factors may cause actual results to
differ materially from those set forth in any forward-looking statements.
Accordingly, forward-looking statements should not be relied upon as a
prediction of actual results. The discussion and analysis contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" set forth in this prospectus may contain forward-looking statements
and involve uncertainties that could cause actual results to differ materially
from those projected in the forward-looking statements. Such statements are
based upon assumptions and known risks and uncertainties. Although we believe
that our assumptions are reasonable, any or all of our forward-looking
statements may prove to be inaccurate and we can make no guarantees about our
future performance. Should unknown risks or uncertainties materialize or
underlying assumptions prove inaccurate, actual results could materially differ
from past results and/or those anticipated, estimated or projected. Except to
the extent of our obligations under the federal securities laws, we undertake no
obligation to release any revisions to any forward-looking statements, to report
events or to report the occurrence of unanticipated events.
RISKS RELATED TO OUR BUSINESS
WE ARE AN "EMERGING GROWTH COMPANY" AND ANY DECISION ON OUR PART TO COMPLY
ONLY WITH CERTAIN REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO "EMERGING GROWTH
COMPANIES" COULD MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.
We are an "emerging growth company," as defined in the JOBS Act, and, for
so long as we continue to be an "emerging growth company," we may choose to take
advantage of exemptions from various reporting requirements applicable to other
public companies that are not "emerging growth companies," including, but not
limited to, not being required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced
disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirement of holding a
nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved. We may remain an
"emerging growth company" for up to five full fiscal years following our initial
public offering or until the last day of the first fiscal year in which our
annual gross revenues exceed $1 billion, (ii) the date that we become a "large
accelerated filer," as defined in Rule 12b-2 of the Exchange Act, which would
occur if the market value of our common stock that is held by non-affiliates
exceeds $700 million as of the last day of our most recently completed second
fiscal quarter, or (iii) the date on which we have issued more than $1 billion
in non-convertible debt during the preceding three year period..
In addition, Section 107 of the JOBS Act also provides that an "emerging
growth company" can take advantage of the extended transition period provided by
Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or
revised accounting standards. In other words, an "emerging growth company" can
delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. We have elected to opt in to the extended
transition period for complying with the revised accounting standards.
We cannot predict if investors will find our common stock less attractive
because we may rely on these exemptions. If some investors find our common stock
less attractive as a result of our reduced disclosures, there may be less active
trading in our common stock (assuming a market ever develops) and our stock
price may be more volatile.
Under the JOBS Act, emerging growth companies can also delay adopting new
or revised accounting standards until such time as those standards apply to
private companies. We have elected to avail ourselves of this exemption from new
or revised accounting standards and, therefore, will not be subject to the same
new or revised accounting standards as other public companies that are not
emerging growth companies.
BECAUSE WE HAVE ELECTED TO DEFER COMPLIANCE WITH NEW OR REVISED ACCOUNTING
STANDARDS, OUR FINANCIAL STATEMENT DISCLOSURE MAY NOT BE COMPARABLE TO SIMILAR
COMPANIES.
8
We have elected to use the extended transition period for complying with
new or revised accounting standards under Section 102(b)(1) of the JOBS Act.
This allows us to delay the adoption of new or revised accounting standards that
have different effective dates for public and private companies until those
standards apply to private companies.
OUR STATUS AS AN "EMERGING GROWTH COMPANY" UNDER THE JOBS ACT MAY MAKE IT
MORE DIFFICULT TO RAISE CAPITAL AS AND WHENWE NEED IT.
Because of the exemptions from various reporting requirements provided to
us as an "emerging growth company" and because we will have an extended
transition period for complying with new or revised accounting standards, we may
be less attractive to investors and it may be difficult for us to raise
additional capital as and when we need it. Investors may be unable to compare
our business with other companies in our industry if they believe that our
financial accounting is not as transparent as other companies in our industry.
If we are unable to raise additional capital as and when we need it, our
financial condition and results of operations may be materially and adversely
affected.
WE DO NOT HAVE AN INDEPENDENT AUDIT OR COMPENSATION COMMITTEE, THE ABSENCE
OF WHICH COULD LEAD TO CONFLICTS OF INTEREST OF OUR OFFICERS AND DIRECTORS AND
WORK AS A DETRIMENT TO OUR SHAREHOLDERS.
We do not have an independent audit or compensation committee. The absence
of an independent audit and compensation committee could lead to conflicts of
interest of our officers and directors, which could work as a detriment to our
shareholders.
THE HIGH LEVEL OF COMPETITION IN THE VEHICLE RENTAL INDUSTRY MAY LEAD TO
REDUCED RENTAL VOLUMES AND INCREASED PRICING PRESSURE, WHICH COULD HAVE AN
ADVERSE IMPACT ON OUR RESULTS OF OPERATIONS.
The vehicle rental industry in Spain is highly competitive. We believe that
price is one of the primary competitive factors in the vehicle rental industry
in Spain. Our competitors may seek to compete aggressively on the basis of
pricing. We risk losing rental volume to the extent that our competitors reduce
their pricing and we do not match or remain within a reasonably competitive
margin of our competitors pricing, or if price increases we seek to implement
make us less competitive. We could be further impacted if we are unable to
adjust the size of our rental fleet in response to fluctuations in demand.
WE MAY NOT BE SUCCESSFUL IN IMPLEMENTING OUR BUSINESS STRATEGIES.
For 2013, our objective is to focus on growing our business profitably,
strengthening our position as a provider of vehicle rental services and
maintaining and enhancing efficiencies achieved through process improvement and
other actions, including certain core strategic initiatives, expanding our
revenue sources, capturing incremental profit opportunities, and controlling
costs and promoting efficiencies. If we are unsuccessful in implementing these
initiatives, our financial condition, results of operations and cash flows could
be adversely affected.
WE FACE RISKS RELATED TO LIABILITY AND INSURANCE.
Our businesses expose us to claims for personal injury, death and property
damage related to the use of our vehicles. We may become exposed to uninsured
liability at levels in excess of our historical levels resulting from unusually
high losses or otherwise. In addition, liabilities in respect of existing or
future claims may exceed the level of our reserves and/or our insurance, which
could adversely impact our financial condition and results of operations.
Furthermore, insurance with unaffiliated carriers may not continue to be
available to us on economically reasonable terms or at all. Should we experience
significant liability for which we did not plan, our results of operations and
financial position could be negatively impacted.
CHANGES IN THE LAWS AND REGULATIONS IN THE JURISDICTIONS IN WHICH WE
OPERATE, INCLUDING LAWS AND REGULATIONS RELATING TO THE ENVIRONMENT, INSURANCE
9
PRODUCTS THAT WE MAY SELL, CONSUMER PRIVACY, DATA SECURITY, EMPLOYMENT MATTERS,
TAXES, AUTOMOBILE-RELATED LIABILITY AND INSURANCE RATES COULD AFFECT OUR
OPERATIONS, DISRUPT OUR BUSINESS, INCREASE OUR EXPENSES OR OTHERWISE HAVE AN
ADVERSE IMPACT ON OUR RESULTS OF OPERATIONS.
We are subject to a wide variety of laws and regulations in Spain and in
the United States and changes in the level of government regulation of our
business have the potential to materially alter our business practices,
financial position and results of operations. Depending on the jurisdiction,
those changes may come about through the issuance of new laws and regulations or
changes in the interpretation of existing laws and regulations by a court,
regulatory body or governmental official.
Optional insurance products that we may offer to renters in the United
States, including, but not limited to, supplemental liability insurance,
personal accident insurance and personal effects protection, are regulated under
state laws governing such products. Any changes in U.S. or international laws
that change our operating requirements with respect to optional insurance
products could increase our costs of compliance or make it uneconomical to offer
such products, which would lead to a reduction in revenue and profitability.
The U.S. Congress and other legislative and regulatory authorities in the
United States and internationally have considered, and will likely continue to
consider, numerous measures related to climate change and greenhouse gas
emissions. Should rules establishing limitations on greenhouse gas emissions or
rules imposing fees on entities deemed to be responsible for greenhouse gas
emissions become effective, demand for our services could be affected, our fleet
and/or other costs could increase, and our business could be adversely affected.
WE FACE RISKS ARISING FROM OUR HEAVY RELIANCE ON COMMUNICATIONS NETWORKS
AND CENTRALIZED INFORMATION SYSTEMS.
We rely heavily on information systems, including our reservation system,
to accept reservations, process rental and sales transactions, manage our fleet
of vehicles, account for our activities and otherwise conduct our business. We
have centralized our information systems, and we rely on communications service
providers to link our systems with the business locations these systems were
designed to serve. A failure of a major system, or a major disruption of
communications between the system and the locations it serves, could cause a
loss of reservations, interfere with our ability to manage our fleet, slow
rental and sales processes and otherwise adversely affect our ability to manage
our business effectively. Our systems' business continuity plans and insurance
programs seek to mitigate such risks but they cannot fully eliminate the risk
that a disruption could be experienced in any of our information systems.
ANY FAILURE BY US TO PROTECT CONFIDENTIAL INFORMATION OF OUR CUSTOMERS
AGAINST SECURITY BREACHES, INCLUDING CYBER-SECURITY BREACHES, COULD DAMAGE OUR
REPUTATION AND SUBSTANTIALLY HARM OUR BUSINESS AND RESULTS OF OPERATIONS.
Third parties may have the technology or expertise to breach the security
of our customer transaction data and our security measures may not prevent
physical security or cyber-security breaches, which could result in substantial
harm to our business, our reputation and our results of operations. We rely on
encryption and/or authentication technology licensed and, at times, administered
by third parties to effect secure transmission of confidential information,
including credit card numbers. Our outsource agreements with third-party service
providers generally require that providers have adequate security systems in
place to protect all of our customer transaction data. However, advances in
computer capabilities, new discoveries in the field of cryptography or other
cyber-security developments could render our security systems and technology or
those employed by our third-party service providers vulnerable to a breach. In
addition, anyone who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
Cyber-security risks such as malicious software and attempts to gain
unauthorized access to data are rapidly evolving and could lead to disruptions
in our reservation system or other data systems, unauthorized release of
confidential or otherwise protected information or corruption of data. Any
successful efforts by individuals to infiltrate, break into, disrupt, damage or
otherwise steal from the Company's, its licensees' or its third-party service
providers' security or information systems could damage our reputation and brand
and expose us to a risk of loss or litigation and possible liability that could
substantially harm our business and results of operations.
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In addition, the industry that regulates the usage of credit and debit
cards (the Payment Card Industry, or the "PCI") imposes strict customer credit
card data security standards to ensure that our customers' credit card
information is protected. Failure to meet the PCI data security standards could
result in substantial increased fees to credit card companies, other liabilities
and/or loss of the right to collect credit card payments, which could adversely
impact our operations. Failure to protect customer credit card and other
information can also result in governmental investigations or material civil or
criminal liability.
WE HAVE A SUBSTANTIAL AMOUNT OF DEBT, WHICH COULD IMPAIR OUR FINANCIAL
CONDITION AND ADVERSELY AFFECT OUR ABILITY TO REACT TO FUTURE CHANGES IN OUR
BUSINESS.
As of September 30, 2012, our total debt was approximately $1,050,000 and
we had $23,000 of available letter of credit and borrowing capacity under our
senior credit facilities. Our indebtedness could have important consequences,
including:
* limiting our ability to borrow additional amounts to fund working
capital, capital expenditures, debt service requirements, execution of
our business strategy or acquisitions and other purposes;
* requiring us to dedicate a substantial portion of our cash flow from
operations to pay principal and interest on our debt, which would
reduce the funds available to us for other purposes; and
* making us more vulnerable to adverse changes in general economic,
industry and competitive conditions, as well as changes in government
regulation and changes to our business.
Our ability to satisfy and manage our debt obligations depends on our
ability to generate cash flow and on overall financial market conditions. To
some extent, this is subject to prevailing economic and competitive conditions
and to certain financial, business and other factors, many of which are beyond
our control. Our business may not generate sufficient cash flow from operations
to permit us to pay principal, premium, if any, or interest on our debt
obligations. If we are unable to generate sufficient cash flow from operations
to service our debt obligations and meet our other cash needs, we may be forced
to reduce or delay capital expenditures, sell or curtail assets or operations,
seek additional capital or seek to restructure or refinance our indebtedness. If
we must sell or curtail our assets or operations, it may negatively affect our
ability to generate revenue.
IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT
BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD. AS A
RESULT, CURRENT AND POTENTIAL STOCKHOLDERS COULD LOSE CONFIDENCE IN OUR
FINANCIAL REPORTING, WHICH WOULD HARM OUR BUSINESS AND THE TRADING PRICE OF OUR
STOCK.
Effective internal controls are necessary for us to provide reliable
financial reports and effectively prevent fraud. If we cannot provide reliable
financial reports or prevent fraud, our brand and operating results could be
harmed. We will strive to adopt and implement effective internal controls and
maintain the effectiveness of our internal controls in the future.
WE ARE VULNERABLE TO THE CURRENT ECONOMIC CRISIS WHICH MAY NEGATIVELY
AFFECT OUR PROFITABILITY AND ABILITY TO CARRY OUT OUR BUSINESS PLAN.
We are currently in a severe worldwide economic recession. Runaway deficit
spending by the Spanish and United States governments and other countries
further exacerbates the Spanish, United States and worldwide economic climate
and may delay or possibly deepen the current recession. Currently, a lot of
economic indicators, such as rising gasoline and commodity prices, suggest
higher inflation, dwindling consumer confidence and substantially higher taxes.
These possibilities could affect our company's growth. The continuing recession
in Spain is placing severe constraints on the ability of all companies,
particularly smaller ones like Arrow Cars, to raise capital, borrow money,
operate effectively and profitably and to plan for the future. In addition,
sudden disruptions in business conditions as a result of a terrorist attack
similar to the events of September 11, 2001, including further attacks,
retaliation and the threat of further attacks or retaliation, war, civil unrest
in the Middle East, adverse weather conditions or other natural disasters, such
as Hurricane Katrina, pandemic situations or large scale power outages can have
a short term or, sometimes, long term impact on spending.
11
BECAUSE JEREMY D. HARRIS, OUR PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR, IS OUR LARGEST AND MOST SIGNIFICANT SHAREHOLDER, POTENTIAL CONFLICTS
OF INTEREST MAY EXIST OR MAY OCCUR, WHICH COULD BE DETRIMENTAL TO OUR
SHAREHOLDERS AND OUR COMPANY AND COULD DECREASE THE PRICE, MARKETABILITY AND
VOLATILITY OF OUR SHARES.
Because Jeremy D. Harris, our President, Chief Executive Officer and
Director, currently owns 57.6% of our common stock, he will be able to cast a
majority of votes in the election of our directors, perpetuate our management
and control our operations, which creates or may create a conflict of interest
that could be detrimental to our shareholders and our Company and could decrease
the price, marketability and volatility of our shares. If we sell the minimum
2,500,000 shares in this offering, Mr. Harris will still own 53.3% of our common
stock, which will entitle him to cast a majority of votes in the election of our
directors, perpetuate management and control our operations, which creates or
could create a conflict of interest that could be detrimental to our
shareholders and our Company, which could decrease the price, marketability and
volatility of our shares. Even if we sell the maximum 12,500,000 shares in this
offering, Mr. Harris will still own 40.9% of our common stock, which may still
afford him substantial voting influence in the election of directors and enable
him to control our operations and possibly perpetuate our management, which
creates or could create a conflict of interest that could be detrimental to our
shareholders and our Company, which could decrease the price, marketability and
volatility of our shares.
OUR INTELLECTUAL PROPERTY RIGHTS ARE VALUABLE AND ANY INABILITY TO PROTECT
THEM COULD REDUCE THE VALUE OF OUR BRAND AND OUR BUSINESS.
We have no patents or trademarks. Our trade secrets, copyrights and our
other intellectual property rights are important assets for us. There are events
that are outside of our control that pose a threat to our intellectual property
rights. Also, the efforts we have taken to protect our propriety rights may not
be sufficient or effective. Any significant impairment of our intellectual
property rights could harm our business or our ability to compete. Also,
protecting our intellectual property rights could be expensive and time
consuming.
RISKS ASSOCIATED WITH THIS OFFERING
BECAUSE WE DO NOT HAVE AN ESCROW OR TRUST ACCOUNT FOR YOUR SUBSCRIPTION, IF
WE FILE FOR BANKRUPTCY PROTECTION OR ARE FORCED INTO BANKRUPTCY, OR A CREDITOR
OBTAINS A JUDGMENT AGAINST US AND ATTACHES YOUR SUBSCRIPTION, YOU WILL LOSE YOUR
INVESTMENT.
Your funds will not be placed in an escrow or trust account. Accordingly,
if we file for bankruptcy protection or a petition for involuntary bankruptcy is
filed by creditors against us, your funds will become part of the bankruptcy
estate and administered according to bankruptcy laws. If a creditor sues us and
obtains a judgment against us, the creditor could garnish the bank account and
take possession of the subscriptions. As such, if the minimum conditions of this
offering are not satisfied, it is possible that a creditor could attach your
subscription which could preclude or delay the return of money to you. If that
happens, you will lose your investment and your funds will be used to pay
creditors.
OUR SHAREHOLDERS MAY BE DILUTED SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN
FINANCING, FUND OUR OPERATIONS AND SATISFY OUR OBLIGATIONS THROUGH ISSUANCE OF
ADDITIONAL SHARES OF OUR COMMON STOCK.
We have no committed source of financing. We will likely have to issue
additional shares of our common stock to fund our operations and to implement
our plan of operation. Wherever possible, our board of directors may use
non-cash consideration to satisfy obligations. Our board of directors has
authority, without action or vote of the shareholders, to issue all or part of
the 69,575,000 authorized, but unissued, shares of our common stock. Future
issuances of shares of our common stock will result in dilution of the ownership
interests of existing shareholders, may further dilute common stock book value
and that dilution may be material.
BECAUSE THERE IS NO PUBLIC TRADING MARKET FOR OUR COMMON STOCK, YOU MAY NOT
BE ABLE TO RESELL YOUR STOCK.
12
Our common stock is not presently quoted on the Over the Counter Bulletin
Board or traded in any market. Therefore, you may not be able to resell your
stock.
Because the Securities and Exchange Commission imposes additional sales
practice requirements on brokers who deal in our shares that will initially be
classified as penny stocks, some brokers may be unwilling to trade them. This
means that you may have difficulty reselling your shares and this may cause the
price of our shares to decline.
Our shares would be classified as penny stocks and are covered by Section
15(g) of the Securities Exchange Act of 1934 and the rules promulgated
thereunder that impose additional sales practice requirements on brokers/dealers
who sell our securities in this offering or in the aftermarket. For sales of our
securities, the broker/dealer must make a special suitability determination and
receive from you a written agreement prior to making a sale for you. Because of
the imposition of the foregoing additional sales practices, it is possible that
brokers will not want to make a market in our shares. This could prevent you
from reselling your shares and may cause the price of our shares to decline.
FINRA SALES PRACTICE REQUIREMENTS MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY
AND SELL OUR STOCK.
In addition to the "penny stock" rules described above, the Financial
Industry Regulatory Authority ("FINRA') has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may have the effect of reducing the level of trading activity and liquidity of
our common stock. Further, many brokers charge higher transactional fees for
penny stock transactions. As a result, fewer broker-dealers may be willing to
make a market in our common stock, which may limit your ability to buy and sell
our stock.
DEPENDENCE ON OFFICERS AND DIRECTORS AND PERSONS TO BE HIRED
Our success will be dependent to a significant degree upon the involvement
of our officers and directors, who are in charge of the development and
operations. It would be difficult for the Company to find adequate replacements
for these key individuals. In addition, we will need to attract and retain
additional talented individuals in order to carry out our business objectives.
The competition for such persons will be intense and there are no assurances
that these individuals will be available to us.
OUR COMPLIANCE WITH CHANGING LAWS AND RULES REGARDING CORPORATE GOVERNANCE
AND PUBLIC DISCLOSURE MAY RESULT IN ADDITIONAL EXPENSES TO US WHICH, IN TURN,
MAY ADVERSELY AFFECT OUR ABILITY TO CONTINUE OUR OPERATIONS.
Keeping abreast of, and in compliance with, changing laws, regulations and
standards relating to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002, new SEC regulations and, in the event we are ever
approved for listing on either an automated quotation system or a registered
exchange, any system or stock exchange rules, will require an increased amount
of management attention and external resources. We intend to continue to invest
all reasonably necessary resources to comply with evolving standards, which may
result in increased general and administrative expenses estimated to be between
$25,000 and $50,000 per year, and a diversion of management time and attention
from revenue-generating activities to compliance and disclosure activities. This
could have an adverse impact on our operations.
WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK AND DO NOT INTEND TO PAY
DIVIDENDS IN THE FUTURE.
13
We have never paid dividends on our common stock and do not presently
intend to pay any dividends in the foreseeable future.
THERE ARE RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS.
This Prospectus contains certain forward-looking statements regarding
management's plans and objectives for future operations including plans and
objectives relating to our planned marketing efforts and future economic
performance. The forward-looking statements and associated risks set forth in
this Prospectus include or relate to, among other things, (a) our projected
sales and profitability, (b) our growth strategies, (c) anticipated trends in
our industry, (d) our ability to obtain and retain sufficient capital for future
operations and (e) our anticipated needs for working capital. These statements
may be found under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Description of Business," in this Prospectus, as
well as in this Prospectus, generally. Actual events or results may differ
materially from those discussed in forward-looking statements as a result of
various factors, including, without limitation, the risks outlined under "Risk
Factors" and matters described in this Prospectus, generally. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
statements contained in this Prospectus will, in fact, occur.
FOR ALL OF THE FOREGOING REASONS AND OTHER REASONS SET FORTH HEREIN, AN
INVESTMENT IN OUR SECURITIES IN ANY MARKET THAT MAY DEVELOP IN THE FUTURE WILL
INVOLVE A HIGH DEGREE OF RISK.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements. These statements
relate to future events or future financial performance and involve known
risksother factors that may cause Arrow Cars' or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by the forward looking statements.
In some cases, you can identify forward looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or the negative of these terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements. We are under no
duty to update any of the forward-looking statements after the date of this
Prospectus to confirm our prior statements to actual results.
Further, this Prospectus contains forward-looking statements that involve
substantial risks. Such statements include, without limitation, all statements
as to expectation or belief and statements as to our future results of
operations, the progress of any product development, the need for, and timing
of, additional capital and capital expenditures, partnering prospects, the
protection of and the need for additional intellectual property rights, effects
of regulations, the need for additional facilities and potential market
opportunities.
TAX CONSIDERATIONS
We are not providing any tax advice as to the acquisition, holding or
disposition of the common stock offered herein. In making an investment
decision, investors are strongly encouraged to consult their own tax advisors to
determine the U.S. federal, state and any applicable foreign tax consequences
relating to their investment in our common stock.
USE OF PROCEEDS
Our offering is being made in a direct public offering, without any
involvement of underwriters or broker-dealers, on a 2,500,000 common shares
minimum, 12,500,000 common shares maximum basis. The table below sets forth the
use of proceeds if 2,500,000, 6,250,000, 9,375,000 or 12,500,000 common shares
in the offering are sold.
14
Minimum 50% 75% Maximum
----------- ----------- ----------- -----------
NUMBER OF COMMON SHARES 2,500,000 6,250,000 9,375,000 12,500,000
Gross proceeds $ 1,000,000 $ 2,500,000 $ 3,750,000 $ 5,000,000
Offering expenses (1) 50,000 50,000 50,000 $ 50,000
----------- ----------- ----------- -----------
Net proceeds $ 950,000 $ 2,450,000 $ 3,700,000 $ 4,950,000
THE NET PROCEEDS WILL BE USED AS FOLLOWS:
For the purchase of vehicles (2) $ 887,500 $ 2,261,000 $ 3,411,000 $ 4,536,000
Fleet insurance costs 22,800 58,800 88,500 120,000
Fleet tracking systems 7,600 19,600 29,500 40,000
Marketing 32,100 71,600 132,000 90,000
Lease of larger office 0 39,000 39,000 39,000
Settlement payment to Mr. Peter Rogers (3) 0 0 0 125,000
----------- ----------- ----------- -----------
Total $ 950,000 $ 2,450,000 $ 3,700,000 $ 4,950,000
=========== =========== =========== ===========
----------
(1) Total estimated offering expenses of $50,000 to be paid from the proceeds
of the offering are for legal fees and auditing fees, EDGAR filer fees, SEC
registration fees, FINRA filing fees, blue sky filing fees and printing
costs related to this offering. No other expenses of the offering will be
paid from the proceeds.
(2) We intend to use a substantial amount of the net proceeds of this offering
to outright purchase as much of our fleet as possible in order to reduce
our vulnerability to possible future increases in finance costs. Our
average vehicle cost is $12,500.
(3) See discussion under heading "Legal Proceedings" in the "BUSINESS" section
of this prospectus.
We believe the proceeds from the offering will allow us to operate for at
least twelve months if only the minimum amount is raised, including filing
reports with the Securities and Exchange Commission, as well as the business
activities contemplated by our business plan.
DETERMINATION OF OFFERING PRICE
The price of the shares we are offering was arbitrarily determined in order
for us to raise a minimum of $1,000,000 in this offering. The offering price
bears no relationship to our assets, earnings, book value or other criteria of
value. Among the factors we considered were:
* the proceeds to be raised by the offering;
* the amount of capital to be contributed by purchasers in this offering
in proportion to the amount of stock to be retained by our existing
stockholders; and
* our relative cash requirements.
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this offering. Net
tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of our shares being
offered. Dilution of the value of our shares you purchase is also a result of
the lower book value of our shares held by our existing stockholders.
As of September 30, 2012, the net tangible book value of our shares of
common stock was $70,117 or approximately $.002 per share based upon 30,450,000
shares outstanding.
IF THE MAXIMUM NUMBER OF SHARES ARE SOLD
Upon completion of this offering if all 12,500,000 of our shares are sold,
the net tangible book value of the 42,950,000 shares to be outstanding will be
$4,788,850 or approximately $.111 per share. The net tangible book value of our
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shares held by our existing stockholders will be increased by $.110 per share
without any additional investment on their part. You will incur an immediate
dilution of $.289 per share.
After completion of this offering, if 12,500,000 shares are sold, investors
in this offering will collectively own 29.12% of the total number of outstanding
shares for which they will have made an aggregate cash investment of $5,000,000,
or $.40 per share. Our existing stockholders will own 70.88% of the total number
of outstanding shares for which they have made cash or asset contributions
totaling $175,595 or approximately $.0058 per share.
IF 75% OF THE SHARES ARE SOLD
Upon completion of this offering if 9,375,000 (75%) of the shares being
offered in this offering are sold, the net tangible book value of the 39,825,000
shares to be outstanding will be $3,538,850 or approximately $.089 per share.
The net tangible book value of our shares held by our existing stockholders will
be increased by $.088 per share without any additional investment on their part.
You will incur an immediate dilution of $.282 per share.
After completion of this offering, if 9,375,000(75%) of the shares being
offered in this offering are sold, investors in this offering will collectively
own 30.78% of the total number of outstanding shares for which they will have
made an aggregate cash investment of $3,750,000, or $.40 per share. Our existing
stockholders will own 69.22% of the total number of outstanding shares for which
they have made cash or asset contributions totaling $175,595 or approximately
$.058 per share.
IF 50% OF THE SHARES ARE SOLD
Upon completion of this offering if 6,250,000 (50%) of the shares being
offered in this offering are sold, the net tangible book value of the 36,700,000
shares to be outstanding will be $2,288,850 or approximately $.062 per share.
The net tangible book value of our shares held by our existing stockholders will
be increased by $.061 per share without any additional investment on their part.
You will incur an immediate dilution of $.338 per share.
After completion of this offering, if 6,250,000(50%) of the shares being
offered in this offering are sold, investors in this offering will collectively
own 17% of the total number of outstanding shares for which they will have made
an aggregate cash investment of $2,500,000, or $.40 per share. Our existing
stockholders will own 83% of the total number of outstanding shares for which
they have made cash or asset contributions totaling $175,595 or approximately
$.058 per share.
IF THE MINIMUM NUMBER OF SHARES ARE SOLD
Upon completion of this offering, in the event 2,500,000 of the shares are
sold, the net tangible book value of the 32,950,000 shares then outstanding will
be $788,850, or approximately $.023 per share. The net tangible book value of
our shares held by our existing stockholders will be increased by $.022 per
share without any additional investment on their part. Persons who invest in
this offering will incur an immediate dilution of $.377 per share.
After completion of this offering, if 2,500,000 shares are sold, investors
in this offering will collectively own approximately 7.50% of the total number
of outstanding shares for which they will have made an aggregate cash investment
of $1,000,000 or $.40 per share. Our existing stockholders will own
approximately 92.5% of the total number of outstanding shares for which they
have made cash and asset contributions totaling $175,595 or approximately $.058
per share.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of January 28, 2013, we had 30,450,000 shares of common stock issued and
outstanding.
There currently exists no public trading market for our common stock. We do
not expect a public trading market will develop until we become a reporting
company under the Securities Exchange Act of 1934, as amended. There can be no
assurance that a public trading market will develop at that time or be sustained
in the future. Without an active public trading market, investors in this
offering may be unable to liquidate their shares of our common stock without
considerable delay, if at all. If a market does develop, the price for our
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shares may be highly volatile and may bear no relationship to our actual
financial condition or results of operations. Factors we discuss in this
prospectus, including the many risks factors associated with an investment in
our Company, may have a significant impact on the market price of our common
stock. Also, because of the relatively low price at which our common stock will
likely trade, many brokerage firms may not effect transactions in our common
stock.
HOLDERS
As of January 28, 2013, there were 26 shareholders of record of our common
stock.
DIVIDENDS
We have not paid cash dividends on any class of common equity since
formation and we do not anticipate paying any dividends on our outstanding
common stock in the foreseeable future. There are no material restrictions
limiting or that are likely to limit our ability to pay dividends on its
outstanding securities.
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
We are offering 12,500,000 shares of common stock on a best efforts basis,
2,500,000 shares minimum, 12,500,000 shares maximum. The offering price is $.40
per share. Funds from this offering will be placed in a separate bank account at
Wells Fargo Bank. The funds will be maintained in a separate bank until we
receive a minimum of $1,000,000 at which time, we will remove those funds and
use the same as set forth in the Use of Proceeds section of this Prospectus.
This account is not an escrow, trust or similar account. Your subscription will
only be deposited in a separate bank account under our name. As a result, if we
are sued for any reason and a judgment is rendered against us, your subscription
could be seized in a garnishment proceeding and you could lose your investment,
even if we fail to raise the $1,000,000 in this offering. As a result, there is
no assurance that your funds will be returned to you if the minimum offering is
not reached. Any funds received by us thereafter will be immediately used by us.
If we do not receive the minimum amount of $1,000,000 within 180 days of the
effective date of our registration statement, all funds will be promptly
returned to you without a deduction of any kind. During the 180 day period, no
funds will be returned to you. You will only receive a refund of your
subscription if we do not raise a minimum of $1,000,000 within the 180 day
period referred to above. There are no broker-dealers or finders involved in our
distribution. Officers, directors, affiliates or anyone involved in marketing
our shares will not be allowed to purchase shares in the offering. You will not
have the right to withdraw your funds during the offering. You will only have
the right to have your funds returned if we do not raise the minimum amount of
the offering or if there is a material change in the terms of the offering. The
following bullet points contain some, but not all, of the material changes that
would entitle you to a refund of your money:
* a change in the offering price;
* a change in the minimum sales requirement;
* a change to allow sales to affiliates in order to meet the minimum
sales requirement; or
* a change in the amount of proceeds necessary to release the funds held
in the separate bank account.
If any material changes to this offering occur, such changes will be
reflected in a post-effective amendment.
We will sell the shares in this offering through our two officers and
directors, who will receive no commission from the sale of any shares. They will
not register as a broker-dealer under section 15 of the Securities Exchange Act
of 1934 in reliance upon Rule 3a4-1. Rule 3a4-1 sets forth those conditions
under which a person associated with an issuer may participate in the offering
of the issuer's securities and not be deemed to be a broker-dealer. The
conditions are that:
1. The person is not statutorily disqualified, as that term is defined in
Section 3(a)(39) of the Act, at the time of his or her participation;
and,
2. The person is not compensated in connection with his or her
participation by the payment of commissions or other remuneration
based either directly or indirectly on transactions in securities;
3. The person is not at the time of his or her participation, an
associated person of a broker-dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1
of the Exchange Act, in that he or she (A) primarily performs, or is
intended primarily to perform at the end of the offering, substantial
17
duties for or on behalf of the issuer otherwise than in connection
with transactions in securities; and (B) is not a broker or dealer, or
an associated person of a broker or dealer, within the preceding
twelve months; and (C) does not participate in selling and offering of
securities for any issuer more than once every twelve months other
than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Our two officers and directors who are selling our shares in this offering,
Jeremy D. Harris and Sergio Perez Conejo, are not statutorily disqualified and
are not being compensated based on the amount of funds raised in this offering.
They are and will continue to be our officers and directors at the end of the
offering and have not been during the last twelve months and are not currently a
broker-dealer or associated with a broker-dealer. They will not participate in
selling and offering securities for any issuer more than once every twelve
months.
After our registration statement is declared effective by the SEC, we may
advertise this offering through tombstones and hold investment meetings in
various states and countries where the offering will be registered. We will not
utilize the Internet to advertise our offering. Our officers and directors will
also distribute the prospectus to potential investors at meetings, to business
associates and to their friends and relatives who are interested in a possible
investment in the offering.
Management and affiliates thereof will not purchase shares in this offering
to reach the minimum.
We do not have any agreements with underwriters with respect to the sale of
shares in this offering. In the event the Company sells all or part of the
shares offered in this prospectus to or through an underwriter, the maximum
compensation paid to any such underwriter shall be 8%. In the event we make a
material change to our plan of distribution, such as offering our shares through
an underwriter and/or increasing the maximum compensation payable to such an
underwriter, we will file a post-effective amendment to our registration
statement to reflect such material change.
SECTION 15(G) OF THE EXCHANGE ACT - PENNY STOCK RULES
The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks are generally equity
securities with a price of less than $5.00 other than securities registered on
certain national securities exchanges or quoted on the OTC Bulletin Board
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. However,
even stocks quoted on the OTC Bulletin Board system can still qualify as penny
stocks. Our Common Stock will more than likely be considered a penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a
penny stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the SEC, which:
* contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with
respect to a violation to such duties or other requirements;
* contains a brief, clear, narrative description of a dealer market,
including "BID" and "ASK" prices for penny stocks and the significance
of the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
* contains such other information and is in such form (including
language, type, size, and format) as the SEC shall require by rule or
regulation.
The broker-dealer also must provide, prior to effecting any transaction in
a penny stock, the customer:
* with bid and offer quotations for the penny stock;
* the compensation of the broker-dealer and its salesperson in the
transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
18
* monthly account statements showing the market value of each penny
stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our securities because it will be subject
to these penny stock rules. Therefore, security holders may have difficulty
selling those securities.
STATE SECURITIES-BLUE SKY LAWS
There is no established public market for our common stock and there can be
no assurances that any market will develop in the foreseeable future. Transfer
of our common stock may also be restricted under the securities laws or
securities regulations promulgated by various states, commonly referred to as
"blue sky" laws. Absent compliance with such individual state laws, our common
stock may not be traded in such jurisdiction. Because the common stock
registered hereunder has not been registered for resale under blue sky laws of
every state, the holders of such shares and persons who desire to purchase them
in any trading market that might develop in the future, should be aware that
there may be significant state blue sky law restrictions upon the ability of
investors to sell the common stock and of purchasers to purchase the common
stock. Accordingly, investors may not be able to liquidate their investments and
should be prepared to hold the common stock for an indefinite period of time.
We intend to apply for listing in Mergent, Inc., a leading provider of
business and financial information on publicly listed and quoted companies,
which, once published, will provide us with "manual" exemptions in approximately
39 states, the District of Columbia, Guam, Puerto Rico and U.S. Virgin Islands,
as indicated in CCH Blue Sky Law Desk Reference at Section 6301 entitled
"STANDARD MANUALS EXEMPTIONS."
Thirty-nine states, certain U.S. Territories (Guam, Puerto Rico and U.S.
Virgin Islands) and the District of Columbia have what is commonly referred to
as a "manual exemption" for secondary trading of securities such as those to be
resold by persons who purchase shares under this Prospectus. In these states,
territories and district, so long as we obtain and maintain a listing in
Mergent, Inc. or Standard and Poor's Corporate Manual, secondary trading of our
common stock can occur without filing, review or approval by state regulatory
authorities in these states, territories and district. These 39 states are:
Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Hawaii,
Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey,
New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island,
South Carolina, South Dakota, Texas, Utah, Vermont, Washington, West Virginia,
Wisconsin and Wyoming. We cannot secure this listing, and thus this
qualification, until after our registration statement is declared effective.
Once we secure this listing, secondary trading can occur in these states without
further action.
We currently do not intend to and may not be able to qualify securities for
resale in other states which require shares to be qualified before they can
resold by our shareholders.
REGULATION M
Our officers and directors, who will sell the shares, are aware that they
are required to comply with the provisions of Regulation M, promulgated under
the Securities and Exchange Act of 1934, as amended. With certain exceptions,
Regulation M precludes officers and/or directors, sales agents, any
broker-dealers or other person who participate in the distribution of shares in
this offering from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete.
19
OFFERING PERIOD AND EXPIRATION DATE
This offering will start on the date that our registration statement is
declared effective by the SEC and continue for a period of 180 days, unless
sooner completed or otherwise terminated by us. We will not accept any money
until our registration statement is declared effective by the SEC.
PROCEDURES FOR SUBSCRIBING
We will not accept any money until our registration statement is declared
effective by the SEC. Once the registration statement is declared effective by
the SEC, if you decide to subscribe for any shares in this offering, you must:
1. Execute and deliver a subscription agreement, a copy of which is
included with the prospectus; and
2. Deliver a check, wire transfer, bank draft or money order to us for
acceptance or rejection.
All checks for subscriptions must be made payable to "Arrow Cars
International Inc."
RIGHT TO REJECT SUBSCRIPTIONS
We have the right to accept or reject subscriptions in whole or in part,
for any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours after
we receive them.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF DEVELOPMENT STAGE ACTIVITIES
Arrow Cars International Inc. ("Successor", "Company", or "ACI"), a private
company, was organized under the laws of Florida on March 8, 2012. Arrow Cars SL
("ACSL" or "Predecessor"), a private limited company, was organized under the
laws of Spain on January 21, 2008. On April, 1, 2012, Arrow Cars SL executed a
reverse recapitalization with Arrow Cars International Inc. ACI (Successor) is a
holding company that conducts operations through its wholly-owned subsidiary
ACSL (Predecessor). The Company's business model, described below, involves
leasing and rent-to-own concepts whereby the respective clients are usually
unable, unwilling, or lack credit-worthiness to purchase or lease vehicles
conventionally. Clients may go through a website called www.autooasiseurope.com
or walk-in to the offices to conduct transactions.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012:
The Company had revenues derived for "Car rentals" amounting to $391,642
for the period ended September 30, 2012. The cost of car rentals amounted to
$88,705. The gross profit at September 30, 2012 amounted to $302,937. The
general and administrative costs were $325,373; these expenses were made up of
the following:
Rent $ 40,141
Salaries $129,219
Professional services rendered $ 87,396
Bank Service charges $ 7,404
Marketing and Advertising $ 11,296
Soft costs $ 7,632
Other costs and services $ 42,285
--------
TOTAL $325,373
========
20
Depreciation of tangible assets amounted to $120,064.
The net operating loss for the nine months ended September 30, 2012
amounted to $142,499. Other income and expenses, including interest paid,
amounted to $103,965, which include Auto Sales - Net of $147,359. The net loss
before taxes was $38,535.
At September 30, 2012, the Company had 30,450,000 shares issued and
outstanding, the weighted average was 20,303,935 shares; hence the loss per
share was $(0.00).
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011:
The Company had revenues derived for "Car rentals" amounting to $525,686
for the period ended September 30, 2011. The cost of car rentals amounted to
$103,552. The gross profit at September 30, 2011 amounted to $422,134. The
general and administrative costs amounted to $4; these expenses were made up of
the following:
Rent $ 36,603
Salaries $104,067
Profesional services rendered $ 28,359
Bank Service charges $ 11,191
Marketing and Advertising $ 9,682
Soft costs $ 35,193
Transportation Costs $137,740
Other costs and services $118,732
--------
TOTAL $481,567
========
Depreciation of tangible assets amounted to $126,421.
The net operating loss for the nine months ended September 30, 2011
amounted to $185,854. Other income and expenses, including interest paid,
amounted to $(31,364), which include Auto Sales - Net loss of $5,420. The net
loss before taxes was $217,218.
LIQUIDITY AND CAPITAL RESERVES
As of September 30, 2012, the Company had $18,287 in cash and net cash used
in operations of $(159,557). The working capital deficit amounted to $468,391.
Finally, the Company had a Shareholders' Equity deficit amounting to $211,150 at
September 30, 2012.
The company's debt amounted to $1,049,411; this debt was made up of
$50,106 of secured loans granted by Banco Popular, $571,969 of credits lines
with two banks (Banco Popular and Bank Inter) and finally $427,336 of leasing
contracts also financed by Banco Popular and Bank Inter. The basic terms of this
debt are as follows:
21
BANKINTER S.A.:
CREDIT LINES:
BANKINTER CREDIT LINE 327:
Interest rate: Variable & Average EURIBOR over three months
+ 2.50%.
Term: No expiry date but renewable every year.
Use & application of loan: Revenue earning equipment - cars.
Outstanding amount at 09/30/2012: $257.119
Quarterly payments: $2.824
Date of agreement: 11/18/2009
Initial amount: $257.119
BANKINTER CREDIT LINE 114:
Interest rate: Average EURIBOR over three months + 2.50%.
Term: Yearly renewable.
Use & application of loan: Revenue earning equipment - cars.
Outstanding amount at 09/30/2012: $257.119
Quarterly payments: $2.846
Date of agreement: 08/04/2009
Initial amount: $321.399
BANKINTER LEASING CONTRACTS:
LEASING CONTRACT - 900017:
Interest rate: 3.34%. Variable
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $787
Date of agreement: 08/27/2009
LEASING CONTRACT - 900024:
Interest rate: 2.76% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $528
Date of agreement: 09/14/2009
LEASING CONTRACT - 900031:
Interest rate: 2.69% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $23
Date of agreement: 11/24/2009
22
LEASING CONTRACT - 000026:
Interest rate: 2.71% - Variable.
Term: 60 months
Use & application of loan: Purchase of trackers
Monthly payments: $23
Date of agreement: 01/15/2015
LEASING CONTRACT - 000033:
Interest rate: 2.72% - Variable.
Term: 60 months.
Use & application of loan: Purchase of trackers
Monthly payments: $122
Date of agreement: 03/31/2010
LEASING CONTRACT - 000047:
Interest rate: 3.16% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $2,204
Date of agreement: 06/09/2010
LEASING CONTRACT - 000054:
Interest rate: 2.72% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $250
Date of agreement: 12/30/2010
LEASING CONTRACT- 100056:
Interest rate: 6.51% - Variable.
Term: 36 months
Use & application of loan: Purchase of car lift
Monthly payments: $103
Date of agreement: 01/03/2012
LEASING CONTRACT - 200016:
Interest rate: 6.33% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $225
Date of agreement: 01/20/2012
LEASING CONTRACT - 200044:
Interest rate: 4.89% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $1,539
Date of agreement: 03/22/2012
23
LEASING CONTRACT - 200051:
Interest rate: 6.33% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $174
Date of agreement: 04/04/2012
LEASING CONTRACT - 200065:
Interest rate: 5.73% - Variable.
Term: 36 months
Use: Purchase of mechanic tools
Monthly payments: $53
Date of agreement: 06/20/2012
LEASING CONTRACT - 200072:
Interest rate: 6.33% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $133
Date of agreement: 09/25/2012
LEASING CONTRACT - 200086:
Interest rate: 6.33% - Variable.
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $73
Date of agreement: 10/30/2012
BANCO POPULAR ESPANOL S.A.:
BANCO POPULAR CREDIT LINE:
Interest rate: 3.00% - Variable.
Term: 12 months renewable
Use & application of loan: Revenue earning equipment - cars.
Outstanding amount at 09/30/2012: $57,739
Monthly payments: $470 (variable)
Date of agreement: 07/14/2.010
Initial amount: $38.568; increased one year later to $57,852
BANCO POPULAR SECURED LOAN:
Interest rate: 4,997% - Fixed
Term: 60 months
Use: Partial cancellation of Bankinter credit
line identified with number 114
Outstanding amount at 09/30/2012: $50,106
Monthly payments: $1,628
Date of agreement: 06/02/2010
Initial amount: $70,707
24
BANCO POPULAR LEASINGS CONTRACTS:
There are 37 Banco Popular leasing contracts in total, of which the following
contracts are all subject to the same terms and conditions:- 1402;- 1321;-
1317;- 1310; -1311;- 1318;- 1312;- 1319;- 1313;- 1320;- 1322;- 1306;- 1323;-
1324;- 1332;- 1309;- 1328;- 1308,- 1315;- 1325;- 1305;- 1316;- 1329;- 1330;-
1327;- 1333;- 1334;- 1335;- 1331 and - 1403:
Interest rate: 4.243% - Fixed interest
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $6,255
Date of agreement: 06/02/2010
Those Banco Popular Leasing contracts identified as: - 7665, 7663, 7664, 7668,
and 7669 - are all subject to the following terms and conditions:
Interest rate: 6.62% - Fixed
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $1,530
Date of agreement: 12/29/2011
The terms and conditions of Banco Popular Leasing contract - 7666 are as
follows:
Interest rate: 6.33% - Fixed
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $349
Date of agreement: 12/29/2011
The terms and conditions of Banco Popular Leasing contract - 1073 are as
follows:
Interest rate: 6.257% - Fixed
Term: 60 months
Use & application of loan: Revenue earning equipment - cars.
Monthly payments: $348
Date of agreement: 03/15/2012
Jeremy D. Harris is the personal guarantor on approximately $1,050,000
related to our secured loan, credit lines and leasing contracts. In addition, by
virtue of Spanish law, Mr. Harris is jointly and severally liable on all of the
Company's bank lines of credit and automobile leasing contracts.
This section of the prospectus includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by words
like: believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements, which apply only
as of the date of this prospectus. These forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from historical results or our predictions.
The following table provides selected financial data about our Company as
of September 30, 2012. For detailed financial information, see the financial
statements included in this prospectus.
Balance Sheet Data:
-------------------
Cash $ 18,287
Total assets $ 981,434
Total liabilities $1,192,584
Shareholders' equity (deficit) $ 211,150
25
PROPOSED MILESTONES TO IMPLEMENT OUR BUSINESS OPERATION
Milestones achievable at minimum and maximum funding levels:
A) IF WE ACHIEVE THE MINIMUM FUNDING ($1,000,000):
Our specific plan of operations and milestones for January 2013 through
December 2013 are as follows:
DURING THE FIRST QUARTER OF 2013, WE INTEND TO:
SPAIN
SOURCE, ORDER AND COORDINATE DELIVERY OF THE INITIAL BATCH OF OUR EXTENDED
VEHICLE FLEET.
COSTS: $887,500. For the purchase of 71 vehicles outright.
We intend delivery of the new fleet of vehicles to be staggered over the
year to help maximize fleet utilization by replacing many of our existing fleet
already on long term hire. The older fleet will be transferred to "Rent to Own"
clients.
INTRODUCE AND DEVELOP A NEW FLEET MANAGEMENT SYSTEM
COSTS $6,500 plus 1.35% of rental revenue per month. This price would be paid
after installation and testing of the system.
A semi bespoke system (designed by thermeon.com to maximize fleet
efficiency) will be introduced and developed during the first quarter of 2013 in
conjunction with our fleet expansion. In addition to general fleet management,
The standard system is a template with the facility to fine tune certain
elements allowing us to semi bespoke features to suit our model. Information
entered into the system via a tablet device and networked throughout each
department, can record the return of a vehicle, any damage, maintenance and
cleaning required and automatically allocate the amount of time to complete the
repairs. This information can be sent to each department along with a schedule
of when to expect the vehicle. The reservations department can also be informed
when the vehicle will be returned for rehire thus helping to maximizing fleet
utilization.
Using a bar code system and a series of alerts it will automatically inform
each department;
1) Of the scheduled repairs/preparation required.
2) Orders parts/materials required
3) When each department should expect a vehicle
4) The pre-determined time allocated for the work to be carried out.
CONTINUE TO DEVELOP OUR RELATIONSHIP WITH FINANCE AND FLEET PROVIDERS.
We intend to use a substantial amount of the net proceeds of this offering
to purchase our fleet outright. However, we will continue to develop
relationships with current and potential finance providers to assist future
growth, if needed. Our current vehicle finance in Spain is provided by Bank
Inter and Banco Popular. We are in negotiations with ABN AMRO with a view to
develop a working partnership to assist in funding both our expansion in Spain
and the USA.
1) Wells Fargo provides banking services for our company in the USA. We
will begin to develop our credit score within the USA in preparation
of our expansion into Florida during 2014.
26
2) Safa Motor, a large car dealership, supplies the majority of our fleet
in Spain. We will continue to negotiate supply and discounts for our
future fleet requirements whilst growing our status with other vehicle
manufacturers and dealers.
DURING THE SECOND QUARTER OF 2013, WE INTEND TO:
SPAIN
ASSIGN A MINIMUM OF TWO WORLDWIDE HOLIDAY CAR RENTAL BROKERS.
ZERO COST: The car rental brokers would be given "Net" rates and add their
own commission to these rates.
In preparation for peak holiday season in Spain we will assign worldwide
holiday car rental brokers to market our long term car rental product to foreign
home owners in Spain staying for extended periods. As is already the case, we
intend to have advance reservations for our long term car rental service,
therefore maximizing fleet utilization immediately.
APPROACH SMALL TO MEDIUM SIZED BUSINESSES IN SPAIN - STAFF COSTS ONLY
Between April and July 2013, we believe that a minimum of ten companies
will return their existing fleets to their current suppliers and switch over to
our AutoOasis "Easy Car Leasing" program and transfer to an AutoOasis "Easy Car
Leasing" fleet. We are confident our low cost/high benefit model will tempt many
Spanish companies to transfer their fleet business to us. Due to contractual
restrictions, the transfer process can take several months. We anticipate the
transfer of corporate clients will begin in earnest during the second quarter of
2013. This will coincide with the return of vehicles hired by foreigners during
peak summer season. However, there is no guarantee that any company will
transfer its fleet to us. We do not expect to incur any material costs in
obtaining these new fleet customers other than normal vehicle acquisition costs.
EXPAND OUR OPERATION IN GIBRALTAR.
MARKETING COSTS: $650 per month plus staff costs
24% of our entire fleet is driven by customers working in the tax free
haven of Gibraltar (on the south western tip of Spain). Gibraltar is home for
many off shore gaming companies employing foreigners on a temporary basis. We
believe we can increase our client base here by a minimum of 200%; however,
there is no guarantee that we will be able to increase our client base by a
minimum of 200%.
We intend to increase our client base in Gibraltar by:
1) Employing the services of an independent sales company to sell our
service directly to these potential clients.
2) Collaborating with the companies directly to introduce our services as
part of a "welcome package" to new arrivals to ensure their arrival in
new country is a more relaxed process.
DURING THE THIRD QUARTER OF 2013, WE INTEND TO:
SPAIN
IMPROVE EXISTING PREMISES.
COSTS: $2,000
To help maximize efficiency, we intend to improve our existing premises
with the addition of wheel and chassis alignment equipment.
27
BEGIN RECRUITMENT OF AGENTS FOR THE RENT TO OWN BUSINESS EXPANSION - STAFF COSTS
ONLY
The "Rent to Own" sector of the AutoOasis business model has been
successfully tested because between December 31, 2011 and October 31, 2012 we
transferred 40 of our vehicles from Easy Car Leasing customers to Rent to Own
customers). During the third quarter of 2013, we intend to develop our dealer
agency network by beginning the recruitment of agents in preparation for the
Easy Car Leasing fleet being transferred to "Rent to Own" during the first
quarter of 2014.
DURING THE FOURTH QUARTER OF 2013, WE INTEND TO:
USA
DEVELOP RELATIONSHIPS WITH VEHICLE SUPPLIERS IN THE USA.
We do not have any operations in the U.S.A at this time. During May 2012,
our management traveled to Orlando, Florida to meet with the Ford Fleet National
Account Manager and Ford Rental Sales Manager and the Regional Fleet Manager for
Southeast Toyota Distributors and began initial discussions regarding our
planned expansion into Florida. Communication has been maintained with these
people pending another trip to the U.S. Prior to our Company entering the U.S.
market, we will communicate with other vehicle manufacturers and suppliers. The
supplier offering an arrangement that suit our needs will be the one we use to
provide our fleet. During our expansion, fleet suppliers will probably change
due to price and supply and terms and conditions fluctuations. Market forces
such as the cost of fuel and model desirability will also be factors that
determine the fleet we choose to operate.
PREPARE FOR COMMENCEMENT OF OPERATIONS IN THE USA.
COST: $13,000
Source, negotiate and complete legalities for our premises in Melbourne, Brevard
County, Florida. Complete operational licensing and insurance (staff, premises
and fleet) requirements and legalities for Florida.
SPAIN
CONTINUE TO IMPROVE EXISTING PREMISES
If we achieve our minimum funding of $1,000,000 and up to $2,000,000, to
help maximize efficiency, we intend to continue to improve our existing premises
with the addition of bodywork and paintwork repair equipment. We expect to
reduce the cost of vehicle bodywork repairs by as much as 50%. The approximate
costs would be $52,000 for equipment and installation.
EMPLOY A VEHICLE BODYWORK AND PAINT SPRAYER
COSTS $31,590: Salary and benefits
To accelerate bodywork repairs and reduce costs of repair we intend to
fully utilize our new vehicle body shop installed between October and December
2013 by employing a qualified vehicle body work repair specialist.
BEGIN NEGOTIATIONS FOR THE 2014 FLEET.
Once peak holiday season is finished, new or nearly new vehicles offers are
extremely attractive. We intend to have our initial batch of vehicles for the
first quarter of 2014, sourced and assigned for delivery before the end of 2013.
28
B) IF WE ACHIEVE THE MAXIMUM FUNDING ($5,000,000):
Our specific plan of operations and milestones for January 2013 through
December 2013 are as follows:
DURING THE FIRST QUARTER OF 2013, WE INTEND TO:
SPAIN
SOURCE, ORDER AND COORDINATE DELIVERY OF THE INITIAL BATCH OF OUR EXTENDED
VEHICLE FLEET. COSTS - $3,086,000 (THE REMAINING $1,450,000 REFERRED TO IN THE
USE OF PROCEEDS WILL BE USED TO PROVIDE INITIAL FLEET FOR THE PROPOSED U.S.
EXPANSION TOWARDS THE END OF THE 2ND QUARTER OF 2013). THE FLEET WILL BE
PURCHASED OUTRIGHT.
We intend delivery of the new fleet of vehicles to be staggered over the
year to help maximize fleet utilization by replacing many vehicles in our
existing fleet already on long term hire. The older fleet will be transferred to
Rent to Own clients.
INTRODUCE AND DEVELOP A NEW FLEET MANAGEMENT SYSTEM.
COSTS $6,500 plus 1.00% of rental revenue per month. This price would be
paid after installation and testing of the system.
A semi bespoke system (designed by thermeon.com) to maximize fleet
efficiency will be introduced and developed during the first quarter of 2013 in
conjunction with our fleet expansion. In addition to general fleet management,
the standard system is a template with the facility to fine tune certain
elements allowing us to semi bespoke features to suit our model. Information
entered into the system via a tablet device and networked throughout each
department, can record the return of a vehicle, any damage, maintenance and
cleaning required and automatically allocate the amount of time to complete the
repairs. This information can be sent to each department along with a schedule
of when to expect the vehicle. The reservations department can also be informed
when the vehicle will be returned for rehire thus helping to maximizing fleet
utilization.
Using a bar code system and a series of alerts it will automatically inform
each department
1) Of the scheduled repairs/preparation required.
2) Orders parts/materials required
3) When to expect the vehicle
4) The pre-determined time allocated for the work to be carried out.
CONTINUE TO DEVELOP OUR RELATIONSHIP WITH FINANCE AND FLEET PROVIDERS.
We intend to purchase our fleet outright. However, we will continue to
develop relationships with current and potential finance providers to assist
future growth if needed. Our current vehicle finance in Spain is provided by
Bank Inter and Banco Popular. We are in negotiations with ABN AMRO with a view
to develop a working partnership to assist in funding both our expansion in
Spain and the USA.
Wells Fargo provides banking services for our company in the USA. We will
begin to develop our credit score within the USA in preparation of our expansion
into Florida during 2013.
Although we do not have a contract with Safa Motor, Safa Motor, a large car
dealership, supplies the majority of our fleet in Spain. We will continue to
negotiate supply and discounts for our future fleet requirements while growing
our status with other vehicle manufacturers and dealers.
29
RELOCATE TO NEW PREMISES.
COST: $39,000
If we achieve funding of between $2,000,000 and $5,000,000 and to be able
to manage a larger fleet, we intend to move our operations to much larger and
superior premises. Already identified, this fully equipped building will
accommodate our projected growth in Spain.
USA
CONTINUE TO DEVELOP RELATIONSHIPS WITH VEHICLE SUPPLIERS IN THE USA.
We do not have any operations in the U.S.A. at this time. During May 2012,
we traveled to Orlando, Florida to meet with the Ford Fleet National Account
Manager and Ford Rental Sales Manager and Toyotas Regional Fleet Manager for
Southeast Toyota Distributors and begun initial discussions regarding our
planned expansion into Florida. Communication has been maintained with these
contacts pending another trip to the U.S. Prior to our company entering the
U.S., we will communicate with other vehicle manufacturers and suppliers. The
supplier offering an arrangement that best suits our needs will be the one we
use to provide our fleet. During our expansion, fleet suppliers will probably
change due fluctuations in price and supply. Market forces, such as the cost of
fuel and model desirability, will also be factors that determine the fleet we
choose to operate.
SOURCE, ORDER AND COORDINATE DELIVERY OF INITIAL FLEET OF VEHICLES IN THE US.
COSTS: $1,475,000, to be used to purchase vehicles outright.
DURING THE SECOND QUARTER OF 2013, WE INTEND TO:
USA
Introduce our vehicle reservation and fleet management system prior to
U.S.A. expansion. The vehicle reservation and fleet management system will
integrate with the system in Spain allowing remote fleet management from either
base. In addition to general fleet management, the standard system is a template
with the facility to fine tune certain elements allowing us to semi bespoke
features to suit our model. Information entered into the system via a tablet
device and networked throughout each department, can record the return of a
vehicle, any damage, maintenance and cleaning required and automatically
allocate the amount of time to complete the repairs. This information can be
sent to each department along with a schedule of when to expect the vehicle. The
reservations department can also be informed when the vehicle will be returned
for rehire thus helping to maximizing fleet utilization.
Using a bar code system and a series of alerts it will automatically inform
each department:
1) Of the scheduled repairs/preparation required.
2) Orders parts/materials required
3) When to expect the vehicle
4) The pre-determined time allocated for the work to be carried out.
PREPARE FOR COMMENCEMENT OF OPERATIONS IN THE U.S.A.
COSTS: $13,000
1) Source, negotiate and complete legalities for our premises in Florida.
2) Complete operational licensing and insurance (staff, premises and
fleet) requirements and legalities for Florida.
3) Begin staff recruitment in Florida.
4) Introduce our vehicle reservation and fleet management system prior to
U.S.A. expansion. The system will integrate with the System in Spain
allowing remote fleet management from either base.
30
SPAIN
ASSIGN A MINIMUM OF TWO WORLDWIDE HOLIDAY CAR RENTAL BROKERS.
ZERO COST: The car rental brokers would be given "Net" rates and add their
own commission to these rates.
In preparation for peak holiday season in Spain we will assign worldwide
holiday car rental brokers to market our long term car rental product to foreign
home owners in Spain staying for extended periods. Our low cost/high benefit
model is extremely competitive during mid to peak holiday seasons. As is already
the case, we intend to have advance reservations for our long term car rental
service, therefore maximizing fleet utilization immediately.
APPROACH SMALL TO MEDIUM SIZED BUSINESSES IN SPAIN - STAFF COSTS ONLY
Between April and July 2013, we believe that a minimum of ten companies
will return their existing fleets to their current suppliers and switch over to
our AutoOasis "Easy Car Leasing" program. We are confident our low cost/high
benefit model will tempt many Spanish companies to transfer their fleet business
to us. Due to contractual restrictions, the transfer process can take several
months. We anticipate the transfer of corporate client will begin in earnest
during the second quarter of 2013. This will coincide with the return of
vehicles hired by foreigners during peak summer season. We do not expect to
incur any material costs in obtaining these new fleet customers other than
normal vehicle acquisition costs.
EXPAND OUR OPERATION IN GIBRALTAR
APPROXIMATE COSTS: $950 per month plus staff costs.
24% of our entire fleet is driven by customers working in the tax free
haven of Gibraltar (on the south western tip of Spain). Gibraltar is home for
many off shore gaming companies and banks, employing foreigners on a temporary
basis. We intend to increase our client base in Gibraltar by a minimum of 300%
by;
1) By employing the services of an independent sales company to sell our
service directly to these potential clients.
2) By collaborating with the companies directly to introduce our services
as part of a "welcome package" to new arrivals to ensure their arrival
in new country is a more relaxed process. However, there is no
guarantee that we will be able to increase our client base by a
minimum of 300%.
DURING THE THIRD QUARTER OF 2013, WE INTEND TO:
USA
BEGIN OPERATIONS IN FLORIDA BETWEEN JULY AND SEPTEMBER 2013.
APPROXIMATE COMBINED COSTS $300,000: Amount that includes salaries,
property lease costs, legal, marketing, utilities, administration for Q3 and Q4;
and excludes the acquisition of vehicles.
By using the same worldwide holiday car rental brokers used for the Spanish
market we intend to have advanced reservations for our long term car rental
service and maximizing fleet utilization immediately.
SPAIN
BEGIN RECRUITMENT OF AGENTS FOR THE RENT TO OWN BUSINESS EXPANSION - STAFF COSTS
ONLY.
31
The "Rent to Own" sector of the AutoOasis business model has been
successfully tested by us (from December 2011 to October 2012 we transferred 40
vehicles from Easy Car Leasing to Rent to Own customers). During the third
quarter of 2013, we intend to develop our dealer agency network by beginning the
recruitment of agents in preparation for the Easy Car Leasing fleet being
transferred to Rent to Own during the first quarter of 2014.
PREPARE TO COMMENCE OPERATIONS ON THE COSTA BLANCA (EASTERN SPAIN): COMBINED
COSTS FOR TRANSPORT, RENTAL OF SMALL VEHICLE STORAGE AND WORKSHOP FACILITIES -
$18,000 PLUS STAFF COSTS.
The Costa Blanca is already a market for us; we intend to expand this
operation by launching a "Sub Hub" in Alicante, Eastern Spain. This will be a
skeleton service with vehicles provided remotely by our large Costa del Sol Hub.
Clients will be able to collect and return vehicles from Alicante (Spain).
DURING THE FOURTH QUARTER OF 2013, WE INTEND TO:
U.S.A
BEGIN DEVELOPMENT OF THE AUTOOASIS RENT TO OWN SERVICE TOWARDS THE END OF 2013
MARKETING COSTS for Q4 2013: $9,000 plus staff costs.
As with our Spanish business, we intend to initially develop the Rent to
Own service in house prior to recruitment of agents for the Rent to Own
expansion. As with Spain, we want a recognized and respected brand established
prior to the recruitment of agents during late 2014.
SPAIN
BEGIN NEGOTIATIONS FOR THE 2014 FLEET.
Once peak holiday season is finished, new or nearly new vehicles offers are
extremely attractive. We intend to have our initial batch of vehicles for the
first quarter of 2014, sourced and assigned for delivery before the end of 2013.
CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes are prepared in accordance
with generally accepted accounting principles in the United States of America.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses. These estimates and assumptions are affected by management's
applications of accounting policies. The Company has elected a December 31
fiscal year end.
In May 2009, the Financial Accounting Standards Board ("FASB") issued an
accounting standard that became part of ASC Topic 855, "Subsequent Events". ASC
Topic 855 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. ASC Topic 855 sets forth (1) the
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, (2) the circumstances
under which an entity should recognize events or transactions occurring after
the balance sheet date in its financial statements and (3) the disclosures that
an entity should make about events or transactions that occurred after the
balance sheet date. ASC Topic 855 is effective for interim or annual financial
periods ending after June 15, 2009. The adoption of ASC Topic 855 did not have a
material effect on the Company's financial statements.
32
In June 2009, the FASB issued an accounting standard whereby the FASB
Accounting Standards Codification ("Codification") will be the single source of
authoritative non-governmental United States of America generally accepted
accounting principles ("GAAP"). Rules and interpretive releases of the United
States of America Securities and Exchange Commission ("SEC") under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. ASC Topic 105 is effective for interim and annual periods ending
after September 15, 2009. All existing accounting standards are superseded as
described in ASC Topic 105. All other accounting literature not included in the
Codification is non-authoritative. The Codification has not had a significant
impact on the Company's financial statements.
The Company has adopted Financial Accounting Standards Board ("FASB")
Statement Number 128, "Earnings per Share" ("EPS") which requires presentation
of basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and denominator of
the diluted EPS computation. In the accompanying financial statements, basic
earnings (loss) per share is computed by dividing net income/loss by the
weighted average number of shares of common stock outstanding during the period.
There are no dilutive shares outstanding.
Cash and cash equivalents include cash in banks, money market funds and
certificates of term deposits with maturities of less than three months from
inception, which are readily convertible to known amounts of cash and which, in
the opinion of management, are subject to an insignificant risk of loss in
value.
Deferred income taxes are reported for timing differences between items of
income or expense reported in the financial statements and those reported for
income tax purposes in accordance with SFAS Number 109, "Accounting for Income
Taxes," which requires the use of the asset/liability method of accounting for
income taxes. Deferred income taxes and tax benefits are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and for tax loss and credit carry-forwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The Company provides for deferred taxes for the
estimated future tax effects attributable to temporary differences and
carry-forwards when realization is more likely than not.
We are an "emerging growth company," as defined in the JOBS Act. For so
long as we are an "emerging growth company," we may take advantage of certain
exemptions from various reporting requirements that are applicable to other
public companies that are not "emerging growth companies," including, but not
limited to, not being required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding advisory
"say-on-pay" votes on executive compensation and shareholder advisory votes on
golden parachute compensation.
Under the JOBS Act, we will remain an "emerging growth company" until the
earliest of:
* The last day of the fiscal year during which we have total annual
gross revenues of $1 billion or more;
* The last day of the fiscal year following the fifth anniversary of the
completion of this offering;
* The date on which we have, during the previous three-year period,
issued more than $1 billion in non-convertible debt; and
* The date on which we are deemed to be a "large accelerated filer"
under the Securities Exchange Act of 1934 ("Echange Act"). We will
qualify as a large accelerated filer as of the first day of the fiscal
year after we have (i) more than $700 million in outstanding common
equity held by our non-affiliates and (ii) been public for at least 12
months. The value of our outstanding common equity will be measured
each year on the last day of our second fiscal quarter.
Section 107 of the JOBS Act provides that we may elect to utilize the
extended transition period for complying with new or revised accounting
standards and such election is irrevocable if made. As such, we have made the
decision to use the extended transition period for complying with new or revised
accounting standards under Section 102(b)(1) of the JOBS Act.
33
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the financial statements upon
adoption.
BUSINESS
OVERVIEW
We were incorporated on March 8, 2012, in the State of Florida and acquired
100% of Arrow Cars SL (a Spanish corporation) on April 14, 2012, in exchange for
the issuance of 27,000,000 shares of our common stock. Arrow Cars SL was
co-founded in 2003 by Jeremy D. Harris, our President, and his wife, Beverly
Harris. Arrow Cars SL operated as an unincorporated business from 2003 until
January 2008 when Arrow Cars SL was incorporated and registered in Spain.
Arrow Cars SL initially operated a booking agent for four of the major
holiday car rental companies in Spain (Crown Car Hire, Goldcar Rent A Car,
Centauro Rent A Car and Helle Hollis Rent A Car) and received compensation in
the form of commissions. Within a few weeks of operating Arrow Cars SL, Jeremy
and Beverly Harris discovered a large and poorly served market - long term car
rentals for durations of four weeks or more--that was not being commercially
exploited anywhere near its full potential. For example, Jeremy and Beverly
Harris recognized that:
* There were hundreds of thousands of Northern Europeans living and
working for long term durations (yet, not permanently) on the Costa
del Sol (Southern Spain), Costa Blanca (Eastern Spain) and in
Barcelona and Madrid, Spain;
* There existed many small and medium size companies in Spain in need of
new, modern, efficient vehicles to carry out their business
operations; and
* There was an increasing number of temporarily contracted workers in
Spain who needed vehicles on short notice and, more importantly,
needed the ability to return a vehicle to the rental company without
penalty when their employment contracts expired.
Between 2003 and mid-2009, Arrow Cars SL utilized third party owned
vehicles for long term leases and was compensated on a commission only basis.
Arrow Cars SL began acquiring its own vehicles and deploying them on long term
rentals in mid-2009.
On December 16, 2010, the Company executed an agreement with GEP Partners
Plc., a limited company based in Dubai and the United Kingdom. GEP Partners
agreed to act as financial advisor in assisting the Company to merge with a
fully listed, compliant, and registered company listed on the OTCBB in the
United States. In exchange, the Company agreed to pay $135,000 in fees and
exchange 3,000,000 company's equity at a valuation of $0.001 per share. In March
2012, due to the fact that a suitable candidate had not been identified, the
Company and GEP verbally agreed that the Company (Predecessor) would be acquired
by a private Florida corporation (the Successor) and subsequently file a
registration statement with the SEC, and that GEP would continue to be retained
to consult in the process of assisting Arrow Cars International Inc. with
registering its shares with the SEC and helping the Company with having its
common stock quoted on the Over-the-Counter Bulletin Board.
We have three business models, which provide varying solutions for the
difficulties in acquiring a vehicle for both business and personal use.
Model No. 1 -- "AutoOasis - Easy Car Leasing"
Under our brand name "AutoOasis - Easy Car Leasing," Arrow Cars provides
rental vehicles for long term use (28 days minimum lease) as an alternative to
conventional methods of vehicle acquisition (i.e., leasing, purchasing via bank
or manufacturer loans, or conventional auto rental). We do not conduct credit
score checks or require credit card payments, so our clients, who are unwilling
or unable to raise financing can still drive a modern, safe, economical vehicle,
which may be exchanged for a new vehicle every 12 months. Model No. 1 is
designed for the customer who does not want own the vehicle so the customer does
not own the leased vehicle at the end of the rental period.
Model No. 2 - "AutoOasis - Rent to Own"
After the vehicle has been leased for between 12 and 36 months under our
AutoOasis - Easy Car Leasing program, the vehicle is then transferred to our
AutoOasis - Rent to Own program. Customers choosing to use our AutoOasis - Rent
to Own service make an initial deposit of approximately 30% of the vehicle
value, followed by 36 monthly payments. One of our more popular vehicle models
is the Skoda Fabia 1.4 TDI. Our current "Easy Car Leasing" 28 day rental rate
for an economy group vehicle like the Skoda Fabia 1.4 TDI is $526. AutoOasis -
Rent to Own monthly rental rate for the same group of vehicles over 36 months is
$316, including insurance of approximately $54 per month and maintenance of
approximately $68 per month. The monthly maintenance expenses will obviously
34
vary depending on mileage, wear and tear of a particular vehicle. Once the 36
month Rent to Own contract has expired, ownership of the vehicle is transferred
to the customer. We do not conduct credit score checks or require credit card
payments, so our clients, who are unwilling or unable to obtain financing can
still drive a modern, safe, economical vehicle while participating in our
AutoOasis - Rent to Own program.
Model No. 3 - "Try Before You Buy"
We also offer a "Try Before You Buy" service whereby a customer who is
interested in one of our AutoOasis Rent to Own vehicles can rent the care they
are interested in for 28 days. If the customer is happy with the vehicle after
the 28 day trial period, then the customer can "Rent to Own it. If after the 28
day trial period, the customer does not like the vehicle, then the customer can
simply return the vehicle to us. We believe that Our Try Before You Buy program
increases the "peace of mind" for our customers in making a major financial
decision and helps to maximize our fleet utilization by reducing the "down time"
of each vehicle.
CURRENT OPERATIONS
We are based on the Costa del Sol, Spain and our client base spreads north
and east to Madrid and Costa Blanca, Spain. We call our car rental program,
"AUTOOASIS Easy Car Leasing." We currently have a fleet of 124 vehicles, 84 of
which are deployed in our long term rental business and 40 of which are deployed
in our rent-to-own business. We call our rent to own program, "AUTOOASIS Rent to
Own." Our long term rental fleet consists primarily of vehicles from the current
and immediately preceding model years. We purchase our vehicles through auto
dealers and finance our vehicle acquisitions through a number of credit
facilities. Once our vehicles are between one and three years old, we deploy
them to our Rent to Own program where we sell them under a rent to own contract
of 36 months duration (with no credit checks and the option to return the car,
if necessary, without penalty if the contract purchaser's circumstances change).
Our Rent to Own program offers us additional benefits:
1. Allows us to maintain a modern fleet of rental cars, while providing
us the ability to dispose of older vehicles at better prices than we
would likely realize as trade-in value or from sales to third parties;
2. Provides another income stream due to the financing, insurance and
maintenance profit realized from the rent to own contracts.
Our long term rentals range from four weeks (28 days). Our long term rental
agreements are generally 28 day renewable contracts. We rent our cars for $420
to $800 per four weeks depending on car size and available options, as well as
length of the rental contract. Since 2005, the average long term rental for our
cars has been seven months. Since obtaining our own fleet in July 2009, the
average 28 day rental amount for our cars has been $495 and our average fleet
utilization has been 92%.
During the fiscal year ended December 31, 2012, the average long term
rental for our Easy Car Leasing vehicles was 7.1 months. 46% of the Easy Car
Leasing fleet has been leased to the same clients prior to 2012, throughout the
entire 2012 fiscal year and continue into 2013 without breaking the rental.
Our average fleet utilization during the 2012 fiscal year was 92%
(including vehicles unable to be hired due to accident damage or mechanical
failure). Our fleet utilization peaked at 95% during August, October and
November 2012. Our lowest fleet utilization of 89%, 90%, and 88% were recorded
during January, February and March 2012, respectively. These fluctuations are
typical as foreigners take advantage of cheap post Christmas flights home and
business owners will experience a slowdown in trade after the Christmas peak
season.
Our car rental fleet consists of cars manufactured by Seat (Leon, Ibiza,
Altea and Exeo) and Skoda (Fabia). Seat and Skoda are owned by VAG (Volkswagen
Audi Group) and are assembled in the country of the brand origin. Our Kangoo
cars are manufactured by Renault. Our Doblo and Panda cars are manufactured by
Fiat.
HOW DOES AUTOOASIS "EASY CAR LEASING" WORK?
1) The customer chooses their preferred vehicle
2) The customer provides us with (a) current driving permit, (b) valid
passport and (c) proof of address.
35
3) A $200 security deposit is paid along with the first 28 day rental
payment (payment in advance before taking the vehicle).
4) The customer either (a) returns the vehicle at the end of the contract
or (b) renews the contract for another 28 day period and so on for as
long as the customer's wishes (payment taken before a new rental
contract is executed).
The customer can exchange for a larger, smaller, more economical vehicle at
any time, according to their requirements (subject to availability).
All insurance costs, maintenance costs, and a replacement vehicle (in the
event of a breakdown or accident) are included in the rental price. The customer
DOES NOT OWN the car at the end of the contract.
HOW AUTOOASIS "RENT TO OWN" WORKS?
1. The customer chooses their preferred vehicle.
2. A 30% deposit (of the value of the car) is paid upfront; the balance
is paid in 36 monthly installments - THE DEPOSIT ACTS AS A "FILTER,"
CONFIRMING THE CLIENT CAN (A) AFFORD THE CAR AND (B) GAIN "PRIDE OF
OWNERSHIP," INSURING THE CLIENT WILL TREAT THE CAR WITH RESPECT.
3. To be sure the vehicle is correctly insured, full insurance is
provided by Arrow Cars at the customer's expense. The customer can
choose to pay either annually or monthly (another income stream).
4. To be sure the vehicle is correctly maintained, servicing and repairs
are undertaken by Arrow Cars at the customer's expense. Payment is
either when a service is performed or monthly in advance by signing a
service schedule contract (another income stream).
5. Upon receipt of the final payment, ownership of the vehicle is
transferred to the customer.
6. Once the rent to own contract has expired, the customer can choose to
return the vehicle and collect another "new car" from the AUTOOASIS
fleet and begin the rent to own process again. The value of returned
Rent to Own vehicle will be assessed (mileage, condition, age, market
value and cost of repairs, etc.) and the valuation total will be used
toward the deposit required to begin a new Rent to Own contract. If
the valuation is less than the initial 30% deposit (see number 2
above) the customer will be asked to supplement the difference. If the
valuation is greater than the initial 30% deposit the extra amount
will be deducted from the monthly rental payments (either a reduction
in the total contract period or reduced monthly rental amounts. This
will be the customer's choice). The returned car will be restored to a
saleable condition and be "resold" under a new Rent to Own contract.
FUTURE OPERATIONS
We are conducting a due diligence review and market analysis of
opportunities for expanding our business to the United States, where our focus
in on the State of Florida. Florida has remarkably similar demographics to Costa
del Sol as there are several thousand British and other international citizens
living in Florida on a semi-permanent basis and many people in Florida suffer
from low credit scores due to substantial decline in the value of Florida real
estate and general economic conditions. Many of these foreign visitors to
Florida would be candidates for our long term rental program. When intend to
open our first long term rental location in Florida during the second half of
2013, depending, of course, on the success of our offering of common stock. We
believe we will need to raise the minimum $1,000,000 in this offering in order
to launch our business in Florida.
MARKETING STRATEGY
SPAIN
Our marketing strategy for Spain is to exploit the long term car rental
business by marketing our rental program to:
* The hundreds of thousands of Northern Europeans living and working for
long term durations (yet, not permanently) on the Costa del Sol
(Southern Spain), Costa Blanca (Eastern Spain) and in Barcelona and
Madrid, Spain;
* The many small and medium size companies in Spain in need of new,
modern, efficient vehicles to carry out their business operations;
36
* The increasing number of temporarily contracted workers in Spain who
need vehicles on short notice and, more importantly, need the ability
to return a vehicle to the rental company without penalty when their
employment contracts expire;
* Credit impaired individuals and small to medium businesses who need
cars, but who may not qualify for conventional car leases or purchase
financing; and
* Individuals and small to medium businesses who are reluctant to, and
fearful of, investing sizeable amounts of cash for car purchases or
borrowing money to buy cars with sizeable amounts cash down payments
that could be used for other purposes.
FLORIDA
Our marketing strategy for Florida is to exploit the long term car rental
business by marketing our rental program to:
* The several hundred thousands of Northern Europeans living and working
for long term durations (yet, not permanently) in Florida;
* The many small and medium size companies in Florida in need of new,
modern, efficient vehicles to carry out their business operations;
* The increasing number of temporarily contracted workers and
smi-permanent foreigners in Florida who need vehicles on short notice
and, more importantly, need the ability to return a vehicle to the
rental company without penalty when their employment contracts expire;
* Credit impaired individuals and small to medium businesses who need
cars, but who may not qualify for conventional car leases or purchase
financing; and
* Individuals and small to medium businesses who are reluctant to, and
fearful of, investing sizeable amounts of cash for down payments for
car purchases or borrowing money to buy cars with sizeable cash down
payments that could be used for other purposes.
As our U.S. business evolves, we may adjust our marketing strategy to
exploit changing market conditions.
We will market our long term rental services by emphasizing the major
benefits of our AUTO OASIS "Easy Car Leasing," which are:
1. No major cash outlay for car purchase down payment;
2. No credit card costs, no depreciation, no debt and no risk;
3. No credit check;
4. Help to repair low credit scores;
5. No maintenance, repairs or insurance bills to pay (aside from those
covered in the car rental contract);
6. No long term commitment (28 day contracts only);
7. Drive a new car every year;
8. 100% tax write off of rental expense in Spain for commercial renters;
9. Mobile tire repair service (we send repair person and vehicle to
client 24/7, within a 150 mile radius of our local offices; and
10. Competitive pricing.
We will employ the above marketing strategy for our AUTOOASIS "Rent to Own"
program with some minor variations. Many of our rent to own customers will be
our long term rental customers, who decide to keep the vehicles they have
enjoyed driving.
RISK MANAGEMENT - "RING FENCE" AND INSURANCE
In order to safeguard our fleet of cars in our long term rental program and
to protect our collateral in our rent to own program, we insure our cars against
loss from accidents and theft. We also equip each car with an electronic
tracking device. We call this device a "ring fence."
37
RING FENCE
All of our vehicles are equipped with a "ring fence" electronic tracking
facility that enables us to (i) track the position of each vehicle within 10
square meters (or 107 square feet) at any time and (ii) immobilize the vehicle
remotely (when necessary and appropriate). The ring fence we use has several
built in safeguards:
1. Automatic alert if the vehicle leaves a designated area (i.e., crosses
a country or state border);
2. Automatic alert if the vehicle is moved without the engine running
(i.e., if the car is being stolen using a vehicle transporter); and
3. Automatic alert if the electronic tracking device is removed from the
vehicle, which also automatically immobilizes the vehicle).
INSURANCE
We insure each of vehicles against losses resulting from vehicular damage
and theft. We acquire insurance policies from major insurance companies.
MARKETING METHODS
We will use the following
marketing methods to target each market
sector;
1. MEDIA MARKETING - Newspapers (Expatriate), Radio (Expatriate).
(HOLIDAY HIRE, HIRE PURCHASE, OUTRIGHT PURCHASE)
2. SEARCH ENGINE OPTIMIZATION - 2012 outsourced, from 2013 in house.
(HOLIDAY HIRE, FLEXIBLE RENTING, LEASING, LEASE HIRE, HIRE PURCHASE,
OUTRIGHT PURCHASE)
3. DIRECT SALES. (FLEXIBLE RENTING, LEASE HIRE, LEASING)
4. BILLBOARD MARKETING. (HOLIDAY HIRE, FLEXIBLE RENTING, LEASE HIRE,
LEASING, HIRE PURCHASE, OUTRIGHT PURCHASE)
5. AGENCY (HOLIDAY) - We will employ the services of global, holiday car
rental agencies. (HOLIDAY HIRE)
6. AGENCY (RECRUITMENT) - We will employ the services of global
employment agencies and provide vehicles for temporarily contracted
employees provided by these agencies ( FLEXIBLE RENTING, LEASE HIRE,
LEASING)
OUR COMPETITION IN THE CAR RENTAL MARKETPLACE
Competition in the car rental marketplace is fierce. In Spain, we compete
with international car rental companies, regional car rental companies and
regional auto sales companies and dealers. Our major competitors are Northgate
Renting Flexible, Avis Rent A Car, Goldcar Rent A Car, Centauro Rent A Car, and
Safa Venta de Coches (car sales). Many of our competitors have greater financial
resources and infrastructure than we have at this time.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We have not historically been reliant on one or a few customers. None of
our customers has provided 10% or more of income in any prior fiscal year. We
feel that, because of the potential wide base of customers for our rental
services, we will not rely on one or a few major customers.
OUR INTELLECTUAL PROPERTY
We have no patents or trademarks. Our trade secrets, copyrights and our
other intellectual property rights are important assets for us. We enter into
confidentiality agreements with our employees and consultants and we generally
control access to and distribution of proprietary information. These agreements
generally provide that any confidential information developed by us or on our
behalf be kept confidential. Further, we require all employees to execute
written agreements assigning to us all rights in all inventions, developments,
technologies and other intellectual property created by our employees.
38
There are events that are outside of our control that pose a threat to our
intellectual property rights. For example, effective intellectual property
protection may not be available in every country in which our services are made
available. Also, the efforts we have taken to protect our propriety rights may
not be sufficient or effective. Any significant impairment of our intellectual
property rights could harm our business or our ability to compete. Also,
protecting our intellectual property rights could be expensive and time
consuming.
REGULATION
We are subject to federal laws and regulations that relate directly or
indirectly to our operations including securities laws. We will also be subject
to common business and tax rules and regulations pertaining to the operation of
our business.
We also face risks associated with international data protection (i.e.,
customer lists and customer banking and credit card information). The
interpretation and application of data protection laws in Europe and elsewhere
are still uncertain and in flux. It is possible that these laws may be
interpreted and applied in a manner that is inconsistent with our data
practices. If so, in addition to the possibility of fines, this could result in
an order requiring that we change our data practices, which, in turn, could have
a material effect on our business.
RESEARCH AND DEVELOPMENT ACTIVITIES
We have never engaged in research and development activities.
BUSINESS AND LEGAL DEVELOPMENTS REGARDING CLIMATE CHANGE
We are not negatively impacted by existing laws and regulations regarding
climate change.
ENVIRONMENTAL LAWS
Our Spanish operations are not subject to any environmental laws other than
local laws and regulations on disposal of used consumables (i.e., auto oil and
transmissions fluid) and battery disposal. We anticipate that we will encounter
similar laws and regulations in Florida and other countries and states where we
may elect to conduct business in the future.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
We currently have two officers, Mr. Jeremy Dean Harris, our President and
Chief Executive Officer, and Mr. Sergio Perez Conejo, our Chief Financial
Officer. We have eight employees including our two officers. We have an
employment agreement with Mr. Sergio Perez Conejo. Due to Mr. Jeremy Dean
Harris' substantial equity ownership in the Company, the laws of Spain prohibit
the Company from entering into an employment agreement with Mr. Harris.
DESCRIPTION OF PROPERTY
We currently do not own any property. Our headquarters are located within a five
minute drive of the Malaga International Airport in Malaga, Spain, where we
operate from a 360 square meter (3,875 square feet), 2-story vehicle showroom
and a 350 square meter (3,767 square feet) vehicle maintenance, repair and
preparation center, which already has adequate room for our planned expansion.
We lease this facility under a written lease agreement dated April 12, 2012,
that will expire on May 31, 2013, and can be renewed through May 31, 2017. Our
monthly lease expense for this facility is 2,500 Euros (approximately U.S.
$3,565). We consider our current principal office space arrangement adequate
assuming we raise between $1,000,000 and $2,000,000 in this offering. If we
raise between $2,000,000 and $5,000,000, we believe we will need to move to a
larger premises to fully implement our business plan.
39
LEGAL PROCEEDINGS
We are not involved in any pending legal proceeding nor are we aware of any
pending or threatened litigation against us, except as follows:
Arrow Cars SL previously contracted with Peter Stuart Rogers for him to
provide certain services to Arrow Cars SL. On November 10, 2010, Arrow Cars SL
unilaterally cancelled the contract with Mr. Rogers. In December, Mr. Rogers
then filed an arbitration action against Arrow Cars SL claiming damages for the
cancellation of the contract. The arbitration action was filed before the
Arbitration & Settlement Office ("CMAC"), file numbers 12627/2010 and
12625/2010. The arbitration case was closed without agreement. As a consequence,
Mr. Rogers filed a claim against Arrow Cars SL in the Malaga Employment Courts,
with the same numbers. Prior to appearing in court, Arrow Cars SL and Mr. Rogers
agreed privately that Arrow Cars SL would pay 18,500 Euros (U.S. $24,420) to Mr.
Rogers, which has been paid. In addition, in the event Arrow Cars SL
successfully raises 4 million Euros (U.S.$5,000,000) in a public offering in the
United States, Arrow Cars SL will be obligated to pay an additional 100,000
Euros ($125,000) to Mr. Rogers, one half of which amount will have to be paid
within 16 weeks after the Company receives $5,000,000 in the proceeds of this
offering. The balance of 50,000 Euros will be payable to Mr. Rogers one year
later.
The Company believes that if it, in fact, raises the $5,000,000 pursuant to
this offering, then it will owe 100,000 Euros (equivalent U.S. Dollars according
to the exchange rate at the time such payments are due) to Mr. Rogers and the
Company has included such payment in the Use of Proceeds section of this
Prospectus. In the event the Company is unsuccessful in raising the $5,000,000
pursuant to this offering, the Company will not owe Mr. Rogers any additional
money pursuant to the arbitration proceeding.
MANAGEMENT
OFFICERS AND DIRECTORS
Our directors will serve until their successors are elected and qualified.
Our officers are elected by the board of directors to a term of one year and
serve until their successor is duly elected and qualified, or until they are
removed from office. Our board of directors has no nominating, auditing or
compensation committees.
The names, addresses, ages and positions of our officers and directors are
set forth below:
First Year as
Name Age Director Position
---- --- -------- --------
Jeremy Dean Harris 45 2012 President, Chief Executive Officer
and Director
Sergio Perez Conejo 39 2012 Chief Financial Officer, Legal
Director and Director
The persons named above were elected to hold their offices until the next
annual meeting of our stockholders.
JEREMY D. HARRIS
Jeremy Harris became our President, Chief Executive Officer and a Director
on April 4, 2012, following our acquisition of Arrow Cars SL. Mr. Harris was a
co-founder of Arrow Cars SL in 2003. Arrow Cars SL was initially an
unincorporated business owned by Mr. Harris and his wife, Beverly Harris. From
1998 to 2001 and 1989 to 1993, Mr. Harris worked for Car Bench International (a
vehicle bodywork repair equipment company, sales and rentals), as a vehicle body
jig demonstrator, where his duties included presenting, explaining and
demonstrating complex vehicle auto body repair equipment to new and existing
clients of Car Bench International, such as Ford Motor, General Motors, Mercedes
and BMW. His experience with Car Bench International helped Jeremy develop a
better knowledge of vehicle accident repairs and better communication and sales
skills in dealing will manual laborers and company management. From 1985 to
1989, Jeremy was a self-employed in providing mechanical and body work repairs
on vehicles.
40
SERGIO PEREZ CONEJO
Sergio Perez Conejo, an attorney, has been the Legal Director of Arrow Cars
SL since February 2008, where he has researched and organized the internal legal
structure of Arrow Cars SL and its policies, licenses and permits as required by
Spanish law for rental car businesses. Sergio has been instrumental in the
negotiations with car dealers. From 2005 to 2008 when he joined Arrow Cars SL,
Sergio was an attorney with the law firm of Anderson Abogados Asociados, based
in Marbella (Costa del Sol), Spain, where he practiced law and managed a team of
25 attorneys, accountants and agency clerks, who were responsible for dealing
with a database of around 5,000 clients and specializing in advice to
non-resident individuals and companies regarding investment in Spain and its
implications in civil, administrative and commercial law, as well as the
execution of Foreign Court Resolutions in Spain. From 2003 to 2005, Sergio was
an attorney with the law firm of GV & A Abogados based in Malaga (Costa del
Sol), Spain with three offices in Spain, where he worked with a team of 12
lawyers and managed their practice in civil, criminal, administrative and
taxation law in collaboration with United Kingdom based law firms, and refined
his skills in advising non-resident individuals and companies in real estate and
other fields of investments in Spain. From 2000 to 2003, Sergio worked in the
law department of Ros & Falcon, a construction company in Spain where he gained
an extensive knowledge of foreign investment regulations in Spain and Spanish
laws applicable to non-residents in Spain. In 1997, Sergio received his law
degree from Malaga University in Malaga, Spain.
CONSULTANT
NICHOLAS PAUL HILL
Nicholas Paul Hill is a part-time consultant to the Company where he
advises the Company on such matters as investment and financial strategies
without remuneration from the Company. From January 2010 until the present time,
Mr. Hill has served as Executive Chairman of Planet Water, a United States
based, non-profit, international development organization, focused on bringing
clean water to the world's most disadvantaged communities through the
installation of community-based water filtration systems and education programs
on water, health and hygiene. From 1999 to 2008, Mr. Hill worked in various
capacities with ITT Corporation, a diversified leading manufacturer of highly
engineered critical components and customized technology solutions for growing
industrial end-markets in energy infrastructure, electronics, aerospace and
transportation. Mr. Hill began his ITT career at ITT's Electronic Components
division, serving in a number of marketing, sales and production management
roles in the United Kingdom before being named Vice President and General
Manager of ITT Industries Cannon - Europe in June 1998. In 2003, Mr. Hill was
made President of ITT's Jabisco Worldwide leisure marine business and received
the prestigious Chairman's Award for Operational Excellence. In June 2004, Mr.
Hill became President of ITT's Motion & Flow Control division. He became a
Senior Vice President of ITT in October 2005, and served in such capacity until
joining Arrow Cars SL as an investor and consultant in 2008.
DIRECTOR QUALIFICATIONS
We do not have a formal policy regarding director qualifications. In the
opinion of our Board of Directors, our Directors have sufficient business
experience and integrity to carry out the Company's plan of operations. Jeremy
Harris has been involved with vehicle rental for over nine years and is
intimately familiar with the vehicle rental business in Spain. Sergio Perez
Conejo has considerable legal experience and has worked for Arrow Cars since
2008. While none of our Directors has any experience in managing or serving on
the Board of Directors of a public company, both of our Directors will rely
heavily on professional consultants (PCAOB accounting firm and securities
counsel) to help them with the Company's compliance with its future reporting
obligations under the Securities Exchange Act 0f 1934, as well as the applicable
rules and regulations of the Securities Act of 1933. In the event, the Company
is successful in raising money under this offering, the Company will recruit
additional members of the Board of Directors, some of whom may have public
company experience.
ABSENCE OF INDEPENDENT DIRECTORS
We do not have any independent directors and are unlikely to be able to
recruit and retain any independent directors due to our small size and limited
financial resources.
41
AUDIT COMMITTEE FINANCIAL EXPERT
Although we have not established an Audit Committee, the functions of the
Audit Committee are currently carried out by our Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes of ownership of our common stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
We intend to ensure to the best of our ability that all Section 16(a)
filing requirements applicable to our officers, directors and greater than ten
percent beneficial owners are complied with in a timely fashion.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation paid by the
Company to our executive officers and directors of the Company for services
rendered during the periods indicated.
SUMMARY COMPENSATION TABLE
Name and
Principal Stock Option All Other
Position Year(1) Salary($) Bonus($) Awards($)(2) Awards($)(3) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ---------
Jeremy D. Harris 2012 $33,902 $ 0 $ 0 $ 0 $ 0 $33,902
Chief Executive 2011 $32,796 $ 0 $ 0 $ 0 $ 0 $32,796
Officer, Director 2010 $33,850 $ 0 $ 0 $ 0 $ 0 $33,850
Sergio Perez Conejo 2012 $30,113 $ 0 $ 0 $ 0 $ 0 $30,113
Chief Financial 2011 $27,908 $ 0 $ 0 $ 0 $ 0 $27,908
Officer, Director 2010 $31,065 $ 0 $ 0 $ 0 $ 0 $31,065
The compensation discussed herein addresses all compensation awarded to,
earned by, or paid to our named executive officers.
STOCK OPTION AND OTHER COMPENSATION PLANS
The Company currently does not have a stock option or any other
compensation plan and we do not have any plans to adopt one in the near future.
COMPENSATION OF DIRECTORS
Our directors do not receive any compensation for serving as a member of
our board of directors.
INDEMNIFICATION
Under our Bylaws, we may indemnify an officer or director who is made a
party to any proceeding, including a lawsuit, because of his or her position, if
he or she acted in good faith and in a manner he or she reasonably believed to
be in our best interest. We may advance expenses incurred in defending a
proceeding. To the extent that the officer or director is successful on the
merits in a proceeding as to which he or she is to be indemnified, we must
indemnify him or her against all expenses incurred, including attorney's fees.
With respect to a derivative action, indemnity may be made only for expenses
actually and reasonably incurred in defending the proceeding, and if the officer
or director is judged liable, only by a court order. The indemnification is
intended to be to the fullest extent permitted by the laws of the State of
Florida.
42
In so far as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to Florida law or otherwise, we have been advised 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.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this prospectus, the
total number of shares owned beneficially by our directors, officers and key
employees, individually and as a group, and the present owners of 5% or more of
our total outstanding shares. The stockholders listed below have direct
ownership of their shares and possesses sole voting and dispositive power with
respect to the shares.
Number of Shares Percentage of
Name and Address before the Ownership before
of Beneficial Owner Offering (1) the Offering (1)
------------------- ------------ ----------------
Jeremy D. Harris 17,550,000 57.6%
Calle del Escritor Herrara
Santaolalla, No. 2
Malaga, Spain 29140
Nicholas P. Hill 5,400,000 17.7%
302 Cottonwood Court
Piermont, New York 10968 USA
Sergio Perez Conejo 4,050,000 13.3%
Calle del Escritor Herrara
Santaolalla, No. 2
Malaga, Spain 29140
Global Equity Partners PLC (2) 3,000,000 9.8%
Al Habtoor Business Tower
Level 28, P.O. Box 29805
Dubai Marina, Dubai, U.A.E.
All officers and directors
as a group (2 persons) 22,950,000 75.4%
----------
1. The numbers and percentages set forth in these columns are based on
30,450,000 shares of common stock outstanding as of January 21, 2013. The
number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rule, beneficial ownership includes any shares as
to which the selling security holder has sole or shared voting power or
investment power and also any shares, which the selling security holder has
the right to acquire within 60 days.
2. These shares are beneficially owned by Peter Smith, President of Global
Equity Partners PLC, who has sole disposition and voting power over these
shares.
FUTURE SALES BY EXISTING STOCKHOLDERS
A total of 30,450,000 shares of common stock are held by our present
shareholders, all of which are "restricted securities," as defined in Rule 144
promulgated under the Securities Act of 1933.
Rule 144 is not currently available for the resale of our restricted
securities.
Shares purchased in this offering, which will be immediately resalable, and
sales of all of our other shares if and when applicable restrictions against
resale expire, could have a depressive effect on the market price, if any, of
our common stock and the shares we are offering.
43
DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized capital stock consists of 100,000,000 shares of $.001 par
value common stock. The holders of our common stock:
* have equal ratable rights to dividends from funds legally available if
and when declared by our board of directors;
* are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution
or winding up of our affairs;
* do not have preemptive, subscription or conversion rights and there
are no redemption or sinking fund provisions or rights; and
* are entitled to one non-cumulative vote per share on all matters on
which stockholders may vote.
NON-CUMULATIVE VOTING
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in that event, the holders of the remaining shares will not
be able to elect any of our directors.
CASH DIVIDENDS
As of the date of this Prospectus, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our board of directors and will depend upon our earnings, if any,
our capital requirements and financial position and our general economic
condition. It is our intention not to pay any cash dividends in the foreseeable
future, but rather to reinvest earnings, if any, in our business operations.
WARRANTS AND OPTIONS
We have no outstanding warrants or options to acquire our stock,
ANTI-TAKEOVER PROVISIONS
There are no Florida anti-takeover provisions that our Board of Directors
have adopted which may have the affect of delaying or preventing a change in
control.
STOCK TRANSFER AGENT
Our stock transfer agent is ClearTrust LLC, 16540 Pointe Village Drive,
Suite 206, Lutz, Florida 33558 USA; telephone: (813) 235-4490.
REGISTRATION RIGHTS
We have not granted registration rights to any person.
REPORTS TO SHAREHOLDERS
We intend to furnish our shareholders with annual reports that will
describe the nature and scope of our business and operations for the prior year
and will contain a copy of our audited financial statements for our most recent
fiscal year.
44
AUTHORIZED BUT UNISSUED CAPITAL STOCK
Florida law does not require shareholder approval for any issuance of
authorized shares. However, the marketplace rules of the NASDAQ, which would
apply only if our common stock were ever listed on the NASDAQ, which is unlikely
for the foreseeable future, require shareholders approval of certain issuances
of common stock equal to or exceeding 20% of the then outstanding voting power
or then outstanding number of shares of common stock, including in connection
with a change of control of Arrow Cars International Inc. , the acquisition of
the stock or assets of another company or the sale or issuance of common stock
below the book or market value price of such stock. These additional shares may
be used for a variety of corporate purposes, including future public offerings
to raise additional capital or to facilitate corporate acquisitions.
One of the effects of the existence of unissued and unreserved common stock
may be to enable our board of directors to issue shares to persons friendly to
current management, which issuance could render more difficult or discourage an
attempt to obtain control of our board by means of a merger, tender offer, proxy
contest or otherwise, and thereby protect the continuity and entrenchment of our
management and possibly deprive the shareholders of opportunities to sell their
shares of our common stock at prices higher then prevailing market prices.
SHAREHOLDER MATTERS
As an issuer of "penny stock," the protection provided by the federal
securities laws relating to forward-looking statements does not apply to us if
our shares are considered to be penny stocks. Although the federal securities
laws provide a safe harbor for forward-looking statements made by a public
company that files reports under the federal securities laws, this safe harbor
is not available to issuers of penny stocks. As a result, we will not have the
benefit of this safe harbor protection in the event of any claim that the
material provided by us, including this prospectus, contained a material
misstatement of fact or was misleading in any material respect because of our
failure to include any statements necessary to make the statements not
misleading.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Although we have not adopted formal procedures for the review, approval or
ratification of transactions with related persons, we adhere to a general policy
that such transactions should only be entered into if they are on terms that, on
the whole, are no more favorable, or no less favorable, than those available
from unaffiliated third parties and their approval is in accordance with
applicable law. Such transactions require the approval of our board of
directors.
When Arrow Cars International Inc. acquired Arrow Cars S.L., we issued
17,500,000 shares of common stock to Jeremy D. Harris, our President
Jeremy D. Harris is the personal guarantor on approximately $1,050,000
related to our secured loan, credit lines and leasing contracts. In addition, by
virtue of Spanish law, Mr. Harris is jointly and severally liable on all of the
Company's bank lines of credit and automobile leasing contracts.
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the company, we have been advised by our special securities counsel
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy and is, therefore, unenforceable.
EXPERTS
Our audited financial statement for the fiscal years ended December 31,
2010 and December 31, 2011, included in this prospectus have been audited by
Labrozzi & Company, P.A. We include the financial statements in reliance on
their report, given upon their authority as experts in accounting and auditing.
45
LEGAL MATTERS
The Law Offices of David E. Wise, P.C., 9901 IH-10 West, Suite 800, San
Antonio, Texas 78230, has passed upon the validity of the shares being offered
and certain other legal matters and is representing us in connection with this
offering. Mr. Wise is not a shareholder of the Company.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1, of which this
prospectus is a part, with the U.S. Securities and Exchange Commission. Upon
completion of the registration, we will be subject to the informational
requirements of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and, in accordance therewith, will file all requisite reports, such as
Forms 10-K, 10-Q and 8-K, proxy statements and information statements under
Section 14 of the Exchange Act and other information with the Commission. Such
reports, proxy statements, this registration statement and other information,
may be inspected and copied at the public reference facilities maintained by the
Commission at 100 F Street NE, Washington, D.C. 20549. Copies of all materials
may be obtained from the Public Reference Section of the Commission's
Washington, D.C. office at prescribed rates. You may obtain information
regarding the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The Commission also maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission at http://www.sec.gov.
You may request, and we will voluntarily provide, a copy of our filings,
including our annual report, which will contain audited financial statements, at
no cost to you, by writing or telephoning us at the following address and
telephone number:
Arrow Cars International Inc., Calle del Escritor Herrera Santaolla No. 2,
Malaga, Spain 29140; Tel.: 0034 952623297
FINANCIAL STATEMENTS
Our unaudited financial statements for the nine month period ending
September 30, 2012 and September 30, 2011, and the audited financial statements
of Arrow Cars International Inc (Successor) and Predecessor (Arrow Cars SL) for
the fiscal years ended December 31, 2010, and December 31, 2011, commence on
page F-1 and are included in this prospectus.
46
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Arrow Cars International Inc. and its Predecessor,
Malaga, Spain.
We have audited the accompanying balance sheets of Arrow Cars
International, Inc (Successor) and its Predecessor (Arrow Cars S.L.) as of
December 31, 2010 and 2011 and the related statements of operations, statements
of shareholders' equity (deficit), and statements of cash flows for the years
then ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Arrow Cars International,
Inc (Successor) and its Predecessor (Arrow Cars S.L.)as of December 31, 2010 and
2011 and the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
/s/ Labrozzi & Co., PA
----------------------------------
Miami, FL
August 10, 2012
F-1
Arrow Cars International Inc (Successor) and Predecessor (Arrow Cars SL)
Consolidated Balance Sheets
December 31, September 30, December 31, March 8, September 30,
2010 2011 2011 2012 2012
---------- ---------- ---------- ---------- ----------
Predecessor Predecessor- Predecessor Predecessor- Successor-
Unaudited Unaudited Unaudited
ASSETS
Cash $ 17,286 $ 4,995 $ 7,517 $ 16,277 $ 18,287
Accounts receivable - trade 377,720 19,573 5,997 14,627 4,727
Tax Rebates receivable 22,484 18,673 12,391 24,356 4,298
Installment sales receivable -- -- -- 83,464 253,693
---------- ---------- ---------- ---------- ----------
TOTAL CURRENT ASSETS 417,490 43,241 25,905 138,724 281,006
---------- ---------- ---------- ---------- ----------
FIXED ASSETS
Revenue earning equipment - cars,
net of accumulated depreciation 837,254 759,239 728,614 702,273 570,105
Lease deposits 11,929 51,836 11,663 11,834 11,570
Property and equipment, net of accumulated
depreciation 12,337 12,542 12,090 15,113 14,363
Guarantor deposits - related party 89,760 91,412 88,121 89,413 87,420
Guarantor deposits - third party 36,661 32,654 22,288 22,602 16,969
---------- ---------- ---------- ---------- ----------
TOTAL FIXED ASSETS 987,941 947,683 862,776 841,235 700,428
---------- ---------- ---------- ---------- ----------
Total Assets $1,405,431 $ 990,924 $ 888,681 $ 979,959 $ 981,434
========== ========== ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 166,720 $ 22,084 $ 48,580 $ 59,231 $ 31,404
Lines of credit 568,507 592,807 572,060 585,046 571,969
Leasing contracts - current 47,416 24,083 98,419 88,870 34,255
Deposits on rental cars 25,884 13,718 22,478 18,666 26,878
Due to shareholders 15,411 28,958 30,693 31,143 29,049
Due to third parties 36,662 32,654 22,288 20,160 11,393
Salaries payable 13,235 2,961 1,945 3,373 1,286
Taxes payable 25,590 10,959 23,057 48,580 43,163
---------- ---------- ---------- ---------- ----------
TOTAL CURRENT LIABILITIES 899,425 728,224 819,520 903,648 749,397
---------- ---------- ---------- ---------- ----------
LONG TERM LIABILITIES
Secured loans 72,718 69,728 63,117 61,245 50,106
Leasing contracts 368,712 347,253 261,714 318,671 393,081
---------- ---------- ---------- ---------- ----------
TOTAL LONG TERM LIABILITIES 441,430 416,981 324,831 379,916 443,187
---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES 1,340,855 1,145,205 1,144,351 1,234,984 1,192,584
---------- ---------- ---------- ---------- ----------
Common stock 27,000 27,000 27,000 27,000 30,450
Additional paid in capital 65,095 65,095 65,095 65,095 145,145
Accumulated deficit (29,158) (246,376) (347,765) (343,294) (386,300)
Other comprehensive (Loss) / Gain 1,639 -- -- (3,826) (445)
---------- ---------- ---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY / (DEFICIT) 64,576 (154,281) (255,670) (255,025) (211,150)
---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY / (DEFICIT) $1,405,431 $ 990,924 $ 888,681 $ 979,959 $ 981,434
========== ========== ========== ========== ==========
F-2
Arrow Cars International Inc (Successor) and Predecessor (Arrow Cars SL)
Consolidated Statement of Operations
For the Nine Months For the For the period For the period Nine Months
Year Ended ended Year Ended January 1 to March 9 to ended
December 31, September 30, December 31, March 8, September 30, September 30,
2010 2011 2011 2012 2012 2012
------------ ------------ ------------ ------------ ------------ ------------
Predecessor Predecessor- Predecessor Predecessor- Successor- Successor-
Unaudited Unaudited Unaudited Unaudited
REVENUES
Car Rental Income $ 750,061 $ 525,686 $ 608,131 $ 97,211 $ 294,431 $ 391,642
---------- ---------- ---------- ---------- ---------- ----------
TOTAL REVENUES 750,061 525,686 608,131 97,211 294,431 391,642
---------- ---------- ---------- ---------- ---------- ----------
Cost of Rental Sales 137,689 103,552 159,765 17,974 70,731 88,705
---------- ---------- ---------- ---------- ---------- ----------
TOTAL COST OF SALES 137,689 103,552 159,765 17,974 70,731 88,705
---------- ---------- ---------- ---------- ---------- ----------
GROSS PROFIT 612,372 422,134 448,366 79,237 223,700 302,937
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
General and Administrative 555,927 481,567 572,373 33,709 291,664 325,373
Depreciation 122,820 126,421 161,489 29,794 90,270 120,064
---------- ---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 678,747 607,988 733,862 63,503 381,934 445,437
---------- ---------- ---------- ---------- ---------- ----------
LOSS BEFORE OTHER INCOME
(EXPENSES) (66,375) (185,854) (285,496) 15,734 (158,233) (142,499)
---------- ---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSES)
Auto Sales - Net (751) (5,420) (1,657) 22,786 124,573 147,359
Interest Income -- 3,532 -- 179 2,369 2,548
Interest Expense (29,927) (22,412) (29,815) (11,701) (29,302) (41,003)
Exchange Rate Difference -- -- (1,639) -- 157 157
---------- ---------- ---------- ---------- ---------- ----------
TOTAL OTHER (INCOME) AND EXPENSES (30,678) (31,364) (33,111) 11,264 92,701 103,965
---------- ---------- ---------- ---------- ---------- ----------
NET LOSS BEFORE PROVISION FOR
INCOME TAX (97,053) (217,218) (318,607) 4,471 (43,005) (38,535)
---------- ---------- ---------- ---------- ---------- ----------
PROVISION FOR INCOME TAXES -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
NET LOSS $ (97,053) $ (217,218) $ (318,607) $ 4,471 $ (43,005) $ (38,535)
========== ========== ========== ========== ========== ==========
BASIC AND DILUTED LOSS PER SHARE $ (0.00)
==========
Basic and Diluted Weighted Average
Number of Shares Outstanding 20,303,935
==========
F-3
Arrow Cars International Inc (Successor) and Predecessor (Arrow Cars SL)
Consolidated Statement of Stockholders' Equity / Deficit
Common Stock Additional Other Total
------------------------- Paid in Accumulated comprehensive Stockholders'
Shares Amount Capital Deficit (Loss)/Gain Equity/Defict
---------- ---------- ---------- ---------- ----------- -------------
DECEMBER 31, 2010 (PREDECESSOR) 27,000,000 $ 27,000 $ 65,095 $ (29,158) $ 1,639 $ 64,576
========== ======== ========= ========== ========== ==========
Net Loss -- -- -- (217,218) -- (217,218)
Exchange rate gain / loss -- -- -- -- (1,639) (1,639)
---------- -------- --------- ---------- ---------- ----------
SEPTEMBER 30, 2011 (PREDECESSOR) 27,000,000 $ 27,000 $ 65,095 $ (246,376) $ -- $ (154,281)
========== ======== ========= ========== ========== ==========
Net Loss -- -- -- (101,389) -- (101,389)
---------- -------- --------- ---------- ---------- ----------
DECEMBER 31, 2011 (PREDECESSOR) 27,000,000 $ 27,000 $ 65,095 $ (347,765) $ -- $ (255,670)
========== ======== ========= ========== ========== ==========
Net Profit -- -- -- 4,471 -- 4,471
Other comprehensive Loss -- -- -- -- (3,826) (3,826)
---------- -------- --------- ---------- ---------- ----------
MARCH 7, 2012 (PREDECESSOR) 27,000,000 $ 27,000 $ 65,095 $ (343,294) $ (3,826) $ (255,025)
========== ======== ========= ========== ========== ==========
Common stock issued for services 3,000,000 3,000 -- -- -- 3,000
Common stock sold at $0.20 450,000 450 89,550 -- -- 90,000
Succesor losses pre-Reverse
Capitalization -- -- (9,500) -- -- (9,500)
Net Loss -- -- -- (43,005) -- (43,005)
Other comprehensive Loss -- -- -- -- 3,381 3,381
---------- -------- --------- ---------- ---------- ----------
SEPTEMBER 30, 2012 (SUCCESSOR) 30,450,000 $ 30,450 $ 145,145 $ (386,300) $ (445) $ (211,150)
========== ======== ========= ========== ========== ==========
F-4
Arrow Cars International Inc (Successor) and Predecessor (Arrow Cars SL)
Statement of Cash Flows
December 31, September 30, December 31, March 8, September 30,
2010 2011 2011 2012 2012
------------ ------------ ------------ ------------ ------------
Predecessor Predecessor- Predecessor Predecessor- Successor-
Unaudited Unaudited Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit / (loss) $ (97,053) $(217,218) $(318,607) $ 4,471 $ (38,535)
Common stock issued for services -- -- -- -- 3,000
Depreciation 122,820 126,421 161,489 29,794 120,064
Adjustments to reconcile net loss to net
cash used in operating activities:
Changes in Operating Assets and Liabilities:
Accounts receivable - trade (95,084) 358,147 371,723 (8,630) 1,270
Tax rebates receivable 28,171 3,811 10,093 (11,965) 8,093
Installment sales receivable -- -- -- (83,464) (253,693)
Lease deposit (3,184) (39,907) 266 (171) 93
Guarantor deposits - related party 9,578 (1,652) 1,639 (1,292) 701
Guarantor deposits - third party (36,661) 4,007 14,373 (314) 5,319
Accounts payable 5,883 (144,635) (118,140) 10,651 (17,176)
Deposits on rental cars (10,034) (12,166) (3,406) (3,812) 4,400
Due to shareholders 8,947 13,547 15,282 450 (1,644)
Due to third party 36,661 (4,008) (14,374) (2,128) (10,895)
Salaries payable 10,026 (10,275) (11,290) 1,428 (659)
Taxes payable 25,590 (14,631) (2,533) 25,523 20,106
--------- --------- --------- --------- ---------
NET CASH USED IN OPERATING ACTIVITIES: 5,660 61,442 106,515 (39,459) (159,557)
--------- --------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES --
Property and Equipment -- (205) (1,323) (3,023) (2,273)
Revenue Earning Assets - Cars (589,019) (48,406) (52,849) (3,453) 38,444
--------- --------- --------- --------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES: (589,019) (48,611) (54,172) (3,453) 36,171
--------- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds - line of credit, net 281,477 24,300 3,533 12,986 (91)
Proceeds - Secured Loans 72,718 (2,990) (9,601) (1,872) (13,011)
Proceeds - Leasing Contracts 57,014 (44,792) (56,044) 47,408 67,203
Proceeds from common stock sold -- -- -- -- 450
Paid in capital 89,760 -- -- -- 80,050
--------- --------- --------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 500,969 (23,482) (62,112) 58,521 134,601
--------- --------- --------- --------- ---------
Other comprehensive (Loss) / Gain -- (1,639) -- (3,826) (445)
--------- --------- --------- --------- ---------
Net decrease in cash (82,390) (12,291) (9,769) 11,783 10,770
--------- --------- --------- --------- ---------
Cash at Beginning of Year 99,676 17,286 17,286 7,517 7,517
--------- --------- --------- --------- ---------
Cash at End of the Period $ 17,286 $ 4,995 $ 7,517 $ 16,277 $ 18,287
========= ========= ========= ========= =========
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest Paid $ 29,927 $ 22,412 $ 29,815 $ 11,701 $ 41,003
========= ========= ========= ========= =========
Taxes Paid $ -- $ -- $ -- $ -- $ --
========= ========= ========= ========= =========
F-5
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
NOTE 1 BACKGROUND
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying consolidated financial statements follows:
Arrow Cars International Inc. ("Successor", "Company", or "ACI") a private
company, was organized under the laws of Florida on March 8 2012. Arrow Cars SL
("ACSL" or "Predecessor") a private limited company, was organized under the
laws of Spain on January 21, 2008. On April, 1, 2012, Arrow Cars SL executed a
reverse recapitalization with Arrow Cars International Inc. See Note 3. ACI
(Successor) is a holding company that conducts operations through its wholly
owned subsidiary ACSL (Predecessor). The company's business model, described
below, involves leasing and rent-to-own concepts whereby the respective clients
are usually unable, unwilling, or lack credit-worthiness to purchase or lease
vehicles conventionally. Clients may go through a website called
www.autooasiseurope.com or walk-in to the offices to conduct transactions.
The Company's brand name is AutoOasis and the vehicles are leased and/or
sold under this identity. The process works as follows:
1. A new vehicle is provided by the AutoOasis "Easy Car Leasing" service.
For between twelve to 36 months the vehicle will be used for longer
term, flexible rentals of 28 day minimum duration periods. The client
may extend the rental or return the car without penalty. This feature
is for clients that do not wish to purchase the vehicle.
2. Once the vehicle surpasses the "Easy Car Leasing" phase (between 12 to
36 months), the Company transfers it to the "Rent to Own" Program and
substantially "sells" the car under a "Rent-to-Own" 36 month contract.
No credit checks are performed. The car may be returned, if necessary,
without penalty if the client's circumstances change such as if the
client loses his job or his business is not doing well.
3. When the 36 month "Rent-to-Own" contract expires, the customer may
either keep the vehicle as it will have been paid in full, or,
4. Return the car to AutoOasis, using the vehicle as a deposit for a
newer "Rent-to-Own" car and continue to pay monthly lease payments for
an additional 36 months. The value of returned "Rent to Own" vehicle
will be assessed on mileage, condition, age, market value and cost of
repairs, etc. The assessed valuation will be used toward the deposit
required to begin a new "Rent to Own" contract. If the valuation is
less than the initial 30% deposit the customer will be asked to
supplement the difference. If the valuation is greater than the
initial 30% deposit the extra amount will be deducted from the monthly
rental payments (by way of reducing the total contract period or
reduced monthly rental amounts. This decision will always be the
customer's choice).
5. Returned Extended Lease vehicles are restored and "re-sold" continuing
the lease revenue for an additional 36 month term.
On December 16, 2010, the Company executed an agreement with GEP Partners
Plc., a limited company based in Dubai and the United Kingdom. GEP Partners
agreed to act as financial advisor in assisting the Company to merge with a
fully listed, compliant, and registered company listed on the OTCBB in the
United States. In exchange, the Company agreed to pay $135,000 in fees and
exchange 3,000,000 company's equity at a valuation of $0.001 per share. In March
2012, due to the fact that a suitable candidate had not been identified. The
Company and GEP verbally agreed that the Company (Predecessor) would be acquired
by a private Florida corporation (the Successor) and subsequently file a
registration statement with the SEC, and that GEP would continue to be retained
to consult in the process of assisting Arrow Cars International Inc. with
registering its shares with the SEC and helping the Company with having its
common stock quoted on the Over-the-Counter Bulletin Board.
F-6
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
NOTE 2 BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
BASIS OF PRESENTATION
Arrow Cars International Inc and its fully owned subsidiary provide long
term car rental services to businesses and consumers in Spain. The accompanying
Financial Statements include the accounts and transactions of ACSL (Predecessor)
and ACI (Successor).
In presenting the Financial Statements in accordance with accounting
principles generally accepted in the United States, management makes estimates
and assumptions that affect the amounts reported and related disclosures.
Estimates, by their nature, are based on judgment and available information.
Accordingly, actual results could differ from those estimates.
ACCOUNTING PRINCIPLES
The Company's Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP").
CASH EQUIVALENTS
Cash equivalents include all highly liquid investments with an original
maturity of three months or less. We maintain cash and cash equivalents at
several Spanish financial institutions whereby the balances are not insured.
However, we have not experienced any losses in such accounts and believe we are
not exposed to any significant credit risks on such accounts. As of the years
ended December 31, 2010, December 31, 2011 and the interim periods September 30,
2011 and September 30, 2012, there were no cash equivalents.
USE OF ESTIMATES AND ASSUMPTIONS
The use of estimates and assumptions as determined by management is
required in the preparation of the Financial Statements in conformity with GAAP.
These estimates are based on management's evaluation of historical trends and
other information available when the Financial Statements are prepared. Changes
in estimates are recognized in accordance with the accounting rules for the
estimate. Actual results could differ from those estimates.
VEHICLES
Leased vehicles are carried at cost, net of accumulated depreciation.
Depreciation for vehicles is provided using straight line method at a rate of
16% per annum. Once a vehicle enters the "Rent to Own" program it is no longer
depreciated as it is deemed to have been sold.
F-7
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
We depreciate leased vehicles for a period generally for 12 to 36 months at
16% per annum depending on when the vehicles enter in the "Rent to Own" program.
Vehicle-related interest expense amounts were $29,815 and $29,927 for 2011
and 2010 respectively; and $41,003 and $22,412 for the 9 months ended September
30, 2012 and September 30, 2011 respectively.
REVENUE RECOGNITION
Revenue from newer vehicles leased from the Company, in conjunction with
the shorter term leases, the "Easy Car Leasing" program, is recognized when the
lease agreement is signed in conjunction with the following:
* Persuasive evidence of an arrangement exists.
* Delivery has occurred or services have been rendered.
* The seller's price to the buyer is fixed or determinable.
* Collectability is reasonably assured.
In connection with the lease/purchase feature, the "Rent to Own" program,
revenue is recognized upon execution of the agreement which provides for a
non-refundable thirty-six month lease term. Generally, the customer has the
right to acquire title through payment of all required lease payments. If the
customer fails to pay, the Company will activated the tracking system installed
in the vehicle and subsequently repossess the vehicle. This vehicle would be
returned to the Company's inventory and the installments receivable would be
deemed uncollectable. The customer also has the option to return the vehicle of
his or her own free will. In any case, the value of the vehicle returned to
inventory would always be the total amount of pending installments payable at
the time that the vehicles was either returned or repossessed.
PROPERTY AND EQUIPMENT
Property and equipment (including leasehold improvements) are stated at
cost, net of accumulated depreciation and amortization. Depreciation is computed
utilizing the straight-line method over the estimated useful lives of the
related assets. Amortization of leasehold improvements is computed utilizing the
straight-line method over the estimated benefit period of the related assets,
which may not exceed 20 years, or the lease term, if shorter. Useful lives are
as follows:
Buildings 39 years
Furniture, fixtures & equipment 3 to 10 years
Capitalized software 3 to 7 years
Buses and support vehicles 4 to 15 years
Revenue earning assets - Cars 6.25 years
IMPAIRMENT OF LONG-LIVED ASSETS
The Company is required to assess goodwill and other indefinite-lived
intangible assets for impairment annually, or more frequently if circumstances
indicate impairment may have occurred. The Company performs its annual
F-8
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
impairment assessment in the fourth quarter of each year at the reporting unit
level. If the carrying value of an intangible asset exceeds its fair value, an
impairment loss is recognized in an amount equal to that excess.
The Company assesses goodwill for such impairment by comparing the carrying
value of each reporting unit to its fair value using the present value of
expected future cash flows. When available and as appropriate, comparative
market multiples and other factors are used to corroborate the discounted cash
flow results.
The Company also evaluates the recoverability of its other long-lived
assets, including amortizable intangible assets, if circumstances indicate
impairment may have occurred. This analysis is performed by comparing the
respective carrying values of the assets to the expected future cash flows, on
an undiscounted basis, to be generated from such assets. Property and equipment
is evaluated separately within each segment. If such analysis indicates that the
carrying value of these assets is not recoverable, the carrying value of such
assets is reduced to fair value.
ADVERTISING EXPENSES
Advertising costs are generally expensed in the period incurred.
Advertising expenses, recorded within general and administrative expense on our
Statements of Operations, include radio, television, "yellow pages" and other
advertising, Internet advertising and other promotions and were $11,238 and
$11,015 in 2011 and 2010 respectively; and $11,296 and $9,682 for the 9 months
ended September 30, 2012 and September 30, 2011 respectively.
TAXES
The Company accounts for income taxes under the asset and liability method,
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial statement and tax
basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. The effect of a change in tax
rates on deferred tax assets and liabilities is recognized in income in the
period that includes the enactment date.
The Company records net deferred tax assets to the extent it believes that
it is more likely than not that these assets will be realized. In making such
determination, the Company considers all available positive and negative
evidence, including scheduled reversals of deferred tax liabilities, projected
future taxable income, tax planning strategies and recent results of operations.
In the event the Company were to determine that it would be able to realize the
deferred income tax assets in the future in excess of their net recorded amount,
the Company would adjust the valuation allowance, which would reduce the
provision for income taxes.
The Company reports revenues net of any tax assessed by a governmental
authority that is both imposed on and concurrent with a specific
revenue-producing transaction between a seller and a customer.
F-9
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
LOSS PER COMMON SHARE
Basic earnings (loss) per common share are based upon the weighted average
number of common shares outstanding during each period presented. Diluted
earnings per common share are based upon the weighted average number of common
shares outstanding during the period, plus, if dilutive, the assumed exercise of
stock options at the beginning of the year, or for the period outstanding during
the year for current year issuances.
NEW ACCOUNTING PRONOUNCEMENTS
In September 2011, the FASB issued Accounting Standards Update 2011-08,
Intangibles--Goodwill and Other (Topic 350): Testing Goodwill for Impairment
("ASU 2011-08"), which allows companies to waive comparing the fair value of a
reporting unit to its carrying amount in assessing the recoverability of
goodwill if, based on qualitative factors, it is not more likely than not that
the fair value of a reporting unit is less than its carrying amount. ASU 2011-08
will be effective for annual and interim goodwill impairment tests performed for
fiscal years beginning after December 15, 2011, with early adoption permissible.
The adoption of this standard is not expected to have a material impact on our
consolidated statement of earnings, financial condition, and statement of cash
flows or earnings per share.
In June 2011, the FASB issued Accounting Standards Update 2011-05,
Comprehensive Income (Topic 220): Presentation of Comprehensive Income ("ASU
2011-05"), which allows an entity the option to present the total of
comprehensive income, the components of net income, and the components of other
comprehensive income either in a single continuous statement of comprehensive
income or in two separate but consecutive statements. In both choices, an entity
is required to present each component of net income along with total net income,
each component of other comprehensive income along with a total for other
comprehensive income, and a total amount for comprehensive income. ASU 2011-05
eliminates the option to present the components of other comprehensive income as
part of the statement of changes in stockholders' equity. The amendments to the
Codification in the ASU do not change the items that must be reported in other
comprehensive income or when an item of other comprehensive income must be
reclassified to net income and are effective for fiscal years, and interim
periods within those years, beginning after December 15, 2011, with early
adoption permissible. The adoption of ASU 2011-05 will not have a financial
impact on our consolidated statement of earnings, financial condition, and
statements of cash flows or earnings per share.
In May 2011, the FASB issued Accounting Standards Update 2011-04, Fair
Value Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs ("ASU 2011-04").
The amendments in this ASU generally represent clarification of Topic 820, but
also include instances where a particular principle or requirement for measuring
fair value or disclosing information about fair value measurements has changed.
This update results in common principles and requirements for measuring fair
value and for disclosing information about fair value measurements in accordance
with U.S. GAAP and IFRS. The amendments are effective for interim and annual
periods beginning after December 15, 2011 and are to be applied prospectively.
F-10
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
Early application is not permitted. The adoption of ASU 2011-04 will not have a
material impact on our consolidated statement of earnings, financial condition,
and statement of cash flows or earnings per share.
From time to time, new accounting pronouncements are issued by the FASB or
other standards setting bodies that we adopt as of the specified effective date.
Unless otherwise discussed, we believe the impact of any other recently issued
standards that are not yet effective are either not applicable to us at this
time or will not have a material impact on our consolidated financial statements
upon adoption.
NOTE 3 REVERSE RECAPITALIZATION
On April 1, 2012, the ACI (Successor) merged with ACSL (Predecessor), a
private corporation, and ACSL became the surviving corporation, in a transaction
treated as a reverse recapitalization. ACI did not have any material operations
and majority-voting control was transferred to ACSL.
In the recapitalization, ACI issued 27,000,000 shares of common stock in
exchange for all of ACSL's 3,006 issued and outstanding shares of commons stock.
For financial reporting purposes, the 3,006 shares have been recast to
27,000,000 shares in accordance with an exchange ratio of 8,982 for 1. The
transaction resulted in ACSL's shareholders acquiring approximately 100%
control.
The transaction also required a recapitalization of ACSL. Since ACSL
acquired a controlling voting interest, it was deemed the accounting acquirer,
while ACI was deemed the legal acquirer. The historical financial statements of
the Company are those of ACSL and of the consolidated entities from the date of
recapitalization and subsequent.
Since the transaction is considered a reverse recapitalization, the
presentation of pro-forma financial information was not required. All share and
per share amounts have been retroactively restated to the earliest periods
presented to reflect the transaction.
NOTE 4 VEHICLES AND PROPERTY AND EQUIPMENT
The Company's tangible assets at December 31 2010, December 31 2011 and the
interims periods September 30 2012 and September 30 2012 consisted of the
following:
December 31, September 30, December 31, September 30,
2010 2011 2011 2012
---------- ---------- ---------- ----------
Vehicles $ 956,989 $1,019,642 $1,010,084 $ 870,535
Property 15,420 15,678 15,113 17,362
---------- ---------- ---------- ----------
SUBTOTAL 972,409 1,035,320 1,025,197 887,897
========== ========== ========== ==========
F-11
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
Depreciation Vehicles 119,735 260,402 281,471 300,430
Depreciation Property 3,083 3,135 3,022 2,998
---------- ---------- ---------- ----------
SUBTOTAL 122,818 263,537 284,493 303,428
========== ========== ========== ==========
NET VALUE $ 849,591 $ 771,782 $ 740,704 $ 584,469
========== ========== ========== ==========
Leased vehicles are carried at cost, net of accumulated depreciation. While
the vehicles are in the "Easy Car Leasing" program, depreciation for these
vehicles is provided using straight line method at a rate of 16% per annum. Once
a vehicle enters the "Rent to Own" program it is no longer depreciated as it is
deemed to have been sold.
Depreciation expense for December 31, 2010 and 2011 were $122,820 and
$161,489 respectively; also $120,064 and $126,421 for the 9 months ended
September 30, 2012 and September 30, 2011 respectively.
NOTE 5 DEBT
A) DUE TO SHAREHOLDERS
From time to time, the Company receives advances from shareholders in the
normal course of business. As of December 31, 2010 and December 31, 2011 the
Company owed shareholders $15,411 and $30,693 respectively; and as of September
30, 2011 and September 30, 2012 the Company owed shareholders $28,958 and
$29,049 respectively. The advances are non-interest bearing, un-secured and due
on demand.
B) DUE TO THIRD PARTY
On April 15, 2010, the Company executed an agreement with a third party who
provided personal guarantor loan collateral so the Company could secure
financing for a fleet of cars. The third party offered his personal residence as
collateral in exchange for 7% of the value of the house paid annually for three
years. Monies owed as of December 31, 2010 and December 31, 2011 amounted to
$36,662 and $22,288 respectively; and for the nine months ended September 30,
2011 and September 30, 2012 $32.654 and $11,393 respectively.
C) LOANS AND LINES OF CREDIT
The Company's "Other debt" consists of a combination of leasing contracts,
secured loans and letters of credit (overdraft facilities):
F-12
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
December 31, September 30, December 31, September 30,
2010 2011 2011 2012
-------- -------- -------- --------
LEASING CONTRACTS
Banco Popular (various
loans all maturing
June 2, 2015 bearing
4.24% interest rate) $257,535 $224,223 $227,803 $243,258
Bankinter (various loans
maturing during 2014 and
2015 with varying interest
rates from 3,19% to 3,96% 148,004 135,621 121,951 175,687
Banco Santander (maturing
February 15, 2015 bearing
interest rate of 7,49% 10,589 11,491 10,379 8,137
-------- -------- -------- --------
$416,128 $371,335 $360,133 $427,082
======== ======== ======== ========
SECURED LOANS
Banco Popular 72,718 69,728 63,117 50,106
-------- -------- -------- --------
$ 72,718 $ 69,728 $ 63,117 $ 50,106
======== ======== ======== ========
RENEWABLE LETTERS OF CREDIT
Bankinter - 0799 50 000032.7 264,456 268,858 259,180 257,119
Bankinter - 0799 50 050111,4 264,402 268,857 259,180 257,119
Banco Popular - 075 0953 0050 010449 39,649 55,091 53,700 57,731
-------- -------- -------- --------
$568,507 $592,807 $572,060 $571,969
======== ======== ======== ========
NOTE 6 EQUITY
A) COMMON STOCK
The Company has 100,000,000 authorized common shares and 30,450,000 issued
and outstanding at September 30, 2012.
The issuance of the common stock to date was as follows:
1) Common stock issued as a result of the reverse recapitalization
Date Shareholder Shares
---- ----------- ------
4/1/2012 Hill, Nicholas Paul 5,400,000
4/2/2012 Harris, Jeremy Dean 17,550,000
4/3/2012 Perez Conejo, Sergio 4,050,000
----------
27,000,000
==========
F-13
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
2) Common Stock issued for services
Date Shareholder Shares
---- ----------- ------
4/4/2012 Global Equity Partners Plc. 3,000,000
---------
3,000,000
=========
3) Common stock issued to investors at $0.20 per share
Date Shareholder Shares
---- ----------- ------
04/15/12 Fielder, Gary Edward 25,000
04/15/12 Fielder, Julia 37,500
04/15/12 Brender, Jacqueline Louise 12,500
04/15/12 Brender, Janet Barbara 12,500
04/20/12 Putt, Robert John 25,000
04/20/12 Otero Romero, Elena 25,000
04/20/12 Putt, Martin John 25,000
04/21/12 Wright, Ronald William 25,000
04/21/12 Wright, Jean Margaret 25,000
04/21/12 Wright, Sandra Jean 25,000
05/09/12 Ingraham, Shirley May 12,500
05/09/12 Ingraham, Bruce Douglas 12,500
05/12/12 Brender, Fridolin Karl 12,500
05/23/12 Smith, Robert James 25,000
05/23/12 Smith, Elizabeth Kay 25,000
05/24/12 Richardson, Nigel K. 12,500
06/15/12 O' Donoghue, Sean Anthony 25,000
06/15/12 O' Donoghue, Niahm Mary Monica 25,000
07/03/12 Springett, Robin 12,500
07/03/12 Springett, Julia Catherine 12,500
06/01/12 Dawkins, Phillip Thomas 12,500
07/01/12 Branson, Olive Margaret 25,000
--------
450,000
========
NOTE 7 - INSTALLMENT SALES RECEIVABLE
Once the vehicle surpasses the initial 12 to 36 month rental phase, the
Company transfers it to the "Rent to Own" program and substantially "Sells" the
car under a "Rent-to-Own" 36 month contract. When this vehicle is sold, it is
taken out of inventory and the amount that the vehicle is sold for becomes
receivable in 36 equal installments.
F-14
Arrow Cars International Inc (Succesor) and Predecessor (Arrow Cars Sl)
Notes to the Audited Financial Statements
December 31, 2010 & December 31, 2011 and the Unaudited Interim
Periods September 30 2011 & September 30, 2012
NOTE 8 LEASES
The Company executed a five year lease for its offices and a warehouse on
December 1, 2009 expiring November 30, 2014. On April 30, 2012 this lease agreed
was mutually rescinded and the Company entered into a new agreed to lease a
different and larger premises. The Company executed a one year renewable up to
five years lease for its new offices and a warehouse on May 12, 2012.
Rental expense was $64,443 and $71,936 as of December 31, 2011 and 2010
respectively. The Rental expense for the nine months September 30, 2012 and
September 30 2011 amounted to $40,141 and $36,603.
F-15
We have not authorized any dealer, salesperson or other person to provide
any information or make any representations about Arrow Cars International Inc.,
except the information or representations contained in this prospectus. You
should not rely on any additional information or representations if made.
* except the common stock covered by this prospectus
* in any jurisdiction in which the distribution, offer or solicitation
is not authorized
* in any jurisdiction where the dealer or other salesperson is not
qualified to make the offer or solicitation;
* to any person who is not a United States resident or who is outside
the jurisdiction of the United States
The delivery of this prospectus or any accompanying sale does not imply
that:
* there have been no changes in the affairs of Arrow Cars International
Inc. after the date of this prospectus; or
* the information contained in this prospectus is correct after the date
of this prospectus.
During the 180 days following the date of this prospectus, all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters.
PROSPECTUS
12,500,000 SHARES OF COMMON STOCK
ARROW CARS INTERNATIONAL INC.
__________, 2013
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of the offering all of which are to be paid by the
registrant are as follows (to be provided by Amendment):
SEC Registration Fee $ 682
Printing Expenses
Accounting Fees and Expenses
Legal Fees and Expenses
Blue Sky Fees/Expenses
Miscellaneous
--------
TOTAL $
========
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our bylaws provide to the fullest extent permitted by Florida law, our
directors or officers shall not be personally liable to us or our shareholders
for damages for breach of such director's or officer's fiduciary duty. The
effect of these provisions of our articles of incorporation, as amended, and
bylaws, is to eliminate our rights and our shareholders (through shareholders'
derivative suits on behalf of our Company) to recover damages against a director
or officer for breach of the fiduciary duty of care as a director or officer
(including breaches resulting from negligent or grossly negligent behavior),
except under certain situations defined by statute. We believe that the
indemnification provisions in our articles of incorporation, as amended, and
bylaws, are necessary to attract and retain qualified persons as directors and
officers.
Under the Florida Corporation Law and our bylaws, our directors will have
no personal liability to us or our stockholders for monetary damages incurred as
the result of the breach or alleged breach by a director of his "duty of care."
This provision does not apply to the directors' (i) acts or omissions that
involve intentional misconduct or a knowing and culpable violation of law, (ii)
acts or omissions that a director believes to be contrary to the best interests
of the corporation or its shareholders or that involve the absence of good faith
on the part of the director, (iii) approval of any transaction from which a
director derives an improper personal benefit, (iv) acts or omissions that show
a reckless disregard for the director's duty to the corporation or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of serious injury to the corporation or its shareholders, (v) acts or omissions
that constituted an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders, or
(vi) approval of an unlawful dividend, distribution, stock repurchase or
redemption. This provision would generally absolve directors of personal
liability for negligence in the performance of duties, including gross
negligence.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised 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.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since our incorporation on March 8, 2012, we have issued the following
securities without registration under the Securities Act of 1933, as amended:
A.
On April 1, 2012, we issued 3,000,000 sharesof common stock to Global
Equity Partners PLC for services rendered valued at $3,000.
II-1
B.
On April 4, 2012, we issued a total of 27,000,000 shares of common stock to
three indviduals in connection with our acquisition of Arrow Cars SL, to wit:
Jeremy Dean Harris 17,550,000 shares
Nicholas Paul Hill 5,400,000 shares
Sergio Perez Conejo 4,050,000 shares
We issued 8,982 shares of common stock to the above three persons for each
one (1) registered share owned by them in Arrow Cars SL. The 27,000,000 shares
were valued at $0.001 per share.
SUB-TOTAL: 30,000,000 shares of common stock outstanding after the
above issuances.
C.
From April 15, 2012, to July 3, 2012, we received subscriptions for an
aggregate 450,000 of restricted shares of our common stock from 22 investors
(none of whom was a "U.S. person" as defined in rule 902 of Regulation S). The
names and numbers of shares sold to these 22 investors at $.20 per share for an
aggregate of $90,000 are as follows:
Name of Investor Number of Shares
---------------- ----------------
Gary E. Fielder 25,000
Julia Fielder 37,500
Jacqueline L. Brender 12,500
Janet B. Brender 12,500
Robert J. Putt 25,000
Elena Otero Romero 25,000
Martin J. Putt 25,000
Ronald W. Wright 25,000
Jean M. Wright 25,000
Sandra J. Wright 25,000
Shirley M. Ingraham 12,500
Bruce D. Ingraham 12,500
Fridolin K. Brender 12,500
Robert J. Smith 25,000
Elizabeth K. Smith 25,000
Nigel K. Richardson 12,500
Sean A. O'Donoghue 25,000
Niahm Mary Monica O'Donoghue 25,000
Robin Springett 12,500
Julia C. Springett 12,500
Phillip T. Dawkins 12,500
Olive M. Branson 25,000
-------
450,000
=======
SUB-TOTAL: 30,450,000 shares of common stock outstanding after the
issuance of such 450,000 shares.
TOTAL: 30,450,000 shares of common stock outstanding after the above
issuances.
A total of 25,050,000 shares were issued to 25 persons (identified in Item
15.A, B. and C., above, except for Nicholas Paul Hill, who is a United States
citizen or resident), who were not citizens or residents of the United States in
reliance on the exemption under Regulation S promulgated under the Securities
Act of 1933, as amended ("33 Act"), asthe issuance of the stock did not involve
a public offering of securities.
II-2
We believe that Regulation S was available to us for the issuance of
such 25,050,000 because:
* we did not employ a "distributor" (as defined in Rule 902 of
Regulation S);
* each investor represented and proved to us that he was not a "U.S.
person" (as defined in Rule 902 of Regulation S);
* all of the offers and sales were made within the one-year compliance
period of Category 3 of Rule 903 of Regulation S, applicable t
non-reporting issuers;
* each investor represented to us that he was acquiring the securities
for his own account for investment and not for the account of any
other person and not with a view to or for distribution, assignment or
resale in connection with any distribution within the meaning of the
33 Act;
* we provided each investor with written disclosure prior to sale or
transfer that the securities have not been registered under the 33 Act
and, therefore, cannot be resold unless they are registered under the
33 Act or unless an exemption from registration is available;
* each investor agreed not to sell or otherwise transfer the purchased
securities unless they are registered under the 33 Act and any
applicable state laws, or an exemption or exemptions from such
registration are available; each investor had knowledge and experience
in financial and other business matters such that he was capable of
evaluating the merits and risks of an investment in us;
* such investor was given information and access to all of our
documents, records, books, officers and directors, our executive
offices pertaining to the investment and was provided the opportunity
to ask questions and receive answers regarding the terms and
conditions of the offering and to obtain any additional information
that we possesses or were able to acquire without unreasonable effort
and expense;
* each investor had no need for liquidity in their investment in us and
could afford the complete loss of their investment in us;
* we did not employ any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio;
* we did not conduct, hold or participate in any seminar or meeting
whose attendees had been invited by any general solicitation or
general advertising;
* we placed a legend on each certificate or other document that
evidences the securities stating that the securities have not been
registered under the 33 Act and setting forth or referring to the
restrictions on transferability and sale of the securities; we placed
stop transfer instructions in our stock transfer records; no
underwriter was involved in the offering;
* we made independent determinations that such person was a
sophisticated or accredited investor and that he was capable of
analyzing the merits and risks of their investment in us, that he
understood the speculative nature of their investment in us and that
he could lose their entire investment in us; and we added the
following legend to the certificates: "The shares represented by this
certificate have not been issued to the registered owner in reliance
upon written representations that these shares have not been
registered under the Securities Act of 1933 ("Act") and are
"restricted securities," as defined under Regulation S, and cannot be
sold, transferred, assigned or traded in the United States for a
period of 12 months from the date of issue and require written release
from either the issuing company or their attorney prior to legend
removal."
The 5,400,000 shares of common stock issued to Nicholas Paul Hill
(identified in Item 15. B., above) in connection with the acquisition of Arrow
Cars SL were issued in reliance on the exemption from registration pursuant to
Section 4(2) of the 33 Act based on the following:
* each investor represented to us that he was acquiring the securities
for his own account for investment and not for the account of any
other person and not with a view to or for distribution, assignment or
resale in connection with any distribution within the meaning of the
33 Act;
* we provided each investor with written disclosure prior to sale or
transfer that the securities have not been registered under the 33 Act
and, therefore, cannot be resold unless they are registered under the
33 Act or unless an exemption from registration is available;
* each investor agreed not to sell or otherwise transfer the purchased
securities unless they are registered under the 33 Act and any
applicable state laws, or an exemption or exemptions from such
registration are available;
II-3
* each investor had knowledge and experience in financial and other
business matters such that he was capable of evaluating the merits and
risks of an investment in us;
* such investor was given information and access to all of our
documents, records, books, officers and directors, our executive
offices pertaining to the investment and was provided the opportunity
to ask questions and receive answers regarding the terms and
conditions of the offering and to obtain any additional information
that we possesses or were able to acquire without unreasonable effort
and expense; each investor had no need for liquidity in their
investment in us and could afford the complete loss of their
investment in us;
* we did not employ any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio;
* we did not conduct, hold or participate in any seminar or meeting
whose attendees had been invited by any general solicitation or
general advertising;
* we placed a legend on each certificate or other document that
evidences the securities stating that the securities have not been
registered under the 33 Act and setting forth or referring to the
restrictions on transferability and sale of the securities;
* no broker-dealer or underwriter was involved in the sale of the
shares; and
* we added the following legend to the certificates: "The shares
represented by this certificate have been issued to the registered
owner in reliance upon written representations that these shares have
been taken for investment. These shares have not been registered under
the Securities Act of 1933, as amended ("Act"), and may not be sold,
transferred or assigned unless an opinion of counsel satisfactory to
the company has been received by the company to the effect that such
sale, transfer or assignment will not be in violation of the Act and
the rules and regulations promulgated thereunder or applicable state
securities laws."
EXHIBITS
The following Exhibits are filed as part of this Registration Statement:
Exhibit No. Document Description
----------- --------------------
2* Plan and Agreement of Reorganization, dated April 4, 2012, by and
between Arrow Cars International Inc., Arrow Cars SL and Certain
Stockholders of Arrow Cars SL.
3.1(i)* Articles of Incorporation filed with the Florida Secretary of State
on March 8, 2012.
3.1(ii)* Articles of Amendment to Articles of Incorporation filed with the
Florida Secretary of State on June 26, 2012.
3.1(iii)* Articles of Amendment to Articles of Incorporation filed with the
Florida Secretary of State on August 28, 2012.
3.2* Bylaws.
4.1* Specimen Stock Certificate.
5.1** Opinion and Consent of Law Offices of David E. Wise, P.C.
10.1* Rental Contract of Commercial Premises, dated April 12, 2012,
between Arrow Cars SL and Mr. Antonio Gomez Martin.
10.2* Unlimited Labour Contract, dated April 12, 2012, by and between
Arrow Cars SL and Sergio Perez Conejo.
10.3* Settlement agreement, dated March 4, 2012, by, between and among
Peter Stuart Rogers, Arrow Cars SL and Jeremy D. Harris.
II-4
10.4* Sample Leasing Contract.
10.5** Credit Line Bankinter - 327
10.6** Credit Line Bankinter - 114
10.7** Credit Line Banco Popular - 4495
10.8** Secured Loan Banco Popular
14* Code of Business Conduct and Ethics Adopted October 9, 2012.
23.1** Consent of Labrozzi & Company, P.A.
23.2** Consent of Law Offices of David E. Wise, P.C. (included in Exhibit
5.1)
24.1* Power of Attorney (included in signature page).
99.1* Subscription Agreement.
99.2** Summary of Bank Liabilities (Bank Credit Lines and Leasing
Contracts).
99.3 * Personal Guaranty of Arrow Cars S.L. debt by Graham James, as
Guarantor.
----------
* Previously Filed
** Filed herewith
UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) Intentionally omitted.
(5) That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
II-5
i. Intentionally omitted.
ii. If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule
430B or other than prospectuses filed in reliance on Rule 430A, shall
be deemed to be part of and included in the registration statement as
of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part
of the registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such
document immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424.
ii. Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
iii. The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
iv. Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised 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. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amended registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Malaga, Spain, on
the 28th day of January, 2013.
ARROW CARS INTERNATIONAL INC.
By: /s/ Jeremy D. Harris
-----------------------------------
Jeremy D. Harris, President
POWER OF ATTORNEY
The undersigned directors and officers of Arrow Cars International Inc.
hereby constitute and appoint Jeremy D. Harris and Sergio Perez Conejo, each of
them, with full power to act without the other and with full power of
substitution and re-substitution, our true and lawful attorneys-in-fact with
full power to execute in our name and behalf in the capacities indicated below
any and all amendments (including post-effective amendments and amendments
thereto) to this registration statement under the Securities Act of 1933 and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and hereby ratify and
confirm each and every act and thing that such attorneys-in-fact, or any them,
or their substitutes, shall lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement his been signed by the following persons in the
capacities and on the dates indicated.
/s/ Jeremy D. Harris January 28, 2013
-----------------------------------------------
Jeremy D. Harris
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Sergio Perez Conejo
-----------------------------------------------
Sergio Perez Conejo January 28, 2013
Chief Financial Officer and Director
(Principal Accounting Officer)
II-
