U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Arrow Capital Group, Inc.
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(Name of Small Business Issuer in its Charter)
Nevada 13-4067631
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
C/O Steven L. Siskind, 645 5th Ave, Suite 403, New York, NY 10022
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(Address of principal executive offices) (zip code)
Issuer's telephone number (212) 750-2002
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
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Arrow Capital Group, Inc.
Form 10-SB
Table of Contents Page
Part I
Item 1. Description of Business 1
Item 2. Management's Discussion and Analysis or Plan of Operations 12
Item 3. Description of Property 12
Item 4. Security Ownership of Certain Beneficial Owners and Management 13
Item 5. Directors, Executive Officers, Promoters, and Control Persons. 14
Item 6. Executive Compensation 14
Item 7. Certain Relationships and Certain Transactions 14
Item 8. Description of Securities 15
Part II
Item 1. Market Price and Dividends on the Registrant's Common 16
Equity and other Shareholder Matters
Item 2. Legal Proceedings 16
Item 3. Changes in and Disagreements with Accountants. 16
Item 4. Recent Sales of Unregistered Securities 16
Item 5. Indemnification of Directors and Officers 17
Part F/S
Independent Auditors Report and Financial Statements F-1
Part III
Index to Exhibits and Description of Exhibits 17
Signatures 18
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PART I
Item 1. Description of Business.
Arrow Capital Group, Inc. (the "Company") was incorporated under the
laws of the state of Nevada on June 4, 1999. The Company was formed as a blind
pool or blank check Company for the purpose of seeking to complete a merger or
business acquisition transaction.
The Company has generally been inactive since inception. Its only
activities have been organizational ones, directed at developing its business
plan, conducting a limited search for business opportunities, and previous
efforts directed at completing a voluntary registration pursuant to Section 12
(g) of the Securities Exchange Act of 1934. The Company has not commenced
commercial operations. The Company has no full-time employees and owns no real
estate or personal property.
The Company has elected to initiate the process of voluntarily becoming
a reporting Company under the Securities Exchange Act of 1934 by filing this
Form 10-SB registration statement. Following the effective date of this
registration statement, the Company intends to comply with the periodical
reporting requirements of the Securities Exchange Act of 1934 and to seek to
complete a business acquisition transaction.
The Company is a "blind pool" or "blank check" Company, whose business
plan is to seek, investigate and if warranted, acquire one or more properties or
businesses, and to pursue other related activities intended to enhance
shareholder value. The acquisition of a business opportunity may be made by
purchaser, merger, exchange of stock, or otherwise, and may encompass assets or
a business entity, such as a corporation, joint venture, or partnership. The
Company has very limited capital, and it is unlikely that the Company will be
able to take advantage of more than one such business opportunity. The Company
intends to seek opportunities demonstrating the potential of long-term growth as
opposed to short-term earnings. However, at the present time, the Company has
not identified any business opportunity that it plans to pursue, nor has the
Company reached any agreement or definitive understanding with any person
concerning an acquisition.
Alternatively, the Company may be referred to as a "shell corporation"
and once trading on the NASD Bulletin Board, a "trading and reporting shell
corporation." Shell corporations have zero or nominal assets and typically no
stated or contingent liabilities. Private companies wishing to become publicly
trading may wish to merge with a shell (a "reverse merger") whereby the
shareholders of the private Company become the majority of the shareholders of
the combined Company. The private Company may purchase for cash all or a portion
of the common share of the shell corporation from its major stockholders.
Typically, the Board and officers of the private Company become the new Board
and officers of the combined Company and often the name of the private Company
becomes the name of the combined Company.
Prior to the effective date of this registration statement, it is
anticipated that the Company's officers and directors will contact
broker-dealers and other persons with whom they are acquainted who are involved
with corporate finance matters to advise them of the Company's existence and to
determine if any companies or businesses that they represent have a general
interest in considering a merger or acquisition with a blind pool or blank check
or shell entity. No direct discussions regarding the possibility of merger are
expected to occur until after the effective date of this registration statement.
No assurance can be given that the Company will be successful in finding or
acquiring a desirable business opportunity, given the limited funds that are
expected to be available for acquisitions. Furthermore, no assurance can be
given that any acquisition, which does occur, will be on terms that are
favorable to the Company or its current stockholders.
The Company's search will be directed toward small and medium-sized
enterprises, which have a desire to become public corporations and which are
able to satisfy, or anticipate and which are able to in the reasonable near
future, meet the minimum tangible asset requirement in order to qualify shares
for trading on NASDAQ or on an exchange such as the American Stock Exchange.
(See "Investigation and Selection of Business Opportunities"). The Company
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anticipates that the business opportunities presented to it will (i) either be
in the process of formation, or be recently organized with limited operating
history or a history of losses attributable to under-capitalization or other
factors; (ii) be experiencing financial or operating difficulties; (iii) be in
need of funds to develop new products or services or to expand into a new
market, or have plans for rapid expansion through acquisition of competing
businesses; (iv) or other similar characteristics. The Company intends to
concentrate its acquisition efforts on properties or businesses that it believes
to be undervalued or that it believes may realize a substantial benefit from
being publicly owned. Given the above factors, investors should expect that any
acquisition candidate may have little or no operating history, or a history of
losses or low profitability.
The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural resources,
manufacturing, high technology, product development, medical, communications and
others. The Company's discretion in the selection of business opportunities is
unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.
As a consequence of this registration of its securities, any entity,
which has an interest in being acquired by, or merging into the Company, is
expected to be an entity that desires to become a public Company and establish a
public trading market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock constituting control of
the Company would either be issued by the Company or be purchased from the
current principal stockholders of the Company by the acquiring entity or its
affiliates. If stock is purchased from the current principal stockholders, the
transaction is very likely to be a private transaction rather than a public
distribution of securities, but is also likely to result in substantial gains to
the current principal stockholders relative to their purchase price for such
stock. In the Company's judgment, none of the officers and directors would
thereby become an "underwriter" within the meaning of the Section 2(11) of the
Securities Act of 1933, as amended as long as the transaction is a private
transaction rather than a public distribution of securities. The sale of a
controlling interest by certain principal shareholders of the Company could
occur at a time when minority stockholders are unable to sell their shares
because of the lack of a public market for such shares.
Depending upon the nature of the transaction, the current officers and
directors of the Company may resign their management and board positions with
the Company in connection with a change of control or acquisition of a business
opportunity (See"Form of Acquisition," below, and "Risk Factors - The Company's
- Lack of Continuity and Management"). In the event of such a resignation, the
Company's current management would thereafter have no control over the conduct
of the Company's business.
It is anticipated that business opportunities will come to the
Company's attention from various sources, including its officers and directors,
its other stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plan, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.
The Company does not foresee that it will enter into a merger or
acquisition transaction with any business with which its officers or directors
are currently affiliated. Should the Company determine in the future, contrary
to the forgoing expectations, that a transaction with an affiliate would be in
the best interests of the Company and its stockholders, the Company is generally
permitted by Nevada law to enter into such a transaction if:
(1) The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed
or are known to the Board of Directors, and the Board in good
faith authorizes, approves or ratifies the contract or
transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested
directors constitute less than a quorum; or
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(2) The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed
or are known to the stockholders entitled to vote thereon, and
the contract or transaction is specifically authorized,
approved or ratified in good faith by vote of the
stockholders; or
(3) The contract or transaction is fair as to the Company as of
the time it is authorized, approved or ratified, by the Board
of Directors or the stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the other
Company's management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological changes, the
perceived benefit the business opportunity will derive from becoming a publicly
held entity, and numerous other factors which are difficult, if not impossible,
to analyze through the application of any objective criteria. In many instances,
it is anticipated that the historical operations of a specific business
opportunity may not necessarily be indicative of the potential for the future
because of a variety of factors, including, but not limited to, the possible
need to expand substantially, shift marketing approaches, change product
emphasis, change or substantially augment management, raise capital and the
like.
It is anticipated that the Company will not be able to diversify, but
will essentially be limited to the acquisition of one business opportunity
because of the Company's limited financing. This lack of diversification will
not permit the Company to offset potential losses from one business opportunity
against profits from another, and should be considered an adverse factor
affecting any decision to purchase the Company's securities.
Certain types of business combination or business acquisition
transactions may be completed without any requirement that the Company first
submit the transaction to the stockholders for their approval. In the event the
proposed transaction is structured in such a fashion that stockholder approval
is not required, holders of the Company's securities (other than principal
stockholders holding a controlling interest) should not anticipate that they
will be consulted or that they will be provided with financial statements or any
other documentation prior to the completion of the transaction. Other types of
transactions require prior approval of the stockholders.
In the event a proposed business combination or business acquisition
transaction is structured in such a fashion that prior stockholder approval is
necessary, the Company will be required to prepare a Proxy or Information
Statement describing the proposed transaction, file it with the Securities and
Exchange Commission for review and approval, and mail a copy of it to all
Company stockholders prior to holding a stockholders meeting for purposes of
voting on the proposal. Minority shareholders who do not vote in favor of a
proposed transaction will then have the right, in the event the transaction is
approved by the required number of stockholders, to exercise statutory
dissenters rights and elect to be paid the fair value of their shares.
The analysis of business opportunities will be undertaken by or under
the supervision of the Company's officers and directors, none of whom are
professional business analysts (See "Management"). Although there are no current
plans to do so, Company management might hire an outside consultant to assist in
the investigation and selection of business opportunities, and might pay a
finder's fee. Since Company management has no current plans to use any outside
consultants or advisors to assist in the investigation and selection of business
opportunities, no policies have been adopted regarding use of such consultants
or advisors, the criteria to be used in selecting such consultants or advisors,
the services to be provided, the term of service, or the total amount of fees
that may be paid. However, because of the limited resources of the Company, it
is likely that any such fee the Company agrees to pay would be paid in stock and
not in cash.
Otherwise, in analyzing potential business opportunities, Company
management anticipates that it will consider, among other things, the following
factors:
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(1) Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
(2) The Company's perception of how any particular business
opportunity will be received by the investment community and
by the Company's stockholders;
(3) Whether, following the business combination, the financial
condition of the business opportunity would be, or would have
a significant prospect in the foreseeable future of becoming,
sufficient to enable the securities of the Company to qualify
for listing on an exchange or on a national automated
securities quotation system, such as NASDAQ, so as to permit
the trading of such securities to be exempt from the
requirements of Rule 15c2-6 adopted by the Securities and
Exchange Commission (See "Risk Factors - The Company -
Regulations of Penny Stocks").
(4) Capital requirements and anticipated availability of required
funds, to be provided by the Company or from operations,
through the sale of additional securities, through joint
ventures or similar arrangements, or from other sources;
(5) The extent to which the business opportunity can be advanced;
(6) Competitive position as compared to other companies of similar
size and experience within the industry segment as well as
within the industry as a whole;
(7) Strength and diversity of existing management, or management
prospects that are scheduled for recruitment;
(8) The cost of participation by the Company as compared to the
perceived tangible and intangible values and potential; and
(9) The accessibility of required management expertise, personnel,
raw materials, services, professional assistance, and other
required items.
In regard to the possibility that the shares of the Company would
qualify for listing on NASDAQ, the current standards for initial listing
include, among other requirements, that the Company (1) have net tangible assets
of at least $4.0 million, or a market capitalization of $50.0 million, or net
income of not less that $0.75 million in its latest fiscal year or in two of the
last three fiscal years; (2) have a public float (i.e., shares that are not held
by any officer, director or 10% stockholder) of at least 1.0 million shares; (3)
have a minimum bid price of at least $4.00; (4) have at least 300 round lot
stockholders (i.e., stockholders who own not less than 100 shares); and (5) have
an operating history of at least one year or have a market capitalization of at
least $50.0 million. Many, and perhaps most, of the business opportunities that
might be potential candidates for a combination with the Company would not
satisfy the NASDAQ listing criteria.
No one of the factors described above will be controlling in the
selection of a business opportunity, and management will attempt to analyze all
factors appropriate to each opportunity and make a determination based upon
reasonable investigative measures and available data. Potentially available
business opportunities may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex. Potential investors must recognize that, because of the Company's
limited capital available for investigation and management's limited experience
in business analysis, the Company may not discover or adequately evaluate
adverse facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more.
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Prior to making a decision to participate in a business opportunity,
the Company will generally request that it be provided with written materials
regarding the business opportunity containing as much relevant information as
possible. Including, but not limited to, such items as a description of
products, services and Company history; management resumes; financial
information; available projections, with related assumptions upon which they are
based; an explanation of proprietary products and services; evidence of existing
patents, trademarks, or service marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions between such
Company and its affiliates during the relevant periods; a description of present
and required facilities;, an analysis of risks and competitive conditions; a
financial plan of operation and estimated capital requirements; audited
financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurance that audited financial statements
would be able to be produced within a reasonable period of time not to exceed 60
days following completion of a merger or acquisition transaction; and the like.
As part of the Company's investigation, the Company's executive
officers and directors may meet personally with management and key personnel,
may visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of management and
key personnel, and take other reasonable investigative measures, to the extent
of the Company's limited financial resources and management expertise.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission regulations regarding purchase and sale of
"penny stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they qualify
for listing on NASDAQ or on an exchange which would make them exempt from
applicability of the "penny stock" regulations.
See "Risk Factors - Regulation of Penny Stocks."
Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current stockholders,
acquisition candidates which have long-term plans for raising capital through
public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates, which have a need for an immediate cash infusion are not
likely to find a potential business combination with the Company to be an
attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which the Company may
participate in a business opportunity. Specific business opportunities will be
reviewed as well as the respective needs and desires of the Company and the
promoters of the opportunity and, upon the basis of the review and the relative
negotiating strength of the Company and such promoters, the legal structure or
method deemed by management to be suitable will be selected. Such structure may
include, but is not limited to leases, purchase and sale agreements, licenses,
joint ventures and other contractual arrangements. The Company may act directly
or indirectly through an interest in a partnership, corporation or other form of
organization. Implementing such structure may require the merger, consolidation
or reorganization of the Company with other corporations or forms of business
organization. In addition, the present management and stockholders of the
Company most likely will not have control of a majority of the voting stock of
the Company following a merger or reorganization transaction. As part of such a
transaction, the Company's existing directors may resign and new directors may
be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other securities of
the Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986 as amended, depends upon the issuance to the
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stockholders of the acquired Company of a controlling interest (i.e., 80% or
more) of the common stock of the combined entities immediately following the
reorganization. If a transaction were structured to take advantage of these
provisions rather than other "tax free" provisions provided under the Internal
Revenue Code, the Company's current stockholders would retain in the aggregate
20% or less of the total issued and outstanding shares. This could result in
substantial additional dilution in the equity of those who were stockholders of
the Company prior to such reorganization. Any such issuance of additional shares
might also be done simultaneously with a sale or transfer of shares representing
a controlling interest in the Company by the current officers, directors and
principal stockholders. See "Description of Business - General."
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon one or more exemptions from registration under
applicable federal and state securities laws to the extent that such exemptions
are available. In some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities either at the
time the transaction is consummated, or under certain conditions at specified
times thereafter. The issuance of substantial additional securities and their
potential sale into any trading market that might develop in the Company's
securities may have a depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its
principal stockholders will enter into a letter of intent with the management,
principals or owners of a prospective business opportunity prior to signing a
binding agreement. Such a letter of intent will set forth the terms of the
proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement is executed. Even after a
definitive agreement is executed, it is possible that the acquisition would not
be consummated should any party elect to exercise any right provided in the
agreement to terminate it on specific grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity, the costs incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"Investment Company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates the
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment Company securities.
Since the Company will not register as an Investment Company, stockholders will
not be afforded these protections.
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Competition
The Company expects to encounter substantial competition in its efforts
to locate attractive business combination opportunities. The competition may in
part come from business development companies, venture capital partnerships and
corporations, small investment companies, brokerage firms, and the like. Some of
these types of organizations are likely to be in a better position than the
Company to obtain access to attractive business acquisition candidates either
because they have greater experience, resources and managerial capabilities than
the Company, because they are able to offer immediate access to limited amounts
of cash, or for a variety of other reasons. The Company also will experience
competition from other public "blind pool" companies, some of which may also
have funds available for use by an acquisition candidate.
Administrative Offices
The Company currently maintains a mailing address at the office of its
attorney, Steven L. Siskind, Esq. 645 5th Ave, Suite 403, New York, NY 10022.
The Company's telephone number there is (212) 750-2002. Other than this mailing
address, the Company does not currently maintain any other office facilities,
and does not anticipate the need for maintaining office facilities at any time
in the foreseeable future. The Company pays no rent or other fees for the use of
the mailing address.
Employees
The Company is in the development stage and currently has no employees.
Management of the Company expects to use consultants, attorneys and accountants
as necessary, and does not anticipate a need to engage any full-time employees
so long as it is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities.
Risk Factors
Conflicts of Interest. Certain conflicts of interest exist between the
Company and its officers and directors. They have other business interests to
which they currently devote attention, and are expected to continue to do so. As
a result, conflicts of interest may arise that can be resolved only through
their exercise of judgement in a manner which is consistent with their fiduciary
duties to the Company. See "Management," and "Conflicts of Interest."
It is anticipated that the Company's principal shareholders may
actively negotiate or otherwise consent to the purchase of a portion of their
common stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's principal shareholders
may consider their own personal pecuniary benefit rather than the best interest
of other Company shareholders. Depending upon the nature of a proposed
transaction, Company shareholders other than the principal shareholders may not
be afforded the opportunity to approve or consent to a particular transaction.
See "Conflicts of Interest."
Possible Need for Additional Financing. The Company has very limited
funds, and such funds, may not be adequate to take advantage of any available
business opportunities. Even if the Company's currently available funds prove to
be sufficient to pay for its operations until it is able to acquire an interest
in, or complete a transaction with, a business opportunity, such funds will
clearly not be sufficient to enable it to exploit the opportunity. Thus, the
ultimate success of the Company will depend, in part, upon it availability to
raise additional capital. In the event that the Company requires modest amounts
of additional capital to funds its operations until it is able to complete a
business acquisition or transaction, such funds, are expected to be provided by
the principal shareholders. However, the Company has not investigated the
availability, source, or terms that might govern the acquisition of the
additional capital which is expected to be required in order to exploit a
business opportunity, and will not do so until it has determined the level of
need for such additional financing. There is no assurance that additional
capital will be available from any source or, if available, that it can be
obtained on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
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Regulations of Penny Stocks. The Company's securities, when available
for trading, will be subject to a Securities and Exchange Commission rule that
impose special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purpose of the rule, the phrase "accredited investor" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker dealer must make special
suitability determination for the purchaser and receive the purchasers written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers of the Company's securities and the ability
to purchase the Company's securities to sell such securities in any market that
might develop therefor.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks." Such rules include Rule 3a51-1 under
the Securities Act of 1933, an Rules 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6,
and 15g-7 under the Securities Exchange Act of 1934, as amended. Because the
securities of the Company may constitute "penny stocks" within the meaning of
the rules, the rules would apply to the Company and to its securities. The rules
may further affect the ability of the Company's shareholders to sell their
shares in any public market, which might develop.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years form patterns of fraud and abuse. Such patterns include (I) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differential and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns form being established with respect to the
Company's securities.
No Operating History. The Company was formed in June of 1999, as a
blind pool or blank check entity, for the purpose of registering its common
stock under the 1934 Act and acquiring a business opportunity. The Company has
no operating history, revenues from operations, or assets other than a modest
amount of cash from private sales of stock. The Company faces all of the risks
of a new business and the special risks inherent in the investigation,
acquisition, or involvement in a new business opportunity. The Company must be
regarded as a new or "start-up" venture with all of the unforeseen costs,
expenses, problems, and difficulties to which such ventures are subject.
No Assurance of Success or Profitability. There is no assurance that
the Company will acquire a favorable business opportunity. Even if the Company
should become involved in a business opportunity, there is no assurance that it
will generate revenues or profits, or that the market price of the Company's
outstanding shares will be increased thereby.
Possible Business - Not Identified and Highly Risky. The Company has
not identified and has no commitments to enter into or acquire a specific
business opportunity. As a result, it is only able to make general disclosures
concerning the risks and hazards of acquiring a business opportunity, rather
than providing disclosure with respect to specific risks and hazards relating to
a particular business opportunity. As a general matter, prospective investors
can expect any potential business opportunity to be quite risky. See Item 1 "
Description of Business."
8
<PAGE>
Type of Business Acquired. The type of business to be acquired may be
one that desires to avoid effecting its own public offering and the accompanying
expense, delays, uncertainties, and federal and state requirements which purport
to protect investors. Because of the Company's limited capital, it is more
likely than not, that any acquisition by the Company will involve other parties
whose primary interest is the acquisition of control of a publicly traded
Company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
Impracticability of Exhaustive Investigation. The Company's limited
funds and lack of full-time management will make it impracticable to conduct a
complete and exhaustive investigation and analysis of a business opportunity
before the Company commits its capital or other resources thereto. Management
decisions, therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if the Company had more
funds available to it, would be desirable. The Company will be particular
dependent in making decisions upon information provided by the promoter, owner,
sponsor, or other associated with the business opportunity seeking the Company's
participation. A significant portion of the Company's available funds may be
expended for investigative expenses and other expenses related to preliminary
aspects of completing an acquisition transaction, whether or not any business
opportunity investigated is eventually acquired.
Lack of Diversification. Because of the limited financial resources
that the Company has, it is unlikely that the Company will be able to diversify
its acquisitions or operations. The Company's probable inability to diversify
its activities into more than one area will subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
Need for Audited Financial Statements. The Company will require audited
financial statements from any business that it proposes to acquire. Since the
Company will be subject to the reporting provisions of the Securities Exchange
Act of 1934 (the "Exchange Act"), it will be required to include audited
financial statements in its periodical reports for any existing business it may
acquire. In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ, the
automated quotation system sponsored by the Association of Securities Dealers,
Inc., or on any existing stock exchange. Moreover, the lack of such financial
statements is likely to discourage broker-dealers from becoming or continuing to
serve as market makers in the securities of the Company. Finally, without
audited financial statements, the Company would almost certainly be unable to
offer securities under a registration statement pursuant to the Securities Act
of 1933, and the ability of the Company to raise capital would be significantly
limited. Consequently, acquisitions prospects that do not have, or are unable to
provide reasonable assurances that they will be able to obtain, the required
audited statements would not be considered by the Company to be appropriate for
acquisition.
Other Regulation. An acquisition made by the Company may be of a
business that is subject to regulation or licensing by federal, state, or local
authorities. Compliance with such regulations and licensing can be expected to
be a time-consuming, expensive process and may limit other investment
opportunities of the Company.
Dependence upon Management; Limited Participation of Management. The
Company will be entirely dependant upon the experience of its officers and
directors in seeking, investigating, and acquiring a business and in making
decisions regarding the Company's operations. It is possible that, from time to
time, the inability of such persons to devote their full time attention to the
business of the Company could result in a delay in progress toward implementing
its business plan. See "Management." Because investors will not be able to
evaluate the merits of possible future business acquisitions by the Company,
they should critically assess the information concerning the Company's officers
and directors.
Lack of Continuity in Management. The Company does not have an
employment agreement with any of its officers or directors, and as a result,
there is no assurance that they will continue to manage the Company in the
future. In connection with any acquisition of a business opportunity, it is
likely the current officers and directors of the Company may resign. A decision
to resign will be based upon the identity of the business opportunity and the
nature of the transaction, and is likely to occur without the vote or consent of
the stockholders of the Company.
9
<PAGE>
Indemnification of Officers and Directors. The Company's Articles of
Incorporation provide for the indemnification of its, directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on behalf of the Company. The
Company will also bear the expenses of such litigation for any of its directors,
officers, employees, or agents, upon such person's promise to repay the Company
therefor if it is ultimately determined that any such person shall not have been
entitled to indemnification. This indemnification policy could result in
substantial expenditures by the Company, which it will be unable to recoup.
Dependence upon Outside Advisors. To supplement the business experience
of its officers and directors, the Company may be required to employ
accountants, technical experts, appraisers, attorneys, or other consultants or
advisors. The selection of any such advisors will, be made by the Company's
officers, without any input from shareholders. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the officers of the
Company consider it necessary to hire outside advisors, they may elect to hire
persons who are affiliates, if those affiliates are able to provide the required
services.
Leveraged Transactions. There is a possibility that any acquisition of
a business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing against the
assets of the business opportunity to be acquired, or against the projected
future revenues or profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
Competition. The search for potentially profitable business
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company. These
competitive conditions will exist in any industry in which the Company may
become interested.
No Foreseeable Dividends. The Company has not paid dividends on its
Common Stock and does not anticipate paying such dividends in the foreseeable
future.
Loss of Control by Present Management and Stockholders. In conjunction
with completion of a business acquisition, it is anticipated that the Company
will issue an amount of the Company's authorized but unissued Common Stock that
represents the greater majority of the voting power and equity of the Company.
In conjunction with such a transaction, the Company's current officers,
directors, and principal shareholders could also sell all, or a portion, of
their controlling block of stock to the acquired Company's stockholders. Such a
transaction would result in a greatly reduced percentage of ownership of the
Company by its current shareholders. As a result, the acquired Company's
stockholders would control the Company, and it is likely that they would replace
the Company's management with persons who are unknown at this time.
No Public Market Exists. There is currently no public market for the
Company's common stock, and no assurance can be given that a market will develop
or that a shareholder ever will be able to liquidate his investment without
considerable delay, if at all. If a market should develop, the price may be
highly volatile. Factors such as those discussed in this "Risk Factors" section
may have a significant impact upon the market price of the securities offered
hereby. Owing to the low price of the securities, many brokerage firms may not
be willing to effect transactions in the securities. Even if a purchasers finds
a broker willing to effect a transaction in theses securities, the combination
of brokerage commissions, state transfer taxes, if any, and any other selling
costs may exceed the selling price. Further, many leading institutions will not
permit the use of such securities as collateral for any loans.
10
<PAGE>
Rule 144 Sales. All of the presently outstanding shares of Common Stock
are "restricted securities" within the meaning of Rule 144 under the Securities
Act of 1933, as amended. As restricted shares, these shares may be resold only
pursuant to an effective registration statement or under the requirements of
Rule 144 or other applicable state securities laws. Rule 144 provides in essence
that a person who has held restricted securities for a prescribed period, may
under certain conditions, sell every three months, in brokerage transactions, a
number of shares that does not exceed the greater of 1.0% of a Company's
outstanding common stock or the Average weekly trading volume during the four
calendar weeks prior to sale. There is no limit on the amount of restricted
securities that may be sold by a non-affiliate after, the restricted securities
have been held by the owner, for a period of at least two years. A sale under
Rule 144 or under any other exemption from the Act, if available, or pursuant to
subsequent registrations of common stock of present shareholders, may have a
depressive effect upon the price of the Common Stock in any market that may
develop. As of the date hereof, all 689,700 of the currently outstanding shares
of common stock of the Company have been held by the current owners, thereof for
a period of more than two years. And accordingly, such shares are currently
available for resale in accordance with the provisions of Rule 144.
Blue Sky Consideration. Because the securities registered hereunder
have not been registered for resale under the Blue-Sky laws of any 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 securities and of purchasers to purchase the securities. Some
jurisdictions may not allow the trading or resale of blind pool or "blank check"
securities under any circumstances. Accordingly, investors should consider the
secondary market for the Company's securities to be a limited one.
Item 2. Management's Discussion and Analysis or Plan of Operations
Liquidity and Capital Resource
The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholders equity other than the receipt of proceeds in the amount of $3,450
for its organizational expenses. As of December 31, 1999, the Company's balance
sheet reflects current and total assets of $1794.
The Company intends to seek to carry out its plan of business as
discussed herein. In order to do so, it will require additional capital to pay
ongoing expenses, including particularly legal and accounting fees incurred in
conjunction with preparation and filing of this registration statement on form
10-SB, and in conjunction with future compliance with its on-going reporting
obligations.
Results of Operations
During the period from June 4, 1999 (inception) through December 31,
1999, the Company has engaged in no significant operations other than
organizational activities, acquisition of capital and preparation for
registration of its securities under the Securities Exchange Act of 1934. During
this period, the Company received no revenues.
For the current fiscal year, the Company anticipates incurring a loss
as a result of expenses associated with registration and compliance with
reporting obligations under the Securities Exchange Act of 1934, and expenses
associated with locating and evaluating acquisition candidates. The Company
anticipates that until a business combination is completed with an acquisition
candidate, it will not generate revenues. The Company may also continue to
operate at a loss after completing a business combination, depending upon the
performance of the acquired business.
11
<PAGE>
Need for Additional Financing
The Company's existing capital will not be sufficient to meet the
Company's cash needs, including the costs of completing its registration and
complying with its continuing reporting obligation under the Securities Exchange
Act of 1934. Accordingly, additional capital will be required.
No commitments to provide additional funds have been made by management
or other stockholders, and the Company has no plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional securities
prior to the location of a merger or acquisition candidate. Accordingly, there
can be no assurance that any additional funds will be available to the Company
to allow it to cover its expenses. Not withstanding the forgoing, to the extent
that additional funds are required, the Company anticipates receiving such funds
in the form of advancements from current shareholders without issuance of
additional shares or other securities, or through the private placement of
restricted securities rather than through a public offering distribution of the
Company's securities.
Regardless of whether the Company's cash assets prove to be inadequate
to meet the Company's operational needs, the Company might seek to compensate
providers of services by issuance's of stock in lieu of cash. For information as
to the Company's policy in regard to payment for consulting services, see
"Certain Relationships and Transactions."
Year 2000 issues are not currently material to the Company's business,
operations or financial condition, and the Company does not currently anticipate
that it will incur any material expenses to remediate year 2000 issues it may
encounter. However, year 2000 issues may become material to the Company
following its completion of a business combination transaction. In that event,
the Company will be required to adopt a plan and a budget for addressing such
issues.
Item 3. Description of Property.
The Company currently maintains a mailing address at 645 5th Ave, Suite
403, New York, NY 10022 C/O Steven L. Siskind. The Company pays no rent for the
use of this mailing address. The Company does not believe that it will need to
maintain an office at any time in the foreseeable future in order to carry out
its plan of operations described herein. The Company's telephone number is
212-750-2002.
Item 4. Security ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the date of this Registration
Statement, stock ownership of each executive officer and director of Arrow
Capital Group, Inc., of all executive officers and directors of Arrow Capital
Group, Inc. as a group, and of each person known by Arrow Capital Group, Inc. to
be a beneficial owner of 5% or more of its Common Stock. Except as otherwise
noted, each person listed below is the sole beneficial owner of the shares and
has sole investment and voting power as to such shares. No person listed below
has any options, warrant or other right to acquire additional securities of
Arrow Capital Group, except as may be otherwise noted.
<TABLE>
<CAPTION>
Name and address Number of Shares Beneficially Owned % of Class Owned
---------------- ----------------------------------- ----------------
<S> <C> <C>
Mid-Continental Securities 300,000 43%
1512 Palisades Avenue, Suite 10F
Fort Lee, NJ 07024
James Season 50,000 7%
22 Clover Place
Cos Cob, CT 06807-2215
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Name and address Number of Shares Beneficially Owned % of Class Owned
---------------- ----------------------------------- ----------------
<S> <C> <C>
Juan P. Martin 1,000 ***
14-40 160th Street
Beechurst, NY 11357
Gary B. Yankelowitz 300,000 43%
201 E. 87th St
New York, NY 10128
All Directors and 51,000 7%
Executive Officers (3 persons)
</TABLE>
Item 5. Directors, Executive Officers, Promoters, and Control Persons.
The directors and executive officers serving the Company are as
follows:
Name Age Position Held
---- --- -------------
James Season 56 President/Director
Juan P. Martin 22 Secretary/Director
Dominick Pope 68 Director
The directors named above will serve until the next annual meeting of
the Company's stockholders or until their successors are duly elected and have
qualified. Directors will be elected for one-year terms at the annual
stockholders meeting. Officers will hold their positions at the pleasure of the
board of directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding between any
of the directors or officers of the Company and any other person pursuant to
which any director or officer was or is to be selected as a director or officer,
and there is no arrangement, plan or understanding as to whether non-management
shareholders will exercise their voting rights to continue to elect the current
directors to the Company's board. There are also no arrangements, agreements or
understandings between non-management shareholders and management under which
non-management shareholders may directly or indirectly participate in or
influence the management of the Company's affairs.
The directors and officers will devote their time to the Company's
affairs on an "as needed" basis, which, depending on the circumstances, could
amount to as little as two hours per month, but no more than forty hours per
month, but more than likely will fall within the range of five to ten hours per
month. There are no agreements or understandings for any officer or director to
resign at the request of another person, and none of the officers or directors
are acting on behalf of, or will act at the direction of, any other person.
Biographical Information
James H. Season, 56 years of age, been treasurer and a director of Insurance
Capital Corp. since 1996. He has been a consultant and President of Ambassador
Capital Group, Inc, since 1999. From 1996 to 1999, he was Chief Financial
Officer and a director of Hungarian Broadcasting Corp. From 1995 to 1996, he was
a senior financial officer and director (until 1999) of Hungarian Telephone and
Cable Corp. From 1993 to 1995, he was Chief Financial Officer and Vice Chairman
of Standard Brands Paint Company. Prior to 1993, he held a number of senior
financial and investment banking positions including being Managing Director of
Chase Mahattan Bank from 1982 to 1986.
Juan P. Martin, 23 years of age. Graduate student at the Stern School of
Business of New York University., New York, New York. Mr. Martin has been an
assistant trader for El Diablo Coffee, Limited, Inc. from 1994 to present. In
1997 he was an assistant trader for Gleber Coffee International and since 1998
Mr. Martin has been involved in mergers and acquisitions at Ambassador Capital
Group, inc. in New York City.
13
<PAGE>
Dominick Pope, 68, years of age. Since 1977, Mr. Pope has served as President of
L.J. Loeffler In-House Communications Business, located in New York City. Mr.
Pope attended Baruch College and received an associates degree. Mr. Pope was
formerly the chairman of Intercom Technologies, Corp. and resigned from that
position April of 1998.
Indemnification of Officers and Directors
As permitted by Nevada law, the Company's Articles of Incorporation
provide that the Company will indemnify its directors and officers against
expenses and liabilities they incur to defend, settle, or satisfy any civil or
criminal action brought against them on account of their being, or having been,
Company directors or officers unless, in any such action, they are adjudged to
have acted with gross negligence or willful misconduct. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers, or persons controlling the Company, pursuant
to the foregoing provisions, the Company has been informed that, in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in that Act and is, therefore, unenforceable.
Conflicts of Interest
None of the officers of the Company will devote more than a portion of
his time to the affairs of the Company. There will be occasions when the time
requirements of the Company's business conflict with the demands of the officers
other business and investment activities. Such conflicts may require that the
Company attempt to employ additional personnel. There is no assurance that the
services of such persons will be available or that they can be obtained upon
terms favorable to the Company.
The officers, directors and principal shareholders of the Company may
actively negotiate for the purchase of a portion of their common stock as a
condition to, or in connection with, a proposed merger or acquisition
transaction. It is anticipated that a substantial premium may be paid by the
purchaser in conjunction with any sale of shares by the Company's officers,
directors and principal shareholders made as a condition to, or in connection
with, a proposed merger or acquisition transaction. The fact that a substantial
premium may be paid to members of Company management to acquire their shares
creates a conflict of interest for them and may compromise their state law
fiduciary duties to the Company's other shareholders. In making any such sale,
members of Company management may consider their own personal pecuniary benefit
rather than the best interests of the Company and the Company's other
shareholders, and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any particular buy-out transaction
involving shares held by members of Company management.
Item 6. Executive Compensation.
No officer or director has received any compensation from the Company.
Until the Company acquires additional capital, it is not anticipated that any
officer or director will receive compensation from the Company other than
reimbursement for out-of-pocket expenses incurred on behalf of the Company. See
"Certain Relationships and Related Transactions." The Company has no stock
option, retirement, pension, or profit-sharing programs for the benefit of
directors, officers or other employees, but the Board of Directors may recommend
adoption of one or more such programs in the future.
Item 7. Certain Relationship and Related Transactions
No officer, director, promoter, or affiliate of the Company has or
proposes to have any direct or indirect material interest in any asset proposed
to be acquired by the Company through security holdings, contracts, options, or
otherwise.
The Company has adopted a policy under which any consulting or finder's
fee that may be paid to a third party for consulting services to assist
management in evaluating a prospective business opportunity would be paid in
stock rather than in cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, the Company is unable to predict whether, or in what amount,
such stock issuance might be made.
14
<PAGE>
It is not currently anticipated that any salary, consulting fee, or
finder's fee shall be paid to any of the Company's directors or executive
officers, or to any other affiliate of the Company except as described under
"Executive Compensation" above.
The Company does not maintain an office, but it does maintain a mailing
address at, 645 5th Ave, Suite 403, New York, NY 10022 C/O Steven L. Siskind,
for which it pays no rent, and for which it does not anticipate paying rent in
the future. It is likely that the Company will not establish an office until it
has completed a business acquisition transaction, but it is not possible to
predict what arrangements will actually be made with respect to future office
facilities.
Although management has no current plans to cause the Company to do so,
it is possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individual or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
Item 8. Description of Securities
Common Stock
The Company's Articles of Incorporation authorize the issuance of
10,000,000 shares of Common Stock. Each record holder of Common Stock is
entitled to one vote for each share held on all matters properly submitted to
the stockholders for their vote. The Articles of Incorporation do not permit
cumulative voting for the election of directors.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common Stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and non-assessable.
To the extent that additional shares of the Company's Common Stock are issued,
the relative interests of then existing stockholders may be diluted.
Transfer Agent
The Company's Transfer Agent is Executive Registrar & Transfer Agency,
Inc., 3118 W. Thomas RD., Ste. 707, Phoenix AZ, 85017.
Reports to Stockholders
The Company plans to furnish it stockholders with an annual report for
each fiscal year ending December 31, containing financial statements audited by
its independent certified public accountants. In the event the Company enters
into a business combination with another Company, it is the intention of
management to continue furnishing annual reports to its stockholders.
Additionally, the Company may, in its sole discretion, issue unaudited quarterly
or other interim reports to its stockholders when it deems appropriate. The
Company intends to comply with the periodic reporting requirements of the
Securities Exchange Act of 1934.
15
<PAGE>
Part II
Item 1. Market Price and Dividends on the Registrant's Common equity and other
Shareholder Matters
There has been no established public trading market for the Company's
securities since its inception on June 4, 1999. As of June 30, 2000, the Company
had 689,700 shares issued and outstanding held by 29 shareholders of record. No
dividends have been paid to date and the Company's Board of directors does not
anticipate paying dividends in the foreseeable future.
Item 2. Legal Proceedings.
The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.
Item 3. Changes in and Disagreements with Accountants.
The Company has had no changes in or disagreements with accountants on
accounting or finaicial disclosure matters.
Item 4. Recent sales of Unregistered Securities.
The following unregistered securities of the Company have been issued
in the past 3 years:
On May 27, 1999, the Company issued 300,000 shares of restricted common
stock to an affiliate pursuant to an exemption from registration under Section
4(2) of the Act for an aggregate consideration of $300.
In May 1999 the Company issued 17,750 shares of restricted common stock
to 6 non-affiliates pursuant to an exemption from registration under Regulation
D, rule 506 of the Securities Act of 1933, as amended (the "Act"), for an
aggregate consideration of $2,722.50.
In June 1999, the Company issued 5,250 shares of restricted common
stock to 3 non-affiliates pursuant to an exemption from registration under
Regulation D, Rule 504 of the Act for an aggregate consideration of $52.50.
On June 21, 1999, the Company issued 50,000 shares of restricted common
stock to an affiliate pursuant to an exemption from registration under Section
4(2) of the Act for an aggregate consideration of $500.
In July 1999, the Company issued 14,700 shares of restricted common
stock to 14 non-affiliates pursuant to an exemption from registration under
Regulation D, Rule 506 of the Act for an aggregate consideration of $147.
On July 7, 1999, the Company issued 300,000 shares of restricted common
stock to an affiliate pursuant to an exemption from registration under Section
4(2) of the Act for an aggregate consideration of $300.
In August 1999, the Company issued 2,000 shares of restricted common
stock to 3 non-affiliates pursuant to an exemption from registration under
Regulation D, Rule 506 of the Act, for an aggregate consideration of $20.
16
<PAGE>
Item 5. Indemnification of Directors and Officers
The Articles of Incorporation and the Bylaws of the Company provide
that the Company will indemnify its officers and directors for costs and
expenses incurred in connection with the defense of actions, suits, or
proceedings where the officer or director acted in good faith and in a manner he
reasonably believed to be in the Company's best interest and is a party by
reason of his status as an officer or director, absent a finding of negligence
or misconduct in the performance of duty.
Part F/S
The Financial Statements of Arrow Capital Group, Inc. required by
regulation S-B commence on page F-1 hereof and are incorporated herein by
reference.
Part III
Items 1 & 2 Index to exhibits and description of Exhibits
Item 2.1 Articles of Incorporation
Item 2.2 By-Laws
17
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: August 23, 2000 By: /s/ James Season
-----------------------------
James Season, President
18
<PAGE>
ARROW CAPITAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS AND
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
FOR THE PERIOD JUNE 4, 1999 (INCEPTION)
THROUGH JUNE 30, 2000
<PAGE>
ARROW CAPITAL GROUP, INC.
TABLE OF CONTENTS
Page No.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT F-1
FINANCIAL STATEMENTS
Balance sheets........................................... F-2
Statements of Operations................................. F-3
Statements of Changes in Stockholders' Deficit........... F-4
Statements of Cash Flows................................. F-5
Notes to Financial Statement............................. F-6
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Arrow Capital Group, Inc.
Reno, Nevada
I have reviewed the accompanying balance sheets of Arrow Capital Group, Inc. (a
Nevada corporation in the developement stage), as of December 31, 1999, March
31, 2000, and June 30, 2000, and the related statements of operations,
stockholders' deficit, and cash flows for the periods then ended in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of Arrow
Capital Group, Inc.
A review consists principally of inquires of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
August 8, 2000
Suwanee, GA
Tim Palmieri
Certified Public Accountant
F-1
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
December 31, 1999 March 31, 2000 June 30, 2000
----------------- -------------- -------------
<S> <C> <C> <C>
Current Assets:
Cash $ 1,794 $ 1,215 $ 982
------- ------- -------
Other Assets: - - -
$ 1,794 $ 1,215 $ 982
======== ======== =======
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities:
Accounts payable $ 1,000 $ 1,250 $ 1,500
Shareholder loan payable 1,140 1,140 1,140
------- ------- -------
Total Current Liabilities 2,140 2,390 2,640
------- ------- -------
Stockholder's Deficit: (Note 2)
Common stock; $.001 par value; authorized 10,000,000 shares;
issued and outstanding 689,700 shares 690 690 420
Additional paid-in capital 890 890 1,160
Deficit accumulated during the development stage (1,926) (2,754) (3,238)
------- ------- -------
Total stockholder's Deficit (346) (1,174) (1,658)
------- ------- -------
$ 1,794 $ 1,215 $ 982
======= ======= =======
</TABLE>
F-2
<PAGE>
ARROW CAPITAL GROUP, INC.
( A Development Stage Company)
Statements of Operations
(Unaudited)
For the periods ended
<TABLE>
<CAPTION>
For the period June 4 to Three months Three months Six months For the period June 4 to
December 31, 1999 ended March 31, 2000 ended June 30, 2000 ended June 30, 2000 June 30, 2000
------------------------ -------------------- ------------------- ------------------- ------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Investment income $ 49 $ 22 $ 16 $ 38 $ 87
-------- -------- --------- -------- ---------
Total Revenues 49 22 16 38 87
-------- -------- --------- -------- ---------
Costs and expenses:
General and
administrative $ 1,975 $ 850 $ 500 $ 1,350 $ 3,325
-------- -------- --------- -------- ---------
Total Expenses 1,975 850 500 1,350 3,325
-------- -------- --------- -------- ---------
Net loss $ (1,926) $ (828) $ (484) $ (1,312) $ (3,238)
======== ======== ========= ======== =========
Loss per common share $(0.0028) $(0.0012) $ (0.0007) $(0.0019) $ (0.0047)
======== ======== ========= ======== =========
Weighted average common
shares outstanding 689,700 689,700 689,700 689,700 689,700
======== ======== ========= ======== =========
</TABLE>
F-3
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Statements of Changes in Stockholder's Deficit
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Common Stock Additional Accumulated
------------------- Paid-in from
Shares Amount Capital Inception Total
------ ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, June 4, 1999 (inception) - $ - $ - $ - $ -
Common stock issued,
valued at $.001 per share 689,700 690 890 - 1,580
Net loss for the period from June 4 to December 31, 1999 - - - (1,926) (1,926)
------- ----- ----- -------- --------
Balance, December 31, 1999 689,700 $ 690 $ 890 $ (1,926) $ (346)
------- ----- ----- -------- --------
Net loss for the quarter ending March 31, 2000 - - - (828) (828)
------- ----- ----- -------- --------
Balance, March 31, 2000 689,700 690 890 (2,754) (1,174)
Net loss for the quarter ending June 30, 2000 - - - (484) (484)
------- ----- ----- -------- --------
Balance, June 30, 2000 689,700 $ 690 $ 890 $ (3,238) $(1,658)
======= ===== ===== ======== =======
</TABLE>
F-4
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
For the periods ended
<TABLE>
<CAPTION>
For the period June 4 to Three months Three months Six months For the period June 4 to
December 31, 1999 ended March 31, 2000 ended June 30, 2000 ended June 30, 2000 June 30, 2000
------------------------ -------------------- ------------------- ------------------- ------------------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net loss $ (1,926) $ (828) $ (484) $(1,312) $ (3,238)
Adjustments to
reconcile net loss
to net cash
used in operating
activities:
Accounts payable 1,000 249 251 500 1,500
------- ------ ----- ------ -------
Net cash used in
operating activities (926) (579) (233) (811) (1,738)
------- ------ ----- ------ -------
Cash flows from
investing activities:
Advance from shareholder 1,670 - - - 1,670
Payments on shareholder
loan payable (530) - - - (530)
------- ------ ----- ------ -------
Net cash provided by in
investing activities 1,140 - - - 1,140
------- ------ ----- ------ -------
Cash flows from
financing acitvities:
Proceeds from sale
of common stock 1,580 - - - 1,580
------- ------ ----- ------ -------
Net cash provided by
financing activities 1,580 - - - 1,580
------- ------ ----- ------ -------
Net increase (decrease)
in cash 1,794 (579) (233) (811) 982
Cash, beginning - 1,794 1,215 1,793 -
------- ------ ----- ------ -------
Cash, ending $ 1,794 $ 1,215 $ 982 $ 982 $ 982
======= ====== ===== ====== =======
</TABLE>
F-5
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Description of Business
The financial statements presented are those of Arrow Capital Group, Inc. a
development stage company (the "Company"). The Company was incorporated under
the laws of the State of Nevada on June 4, 1999. The Company's activities, to
date, have been primarily directed towards the raising of capital.
As shown in the financial statement, as of March 31 and June 30, 2000, the
Company has incurred accumulated deficits of $2,754 and $3,238, respectively and
only has cash of $1,216 and $982, respectively. The Company's continued
existence is dependent on its ability to generate sufficient cash flow to meet
its obligations on a timely basis. Accordingly, the financial statements do not
include any adjustment that might be necessary should the Company be unable to
continue in existence. The Company has been exploring sources to obtain
additional equity or debt financing. The Company has also indicated its
intention to participate in one or more as yet unidentified business ventures,
which management will select after reviewing the business opportunities for
their profit or growth potential.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and 1iabilities and their respective tax
bases. 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 reverse. The effect on deferred tax assets and.
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
Loss Per Common Share
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
F-6
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 2 - Stockholders' Equity
Common Stock
The Company authorized 10,000,000 shares of par value $.001 common stock, the
rights and preferences of which were determined by the Board of Directors at the
time of issuance.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred a net
operating loss.
Note 4 - Related Party Transactions
A shareholder advanced the Company $1,140 for operating expenses. This advance
will be repaid from future capital contributions.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
For the periods ending March 31 and June 30, 2000, the Company incurred net
losses of ($828) and ($484), respectively. Explanations of these results are set
forth below.
Revenue
For the periods ending March 31 and June 30, 2000, the Company recorded
investment revenue of $22 and $16, respectively.
Expenses
General and Administrative
General and administrative costs consist primarily of professional and
consulting fees. Significant costs are attributed to the Company becoming a
reporting public company. This status will increase audit and legal costs
significantly. In relation to the Company becoming a public company, the cost of
corporate relations will also increase as quarterly reports and other investor
information is required.
F-7
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
The Company incurred expenses of $850 and $500, respectively during the periods
ending March 31 and June 30, 2000. This was due to the high professional and
legal costs related to the Company's operations.
Liquidity and Capital Resources
During the periods ending March 31 and June 30, 2000, the Company decreased cash
($577) and ($236), respectively, primarily from operations.
At March 31 and June 30, 2000, the Company had current assets of $1,216 and $982
and current liabilities of $2,390 and $2,640, respectively.
Implementation of the Company's business plan may require capital resources
substantially greater than those currently available to the Company. The Company
may determine, depending on the opportunities available to it, to seek
additional debt or equity financing to fund the cost of acquiring an operating
entity. There can be no assurance that additional equity financing will be
available. If neither additional debt or equity financing is available, the
Company might seek loans. In addition, the Company might seek some sort of
strategic alliance with another company that would provide equity to the
Company.
To the extent that the Company finances expansion through the issuance of
additional equity securities, any such issuance would result in dilution of the
interests of the Company's stockholders. Additionally, to the extent that the
Company incurs indebtedness or issues debt securities to finance expansion
activities, it will be subject to all of the risks associated with incurring
substantial indebtedness, including the risks that interest rates may fluctuate
and cash flow may be insufficient to pay the principal of , and interest on, any
such indebtedness.
Inflation
The Company believes that the impact of inflation and changing prices on its
operations since commencement of operations has been negligible.
Seasonality
The Company does not deem its revenues to be seasonal and any effect would be
immaterial.
F-8
<PAGE>
ARROW CAPITAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
FOR THE PERIOD JUNE 4, 1999 (INCEPTION)
THROUGH DECEMBER 31, 1999
<PAGE>
ARROW CAPITAL GROUP, INC.
TABLE OF CONTENTS
Page No.
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance sheet.............................................. 2
Statement of Operations.................................... 3
Statement of Changes in Stockholders' Deficit.............. 4
Statement of Cash Flows.................................... 5
Notes to Financial Statement............................... 6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Arrow Capital Group, Inc.
Reno, Nevada
I have audited the accompanying balance sheet of Arrow Capital Group, Inc. (a
Nevada corporation in the developement stage), as of December 31, 1999, and the
related statement of operations, stockholders' deficit, and cash flows for the
period from June 4, 1999 (inception), to December 31, 1999. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above presents fairly, in
all material respects, the financial position of Arrow Capital Group, Inc., as
of December 31, 1999, and the results of its operations and its cash flows for
the period from June 4, 1999 (inception) to December 31, 1999, in conformity
with generally accepted accounting principles.
July 10, 2000
Suwanee, GA
Tim Palmieri
Certified Public Accountant
F-1
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1999
ASSETS
Current Assets:
Cash $ 1,794
-------
Other Assets: -
-
$ 1,794
=======
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities:
Accounts payable $ 1,000
Shareholder loan payable 1,140
-------
Total Current Liabilities 2,140
-------
Stockholder's Deficit: (Note 2)
Common stock; $.001 par value; authorized- 10,000,000 shares;
issued and outstanding - 689,700 shares 690
Additional paid-in capital 890
Deficit accumulated during the development stage (1,926)
-------
Total stockholder's Deficit (346)
-------
$ 1,794
=======
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Statement of Operations
For the period from June 4, 1999 (inception) to December 31, 1999
Revenues:
Investment income $ 49
--------
49
Costs and expenses:
General and administrative $ 1,975
--------
Total Expenses 1,975
--------
Net loss $ (1,926)
========
Loss per common share $(0.0028)
========
Weighted average common shares outstanding 689,700
========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Statement of Changes in Stockholder's Deficit
For the period from June 4, 1999 (inception) to December 31, 1999
<TABLE>
<CAPTION>
Deficit
Common Stock Additional Accumulated
------------------------ Paid-in from
Shares Amount Capital Inception Total
------ ------ ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Balance, June 4, 1999 (inception) - $ - $ - $ - $ -
Common stock issued,
valued at $.001 per share 689,700 690 890 - 1,580
Net loss for the period - - - (1,926) (1,926)
------- ----- ----- -------- ------
Balance, December 31, 1999 689,700 $ 690 $ 890 $ (1,926) $ (346)
======= ===== ===== ======== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Statement of Cash Flows
For the period June 4, 1999 (inception) to December 31, 1999
Cash flows from operating activities:
Net loss $(1,926)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Accounts payable 1,000
-------
Net cash used in operating activities (926)
-------
Cash flows from investing activities:
Advance from shareholder 1,670
Payments on shareholder loan payable (530)
-------
Net cash provided by in investing activities 1,140
-------
Cash flows from financing acitvities:
Proceeds from sale of common stock 1,580
-------
Net cash provided by financing activities 1,580
-------
Net increase in cash 1,794
Cash, beginning -
-------
Cash, ending $ 1,794
=======
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Description of Business
The financial statements presented are those of Arrow Capital Group, Inc. a
development stage company (the "Company"). The Company was incorporated under
the laws of the State of Nevada on June 4, 1999. The Company's activities, to
date, have been primarily directed towards the raising of capital.
As shown in the financial statement, as of December 31, 1999, the Company has
incurred an accumulated deficit of $1,926 and only has $1,794 in cash. The
Company's continued existence is dependent on its ability to generate sufficient
cash flow to meet its obligations on a timely basis. Accordingly, the financial
statements do not include any adjustment that might be necessary should the
Company be unable to continue in existence. The Company has been exploring
sources to obtain additional equity or debt financing. The Company has also
indicated its intention to participate in one or more as yet unidentified
business ventures, which management will select after reviewing the business
opportunities for their profit or growth potential.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and 1iabilities and their respective tax
bases. 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 reverse. The effect on deferred tax assets and.
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
Loss Per Common Share
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
F-6
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 2 - Stockholders' Equity
Common Stock
The Company authorized 10,000,000 shares of par value $.001 common stock, the
rights and preferences of which were determined by the Board of Directors at the
time of issuance.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred a net
operating loss.
Note 4 - Related Party Transactions
A shareholder advanced the Company $1,140 for operating expenses. This advance
will be repaid from future capital contributions.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
For the period ended December 31, 1999, the Company incurred a net loss of
$(1,926). Explanations of these results are set forth below.
Revenue
For the year ended December 31, 1999, the Company recorded investment revenue of
$49.
Expenses
General and Administrative
General and administrative costs consist primarily of professional and
consulting fees. Significant costs are attributed to the Company becoming a
reporting public company. This status will increase audit and legal costs
significantly. In relation to the Company becoming a public company, the cost of
corporate relations will also increase as quarterly reports and other investor
information is required.
F-7
<PAGE>
ARROW CAPITAL GROUP, INC.
(A Development Stage Company)
Notes to Financial Statements
The Company incurred expenses of $1,975 during the period ended December 31,
1999. This was due to the high professional and legal costs related to the
Company's operations.
Liquidity and Capital Resources
During the period ended December 31, 1999, the Company increased cash $1,794
primarily from capital contributions. Cash used for operations, approximately
$926, resulted from the Company's net loss.
At December 31, 1999, the Company had current assets of $1,794 and current
liabilities of $2,140.
Implementation of the Company's business plan may require capital resources
substantially greater than those currently available to the Company. The Company
may determine, depending on the opportunities available to it, to seek
additional debt or equity financing to fund the cost of acquiring an operating
entity. There can be no assurance that additional equity financing will be
available. If neither additional debt or equity financing is available, the
Company might seek loans. In addition, the Company might seek some sort of
strategic alliance with another company that would provide equity to the
Company.
To the extent that the Company finances expansion through the issuance of
additional equity securities, any such issuance would result in dilution of the
interests of the Company's stockholders. Additionally, to the extent that the
Company incurs indebtedness or issues debt securities to finance expansion
activities, it will be subject to all of the risks associated with incurring
substantial indebtedness, including the risks that interest rates may fluctuate
and cash flow may be insufficient to pay the principal of , and interest on, any
such indebtedness.
Inflation
The Company believes that the impact of inflation and changing prices on its
operations since commencement of operations has been negligible.
Seasonality
The Company does not deem its revenues to be seasonal and any effect would be
immaterial.
F-8
