CAREY INTERNATIONAL INC, S-1/A, 1997-05-05

CAREY INTERNATIONAL INC
S-1/A, 1997-05-05
LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRANS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 1997

REGISTRATION NO. 333-22651
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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CAREY INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 4119 52-1171965
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION
ORGANIZATION) CODE NUMBER)

4530 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20016
(202) 895-1200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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VINCENT A. WOLFINGTON
CAREY INTERNATIONAL, INC.
4530 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20016
(202) 895-1200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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COPIES OF COMMUNICATIONS TO:

JOHN P. DRISCOLL, JR., ESQUIRE NEIL GOLD, ESQUIRE
NUTTER, MCCLENNEN & FISH, LLP FULBRIGHT & JAWORSKI L.L.P.
ONE INTERNATIONAL PLACE 666 FIFTH AVENUE
BOSTON, MA 02110 NEW YORK, NY 10103
(617) 439-2000 (212) 318-3000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If the Form is a post-effective amendment filed pursuant to Rule 426(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS BE ACCEPTED TO BUY PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED MAY 5, 1997

2,900,000 SHARES

CAREY INTERNATIONAL, INC.
COMMON STOCK

All of the shares of Common Stock offered hereby are being offered by Carey
International, Inc. ("Carey" or the "Company").

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering
price will be between $10.00 and $12.00 per share. See "Underwriting" for a
discussion of the factors considered in determining the initial public offering
price. The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "CARY."

SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
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<S> <C> <C> <C>
Per Share.................................. $ $ $
Total(3)................................... $ $ $
</TABLE>
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(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.

(2) Before deducting offering expenses payable by the Company, estimated at
$1,600,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 435,000 additional shares of Common Stock solely to cover over-
allotments, if any. If the Underwriters exercise this option in full, the
total Price to Public, Underwriting Discounts and Commissions and Proceeds
to Company will be $ , $ , and $ , respectively. See "Underwriting."

The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the office of Montgomery Securities on or about , 1997.

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Montgomery Securities Ladenburg Thalmann & Co. Inc.

, 1997

<PAGE>

[Artwork consisting of a "gate fold" containing the following:

(i) A map of the world indicating the various locations of Carey's
subsidiaries, licensees, and affiliates; and

(ii) A montage containing (among other items) (A) the Carey "logo," (B)
various photographs of Carey limousines and chauffeurs, and (C) a photograph of
a Carey reservation agent.]

The Company intends to furnish its stockholders with annual reports
containing audited financial statements reported on by independent auditors
for each fiscal year and quarterly reports containing unaudited financial
statements for the first three quarters of each fiscal year.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE,
PURCHASES OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE
COMMON STOCK MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information
contained in this Prospectus (i) gives effect to the Recapitalization (as
defined herein) of the Company (see "Recapitalization"), (ii) does not give
effect to 1,012,320 shares of Common Stock issuable upon the exercise or
conversion of outstanding options, warrants and a convertible note or 150,000
shares of Common Stock issuable pursuant to warrants described under the
caption "Underwriting" and (iii) assumes no exercise of the Underwriters' over-
allotment option to purchase 435,000 shares of Common Stock.

THE COMPANY

Carey International, Inc. ("Carey" or the "Company") is one of the world's
largest chauffeured vehicle service companies, providing services through a
worldwide network of owned and operated companies, licensees and affiliates
serving 420 cities in 65 countries. The "Carey" brand name has represented
quality chauffeured vehicle service since the 1920s. The Company owns and
operates its service providers in New York, San Francisco, Los Angeles, London,
Washington D.C., South Florida and Philadelphia. In addition, the Company
generates revenues from licensing the "Carey" name and providing central
reservation, billing and sales and marketing services to its licensees. The
Company's worldwide network also includes affiliates in locations in which the
Company has neither owned and operated companies nor licensees. Over the past
five years, the Company has invested significant capital in developing its
reservation, central billing and worldwide service infrastructure. By
leveraging its current infrastructure and position as a market leader, the
Company intends to consolidate the highly fragmented chauffeured vehicle
service industry through the acquisition of: (i) current Carey licensees, (ii)
additional companies in markets in which the Company already owns and operates
a chauffeured vehicle service company, and (iii) companies in other strategic
markets in North America, Europe and the Pacific rim of Asia.

The Carey network utilizes chauffeured sedans, limousines, vans and minibuses
to provide services for airport pick-ups and drop-offs, inter-office transfers,
business and association meetings, conventions, roadshows, promotional tours,
special events, incentive travel and leisure travel. Businesses and business
travelers utilize the Company's services primarily as a management tool, to
achieve more efficient use of time and other resources.

Carey's worldwide network of chauffeured vehicle service companies allows it
to provide services with consistently high quality to its customers in
virtually every major city in the expanding global travel market. The network
is linked to over 300,000 reservation terminals in travel agencies, corporate
travel departments and government offices by the Carey International
Reservation System (the "CIRS"), the chauffeured vehicle service industry's
most extensive centralized global reservation system.

The Company estimates that the United States chauffeured vehicle service
industry generated revenues of approximately $3.9 billion in 1996, and has
undergone steady growth in recent years, with revenues increasing at a compound
annual growth rate of 10.9% between 1990 and 1996. The industry is highly
fragmented, with approximately 9,000 companies utilizing over 100,000 vehicles.
The Company believes that during 1996 no chauffeured vehicle service company
accounted for more than 2% of total United States industry revenues. The
Company also believes that similar fragmentation exists in the chauffeured
vehicle service industry outside the United States.

3
<PAGE>

The Company's objective is to increase its profitability and its market share
in the chauffeured vehicle service industry by implementing the following
growth strategies:

Expand through Acquisitions. Carey believes that there are significant
opportunities to acquire additional chauffeured vehicle service companies
that would benefit from the capital and management resources that the
Company can provide. Carey intends to acquire current Carey licensees, as
well as additional chauffeured vehicle service companies both in markets in
which the Company already owns and operates such a business and in other
strategic regions in North America, Europe and the Pacific rim of Asia.
Carey believes it has a competitive advantage in acquiring licensees
because of a right of first refusal contained in a substantial majority of
its domestic license agreements. The Company believes that it has less than
a 10% market share in each of the markets in which it owns and operates a
chauffeured vehicle service company, and that there is significant
potential for it to expand its business in such markets through
acquisitions. As the Company acquires additional chauffeured vehicle
service companies, it anticipates that cost savings can be achieved through
the consolidation of certain administrative functions and the elimination
of redundant facilities, equipment and personnel.

Carey has successfully begun to implement its acquisition strategy. Since
November 1991, the Company has acquired 15 chauffeured vehicle service
companies, including, since January 1995, two of its licensees (in Ft.
Lauderdale/Miami and San Francisco) and six additional chauffeured vehicle
service companies (two in each of Boca Raton and San Francisco, and one in
each of Washington, D.C. and London). Upon the closing of this offering,
the Company will acquire Manhattan International Limousine Network Ltd. and
an affiliated company ("Manhattan Limousine"), one of the largest
chauffeured vehicle service companies in the metropolitan New York area and
the operator of a network of approximately 300 affiliates worldwide.
Manhattan Limousine generated revenues of approximately $18.4 million
during its fiscal year ended September 30, 1996, representing approximately
23.4% of the Company's fiscal 1996 revenues on a pro forma basis. See
"Acquisition of Manhattan Limousine" and "Pro Forma Consolidated Financial
Statements."

Increase International Market Share. Approximately 12.8% of the Company's
revenue, net was derived from services performed outside the United States
during its fiscal year ended November 30, 1996. Of these international
revenues, approximately 60.8% was generated by the Company's owned and
operated business in London, approximately 38.1% was generated by the
Company's international licensees and the remainder was generated by the
Company's international affiliates. Carey believes that its network can
capture a significant portion of the growing international market for
chauffeured vehicle services by acquiring or licensing additional
chauffeured vehicle service companies and otherwise implementing the Carey
system outside the United States. The Company intends to increase its
international presence by intensifying its sales and marketing efforts,
strengthening its relationships with significant domestic and international
business travel arrangers, and capitalizing on the capacity of the CIRS to
operate on a global scale. By enhancing its international presence, the
Company also expects to increase its revenues from providing chauffeured
vehicle services to international travelers both visiting the United States
and travelling abroad.

Expand Licensee Network Worldwide. The Company will seek to expand its
worldwide network and generate additional revenues from license and
marketing fees by licensing additional chauffeured vehicle service
companies in smaller markets that do not justify a Company-owned presence.
Ultimately, as these less strategic markets grow in size and importance to
the Company, the licensees in such markets may become acquisition
candidates for the Company.

4
<PAGE>

the profitability of the chauffeur and the Company. Carey's independent
operator program allows the Company to reduce its labor and capital costs,
convert fixed costs to variable costs and generate revenues from fees paid
by independent operators.

In 1979, the Company was organized as a Delaware corporation and commenced
operations by acquiring certain rights to the "Carey" name held by a
predecessor company. Predecessor companies operated chauffeured vehicle service
businesses under the "Carey" name since the 1920s. The Company's principal
executive offices are located at 4530 Wisconsin Avenue, N.W., Washington, D.C.
20016. Its telephone number at that location is (202) 895-1200. As used herein,
unless the context otherwise requires, "Carey" or the "Company" refers to Carey
International, Inc. and its subsidiaries.

THE OFFERING

<TABLE>
<C> <S>
Common Stock being offered......................... 2,900,000 shares
Common Stock to be outstanding after the offering.. 6,377,026 shares(1)
Use of proceeds.................................... To repay certain
indebtedness, redeem
certain shares of
preferred stock, pay the
cash portion of the
purchase price for
Manhattan Limousine, fund
other acquisitions and for
general corporate
purposes, including
working capital
Proposed Nasdaq National Market symbol............. CARY
</TABLE>
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(1) Excludes: (i) 1,012,320 shares of Common Stock issuable upon the exercise
or conversion of outstanding options, warrants and a convertible note, (ii)
28,662 shares of Common Stock which are authorized but have not yet been
granted under options pursuant to the Company's 1987 Stock Option Plan and
1992 Stock Option Plan, (iii) 150,000 shares of Common Stock issuable upon
the exercise of warrants described under the caption "Underwriting," (iv)
650,000 shares of Common Stock authorized pursuant to the 1997 Equity
Incentive Plan, of which options to purchase 411,500 shares of Common Stock
are outstanding, and (v) 100,000 shares of Common Stock authorized pursuant
to the Stock Plan for Non-Employee Directors, of which options to purchase
22,500 shares of Common Stock are outstanding.

5
<PAGE>

SUMMARY AND PRO FORMA CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------
FISCAL YEAR ENDED NOVEMBER 30, FEB. 29, 1996 FEB. 28, 1997
--------------------------------------------------------------- ------------- -------------------------
1992 1993 1994 1995 1996
------- -------- ------- ------- --------------------------
ACTUAL PRO FORMA(1) ACTUAL ACTUAL PRO FORMA(2)
---------- ------------ ------------- --------- ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED
STATEMENT OF
OPERATIONS DATA:
Revenue, net.... $27,669 $30,319 $35,525 $43,484 $59,505 $78,883 $11,558 $14,141 $19,613
Cost of reve-
nue............ 20,199 22,751 24,954 29,943 40,438 52,344 7,904 9,756 13,149
------- -------- ------- ------- ---------- --------- ------- --------- ---------
Gross profit.... 7,470 7,568 10,571 13,541 19,067 26,539 3,654 4,385 6,464
Selling, general
and
administrative
expense........ 5,939 8,174 9,487 12,419 15,078 21,192 3,361 3,819 5,504
------- -------- ------- ------- ---------- --------- ------- --------- ---------
Operating income
(loss)......... 1,531 (606) 1,084 1,122 3,989 5,347 293 566 960
Interest income
(expense) and
other income
(expense)...... (819) (1,308) (1,194) (1,292) (1,277) (253) (340) (245) 23
------- -------- ------- ------- ---------- --------- ------- --------- ---------
Income (loss)
before
provision
(benefit) for
income taxes... 712 (1,914) (110) (170) 2,712 5,094 (47) 321 983
Provision
(benefit) for
income taxes... 53 10 19 25 (104) 2,155 11 154 413
------- -------- ------- ------- ---------- --------- ------- --------- ---------
Net income
(loss)......... $ 659 $ (1,924) $ (129) $ (195) $ 2,816 $ 2,939 $ (58) $ 167 $ 570
======= ======== ======= ======= ========== ========= ======= ========= =========
Pro forma net
income per
share.......... $0.89(3) $0.49 $0.07(3) $0.10
========== ========= ========= =========
Weighted average
shares
outstanding.... 3,510,020(3) 6,023,785 3,518,083(3) 5,971,960
</TABLE>

<TABLE>
<CAPTION>
FEBRUARY 28, 1997
---------------------
NOVEMBER 30,
1996 ACTUAL PRO FORMA(4)
------------ ------- ------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficit)................... $(1,732) $(1,029) $ 81
Total assets................................ 42,526 39,378 73,703
Long-term debt, less current maturities..... 11,192 11,327 1,719
Deferred revenue(5)......................... 6,181 6,629 13,500
Total stockholders' equity.................. $ 6,672 $ 6,844 $39,376
</TABLE>
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(1) Gives effect to the following events as if they had occurred on December 1,
1995: (i) the acquisition of Camelot Barthropp Ltd., completed February
1996, including the interest cost related to indebtedness incurred in
connection with such acquisition, (ii) the acquisition of Manhattan
Limousine (using statement of operations data for Manhattan Limousine's
fiscal year ended September 30, 1996) and the amortization of associated
goodwill, (iii) the conversion of certain preferred stock and subordinated
debt into Common Stock, see "Recapitalization," and the elimination of
interest expense associated with the subordinated debt; (iv) the issuance
of shares of Common Stock to (a) repay certain existing debt of the
Company, (b) pay the cash portion of the purchase price for Manhattan
Limousine, (c) repay certain debt assumed in connection with the
acquisition of Manhattan Limousine, (d) redeem certain preferred stock of
the Company and (e) pay the stock portion of the purchase price in
connection with the acquisition of Manhattan Limousine, (v) the elimination
of interest expense associated with debt repaid from the proceeds of this
offering and (vi) other adjustments as described under "Pro Forma
Consolidated Financial Statements" and the notes thereto.
(2) Gives effect to the events set forth in clauses (ii) through (vi) of note
(1) above as if they had occurred on December 1, 1995, except that, with
respect to clause (ii), the statement of operations data is for Manhattan
Limousine's three months ended December 31, 1996.
(3) Gives effect to the conversion of certain preferred stock and subordinated
debt into Common Stock and the elimination of associated interest expense
on the subordinated debt as a result of the Recapitalization. See Notes 2
and 18 to the Company's Consolidated Financial Statements.

(4) Reflects (i) the Recapitalization, see "Recapitalization," (ii) the
acquisition of Manhattan Limousine, see "Acquisition of Manhattan
Limousine," and (iii) the issuance and sale of the 2,900,000 shares of
Common Stock offered hereby (at an assumed offering price of $11.00 per
share less estimated underwriting discounts and commissions and offering
expenses) and the application of the net proceeds therefrom as described
under "Use of Proceeds."
(5) Represents the balance of the fees deferred in connection with independent
operator agreements less amounts previously recognized. Such fees are
recognized ratably over the terms of the agreements, which typically range
from 10 to 20 years. See the Notes to the Company's Consolidated Financial
Statements.

<PAGE>

RISK FACTORS

The following factors should be considered, together with the other
information in this Prospectus, in evaluating an investment in the Company.
This Prospectus contains certain forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from the results anticipated in these forward-looking statements as a result
of certain of the factors set forth in the following risk factors and
elsewhere in this Prospectus.

HISTORY OF LOSSES

The Company has generated a net loss in three of the past four fiscal years.
Although the Company was profitable during the fiscal year ended November 30,
1996, there can be no assurance that the Company will be able to sustain
profitability.

RISKS ASSOCIATED WITH ACQUISITION OF MANHATTAN LIMOUSINE

The acquisition of Manhattan Limousine will be consummated simultaneously
with this offering. Manhattan Limousine generated pro forma revenues of
approximately $18.4 million during its fiscal year ended Septem- ber 30, 1996,
representing approximately 23.4% of the Company's fiscal 1996 revenues on a
pro forma basis. As a result of the acquisition of Manhattan Limousine, nearly
half of the Company's revenues will be generated from services provided within
the New York City metropolitan area. The eventual integration of Manhattan
Limousine, which is the Company's largest acquisition to date, will place
significant demands on the Company's management and infrastructure, and there
can be no assurance that Manhattan Limousine's business will be successfully
integrated with that of the Company, that the Company will be able to realize
operating efficiencies or eliminate redundant costs, or that the combined
business will be operated profitably. Further, there can be no assurance that
customers of Manhattan Limousine will continue to do business with the
Company. The failure of the Company in any of these respects could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Use of Proceeds" and "Acquisition of Manhattan
Limousine."

RISKS RELATED TO THE COMPANY'S ACQUISITION STRATEGY

The Company intends to grow primarily through the acquisition of additional
chauffeured vehicle service companies. Increased competition for acquisition
candidates may develop, in which event there may be fewer acquisition
opportunities available to the Company as well as higher acquisition costs for
the opportunities that are available. There can be no assurance that the
Company will be able to identify, acquire or profitably manage additional
businesses or successfully integrate any acquired businesses into the Company
without substantial costs, delays, or other operational or financial problems.
There also can be no assurance that the Company will be able to purchase its
licensees that operate in markets in which the Company does not own and
operate a chauffeured vehicle service company.

The success of any acquisition will depend upon the Company's ability to
introduce automation and management systems, to convert salaried chauffeurs
employed by the acquired businesses to independent operators and to integrate
the acquired business with the Company's existing operations. Customer
dissatisfaction or performance problems at a single acquired company could
have an adverse effect on the reputation of the Company and the Company's
sales and marketing initiatives. There can be no assurance that any businesses
acquired in the future will achieve anticipated revenues and earnings.
Further, acquisitions involve a number of special risks, including possible
adverse effects on the Company's operating results, diversion of management's
attention, failure to retain key personnel at an acquired company, risks
associated with unanticipated events or liabilities and amortization of
goodwill or other acquired intangible assets, some or all of which could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Acquisition Strategy."

7
<PAGE>

RISKS RELATED TO ACQUISITION FINANCING

The Company may choose to finance future acquisitions by using shares of its
Common Stock for a portion or all of the consideration to be paid. In the
event that the Common Stock does not maintain a sufficient market value, or
potential acquisition candidates are otherwise unwilling to accept Common
Stock as part of the consideration for the sale of their businesses, the
Company might not be able to utilize Common Stock as consideration for
acquisitions and would be required to utilize more of its cash resources, if
available, in order to maintain its acquisition program. If the Company does
not have sufficient cash resources, its growth could be limited unless it is
able to obtain additional capital through debt or equity financings. There can
be no assurance that such financing will be available if and when needed or on
terms acceptable to the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."

RISKS ASSOCIATED WITH RAPID GROWTH

As a result of the Manhattan Limousine acquisition, the continued
implementation of the Company's acquisition strategy and the expansion of the
Company's licensee network, the Company may experience rapid growth which
could place additional demands on the Company's administrative, operational
and financial resources. Managing future growth will depend on a number of
factors, including the maintenance of the quality of services the Company
provides to its customers, and the recruitment, motivation and retention of
qualified chauffeurs and other personnel. Sustaining growth will require
enhancements to the Company's operational and financial systems as well as
additional management, operational and financial resources. There can be no
assurance that the Company will be able to manage its expanding operations
effectively or that it will be able to maintain or accelerate its growth, and
any failure to do so could have a material adverse effect on the Company's
business, financial condition and results of operations.

SEASONALITY AND QUARTERLY FLUCTUATIONS

The Company believes that its future operating results may continue to be
subject to quarterly variations caused by such factors as seasonal business
travel, variable scheduling of special events and the timing of acquisitions
by the Company. The Company's least profitable quarter generally has been the
first quarter (ending February 28 or 29), and its most profitable quarter
generally has been the fourth quarter (ending November 30). The Company's
operating results may be subject to considerable fluctuations caused by
special events, such as business and trade association meetings and
conventions and sporting events with national or international participation,
which do not necessarily recur annually, may not be held at the same time of
year and may not always be located in a city in which the Company owns and
operates a chauffeured vehicle service company. In addition, adverse economic
conditions may impact the Company's operating results by reducing the overall
number of road shows and promotional tours. All of these factors can cause
significant fluctuations in quarterly results of operations. Accordingly,
results in any fiscal quarter may not be indicative of results of future
quarters. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Quarterly Results of Operations."

RISKS ASSOCIATED WITH LICENSEE OPERATIONS

The Company has 38 licensees serving 106 cities in the United States and 24
licensees serving 105 cities outside the United States. Although a component
of the Company's strategy is to increase the number of licensees, there can be
no assurance that the Company will be able to attract qualified licensees in
desired locations. The failure of the Company to attract new licensees or the
failure of the Company's licensees to operate successfully could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the failure of one or more of the
Company's licensees to maintain the Company's service standards and conform to
the Carey system could have a material adverse effect on the reputation of the
Carey network and the Company's business, financial condition and results of
operations.

In addition, the Company is subject to federal regulation and certain state
laws which govern the offer and sale of franchises. Most state franchise laws
impose substantive requirements on the franchise agreement,

8
<PAGE>

including limitations on non-competition provisions and termination or non-
renewal of a franchise. Some states require that certain materials be
registered before franchises can be offered or sold in that state. Violations
of federal regulations and the state franchising laws could result in civil
penalties against the Company and civil and criminal penalties against the
executive officers of the Company. While the Company believes that it has
operated in compliance with federal and state franchise laws, no assurance can
be given that the Company will not be required to cease offering and selling
licenses in certain states because of future changes in franchise laws or the
Company's failure or inability to comply with existing franchise laws.

STATUS OF INDEPENDENT OPERATORS

The Company's ability to benefit from conversions of salaried chauffeurs to
independent operators will depend, in part, on the Company's continued ability
to classify independent operators as third party contractors rather than as
employees. The Company does not pay or withhold any federal or state
employment tax with respect to or on behalf of independent operators. The
Internal Revenue Service (the "IRS") previously challenged the Company's
independent operator policy at its owned and operated business in
Philadelphia, but in March 1997 agreed to settle the challenge without an
adjudication of a violation of IRS regulations. In September 1996, the IRS
proposed guidelines that chauffeured vehicle service providers such as the
Company can follow in order to treat independent operators as third party
contractors rather than as employees. These proposed guidelines distinguish a
third party contractor from an employee using several factors based upon
whether or not the individual, among other things, (i) invests cash in the
venture, (ii) has the potential to realize a profit or loss, (iii) can make
his or her service available to the public and (iv) is required to comply with
company policies regarding how and when to provide services. The Company
believes that its practices substantially conform to these proposed
guidelines, and that, as a result, its independent operators will be treated
as third party contractors. If, however, the Company's practices are
determined not to conform with the guidelines in the form in which they may be
adopted, or if it is adjudicated that the Company is required to treat
independent operators as employees, the Company could become responsible for
certain past and future employment taxes. There can be no assurance that, in
the event of such an adverse adjudication, there will not be a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Independent Operators."

INDEPENDENT OPERATOR FINANCING

An important component of the Company's business strategy for its owned and
operated companies involves the preferred use of independent operators instead
of salaried chauffeurs operating Company-owned vehicles. A chauffeur becomes
an independent operator by signing an agreement to pay a fee to the Company
ranging from $45,000 to $60,000. The payment of independent operator fees
historically has been financed by the Company, financing companies or banks.
Prior to September 1996, the Company usually sold to third parties the
independent operator notes initially financed by it. Since September 1996, the
Company has ceased selling such notes to third parties. Because the Company
now bears most of the risk relating to payment of these notes, significant
defaults in their payment could have a material adverse effect on the
Company's business, financial condition and results of operations. Each new
independent operator is required to own or obtain his or her vehicle. The cost
of a new vehicle ranges from $35,000 to $65,000, depending upon whether it is
a sedan or a limousine and the features included in the vehicle. The Company
generally does not finance vehicle purchases by its independent operators. As
a result, the ability of independent operators to obtain their own vehicles, a
requirement for conversions from salaried chauffeurs to independent operators,
will depend upon the availability of third party vehicle financing for
independent operators. The inability of independent operators to obtain
vehicle financing will adversely affect the Company's ability to utilize
independent operators, and would have a material adverse effect on the
Company's business, financial condition and results of operations. There can
be no assurance that such financing will be available if and when needed or on
terms acceptable to potential independent operators. See "Business--
Independent Operators."

POTENTIAL ADVERSE EFFECT OF LITIGATION

The Company, certain of its subsidiaries and certain of its officers and
directors currently are named as defendants in a complaint, purporting to be a
class action, alleging that the plaintiff and others similarly situated

9
<PAGE>

suffered monetary damages as a result of misrepresentations by the defendants
in their use of a surface transportation billing charge. While the Company
denies all claims made against it, it has reached a tentative settlement with
the plaintiff and plaintiff's counsel. The settlement is subject to court
approval and acceptance by the proposed class. There can be no assurance that
the proposed class will agree to, or that the court will approve, the
settlement. Moreover, there can be no assurance that claims under the terms of
this or any other settlement entered into by the Company will not adversely
affect the Company's business, financial condition and results of operations.
Defense of lawsuits against the Company generally can be expensive and time-
consuming, regardless of the outcome, and an adverse result in a lawsuit could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business--Legal Proceedings."

FACTORS AFFECTING TRAVEL

The Company is subject to risks generally affecting levels of business
travel, including economic cycles, political changes, terrorist threats or
acts and technological advances. The Company cannot predict the likelihood of
occurrence of any such events. If the occurrence of any such event
significantly reduces domestic or international travel, there could be a
material adverse effect on the Company's business, financial condition and
results of operations.

INSURANCE COVERAGE AND CLAIMS

The Company is exposed to claims for personal injury or death and property
damage as a result of automobile accidents involving chauffeured vehicles
operated by its employees and independent operators and by its licensees and
their drivers. The Company maintains, and the Company's independent operators
are required to maintain, levels of insurance which the Company believes to be
adequate. The Company's licensees are required to maintain adequate levels of
insurance and are required to name the Company as an additional insured on
their insurance policies. There can be no assurance, however, that the limits
and the scope of any such insurance coverage will be adequate. The cost of
maintaining personal injury, property damage and workers' compensation
insurance is significant. The Company and its independent operators and
licensees could experience higher insurance premiums as a result of adverse
claims experiences, general increases in premiums by insurance carriers or
both. Significant increases in such premiums could have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business--Independent Operators" and "Business--Insurance."

DEPENDENCE ON KEY PERSONNEL

While the Company has numerous senior managers with many years of experience
in the chauffeured vehicle service industry, the Company's success is
dependent on the efforts, abilities and leadership of its executive officers,
particularly, Vincent A. Wolfington, the Company's Chairman and Chief
Executive Officer, and Don R. Dailey, the Company's President. The Company
currently does not have employment agreements with any of its executive
officers. The loss of the services of one or more of such officers could have
a material adverse effect on the Company's business, financial condition and
results of operations.

COMPETITION

The chauffeured vehicle service industry is highly competitive and
fragmented with few significant national participants operating multi-city
reservation systems. Each local market usually contains numerous local
participants as well as a few companies offering regional and national
service. Chauffeured vehicle service companies compete primarily on the basis
of price, quality, scope of service and dependability. The Company also
competes with service providers offering alternative modes of transportation,
such as buses, jitney services, taxis, radio cars and rental cars. The Company
competes both for customers and for possible acquisitions. The Company expects
its business to become more competitive as existing competitors expand and
additional companies enter the market. Certain of the Company's existing
competitors have, and any new competitors that enter the industry may have,
access to significantly greater financial resources than the Company.
Competitive market conditions could have a material adverse affect on the
Company's business, financial condition and results of operations. See
"Business--Competition."

10
<PAGE>

POSSIBLE FUTURE SALES OF SHARES

Sales of substantial amounts of Common Stock in the public market after this
offering under Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), or otherwise, or the perception that such sales could
occur, may adversely affect prevailing market prices of the Common Stock and
could impair the future ability of the Company to raise capital through an
offering of its equity securities or to use such securities as consideration
in acquisitions. Upon the completion of this offering, the holders of the
Company's securities who did not purchase Common Stock in this offering will
beneficially own 4,639,346 shares of Common Stock, including (i) an aggregate
of 1,162,320 shares issuable upon the exercise of outstanding options,
warrants and a convertible note and (ii) an aggregate of 218,181 shares issued
in connection with the acquisition of Manhattan Limousine (assuming an initial
public offering price of $11.00 per share), all of which will be "restricted
securities" within the meaning of the Securities Act. Subject to the
contractual lockup provisions discussed below and unless the resale of the
shares, or the sale of shares (in the case of employee benefit plan shares),
is registered under the Securities Act, these restricted shares may not be
sold in the open market unless in compliance with the applicable requirements
of Rule 144. The Company and the beneficial owners of at least 4,000,000 of
such shares have agreed not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock, or any securities convertible into or
exercisable or exchangeable for Common Stock, for a period of 180 days after
the date of this Prospectus without the prior written consent of Montgomery
Securities, except for (i) in the case of the Company, Common Stock issued
pursuant to any employee benefit plans described herein or in connection with
acquisitions and (ii) in the case of the Company's directors and executive
officers, the exercise of stock options pursuant to benefit plans described
herein and shares of Common Stock disposed of as bona fide gifts, subject, in
each case, to any remaining portion of the 180-day period applying to any
shares so issued or transferred. In connection with future acquisitions, the
Company may issue shares of Common Stock which, if the Company also files a
registration statement under the Securities Act with respect to such shares,
may be subject to immediate resale, subject to any remaining portion of the
180-day period applying to any shares so issued. See "Shares Eligible for
Future Sale" and "Underwriting."

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Restated Certificate of Incorporation,
By-laws and Delaware law could, together or separately, discourage potential
acquisition proposals, delay or prevent a change in control of the Company and
limit the price that certain investors might be willing to pay in the future
for shares of the Common Stock. Those provisions, among other things, provide
for a classified Board of Directors, allow the Board of Directors to issue,
without further stockholder approval, up to 1,000,000 shares of preferred
stock with rights and privileges that could be senior to the Common Stock,
prohibit the stockholders from calling special meetings of stockholders,
restrict the ability of stockholders to nominate directors and submit
proposals to be considered at stockholders' meetings, impose a supermajority
voting requirement in connection with stockholders' amendments to the By-laws
and prohibit stockholders after this offering from acting by written consent
in lieu of a meeting. The Company also is subject to Section 203 of the
Delaware General Corporation Laws (the "DGCL") which, subject to certain
exceptions, prohibits a Delaware corporation from engaging in any of a broad
range of business combinations with any "interested stockholder" for a period
of three years following the date on which such stockholder became an
interested stockholder. See "Description of Capital Stock."

NO PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the
Common Stock will develop or continue after this offering. The initial public
offering price was determined by negotiations between the Company and the
Representatives of the Underwriters, and may not be indicative of the market
price for the Common Stock after this offering. See "Underwriting" for factors
considered in determining the initial public offering price. From time to time
after this offering, there may be significant volatility in the market price
for the Common Stock. Quarterly operating results of the Company, changes in
general conditions in the economy or the chauffeured vehicle service industry,
or other developments affecting the Company, its licensees and affiliates or
the Company's competitors

11
<PAGE>

could cause the market price of the Common Stock to fluctuate substantially.
The equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies'
securities and have been unrelated to the operating performance of those
companies. Any such fluctuations that occur following completion of this
offering may adversely affect the prevailing market price of the Common Stock.

IMMEDIATE AND SUBSTANTIAL DILUTION

The purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value of their
shares of Common Stock in the amount of $10.92 per share. See "Dilution."

12
<PAGE>

ACQUISITION OF MANHATTAN LIMOUSINE

Simultaneously with the completion of this offering, the Company will
acquire Manhattan International Limousine Network Ltd. and an affiliated
company ("Manhattan Limousine") for aggregate consideration of $14.2 million,
composed of (i) $7.1 million in cash, (ii) $4.7 million in promissory notes
bearing interest at the rate of 8.0% per annum and payable one year from the
date of the acquisition, and (iii) 218,181 shares of Common Stock (assuming an
initial public offering price of $11.00 per share). In addition, the Company
will assume approximately $3.7 million of outstanding indebtedness of
Manhattan Limousine. If the acquisition of Manhattan Limousine is not
completed by May 20, 1997, the Company has agreed to pay additional purchase
price in the amount of $7,500 for each day after such date until the closing
of the acquisition, up to an aggregate of $675,000. Pursuant to the terms of
the acquisition, Manhattan Limousine will distribute to its stockholders prior
to the closing approximately $3.8 million in assets and $2.3 million in
liabilities. See Note 3 to "Pro Forma Consolidated Financial Statements."

Manhattan Limousine is one of the largest chauffeured vehicle service
companies in the New York metropolitan area, with revenues in its fiscal year
ended September 30, 1996 totalling approximately $18.4 million. Manhattan
Limousine also operates the Manhattan International Limousine Network of more
than 300 worldwide affiliates, a significant majority of which are located in
cities in which the Company already has affiliates. In some cities the Company
and Manhattan Limousine share common affiliates. Approximately 89.2% of
Manhattan Limousine's fiscal 1996 revenues was generated by Manhattan
Limousine's New York metropolitan operations, and approximately 10.8% was
generated by its affiliates outside the New York metropolitan area. See the
Manhattan Limousine Consolidated Financial Statements and related notes
thereto.

Manhattan Limousine's independent operators are responsible for a fleet
consisting of approximately 125 sedans and limousines. Manhattan Limousine
derives revenues from contracts with major airlines, including Virgin Atlantic
Airways and Aer Lingus, and with many of the premier hotels in New York City,
including the Plaza Hotel and the Mark Hotel, as well as from other corporate
and individual customers. Typically these contracts are terminable by the
airline or hotel upon 30 days' notice. In its fiscal year ended September 30,
1996, approximately 18.0% of Manhattan Limousine's revenues were derived from
services performed for Virgin Atlantic Airways, Manhattan Limousine's largest
customer.

RECAPITALIZATION

At or prior to the closing of this offering, the Company shall effect the
following transactions (collectively, the "Recapitalization"): (i) a one-for-
2.3255 reverse split of outstanding Common Stock; (ii) the conversion of all
of the 42,070 outstanding shares of the Company's Series A Preferred Stock
into the right to receive an aggregate of $2,103,500 and 86,003 shares of
Common Stock; (iii) the redemption of all 10,000 shares of the Company's
Series F Preferred Stock and 3,000 shares of the Company's Series G Preferred
Stock for an aggregate price of $1,000,000; (iv) the conversion of 9,580
shares of the Company's Series B Preferred Stock, 46,890 shares of the
Company's Series G Preferred Stock and the Company's Subordinated Convertible
Promissory Note dated September 1, 1991 in the principal amount of $2,000,000
into an aggregate of 1,857,524 shares of Common Stock; (v) the exercise of a
warrant to purchase 616,544 shares of Common Stock by the application of
$2,867,546 due the warrant holder under a subordinated promissory note, and
the repayment by the Company of the remaining outstanding principal balance of
$912,454 under such note; and (vi) the amendment of the Company's Certificate
of Incorporation to, among other things, (a) eliminate all previously-
designated series of Preferred Stock and the designation of Class A Common
Stock, and (b) increase the authorized number of shares of Common Stock from
9,512,950 to 20,000,000.

13
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,900,000 shares of
Common Stock offered by it (assuming an initial public offering price of
$11.00 per share and after deducting estimated underwriting discounts and
commissions and offering expenses that have not yet been paid) are estimated
to be approximately $28.4 million (approximately $32.8 million if the
Underwriters' over-allotment option is exercised in full).

The Company will use approximately $8.5 million of the net proceeds to repay
principal with respect to certain indebtedness which was incurred to finance
certain of the Company's acquisitions and for working capital purposes. Such
indebtedness bears interest at rates ranging from 7.7% to 12.0%, has a
weighted average interest rate of 9.6% and matures at various dates through
March 1, 2001. Such indebtedness includes approximately $1.1 million in
principal to be repaid to Yerac Associates, L.P. ("Yerac") and approximately
$912,000 to be paid to PNC Capital Corp. ("PNC"). Vincent A. Wolfington, the
Company's Chairman of the Board and Chief Executive Officer, and Don R.
Dailey, President and a director of the Company, have personally guaranteed
$3.7 million of the Company's indebtedness which will be repaid from the net
proceeds of this offering. These personal guarantees will be terminated upon
the repayment of the underlying indebtedness. See "Certain Transactions."

The Company currently intends to use approximately $7.1 million of the net
proceeds of this offering to pay the cash portion of the purchase price for
the acquisition of Manhattan Limousine. The Company also will utilize
approximately $3.7 million of the net proceeds to repay certain indebtedness
assumed upon the acquisition of Manhattan Limousine.

Approximately $3.1 million of the net proceeds will be used by the Company
to redeem all outstanding shares of its Series A and Series F Preferred Stock
and certain shares of its Series G Preferred Stock in connection with the
Recapitalization. Of this amount, $1.1 million will be paid to entities
affiliated with Hambrecht & Quist Group in connection with the redemption of
22,000 shares of Series A Preferred Stock held by those entities, $1.0 million
will be paid to IBJS Capital Corporation in connection with the redemption of
its 10,000 shares of Series F and 3,000 shares of Series G Preferred Stock,
and $20,250 and $13,650, respectively, will be paid to each of Messrs.
Wolfington and Dailey in connection with the redemption of 405 shares and 273
shares of Series A Preferred Stock, respectively, beneficially owned by each
of them. See "Recapitalization" and "Certain Transactions."

The balance of the net proceeds from this offering, approximately $5.9
million, will be used for acquisitions and other general corporate purposes,
including working capital. Except for the acquisition of Manhattan Limousine,
the Company currently has no existing commitment or agreement with respect to
any acquisition. The Company regularly reviews potential acquisition
candidates and has held preliminary discussions with a number of such
candidates.

Pending such uses, the Company intends to invest the net proceeds in short-
term, investment grade securities.

<PAGE>

DILUTION

The deficit in the pro forma net tangible book value of the Company as of
February 28, 1997, after giving effect to the issuance of shares of Common
Stock as part of the Recapitalization, was approximately $7.4 million, or
$(2.32) per share. The deficit in net tangible book value is determined by
subtracting franchise rights, goodwill and all other intangible assets from
total stockholders' equity. After giving effect to (i) the sale by the Company
of 2,900,000 shares of Common Stock in this offering at an assumed initial
public offering price of $11.00 per share after deducting estimated
underwriting discounts and commissions and offering expenses, (ii) the
acquisition of Manhattan Limousine and (iii) the conversion of a convertible
note into 43,001 shares of Common Stock, the pro forma net tangible book value
at February 28, 1997 would have been approximately $541,000, or $.08 per
share. This offering represents an immediate increase in net tangible book
value of $2.40 per share to the existing stockholders, and an immediate
dilution in net tangible book value per share of $10.92 to new investors in
this offering.

The following table illustrates the dilution on a per share basis, assuming
no exercise by the Underwriters of their over-allotment option:

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $11.00
Deficit in pro forma net tangible book value before
offering................................................. $(2.32)
Increase in pro forma net tangible book value attributable
to sale of shares to new investors....................... 2.40
------
Pro forma net tangible book value after offering............ .08
------
Dilution to new investors................................... $10.92
======
</TABLE>

The following table sets forth, on a pro forma basis as of February 28,
1997, the number of shares of Common Stock acquired from the Company, the
total consideration paid and the average price per share paid by (i) the
Company's debt holders and preferred stockholders who are acquiring shares of
Common Stock in the Recapitalization and (ii) new investors for (a) the
2,900,000 shares of Common Stock offered hereby and (b) the 218,181 shares of
Common Stock that constitute a portion of the consideration for the
acquisition of Manhattan Limousine (see "Acquisition of Manhattan Limousine"):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Debt holders and preferred
stockholders............. 2,560,071 45.1% $ 4,867,548 12.4% $ 1.90
New investors............. 3,118,181 54.9 34,299,991 87.6 $11.00
--------- ----- ----------- -----
Total................... 5,678,252 100.0% $39,167,539 100.0%
========= ===== =========== =====
</TABLE>

<PAGE>

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of the
Company (i) as of February 28, 1997 and (ii) on a pro forma basis to give
effect to (a) the Recapitalization, see "Recapitalization," (b) the issuance
and sale of the 2,900,000 shares of Common Stock offered hereby (at an assumed
offering price of $11.00 per share, after deducting estimated underwriting
discounts and commissions and offering expenses) and the application of the
net proceeds therefrom as described under "Use of Proceeds," (c) the
acquisition of Manhattan Limousine, see "Acquisition of Manhattan Limousine,"
and (d) the conversion of a convertible note into 43,001 shares of Common
Stock. This table should be read in conjunction with the Company's
Consolidated Financial Statements and the related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
FEBRUARY 28, 1997
------------------
ACTUAL PRO FORMA
------- ---------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt and current maturities of long-term
obligations............................................. $ 4,837 $ 5,699
======= =======
Long-term obligations, net of current maturities......... $11,327 $ 1,719
Stockholders' equity:
Preferred Stock (1)..................................... 1,115 --
Common Stock (2), $.01 par value; 9,512,950 shares
authorized, 655,773 shares issued and outstanding;
20,000,000 shares authorized, 6,377,026 shares issued
and outstanding on a pro forma basis................... 7 64
Paid-in-capital......................................... 7,357 41,046
Accumulated deficit..................................... (1,635) (1,734)
------- -------
Total stockholders' equity.............................. 6,844 39,376
------- -------
Total capitalization................................. $18,171 $41,095
======= =======
</TABLE>
- --------
(1) See Notes 10 and 18 to the Company's Consolidated Financial Statements.
(2) Excludes Class A Common Stock, $.01 par value, none of which is issued and
outstanding. The Class A Common Stock will be eliminated as a result of
the Recapitalization.

DIVIDEND POLICY

Following this offering, the Company intends to retain all earnings to
finance the growth and development of its business and does not anticipate
paying cash dividends on the Common Stock in the foreseeable future. Any
future determination as to the payment of dividends on the Common Stock will
depend upon the Company's future earnings, results of operations, capital
requirements and financial condition and any other factor the Board of
Directors of the Company may consider. The Company's agreements with its
principal lenders prohibit dividend payments.

16
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The selected actual consolidated financial data as of November 30, 1992,
1993, 1994, 1995 and 1996 and for each of the five years in the period ended
November 30, 1996 have been derived from the consolidated financial statements
of the Company audited by Coopers & Lybrand L.L.P., independent accountants.
The selected actual consolidated financial data as of and for the three months
ended February 29, 1996 and February 28, 1997 have been derived from the
unaudited consolidated financial statements of the Company. In the opinion of
management, the unaudited consolidated financial statements reflect all
adjustments, consisting only of normal, recurring adjustments, necessary to
present fairly the consolidated financial position and the consolidated
results of operations of the Company. The consolidated results of operations
for the three-month period ended February 28, 1997 are not necessarily
indicative of the consolidated results of operations to be expected for the
year ended November 30, 1997.

The selected actual and pro forma consolidated financial data of the Company
should be read in conjunction with the Company's Consolidated Financial
Statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations contained elsewhere in this Prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30, THREE MONTHS ENDED
------------------------------------------------------------- ---------------------------------------
1992 1993 1994 1995 1996 FEB. 29, 1996 FEB. 28, 1997
------- ------- ------- ------- ------------------------- ------------- -------------------------
ACTUAL PRO FORMA(1) ACTUAL ACTUAL PRO FORMA(2)
--------- ------------ ------------- --------- ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED
STATEMENT OF
OPERATIONS DATA:
Revenue, net...... $27,669 $30,319 $35,525 $43,484 $59,505 $78,883 $11,558 $14,141 $19,613
Cost of revenue... 20,199 22,751 24,954 29,943 40,438 52,344 7,904 9,756 13,149
------- ------- ------- ------- --------- --------- ------- --------- ---------
Gross profit...... 7,470 7,568 10,571 13,541 19,067 26,539 3,654 4,385 6,464
Selling, general
and
administrative
expense.......... 5,939 8,174 9,487 12,419 15,078 21,192 3,361 3,819 5,504
------- ------- ------- ------- --------- --------- ------- --------- ---------
Operating income
(loss)........... 1,531 (606) 1,084 1,122 3,989 5,347 293 566 960
Interest income
(expense) and
other income
(expense)........ (819) (1,308) (1,194) (1,292) (1,277) (253) (340) (245) 23
------- ------- ------- ------- --------- --------- ------- --------- ---------
Income (loss)
before provision
(benefit) for
income taxes..... 712 (1,914) (110) (170) 2,712 5,094 (47) 321 983
Provision
(benefit) for
income taxes..... 53 10 19 25 (104) 2,155 11 154 413
------- ------- ------- ------- --------- --------- ------- --------- ---------
Net income
(loss)........... $ 659 $(1,924) $ (129) $ (195) $ 2,816 $ 2,939 $ (58) $ 167 $ 570
======= ======= ======= ======= ========= ========= ======= ========= =========
Pro forma net in-
come per share... $0.89(3) $0.49 $0.07(3) $0.10
========= ========= ========= =========
Weighted average
shares
outstanding...... 3,510,020(3) 6,023,785 3,518,083(3) 5,971,960
</TABLE>

<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28, 1997
----------------------------------------- ---------------------
1992 1993 1994 1995 1996 ACTUAL PRO FORMA(4)
------- ------- ------- -------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Working capital (defi-
cit).................. $ 1,740 $ 1,484 $ 1,298 $ (1,407) $(1,732) $(1,029) $ 81
Total assets........... 28,855 27,941 27,109 35,897 42,526 39,378 73,703
Long-term debt, less
current maturities.... 10,293 12,083 11,090 13,217 11,192 11,327 1,719
Deferred revenue(5).... 3,270 4,300 4,485 4,726 6,181 6,629 13,500
Total stockholders' eq-
uity.................. $ 5,843 $ 4,388 $ 4,165 $ 3,912 $ 6,672 $ 6,844 $39,376
</TABLE>
- -------

(1) Gives effect to the following events as if they had occurred on December
1, 1995: (i) the acquisition of Camelot Barthropp Ltd., completed February
1996, including the interest cost relating to indebtedness incurred in
connection with such acquisition, (ii) the acquisition of Manhattan
Limousine (using statement of operations data for Manhattan Limousine's
fiscal year ended September 30, 1996) and the amortization of associated
goodwill, (iii) the conversion of certain preferred stock and subordinated
debt into Common Stock, see "Recapitalization", (iv) the issuance of
shares of Common Stock to (a) repay certain existing debt of the Company,
(b) pay the cash portion of the purchase price for Manhattan Limousine,
(c) repay certain debt assumed in connection with the acquisition of
Manhattan Limousine, (d) redeem certain preferred stock of the Company and
(e) pay the stock portion of the purchase price in connection with the
acquisition of Manhattan Limousine, (v) the elimination of interest
expense associated with debt repaid from the proceeds of this offering and
(vi) other adjustments as described under "Pro Forma Consolidated
Financial Statements" and the notes thereto.
(2) Gives effect to the events set forth in clauses (ii) through (vi) of note
(1) above as if they had occurred on December 1, 1995, except that, with
respect to clause (ii), the statement of operations data is for Manhattan
Limousine's three months ended December 31, 1996.
(3) Gives effect to the conversion of certain preferred stock and subordinated
debt into Common Stock and the elimination of associated interest expense
on the subordinated debt as a result of the Recapitalization. See Notes 2
and 18 to the Company's Consolidated Financial Statements.

17
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes thereto and "Selected Consolidated
Financial Data" appearing elsewhere in this Prospectus. Unless otherwise
indicated or the context otherwise requires, each reference to a year is to
the Company's fiscal year which ends on November 30 of such year.

OVERVIEW

The Company generates revenues primarily from chauffeured vehicle services
provided by (i) Carey's owned and operated businesses and (ii) Carey's
licensees and affiliates when services provided by such licensees and
affiliates are billed through the Company's central reservation and billing
system. In 1995 and 1996, approximately 74.7% and 73.6%, respectively, of the
Company's revenue, net was generated by chauffeured vehicle services provided
by the Company's owned and operated businesses, approximately 16.3% and 15.6%,
respectively, was generated by chauffeured vehicle services provided by the
Company's licensees and billed by the Company, and approximately 2.5% and
2.0%, respectively, was generated by chauffeured vehicle services provided by
the Company's affiliates and billed by the Company. Carey also generates
revenues from its licensees through fees (both initial and monthly) related to
(i) licensing the use of its name and service mark, (ii) its central
reservation and billing services and (iii) its marketing activities. In 1995
and 1996, approximately 2.7% and 3.2%, respectively, of the Company's revenue,
net was generated from its licensees through such fees. To a lesser extent,
the Company derives revenues from the payment of fees by independent
operators. The Company recognizes revenues from these fees ratably over the
terms of the independent operators' agreements with the Company, which
typically range from 10 to 20 years. As of February 28, 1997, the Company had
$6.6 million of deferred revenue on its balance sheet ($13.5 million on a pro
forma basis reflecting the acquisition of Manhattan Limousine).

Cost of revenue primarily consists of amounts due to the Company's
independent operators. The amount due to independent operators is a percentage
(ranging from 60% to 65%) of the charges for services provided, net of
discounts and commissions. Cost of revenue also includes amounts due to the
Company's licensees and affiliates for chauffeured vehicle services provided
by them and billed by the Company. Such amounts generally include the charges
for services provided less a referral fee ranging from 15% to 25% of net
vehicle service revenue. Cost of revenue also includes salaries and benefits
paid to chauffeurs employed by the Company. To a lesser extent, cost of
revenue includes costs associated with owning and maintaining the vehicles
owned by the Company, telecommunications expenses, salaries and benefits for
reservationists, marketing expenses for the benefit of licensees, and
commissions due to travel agents and credit card companies.

Selling, general and administrative expenses consist primarily of
compensation and related benefits for the Company's officers and
administrative personnel, marketing and promotional expenses for the Company's
owned and operated chauffeured vehicle service companies, and professional
fees, as well as amortization costs related to the intangibles recorded as a
result of the Company's acquisitions.

In addition to internal growth from the Company's sales and marketing
efforts, an important component in the Company's growth to date has been the
acquisition of its licensees and other chauffeured vehicle service companies.
Since December 1994, Carey has acquired eight chauffeured vehicle service
companies. Each of these acquisitions was made for cash and the issuance or
assumption of notes and was accounted for using the purchase method of
accounting. A substantial majority of the purchase price paid by the Company
in each such acquisition represented goodwill, franchise rights (if a licensee
was acquired) and/or other intangibles. Such franchise rights and goodwill are
amortized over 30 years on a straight-line basis and amounted to $12.5 million
(net of accumulated amortization) as of February 28, 1997. As a result of the
acquisition of Manhattan Limousine, the Company will recognize an additional
$19.7 million of goodwill.

18
<PAGE>

The results of operations for the acquired companies have been included in
the Company's consolidated financial statements from their respective dates of
acquisition. Carey expects to benefit from its acquisitions by consolidating
general and administrative functions, increasing operating efficiencies, and,
as a result of converting salaried chauffeurs to independent operators,
eliminating the overhead and capital costs associated with employing salaried
chauffeurs, leasing garages, maintaining parts and fuel inventories, and
owning and operating vehicles. The Company generally realizes these benefits
within six to twelve months after an acquisition, depending upon whether the
acquisition is of a chauffeured vehicle service company in a location in which
the Company already operates, or of a licensee in a market where Carey has yet
to establish operations.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain financial
data for the Company expressed as a percentage of revenue, net. With respect
to the pro forma data, see "Pro Forma Consolidated Financial Statements" and
the notes thereto.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30, THREE MONTHS ENDED
------------------------------------- -----------------------------
1994 1995 1996 FEB. 29, 1996 FEB. 28, 1997
------- ------- ----------------- ------------- ---------------
PRO PRO
ACTUAL FORMA ACTUAL ACTUAL FORMA
-------- ------- ------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue, net............ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue......... 70.2 68.9 68.0 66.3 68.4 69.0 67.0
------- ------- ------- ------- ----- ------ ------
Gross profit............ 29.8 31.1 32.0 33.7 31.6 31.0 33.0
Selling, general and
administrative
expense................ 26.7 28.6 25.3 26.9 29.1 27.0 28.1
------- ------- ------- ------- ----- ------ ------
Operating income........ 3.1 2.5 6.7 6.8 2.5 4.0 4.9
Interest expense and
other income
(expense).............. (3.4) (3.0) (2.1) (0.3) 2.9 (1.7) 0.1
------- ------- ------- ------- ----- ------ ------
Income (loss) before
provision (benefit) for
income taxes........... (0.3) (0.5) 4.6 6.5 (0.4) 2.3 5.0
Provision (benefit) for
income taxes........... 0.1 -- (0.2) 2.8 0.1 1.1 2.1
------- ------- ------- ------- ----- ------ ------
Net income (loss)....... (0.4)% (0.5)% 4.8% 3.7% (0.5)% 1.2% 2.9%
======= ======= ======= ======= ===== ====== ======
</TABLE>

THREE MONTHS ENDED FEBRUARY 28, 1997 (THE "1997 PERIOD") COMPARED TO THREE
MONTHS ENDED FEBRUARY 29, 1996 (THE "1996 PERIOD")

Revenue, Net. Revenue, net increased approximately $2.5 million or 22.4%
from $11.6 million in the 1996 Period to $14.1 million in the 1997 Period. Of
the increase, approximately $1.6 million was contributed by existing
operations as a result of expanded use of the Carey network, including an
increase in business from corporate travel customers and business travel
arrangers, and approximately $930,000 was due to revenues of the Company's
operations in London which were not included in the 1996 Period.

Cost of Revenue. Cost of revenue increased approximately $1.9 million or
23.4% from $7.9 million in the 1996 Period to $9.8 million in the 1997 Period.
The increase was primarily attributable to higher costs due to increased
business levels. Cost of revenue increased as a percentage of revenue, net
from 68.4% in the 1996 Period to 69.0% in the 1997 Period primarily as a
result of seasonally higher operating costs as a percentage of revenues in the
Company's London operations for the 1997 Period.

Selling, General and Administrative Expense. Selling, general and
administrative expenses increased approximately $459,000 or 13.6% from $3.4
million in the 1996 Period to $3.8 million in the 1997 Period. The increase
was largely due to the costs of additional personnel, increased marketing
expenses and increased

19
<PAGE>

administrative expenses as a result of the Company's acquisition in London in
February 1996. Selling, general and administrative expense decreased as a
percentage of revenue, net from 29.1% in the 1996 Period to 27.0% in the 1997
Period as a result of an increase in revenue, net without a corresponding
increase in administrative costs.

Interest Expense. Interest expense was approximately $422,000 in the 1996
Period and approximately $392,000 in the 1997 Period. Interest expense
decreased as a percentage of revenue, net from 3.7% in the 1996 Period to 2.8%
in the 1997 Period.

Provision For Income Taxes. The provision for income taxes increased
approximately $142,000 from approximately $12,000 in the 1996 Period to
approximately $153,000 in the 1997 Period. The increase primarily related to
the increase in pre-tax income of the Company from a pre-tax loss of
approximately $46,000 in the 1996 Period to pre-tax income of approximately
$321,000 in the 1997 Period.

Net Income (Loss). As a result of the foregoing, the Company had net income
of approximately $167,000 in the 1997 Period compared to a net loss of
approximately $58,000 in the 1996 Period.

YEAR ENDED NOVEMBER 30, 1996 COMPARED TO YEAR ENDED NOVEMBER 30, 1995

Revenue, Net. Revenue, net increased approximately $16.0 million or 36.8%
from $43.5 million in 1995 to $59.5 million in 1996. Of the increase,
approximately $9.6 million was contributed by existing operations as a result
of expanded use of the Carey network, including an increase in business from
corporate travel customers and business travel arrangers, and approximately
$6.4 million was due to revenues of companies which were acquired from
December 1994 through February 1996.

Cost of Revenue. Cost of revenue increased approximately $10.5 million or
35.1% from $29.9 million in 1995 to $40.4 million in 1996. The increase was
primarily attributable to higher costs due to increased business levels. Cost
of revenue decreased as a percentage of revenue, net from 68.9% in 1995 to
68.0% in 1996 as a result of spreading the fixed costs of the Company's
reservations infrastructure over a larger revenue base.

Selling, General and Administrative Expense. Selling, general and
administrative expenses increased approximately $2.7 million or 21.4% from
$12.4 million in 1995 to $15.1 million in 1996. The increase was largely due
to higher administrative costs associated with additional personnel, increased
marketing and promotional expenses, and higher amortization of intangibles as
a result of acquisitions. Selling, general and administrative expenses
decreased as a percentage of revenue, net from 28.6% in 1995 to 25.3% in 1996
as a result of an increase in revenue without a corresponding increase in
administrative costs.

Interest Expense. Interest expense was $1.7 million in each of 1995 and
1996. Interest expense decreased as a percentage of revenue, net from 3.0% in
1995 to 2.1% in 1996.

Provision (Benefit) for Income Taxes. The provision for income taxes was
nominal in 1995. In 1996, the Company had a tax benefit of $104,000. Prior to
1996, the Company recorded a valuation allowance against its net deferred tax
assets. This allowance was reversed in 1996 in accordance with generally
accepted accounting principles. The reversal reduced the provision for income
taxes in 1996 by approximately $1.5 million. The increase in the provision
recordable in 1996, which was offset by the effect of reducing the valuation
allowance against deferred tax assets, was attributable to the Company's
increased pretax profit level in 1996 which exceeded the beneficial tax effect
of net operating loss carryforwards of prior years. The Company has utilized
the full amount of its net operating loss carryforwards.

Net Income (Loss). As a result of the foregoing, the Company had net income
of $2.8 million in 1996 compared to a net loss of approximately $195,000 in
1995.

20
<PAGE>

YEAR ENDED NOVEMBER 30, 1995 COMPARED TO YEAR ENDED NOVEMBER 30, 1994

Revenue, Net. Revenue, net increased approximately $8.0 million or 22.4%
from $35.5 million in 1994 to $43.5 million in 1995. Of the increase,
approximately $4.7 million was due to revenues of companies acquired from
December 1994 through August 1995, as well as the full year effect in 1995 of
companies acquired in 1994. Approximately $3.3 million of the increase was
contributed by existing operations as a result of an increase in business from
corporate travel customers, business travel arrangers, special event business,
and the implementation in mid-1995 of charges to licensees for central
reservation and billing services.

Cost of Revenue. Cost of revenue increased approximately $4.9 million or
20.0% from $25.0 million in 1994 to $29.9 million in 1995. The increase was
primarily attributable to higher operating costs due to increased business
levels and to operating costs related to acquired companies. Cost of revenue
decreased as a percentage of revenue, net from 70.2% in 1994 to 68.9% in 1995
as a result of increased utilization of the Company's operating resources and
the implementation, in mid-1995, of charges to licensees for central
reservation and billing services which did not result in a corresponding
increase in cost.

Selling, General and Administrative Expense. Selling, general and
administrative expenses increased approximately $2.9 million or 30.9% from
$9.5 million in 1994 to $12.4 million in 1995. This increase was largely due
to higher costs associated with additional personnel, increased marketing and
promotional expense, and the increase in the amortization of intangibles
recorded as a result of acquisitions. Selling, general and administrative
expenses increased as a percentage of revenue, net from 26.7% in 1994 to 28.6%
in 1995 as a result of relatively higher levels of administrative costs in
existing operations and additional expenses related to companies acquired late
in 1995 whose operations were not consolidated with the Company's operations
until 1996.

Interest Expense. Interest expense increased approximately $334,000 or 24.8%
from approximately $1.4 million in 1994 to $1.7 million in 1995. This increase
was due to net increases in debt in 1995 to fund acquisitions. Interest
expense as a percentage of revenue, net increased slightly from 3.8% in 1994
to 3.9% in 1995.

Provision for Income Taxes. The provision for income taxes was nominal in
1994 and in 1995.

Net Loss. As a result of the foregoing, the Company had a net loss of
approximately $195,000 in 1995 compared to a net loss of approximately
$129,000 in 1994.

21
<PAGE>

QUARTERLY RESULTS

The following table presents unaudited quarterly financial information for
1995, 1996 and the first quarter of 1997. This information has been prepared
by the Company on a basis consistent with the Company's audited financial
statements and includes all adjustments (consisting only of normal recurring
adjustments) which management considers necessary for a fair presentation of
the results for such quarters.

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------
1995 1996 1997
----------------------------------- ---------------------------------- -------
FEB. MAY AUG. NOV. FEB. MAY AUG. NOV. FEB.
28 31 31 30 29 31 31 30 28
------ ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue, net............ $8,333 $10,320 $10,235 $14,596 $11,558 $15,043 $14,575 $18,330 $14,141
Gross profit............ 2,647 3,113 2,980 4,800 3,654 4,835 4,737 5,841 4,385
Operating income
(loss)................. (101) 235 (216) 1,204 293 1,037 987 1,673 566
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------
1995 1996 1997
----------------------------------- ---------------------------------- -------
FEB. MAY AUG. NOV. FEB. MAY AUG. NOV. FEB.
28 31 31 30 29 31 31 30 28
------ ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue, net............ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit............ 31.8 30.2 29.1 32.9 31.6 32.1 32.5 31.9 31.0
Operating income
(loss)................. (1.3)% 2.2% (2.1)% 8.2% 2.5% 6.8% 6.7% 9.1% 4.0%
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of funding have been cash flow from
operations, proceeds from the bulk sale of independent operator notes,
commercial bank credit facilities, notes issued by the Company to sellers of
acquired chauffeured vehicle service companies and, to a lesser extent, the
sale of vehicles obtained from acquired companies. For the period from
December 1, 1993 through February 28, 1997, the Company generated $7.6 million
in cash from operating activities, had aggregate borrowings to fund
acquisitions of $6.5 million and had proceeds from bulk sales of notes from
independent operators of approximately $2.6 million. The Company anticipates
that in addition to the net proceeds from this offering, cash flow from
operations and borrowings under credit facilities will be its principal
sources of funding. The Company has discontinued its practice of selling notes
received from independent operators.

The Company's principal uses of cash have been, and will continue to be, the
funding of acquisitions, repayment of debt, and investment in both its
centralized reservation facility and its automated operation and information
systems.

Net cash used in operating activities increased from approximately $304,000
in the 1996 Period to approximately $364,000 in the 1997 Period. Net cash
provided by operating activities increased by $1.9 million, from $2.7 million
in 1995 to $4.6 million in 1996, primarily as a result of an increase in
operating income, as adjusted for depreciation and amortization of fixed
assets, franchise rights and goodwill from acquired operations. Net cash
provided by operating activities increased by approximately $2.0 million, from
approximately $701,000 in 1994 to $2.7 million in 1995, primarily as a result
of the timing of payments to independent operators and as a result of its
acquisition activities and internal growth. As of February 28, 1997, the
Company's working capital deficit and current ratio were approximately $1.0
million and 0.92, respectively, as a result of the high level of short-term
debt generated from the Company's practice of borrowing against its cash flow
rather than its assets, many of which are intangible in nature. The Company
may continue to experience working capital deficits as a result of short-term
borrowings to finance its acquisition strategy.

22
<PAGE>

Cash used in investing activities was approximately $988,000 in the 1996
Period compared to cash provided by investing activities of approximately
$94,000 in the 1997 Period. Cash was used in the 1996 Period to acquire
operations in London, whereas relatively little acquisition activity occurred
in the 1997 Period. Cash used in investing activities decreased by $2.1
million, from $4.1 million in 1995 to $2.0 million in 1996. Cash was used in
investing activities in 1995 and 1996 primarily for the acquisition of
chauffeured vehicle service companies. In 1994, relatively little acquisition
activity occurred and cash for investment purposes of approximately $388,000
was used primarily for capital expenditures. In all periods, funds used for
acquisitions and capital expenditures were offset in part by proceeds from the
sale of fixed assets, primarily vehicles acquired in connection with the
purchase of chauffeured vehicle service businesses.

Cash provided by financing activities was approximately $87,000 in the 1996
Period compared to cash used in financing activities of $1.0 million in the
1997 Period, primarily as a result of the net payment of notes payable during
the 1997 Period. Cash provided by financing activities was $1.4 million in
1995, compared to cash used in financing activities of $1.2 million in 1996,
primarily as a result of net repayment of notes payable in 1996. Cash used in
financing activities was $1.3 million in 1994, primarily as a result of
repaying notes payable.

At February 28, 1997, the Company had borrowings, exclusive of notes payable
to sellers of chauffeured vehicle service companies, in the amount of
approximately $14.0 million. This debt was composed of (i) a $3.7 million term
loan collateralized by the stock of the Company's United States subsidiaries,
(ii) a $1.1 million term loan collateralized by an assignment of the Carey
name and service mark and license agreements related thereto, (iii) $5.8
million in subordinated debt and (iv) $3.4 million in debt to commercial
banks, which debt is typically collateralized by a subsidiary's accounts
receivable and other assets. Of the Company's total debt at February 28, 1997,
approximately $8.5 million will be repaid from the net proceeds of this
offering. See "Use of Proceeds." As part of the Recapitalization, a further
$4.9 million of the debt will be converted to Common Stock of the Company,
approximately $1.3 million of the Company's Series G and Series F Preferred
Stock will be redeemed for cash in the amount of $1.0 million, and all
outstanding shares of the Company's Series A Preferred Stock will be redeemed
for $2.1 million in cash and 86,003 shares of Common Stock. All payments as a
result of the Recapitalization will be made from the proceeds of this
offering. See "Recapitalization."

The Company has received a commitment letter from a bank for a credit
facility consisting of a secured revolving line of credit and subsequent term
loan of $20.0 million. The bank has agreed to use its best efforts to
syndicate an additional $5.0 million for the facility. The facility, which may
be used for acquisitions and working capital, will be collateralized by the
assets of the Company and its existing and future subsidiaries. Loans made
under the revolving line of credit shall bear interest at the Company's option
of either the bank's prime lending rate or 2.0% above the LIBOR rate.
Commitment fees equal to 0.5% per annum will be payable on the unused portion
of the revolving line of credit. On the second anniversary of the closing of
this offering, the revolving line of credit will convert into a five-year term
loan, which loan will bear interest either at a fixed rate (subject to
availability) or at a variable LIBOR rate with adjustments determined based on
the Company's earnings. The credit facility (i) will prohibit the payment of
dividends by the Company, (ii) will not permit the Company to incur or assume
other indebtedness that is not subordinated to the bank and (iii) will require
the Company to comply with certain financial covenants. The ability of the
Company to obtain the credit facility is subject to the completion of
negotiations with the bank as well as the satisfaction of certain conditions,
including the closing of this offering and the execution of appropriate loan
documentation. In the event that the Company is unable to obtain the credit
facility, the Company believes that sufficient alternative sources of
financing will be available on reasonable terms.

While there can be no assurance, management believes that cash flow from
operations, funds from the credit facility and the net proceeds to the Company
from this offering will be adequate to meet the Company's capital
requirements for the next 12 months, depending on the methods of financing and
size of potential acquisitions. While the Company historically has financed
acquisitions primarily with cash, it may seek to finance future acquisitions
by using Common Stock for a portion or all of the consideration to be paid.

IMPACT OF INFLATION AND FOREIGN CURRENCY FLUCTUATIONS

The Company does not believe that inflation and foreign currency fluctuation
has had, or will have, a material impact on the financial position and results
of operation.

23
<PAGE>

BUSINESS

Carey International, Inc. is one of the world's largest chauffeured vehicle
service companies, providing services through a worldwide network of owned and
operated companies, licensees and affiliates serving 420 cities in 65
countries. The "Carey" brand name has represented quality chauffeured vehicle
services since the 1920s. The Company owns and operates its service providers
in New York, San Francisco, Los Angeles, London, Washington D.C., South
Florida and Philadelphia. In addition, the Company generates revenues from
licensing the "Carey" name and providing central reservation, billing and
sales and marketing services to its licensees. The Company's worldwide network
also includes affiliates in locations in which the Company has neither owned
and operated companies nor licensees. Over the past five years, the Company
has invested significant capital in developing its reservation, central
billing and worldwide service infrastructure. By leveraging its current
infrastructure and position as a market leader, the Company intends to
consolidate the highly fragmented chauffeured vehicle service industry through
the acquisition of: (i) current Carey licensees, (ii) additional companies in
markets in which the Company already owns and operates a chauffeured vehicle
service company, and (iii) companies in other strategic markets in North
America, Europe and the Pacific rim of Asia.

The Carey network utilizes chauffeured sedans, limousines, vans and
minibuses to provide services for airport pick-ups and drop-offs, inter-office
transfers, business and association meetings, conventions, roadshows,
promotional tours, special events, incentive travel and leisure travel.
Businesses and business travelers utilize the Company's services primarily as
a management tool, to achieve more efficient use of time and other resources.

Carey's worldwide network of chauffeured vehicle service companies allows it
to provide services with consistently high quality to its customers in
virtually every major city in the expanding global travel market. The network
is linked to over 300,000 reservation terminals in travel agencies, corporate
travel departments and government agencies by the Carey International
Reservation System (the "CIRS"), the chauffeured vehicle service industry's
most extensive centralized global reservation system.

MARKET OVERVIEW

The Company estimates that the United States chauffeured vehicle service
industry generated revenues of approximately $3.9 billion in 1996, and has
undergone steady growth in recent years, with revenues increasing at a
compound annual growth rate of 10.9% between 1990 and 1996. The industry is
highly fragmented, with approximately 9,000 companies utilizing over 100,000
vehicles. The Company believes that during 1996 no chauffeured vehicle service
company accounted for more than 2% of total United States industry revenues.
The Company also believes that similar fragmentation exists in the chauffeured
vehicle service industry outside the United States.

The chauffeured vehicle service industry serves businesses in virtually all
industrial and financial sectors of the economy. The Company believes that
business customers are becoming increasingly sophisticated in their use of
ground vehicle services and are demanding a broader array of "meet-and-greet"
and other services, as well as business amenities such as cellular phones.
Although there are other forms of transportation that compete with chauffeured
vehicles, such as buses, jitney services, taxis, radio cars and rental cars,
the Company believes that none of those forms of transportation provides the
quality, dependability and value-added services of chauffeur-driven vehicles.
The Company also believes that businesses place a premium on service providers
that are able to coordinate the travel itinerary of each member of a large
group over many locations with a single reservation and billing system.

24
<PAGE>

BUSINESS STRATEGY

The Company's objective is to increase its profitability and its market
share in the chauffeured vehicle service industry by implementing the
following growth strategies:

Expand through Acquisitions. Carey believes that there are significant
opportunities to acquire additional chauffeured vehicle service companies
that would benefit from the capital and management resources that the
Company can provide. Carey intends to acquire current Carey licensees, as
well as additional chauffeured vehicle service companies both in markets in
which the Company already owns and operates such a company and in other
strategic regions in North America, Europe and the Pacific rim of Asia.
Carey believes it has a competitive advantage in acquiring licensees
because of a right of first refusal contained in a substantial majority of
its domestic license agreements. The Company has successfully begun to
implement its acquisition strategy, having acquired 15 chauffeured vehicle
service companies since November 1991. Upon the closing of this offering,
the Company will acquire Manhattan Limousine, one of the largest
chauffeured vehicle service companies in the New York metropolitan area and
the operator of the Manhattan International Limousine Network.

Convert Salaried Chauffeurs to Independent Operators. The Company
believes that it can improve its profitability by continuing to convert
salaried chauffeurs to independent operators in businesses acquired by
Carey. The objective of Carey's independent operator strategy is to instill
in each chauffeur the sense of purpose, responsibility and dedication
characteristic of an independent business owner, thereby increasing the
profitability of the chauffeur and the Company. Carey's independent
operator program allows the Company to reduce its labor and capital costs,
convert fixed costs to variable costs and generate revenues from fees paid
by independent operators.

ACQUISITION STRATEGY

Carey believes that there are significant opportunities to acquire
additional chauffeured vehicle service companies as a result of: (i) the
highly fragmented and increasingly global nature of the industry, (ii)
industry participants' capital requirements and desire for liquidity, and
(iii) the pressures of increasing competition. The Company intends to continue
to pursue its acquisition program in order to strengthen its position in its
existing markets and to acquire operations in new markets.

Carey intends to pursue acquisitions that will allow the Company to own and
operate chauffeured vehicle service companies in new geographic markets. The
Company currently owns and operates chauffeured vehicle

25
<PAGE>

service companies in six of the largest United States travel markets and in
London, the largest European travel market, and will seek to acquire Carey
licensees in other significant travel markets in North America, Europe, and
the Pacific rim of Asia. The Company believes that its ability to acquire its
licensees will be enhanced by a right of first refusal that is contained in a
substantial majority of its domestic license agreements and the limited terms
of most of its international license agreements. The Company's preference is
to retain key management, operating and sales personnel of an acquired company
in a new market in order to maintain continuity of operations and customer
service.

The Company believes that it has a market share of less than 10% in each of
the markets in which it owns and operates a chauffeured vehicle service
company, and that there is significant potential for it to expand its business
in such markets through acquisitions. When justified by the size of an
existing market acquisition, the Company expects to retain key management and
sales personnel of the acquired company and to seek to improve that company's
profitability through implementation of the Company's operating strategies. In
most instances, acquired operations can be integrated into the Company's
existing operations in a market, resulting in elimination of duplicative
overhead and operating costs.

The Company believes that there are significant advantages to consolidating
the chauffeured vehicle service industry. Carey believes it can increase
revenues of acquired companies by marketing the worldwide services of its
network to customers of such companies, and by increasing the productivity of
chauffeurs at the acquired companies through the implementation of training
and quality assurance programs. Moreover, Carey believes that cost savings can
be achieved following acquisitions through (i) the consolidation of certain
administrative functions and increased use of automation, (ii) the elimination
of redundant facilities, equipment and personnel and (iii) the conversion of
salaried chauffeurs driving company-owned vehicles into independent operators
driving their own vehicles.

Carey has successfully begun its acquisition strategy, having acquired 15
chauffeured vehicle service companies since November 1991. The following table
lists the date of acquisition, location of each such chauffeured vehicle
service company and whether the acquired company was a licensee or affiliate
of the Company or other chauffeured vehicle service company:

ACQUISITION HISTORY
NOVEMBER 1991--PRESENT

<TABLE>
<CAPTION>
DATE LOCATION ACQUIRED COMPANY
---- -------- ----------------
<S> <C> <C>
November 1991................... Washington, DC Other
September 1992.................. Los Angeles, CA Other
August 1993..................... Wilmington, DE Licensee
September 1993.................. West Palm Beach, FL Licensee
November 1993................... New York, NY Other
June 1994....................... Washington, DC Other
June 1994....................... Los Angeles, CA Other
December 1994................... Boca Raton, FL Other
January 1995.................... San Francisco, CA Licensee
April 1995...................... Washington, DC Other
April 1995...................... Ft. Lauderdale/Miami, FL Licensee
May 1995........................ San Francisco, CA Other
August 1995..................... San Francisco, CA Other
August 1995..................... Boca Raton, FL Other
February 1996................... London, England Affiliate(/1/)
May 1997(/2/)................... New York, NY Other
</TABLE>

- --------
(1) Prior to the acquisition, the Company had no licensee in London.
(2) The acquisition will be completed upon the closing of this offering. See
"Acquisition of Manhattan Limousine."

26
<PAGE>

The Company has analyzed significant data on the chauffeured vehicle service
industry and individual businesses within that industry and believes that it
is well positioned to further implement its acquisition program following this
offering. The Company believes that management's lengthy tenure with the
Company, extensive experience in the chauffeured vehicle service industry and
relationships with acquisition candidates provide the Company with significant
knowledge that will assist the Company in its attempts to acquire licensees of
the Company and other chauffeured vehicle service companies. The Company
regularly reviews various strategic acquisition opportunities and periodically
engages in discussions regarding such possible acquisitions. Currently, other
than with respect to the acquisition of Manhattan Limousine, the Company is
not a party to any agreements regarding any material acquisitions; however, as
the result of the Company's process of regularly reviewing acquisition
prospects, negotiations and such acquisition agreements may occur from time to
time if appropriate opportunities arise.

The acquisition of Manhattan Limousine is intended to solidify the Company's
presence in the New York metropolitan area and diversify its customer base. In
particular, the Company intends to capitalize on Manhattan Limousine's
contracts with many New York-based participants in the airline and hotel
industries, including airlines such as Virgin Atlantic Airways and Aer Lingus,
and hotels such as the Plaza Hotel and the Mark Hotel. Typically these
arrangements are terminable by the airline or hotel upon 30 days' notice.
During its fiscal year ended September 30, 1996, approximately 18.0% of
Manhattan Limousine's revenues were derived from services performed for Virgin
Atlantic Airways. While the Company intends to consolidate certain
administrative operations of Manhattan Limousine with its own and to eliminate
redundant facilities, equipment and personnel, Manhattan Limousine otherwise
will retain its separate identity for at least 12 months following the
consummation of the acquisition.

Manhattan Limousine provides services solely through independent operators
rather than salaried chauffeurs. As a result, Carey will not be able to
realize the benefits of converting salaried chauffeurs into independent
operators following the acquisition. See "--Independent Operators." Manhattan
Limousine's network is composed of approximately 300 affiliates from which
Manhattan Limousine receives fees for referred business. A significant
majority of Manhattan Limousine's affiliates are located in cities in which
the Company already has affiliates, and in some cities the companies share
common affiliates.

As consideration for future acquisitions, the Company intends to use various
combinations of shares of Common Stock, cash and notes. Some or all of any
shares of Common Stock issued in connection with acquisitions may be
registered under the Securities Act.

SERVICE PROVIDER NETWORK

Carey's international network of owned and operated chauffeured vehicle
service companies, licensees and affiliates, serving 420 cities in 65
countries, enables it to provide its customers chauffeured vehicles in
virtually every significant travel market throughout the world. Carey believes
that its network is the most extensive in the industry, and intends to expand
the network by adding qualified licensees and affiliates in locations
justifying new or expanded service. The Company believes that the trend toward
globalization is opening more cities for business and personal travel around
the world. The Company monitors and evaluates cities in which a demand for
chauffeured vehicle services may warrant a "Carey" presence.

The Company's network provides chauffeured vehicle services for airport
pickups and drop-offs, inter-office transfers, business and association
meetings, conventions, road shows, promotional tours, special events,
incentive travel and leisure travel. Of these activities, the Company derived
approximately 9.3% of its 1996 pro forma revenues from hotel contracts,
approximately 8.3% from financial services customers and approximately 5.1%
from contracts with airlines. The Company also offers its clients travel and
tour planning services, "meet-and-greet" services, destination management
services, group movement coordination services, direct and central billing in
U.S. dollars, and access to the Company's 24-hour worldwide computerized
reservation system, the CIRS.

27
<PAGE>

The Company's fleet in its owned and operated locations contains four types
of vehicles consisting of chauffeured sedans, limousines, vans and minibuses,
some of which can carry up to 30 persons. In addition, the Company
subcontracts from time to time for buses that can carry a greater number of
passengers. The fleets of the Company's licensees and affiliates in larger
markets are similar to the Company's fleet, and in smaller markets generally
consist of only chauffeured sedans and limousines. All vehicles are driven by
uniformed professional chauffeurs, most of whom own the vehicles that they
drive. Each such chauffeur drives a clean, late model vehicle with amenities
important to the business traveler, such as cellular telephones and daily
newspapers.

Owned and Operated Companies. The Company owns and operates chauffeured
vehicle service companies in New York, San Francisco, Los Angeles, London,
Washington, D.C., South Florida and Philadelphia. Revenue provided by these
companies represented approximately 74.7% of the Company's revenue, net in
fiscal 1995 and 73.6% in fiscal 1996.

Licensees. The Company has 38 licensees serving 106 cities in the United
States and 24 licensees serving 105 cities outside the United States, all of
which operate under the Carey name. Revenue, net provided by the Company's
licensees represented approximately 19.0% and 18.8% of the Company's revenue,
net in fiscal 1995 and 1996, respectively.

The domestic license fee ranges from $15,000 to $75,000, depending upon the
size of the market. The sum of the continuing fees paid by the domestic
licensee varies, but annually is generally less than 10% of its revenues or,
in some cases, less than 10% of an excess above a specified base.
Substantially all candidates appointed as domestic licensees have been in
business for at least 10 years prior to the grant of a license. The term of a
domestic license agreement entered into prior to January 1, 1996 is perpetual
and subsequent to January 1, 1996 is 10 years.

International licensees historically have not paid annual license fees;
rather, they have paid a commission on business referred to them. The term of
an international license agreement usually is from year to year, although in a
few cases it is perpetual.

Under the domestic license agreement, the Company provides the licensee with
(i) the right to use the "Carey" name, (ii) participation in the CIRS, (iii)
various consulting services, (iv) identification in various travel
directories, (v) access to bulk purchasing arrangements for automobiles, parts
and maintenance materials and (vi) national sales and marketing services. In
the event of a proposed transfer of a license or a licensee, the Company has
the right to approve the transferee. In addition, for most license agreements
executed prior to January 1, 1996 and all license agreements executed on or
after January 1, 1996, Carey retains a right of first refusal by which it may
acquire any license or licensee upon the same terms as the license or licensee
is proposed to be sold.

Typically, a licensee candidate acts as an affiliate before being selected
as a licensee. Licensees operate according to strict service guidelines
specified by the Company and market the Carey name in conjunction with the
Company's overall marketing program. The Company conducts ongoing quality
assurance programs and annual audits of licensees to insure that the licensees
have met the high service standards set forth by the Company. The Company has
the right to terminate any license if the licensee fails to comply with such
standards.

Affiliates. The Company utilizes affiliates to provide services to its
clients in cities where the Company does not have Company-owned operations or
licensees. Affiliates are not licensed to use the Carey name and do not pay
license fees to the Company, but must meet the Company's quality standards in
order to receive referred business. Pursuant to oral agreements between the
Company and its affiliates, the Company is entitled to receive a commission of
15% of net vehicle revenues for all referred business. The Company's
affiliates are located in 121 cities in the United States and 67 cities
outside the United States. Revenue, net provided by the Company's affiliates
represented approximately 2.5% and 2.0% of the Company's revenue, net in
fiscal 1995 and 1996, respectively.

28
<PAGE>

CAREY INTERNATIONAL RESERVATION SYSTEM (CIRS)

The hub of the Company's network of service providers is the CIRS, the Carey
International Reservation System. The CIRS is operated on a 24-hour basis by
Carey's central reservation department, which processes reservations through
the Company's proprietary computer system. The central reservation department
receives reservations through the Company's toll free "800" telephone number
(800-336-4646), by fax or telex, or through one of the six major airline
reservation systems, SABRE, APOLLO, WORLDSPAN, GALILEO, BABS and SITA. These
airline systems allow travel agencies, corporate travel departments and
government offices to access the CIRS through over 300,000 reservation
terminals worldwide. The Company bills a licensee or affiliate for each
reservation referred to the licensee or affiliate through the CIRS.

The CIRS can be accessed for up-to-date tariffs both in dollars and in
foreign currency for 420 cities throughout the world. Through the CIRS, the
Company's reservation and customer service personnel have instant access to
all rates, services offered, types of vehicles available and special airport
greeting capabilities in each individual city. Individual customer profiles
are maintained, including vehicle and chauffeur preferences, frequent pick-up
points, addresses and directions, billing requirements and account status.

The CIRS is used to make arrangements for a broad range of business and
consumer applications such as transportation to and from airports, association
and industry meetings and functions, road shows, transportation related to
incentive travel, board of directors meetings and sight seeing tours. Special
customer service facilities are available with direct phone lines, including a
special service desk, executive VIP desk, international tour desk, special
event desk and road show desk.

The CIRS utilizes client/server architecture and proprietary software
developed over a five-year period which allows constant input into a complex
international network linking more than 65 countries. A primary strength of
the CIRS is the reliability of its reporting and control systems which verify
all reservations for complete information, customer service requirements and
accounting authorizations. The CIRS also contains customer invoicing programs
to allow central billing directly through the system for all services used
worldwide. In addition, the system's ability to track reservations allows more
accurate and detailed analyses for marketing purposes.

In 1992, the Company began leasing its reservation and operating systems to
its licensees. These systems create a basis for certain licensees to have
direct access to the CIRS and provide them with the ability to book local
reservations, dispatch vehicles and account for chauffeured vehicle services.

MARKETING, SALES AND CUSTOMER SERVICE

The Company believes that "Carey," a registered service mark, is a highly
recognized name in the chauffeured vehicle service and travel industries
worldwide. The Company intends to continue to expand recognition of the
"Carey" name through its marketing and promotional efforts. Carey has
developed an extensive marketing program directed at both the travel arranger
and the end user of chauffeured vehicle services. The program consists of
directory listings, advertising, direct mail, public relations, cooperative
promotional and joint marketing programs, attendance at and sponsorship of
travel-related conventions and workshops, and direct selling. The direct sales
force serving the Company and its licensees currently consists of 20
professionals.

Carey is listed in 95 travel directories which are used by travel arrangers
to obtain information on travel related services. Advertising targeted at
travel arrangers is placed in over 35 trade journals including Business Travel
Executive, Travel Weekly, Travel Trade and Business Travel News. In addition,
the Company advertises extensively in magazines and newspapers, consumer
association books, hotel room information books and the Yellow Pages, and on
radio and television in selected markets.

The Company's continuing direct mail program is targeted at both the travel
arranger and the end user. The program distributes approximately two million
promotional pieces annually. Most major travel arrangers receive at least six
direct mail pieces per year which include announcements of new services, news
on service providers

29
<PAGE>

and reservation programs, the Carey Newsletter and listings of rates. End
users and arrangers receive promotional pieces on Carey when they are billed
for the Company's services.

The Company's marketing program seeks to build upon brand name acceptance,
customer loyalty, service know-how, technology and strategic market
relationships with other market leaders in the travel and tourism industry,
such as airlines, travel agencies, credit card companies and central
reservation systems. The Company's sales force calls on thousands of accounts
annually and participates in trade shows, seminars and association meetings.
The Company also is involved in promotional and cooperative agreements with
American Express Platinum Card and Gold Card, Diner's Club "Club Chauffeur"
program, British Airways, Air France and various cruise lines.

The Company believes that the retention and expansion of existing business
is as important as new sales. Carey has established a base of loyal customers
in part by monitoring the standard of service through its quality assurance
and customer service programs. To assure that the Company continues to provide
consistently high quality and reliable service, Carey operates a five-part
quality assurance program. The Company's quality assurance program utilizes
survey cards that are sent to customers and travel arrangers. Approximately
90% of the quality assurance cards returned to Carey during the twelve-month
period ended November 30, 1996 rated the Company's reservation services,
chauffeurs and vehicles as "excellent." Carey's quality assurance program
includes evaluations performed by an independent consultant to measure the
quality of chauffeur services, the appearance of chauffeurs and vehicles, and
the availability of other amenities, such as cellular phones and daily
newspapers.

INDEPENDENT OPERATORS

An important component of Carey's strategy involves the preferred use of
independent operators instead of salaried chauffeurs operating Company-owned
vehicles. An independent operator takes responsibility for owning, operating
and maintaining his or her own vehicle. The Company believes that acting as an
independent operator creates incentives for the chauffeur to become more
productive, efficient and service-oriented, thereby increasing the
profitability of the chauffeur and the Company. The objective of the Company's
independent operator strategy is to instill in each chauffeur the sense of
purpose, responsibility and dedication characteristic of an independent
business owner.

The use of independent operators allows the Company to reduce its labor and
capital costs, convert fixed costs to variable costs and generate revenues
from fees paid by independent operators. Because of the greater responsibility
borne by independent operators, the Company is able to allocate fewer
resources to oversee its vehicle operations. As a result, the Company can
focus to a greater extent on support services, business development,
administration, billing, quality assurance, and sales and marketing.

Each independent operator enters into an agreement with the Company to
provide prompt and courteous service to the Company's customers with a
properly maintained, late model vehicle consistent with the Company's
standards. The cost of a new vehicle ranges from $35,000 to $65,000, depending
upon whether it is a sedan or a limousine and the features included in the
vehicle. Each new independent operator agrees to pay an initial fee to the
Company, acquires his or her vehicle and pays all of the maintenance and
operating expenses of such vehicle, including gasoline.

Prior to December 1996, the Company's typical agreement with an independent
operator had a term of 10 years and provided for a fee ranging from $30,000 to
$45,000 (depending on the local market) that was financed by the Company at an
annual interest rate of 8% to 12%. The notes evidencing such financing
generally were sold by the Company to third parties. Since December 1996, the
independent operator agreements entered into by the Company generally have
provided for, and the Company intends that future agreements will provide for,
a term of 15 years, fees of $45,000 to $60,000 and an interest rate of 14% per
year. In certain markets, such as New York, the Company may provide longer
terms and higher fees in its independent operator agreements. Currently, the
Company does not intend to continue its former practice of selling to third
parties notes evidencing independent operator financing. To date, the Company
has not incurred any material losses as a result of defaults under such notes,
and any potential future losses will be mitigated from an accounting
perspective because of the Company's policy of deferral of revenue recognition
in connection with independent operator fees.

30
<PAGE>

The independent operator agreement provides that the Company will bill and
collect all revenues (as defined in the agreement) and remit to the
independent operator 60% to 65% of such revenues. In this arrangement, the
Company assumes the risk of collecting from each customer and generally pays
the independent operator his or her share regardless of whether the Company is
paid by the customer. An independent operator's failure to meet the high
standards of service associated with the Carey name constitutes a breach of
the agreement and gives rise to a right of the Company to terminate the
agreement.

Independent operators also generally require financing to purchase their
vehicles. Typically, independent operators have utilized banks, vehicle
financing companies or CLI Fleet, Inc. ("CLI Fleet"), a finance company that
specializes in providing financing to the chauffeured vehicle service
industry. See "Certain Transactions." On occasion, the Company has provided
secured vehicle financing to independent operators with repayment terms of
three to five years.

CUSTOMERS

The Company's customer list exceeds 75,000 individuals and organizations
that are dispersed across many different industries and geographic locations.
No client accounted for more than 5% of the Company's revenue, net in 1996.
The Company's major clients include companies in the finance, travel and
related services, manufacturing, pharmaceutical, airline, insurance,
publishing, oil and gas exploration, entertainment, tobacco, and food and
beverage industries.

COMPETITION

The chauffeured vehicle service industry is highly competitive and
fragmented, with few significant national participants operating a multi-city
reservation system. Each local market usually contains numerous local
participants as well as a few companies offering regional and national
service. Chauffeured vehicle service providers compete primarily on the basis
of price, quality, scope of service and dependability. The Company also
competes with service providers offering alternative modes of transportation,
such as buses, jitney services, taxis, radio cars and rental cars. The Company
believes that its high quality of service and dependability have allowed the
Company to compete effectively in its markets. Carey competes both for
customers and for possible acquisitions. The Company expects its business to
become more competitive as existing competitors expand and additional
companies enter the industry. Certain of the Company's existing competitors
have, and any new competitors that enter the industry may have, access to
significantly greater financial resources than the Company.

GOVERNMENT REGULATION

The Company's chauffeured vehicle service operations are subject to various
state and local regulations and, in many instances, require permits and
licenses from state and local authorities. In addition, the Company is
regulated by the Federal Highway Administration with respect to, among other
things, minimum vehicular insurance requirements. The Company believes that it
has all required permits and licenses to conduct its operations and that it is
in substantial compliance with applicable regulatory requirements relating to
its operations.

The Company is subject to federal and state laws, rules and regulations
governing the offer and sale of franchises. A number of states have enacted
laws that require detailed disclosure in the offer and sale of franchises
and/or the registration of the franchisor with state administrative agencies.
The Company is also subject to Federal Trade Commission regulations relating
to disclosure requirements in the sale of franchises. Certain states have
enacted, and others may enact, legislation governing certain aspects of the
franchise relationship and limiting the ability of the franchisor to terminate
or refuse to renew a franchise. The law applicable to franchise sales and
relationships is rapidly developing, and the Company is unable to predict the
effect on its franchise system of additional requirements or restrictions that
may be enacted or promulgated or of court decisions that may be adverse to
franchisors. Due to the scope of the Company's business, and the complexity of
franchise regulation, compliance problems may be encountered from time to
time.

31
<PAGE>

INSURANCE

The Company is subject to accident claims as a result of the normal
operation of its fleet of vehicles, which claims and the defense thereof
generally are covered by insurance. The Company purchases automobile
liability, automobile collision and comprehensive damage, general liability,
comprehensive property damage, workers' compensation and other insurance
coverages that management considers adequate for the protection of the
Company's assets and operations, although there can be no assurance that the
coverages and limits of such policies will be adequate. The Company's standard
license agreement requires that its licensees purchase similar types of
insurance and name the Company as a named insured in such insurance policies.
A successful claim against the Company beyond the scope of its or its
licensees' insurance coverage or in excess of its or its licensees' limits
could have a material adverse effect on the Company's business, financial
condition and results of operations.

FACILITIES

The Company owns a facility in Alexandria, Virginia used by its owned and
operated chauffeured vehicle service company providing services in Washington,
D.C. The Company leases its corporate headquarters in Washington, D.C. and
also leases nine administrative and/or operating facilities in California, New
York, Pennsylvania, Florida and London. Management believes that the Company's
facilities are adequate for its present needs and that suitable additional or
replacement space will be available as required.

EMPLOYEES AND INDEPENDENT OPERATORS

As of March 31, 1997, the Company had approximately 255 full-time employees
(approximately 41 of whom were chauffeurs) and approximately 99 part-time
employees (approximately 71 of whom were chauffeurs). As of March 31, 1997,
the Company also had agreements with approximately 334 independent operators.
The Company is not a party to any collective bargaining agreement.

INTELLECTUAL PROPERTY

The Company is the registered owner of two United States service marks
covering the "Carey" name. The Company believes that customer and travel
arranger recognition of these marks has contributed to its success. The
Company is not affiliated with Carey Transportation, Inc., a company that
provides bus transportation services in the metropolitan New York City area.
Except in this area, the Company believes it has the exclusive right to use
the "Carey" name in connection with transportation services in all locations
in which it either owns and operates a chauffeured vehicle service company or
maintains a licensee.

LEGAL PROCEEDINGS

The Company and certain of its officers and directors were named in a civil
action filed on May 15, 1996 in the United States District Court for the
Eastern District of Pennsylvania (Case No. 96-CV-3702) entitled "Felix v.
Carey International, Inc., et al." The plaintiff's complaint, which purports
to be a class action, alleges that the plaintiff and others similarly situated
suffered monetary damages as a result of misrepresentations by the various
defendants in their use of a surface transportation billing charge (the
"STC"). The STC is billed by Carey to its customers and represents a surcharge
on account of various fees and service costs incurred by it in its provision
of services to such customers. The plaintiff seeks damages in excess of $1.0
million on behalf of the class for each of the counts in the complaint
including fraud, negligent misrepresentation and violations of the Racketeer
Influenced and Corrupt Organizations law of 1970, which permits the recovery
of treble damages and attorneys' fees. A class has not yet been certified in
this case. The Company filed a motion to dismiss that was denied, and
subsequently has filed an answer denying any liability in connection with this
complaint.

The Company has reached a tentative settlement with the plaintiff and
plaintiff's counsel, which is subject to court approval and acceptance by the
proposed class. The settlement calls for the Company to deposit up to $950,000
into a settlement fund for a class consisting of all persons who paid the STC
during the period from

32
<PAGE>

May 15, 1992 through March 15, 1997. Following court approval of the
settlement, the Company will change its disclosure concerning the STC, and
each class member showing proper authentication of a claim shall be entitled
to receive either (i) cash totalling 10% of the STC paid during the period
described above or (ii) a nontransferable credit to be applied toward future
use of the Company's services in an amount equal to 30% of such STC. This
settlement has been agreed to by the plaintiff and plaintiff's counsel, but
there can be no assurance that the court will approve, or the proposed class
will accept, the settlement. The Company is indemnifying and defending its
officers and directors who were named defendants in the case, subject to
conditions imposed by applicable law.

Although the Company does not believe the litigation described above will
have a material adverse effect on its business, financial condition and
results of operations, the defense of the litigation could be expensive and
time-consuming, regardless of the outcome, and, if the proposed settlement is
not approved and accepted, an adverse result in such litigation could have a
material adverse effect on the Company's business, financial condition,
results of operations and cash flows.

The Company is a party to other litigation in the ordinary course of
business. The Company does not anticipate an unfavorable result in any such
litigation or believe that an unfavorable result, if it occurred, would have a
material adverse effect on its business, financial condition and results of
operations.

33
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information pertaining to the
directors and executive officers and the director nominee of the Company. The
director nominee has agreed to become a director of the Company upon the
closing of this offering.

<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
---- --- ----------------
<S> <C> <C>
Vincent A. Wolfington.......... 57 Chairman of the Board and Chief Executive
Officer
Don R. Dailey.................. 59 President and Director
Guy C. Thomas.................. 58 Executive Vice President--Operations
David H. Haedicke.............. 50 Executive Vice President and Chief
Financial Officer
Richard A. Anderson, Jr........ 51 Senior Vice President
Sally A. Snead................. 37 Senior Vice President--Information Systems
John C. Wintle................. 50 Senior Vice President--Europe
Paul A. Sandt.................. 36 Vice President and Chief Accounting Officer
Devin J. Murphy................ 31 Senior Vice President and Chief Development
Officer
Robert W. Cox.................. 59 Director
William R. Hambrecht........... 61 Director
David McL. Hillman............. 43 Director
Nicholas J. St. George......... 58 Director nominee
</TABLE>

Set forth below is a description of the backgrounds of each of the directors
and executive officers and the director nominee of the Company.

Vincent A. Wolfington, a co-founder of the Company, has served as its
Chairman of the Board of Directors and Chief Executive Officer since 1979. For
over 25 years, Mr. Wolfington has been involved in the limousine industry and
directly associated with the Carey system of licensees and affiliates. Mr.
Wolfington has served as a consultant to the National Academy of Sciences
Transportation Research Board, President of the National Para-transit
Association and a member of the International Limousine Association. Mr.
Wolfington currently is a member of the Executive Committee of the World
Travel and Tourism Council.

Don R. Dailey has been President and a director of the Company, which he co-
founded, since 1979. Mr. Dailey has been directly involved in the limousine
business for over 30 years. Mr. Dailey serves on a number of boards and
committees related to the travel industry, including the National Business
Travel Association, the International Business Travel Associates, the
Association of Corporate Travel Executives, the National Limousine Association
and the International Limousine Association (as its past president and member
of its executive committee).

Guy C. Thomas has served as Executive Vice President--Operations of the
Company since 1987. Mr. Thomas has served on a number of boards and committees
related to the travel industry, including the National Business Travel
Association, the Greater Washington Area Passenger Traffic Association, the
American Society of Association Executives, Meeting Planners International,
the Association of Corporate Travel Executives, the National Limousine
Association and the International Taxicab and Livery Association.

David H. Haedicke has been an Executive Vice President and Chief Financial
Officer of the Company since October 1996. From August 1996 to October 1996,
he was Senior Vice President and Chief Financial Officer of Infotechnology,
Inc., Hadron, Inc. and Comtex Scientific Corporation, an affiliated group of
companies engaged in systems management and software development. From
September 1993 to May 1996, he was Chief Financial Officer of Walcoff &
Associates, Inc., a communications and information management firm. From June
1991 to September 1993, he was Chief Financial Officer and Vice President of
Xsirus, Inc., a high technology research and development company. Mr. Haedicke
also was a partner at Ernst & Young L.L.P. from 1985 to June 1991, and was an
employee at that firm from 1973 to 1985. Mr. Haedicke is a Certified Public
Accountant.

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<PAGE>

Richard A. Anderson, Jr. has served as a Senior Vice President of the
Company since December 1988. Mr. Anderson also has been Chief Operating
Officer of the Company's New York subsidiary, Carey Limousine NY, Inc., since
December 1988. Mr. Anderson is Chairman of the New York Taxi and Limousine
Commission's Limousine Advisory Board, a former Board Member of the
Association of Corporate Travel Executives, and a member of the National
Business Travel Association and Meeting Planners International.

Sally A. Snead has served as the Company's Senior Vice President--
Information Systems since June 1993. From January 1987 to June 1993, she was
Executive Vice President and General Manager of Carey Limousine L.A., Inc. She
is a member of Executive Women International, the National Business Travel
Association, the Association of Corporate Travel Executives and the National
Limousine Association.

John C. Wintle has served as the Company's Senior Vice President--Europe
since May 1996 and as Executive Vice President and Managing Director of Carey
U.K. Ltd., a subsidiary of the Company, since March 1996. From 1982 to
February 1996, Mr. Wintle served Savoy Hotel PLC ("Savoy") and its affiliates,
including Camelot Barthropp Ltd. ("Camelot"), in various capacities. From
March 1993 to February 1996, Mr. Wintle was Executive Vice Chairman of
Camelot, which was acquired by Carey U.K. Ltd. in February 1996. Previously,
from 1989 to 1993, Mr. Wintle was General Manager, Restaurant Division, of
several entities affiliated with Savoy. From 1982 to 1989, Mr. Wintle had been
Group Financial Controller at Savoy.

Paul A. Sandt has served as a Vice President and Chief Accounting Officer of
the Company since October 1994. From May 1992 through September 1994, Mr.
Sandt was a staff member with the Securities and Exchange Commission, and from
December 1990 through May 1992, he was Director of Finance of The Kline
Automotive Group. From 1984 through 1990, he was employed by Coopers & Lybrand
L.L.P. Mr. Sandt is a Certified Public Accountant.

Devin J. Murphy has served as a Vice President of the Company since May
1996, and became Senior Vice President and Chief Development Officer in April
1997. Mr. Murphy received a Master's Degree in Business Administration from
Duke University in May 1996. For the six years prior to the commencement of
his MBA program in September 1994, Mr. Murphy held various sales and marketing
positions at companies within the information technology industry. These
companies include Bay Networks, Inc., where Mr. Murphy was Marketing Manager
from January 1993 to August 1994, Motorola Inc., where he was Manager, Major
Accounts from February 1991 to January 1993, and Hewlett-Packard Co. Inc.,
where he was Territory Manager from 1988 to 1991.

Robert W. Cox has served as a director of the Company since 1995. From 1969
until his retirement in 1994, Mr. Cox was a partner in the New York and
Chicago offices of the law firm Baker & McKenzie. From 1984 to 1992, Mr. Cox
was Chairman of the Executive Committee and Managing Partner of the firm, and
from 1993 to 1994, Mr. Cox was Chairman of the Policy Committee. Mr. Cox
currently is a director of Hon Industries, Inc.

William R. Hambrecht has served as a director of the Company since 1995. Mr.
Hambrecht is Chairman of Hambrecht & Quist LLC, an investment banking firm
which he co-founded in 1968. Mr. Hambrecht also serves as a director of Adobe
Systems, Inc.

David McL. Hillman has served as a director of the Company since 1994. Mr.
Hillman is Executive Vice President of PNC Capital Corp. and Executive Vice
President and Director of PNC Equity Management Corp., which he co-founded in
1982. Mr. Hillman is a director of several privately-held companies in
connection with PNC Capital Corp.'s investments in such companies.

Nicholas J. St. George will become a director of the Company upon
consummation of this offering. Mr. St. George has been President and Chief
Executive Officer of Oakwood Homes Corporation ("Oakwood"), a manufacturer and
retailer of manufactured homes, since February 1979. Mr. St. George serves as
a director of Oakwood, and also is a director of American Bankers Insurance
Group, Inc. and Legg Mason, Inc.

35
<PAGE>

BOARD OF DIRECTORS

The Company's Board of Directors is divided into three classes with
staggered three-year terms. After the completion of this offering, the initial
term of Messrs. Hambrecht and Hillman expire at the Company's 1998 annual
meeting, the initial terms of Messrs. Cox and St. George expire at the
Company's 1999 annual meeting, and the initial terms of Messrs. Wolfington and
Dailey expire at the Company's 2000 annual meeting. Successors to the
directors whose terms expire at each annual meeting are elected for three-year
terms. A director holds office until the annual meeting for the year in which
his term expires and until his successor is elected and qualified.

Executive Committee. After the completion of this offering, the members of
the Executive Committee of the Company's Board of Directors will be Messrs.
Wolfington, Cox and Dailey. The Executive Committee will exercise all the
powers of the Board of Directors between meetings of the Board of Directors,
except such powers that are reserved to the Board of Directors by applicable
law.

Audit Committee. After the completion of this offering, the members of the
Audit Committee of the Company's Board of Directors will be Messrs. Hillman
and St. George. The Audit Committee will make recommendations concerning the
engagement of independent public accountants, review with the independent
public accountants the plans for and results of the audit, approve
professional services provided by the independent public accountants, review
the independence of the independent public accountants, consider the range of
audit and non-audit fees and review the adequacy of the Company's internal
accounting controls.

Compensation Committee. After the completion of this offering, the members
of the Compensation Committee of the Company's Board of Directors will be
Messrs. Cox and St. George. The Compensation Committee will establish a
general compensation policy for the Company and approve increases in
directors' fees and salaries paid to officers and senior employees of the
Company. The Compensation Committee will administer the Company's equity
incentive plans and will determine, subject to the provisions of the Company's
plans, the directors, officers and employees of the Company eligible to
participate in any of the plans, the extent of such participation and terms
and conditions under which benefits may be vested, received or exercised.

DIRECTOR COMPENSATION

Members of the Board of Directors who also serve as officers of the Company
do not receive compensation for serving on the Board. Each other member of the
Board receives an annual retainer of $15,000 for serving on the Board, plus a
fee of $1,000 for each Board of Directors' meeting attended. In addition, such
directors receive an additional fee of $500 for each committee meeting
attended, except that only one fee is paid in the event that more than one
such meeting is held on a single day. All directors receive reimbursement of
reasonable expenses incurred in attending Board and committee meetings and
otherwise carrying out their duties.

The Company's Board of Directors has adopted the Stock Plan for Non-Employee
Directors (the "Directors' Plan"). A maximum of 100,000 shares of Common Stock
may be delivered upon the exercise of options granted under the Directors'
Plan and elections to receive shares in lieu of cash compensation. Only
directors of the Company who are not employees of the Company or any of its
subsidiaries (the "Non-Employee Directors") are eligible to participate in the
Directors' Plan. While grants of stock options under the Directors' Plan are
automatic and non-discretionary, all questions of interpretation of the
Directors' Plan are determined by the Board of Directors.

The Directors' Plan provides that on the date of this Prospectus, an option
to purchase 7,500 shares of Common Stock will be granted to each Non-Employee
Director. On the date of each subsequent annual meeting of stockholders, each
Non-Employee Director continuing in office will be granted an option covering
2,500 shares. Any newly elected Non-Employee Director will be granted an
option covering 5,000 shares on the date of his or her election (whether such
election occurs at an annual meeting or otherwise). The option exercise price
for each option granted under the Directors' Plan will be the closing price of
a share of the Common Stock as reported on the Nasdaq National Market on the
date the option is granted, except that options awarded on the date of this
Prospectus will have an exercise price equal to the initial public offering
price in this

36
<PAGE>

offering. All options granted under the Directors' Plan become fully
exercisable six months after the date of grant. Unless sooner terminated
following the death, disability or termination of service of a director,
options granted under the Directors' Plan will remain exercisable until the
fifth anniversary of the date of grant. In addition, upon certain transactions
involving a change of control or the dissolution or liquidation of the
Company, all options held by Non-Employee Directors will terminate; provided,
however, that for a period of 20 days prior to the effective date of any such
transaction, dissolution or liquidation, all options outstanding under the
Directors' Plan that are not otherwise exercisable shall immediately vest and
become exercisable.

Under the Directors' Plan, a Non-Employee Director may elect to be paid all
or a portion of his or her annual retainer in shares of Common Stock. Any such
election must be made in writing at least 30 days prior to the date the annual
retainer would be paid by the Company. The number of shares to be delivered to
a Non-Employee Director upon such election is determined by dividing the
amount of the annual retainer to be received in shares of Common Stock by the
closing price of a share of Common Stock as reported on the Nasdaq National
Market on the date the annual retainer is to be paid.

The Board of Directors may at any time or times amend the Directors' Plan
for any purpose which at the time may be permitted by law.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table contains a summary of the compensation paid to the Chief
Executive Officer of the Company and the other executive officers whose salary
and bonus for the Company's fiscal year ended November 30, 1996 exceeded
$100,000.

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-----------------------------------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)(1)
- ------------------ --------- -------- --------------- ------------------
<S> <C> <C> <C> <C>
Vincent A. Wolfington.... $211,620 -- -- $57,000
Chairman and Chief
Executive Officer
Don R. Dailey............ 185,001 -- -- 57,000
President and Director
Guy C. Thomas............ 115,000 -- $13,020(2) 6,300
Executive Vice
President--Operations
and Chief
Operating Officer
</TABLE>
- --------
(1) Includes with respect to each of Messrs. Wolfington and Dailey $45,000
paid for providing certain personal guarantees on behalf of the Company
and $12,000 in life insurance premiums, and with respect to Mr. Thomas,
$6,300 in life insurance premiums.
(2) Includes a car allowance of $11,820.

37
<PAGE>

OPTIONS TO PURCHASE SHARES OF COMMON STOCK

Messrs. Wolfington, Dailey and Thomas hold options to purchase the following
shares of Common Stock, all of which options are exercisable at a price of
approximately $4.65 per share. The aggregate values of the options are as set
forth below, assuming a fair market value of $11.00 per share of Common Stock.
The named officers neither were granted nor exercised options during the
fiscal year ended November 30, 1996.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
NAME UNDERLYING OPTIONS VALUE
---- ------------------ --------
<S> <C> <C>
Vincent A. Wolfington......................... 105,706 $671,127
Don R. Dailey................................. 105,706 $671,127
Guy C. Thomas................................. 32,018 $203,282
</TABLE>

EQUITY INCENTIVE PLANS

The Company currently maintains the 1987 Stock Option Plan (the "1987 Plan")
and the 1992 Stock Option Plan (the "1992 Plan"), both of which provide for
the award of incentive and non-statutory stock options by the Company. The
Company has adopted the 1997 Equity Incentive Plan (the "1997 Plan"), which
provides for the award of up to 650,000 shares of Common Stock in the form of
incentive stock options, non-statutory stock options, stock appreciation
rights, restricted stock, performance stock units and other stock units which
are valued by reference to the value of the Common Stock. The 1987 Plan, 1992
Plan and 1997 Plan are hereinafter referred to collectively as the "Equity
Plans."

Options are outstanding to purchase an aggregate of 454,155 shares of Common
Stock under the 1987 Plan and the 1992 Plan, and an aggregate of 28,655 shares
of Common Stock are authorized but have not yet been granted under options
pursuant to such plans. The Company has granted to employees options to
purchase an aggregate of 411,500 shares of Common Stock pursuant to the 1997
Plan having an exercise price equal to the initial public offering price. Of
these options, Messrs. Wolfington and Dailey each received an option to
purchase 100,000 shares of Common Stock, and Mr. Thomas received an option to
purchase 15,000 shares of Common Stock. The options issued to Messrs.
Wolfington and Dailey will vest in full 90 days from the date of this
Prospectus. The balance of the options issued under the 1997 Plan will vest
with respect to one-quarter of the underlying shares on each of the first four
anniversaries of the date of grant.

Officers, key employees, non-employee directors of and consultants to the
Company have participated in the 1987 Plan and the 1992 Plan. The 1987 Plan
and the 1992 Plan are administered by the Compensation Committee of the Board
of Directors. Among other things, the Compensation Committee determines,
subject to the provisions of said plans, who shall receive awards, the types
of awards to be made, and the terms and conditions of each award. No incentive
stock option may be granted under the 1987 Plan and the 1992 Plan at an
exercise price less than the fair market value of the shares of Common Stock
at the time the option is granted (and, in the case of stock options granted
to holders of more than 10% of the Common Stock, no option may be granted at
an exercise price less than 110% of the fair market value of the shares of
Common Stock at the time the option is granted).

All employees and directors of, and consultants and advisers to, the Company
and any of its subsidiaries are eligible to participate in the 1997 Plan. The
1997 Plan will be administered by the Compensation Committee, which will
determine who shall receive awards from those eligible to participate in the
1997 Plan, the type of award to be made, the number of shares of Common Stock
which may be acquired pursuant to the award and the specific terms and
conditions of each award, including the purchase price, term, vesting
schedule, restrictions on transfer and any other conditions and limitations
applicable to the awards or their exercise. Options that are intended to
qualify as incentive stock options may be exercisable for not more than 10
years after the date the option is awarded and may not be granted at an
exercise price less than the fair market value of the shares of Common Stock
at the time the option is granted. The Compensation Committee may at any time,
including in connection with a change in control of the Company, accelerate
the exercisability of all or any portion of any option issued under the 1997
Plan.

38
<PAGE>

The Compensation Committee may amend, modify or terminate any outstanding
award under the Company's Equity Plans with the participant's consent, except
consent shall not be required if the Compensation Committee determines that
such action will not materially and adversely affect the participant. The
Board may amend, suspend or terminate any of the Equity Plans, or any part of
such plans, at any time, except that no amendment may be made without
stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.

INDEMNIFICATION AND LIMITATION OF LIABILITIES OF OFFICERS AND DIRECTORS

As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation provides for the elimination, subject to certain
conditions, of the personal liability of directors of the Company for monetary
damages for breach of their fiduciary duties. The directors, however, remain
subject to equitable remedies even if their liability for monetary damages is
eliminated. The Company's Certificate of Incorporation also provides that the
Company shall indemnify its directors and officers. In addition, the Company
maintains an indemnification insurance policy covering all directors and
officers of the Company. In general, the Company's Certificate of
Incorporation and the indemnification insurance policy attempt to provide the
maximum protection permitted by Delaware law with respect to indemnification
of directors and officers.

Under the indemnification provisions of the Company's Certificate of
Incorporation and the indemnification insurance policy, the Company will pay
certain amounts incurred by a director or officer in connection with any civil
or criminal action or proceeding, and specifically including actions by or in
the name of the Company (derivative suits), where the individual's involvement
is by reason of the fact that he is or was a director or officer of the
Company. Such amounts include, to the maximum extent permitted by law,
attorney's fees, judgments, civil or criminal fines, settlement amounts, and
other expenses customarily incurred in connection with legal proceedings. A
director or officer will not receive indemnification if he is found not to
have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company.

39
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of Common Stock before and after the completion of this
offering for each beneficial owner of more than 5% of the Company's Common
Stock, each director and the director nominee of the Company, each named
executive officer of the Company and all directors, executive officers and the
director nominee as a group. Except as indicated in the footnotes below, the
persons named in this table have sole investment and voting power with respect
to the shares beneficially owned by them. The information contained in the
table and the footnotes thereto gives effect to the Recapitalization and the
post-offering beneficial ownership percentages also give effect to the
acquisition of Manhattan Limousine.

<TABLE>
<CAPTION>
PERCENT OWNED
-----------------
SHARES BEFORE AFTER
BENEFICIALLY THE THE
NAME OWNED OFFERING OFFERING
- ---- ------------ -------- --------
<S> <C> <C> <C>
Vincent A. Wolfington.......................... 316,228(1) 9.5% 4.9%
Don R. Dailey.................................. 315,176(2) 9.5% 4.9%
Guy C. Thomas.................................. 94,800(3) 2.9% 1.5%
Robert W. Cox.................................. 12,900(4) * *
William R. Hambrecht........................... 945,060(5) 29.4% 14.8%
David McL. Hillman............................. 616,544(6) 19.2% 9.7%
Nicholas J. St. George......................... -- -- --
H&Q London Ventures............................ 444,093 13.8% 7.0%
One Bush St.
San Francisco, CA 94104
H&Q Ventures International C.V.(7)............. 175,197 5.4% 2.7%
H&Q Ventures IV(7)............................. 175,197 5.4% 2.7%
PNC Capital Corp. ............................. 616,544(6) 19.2% 9.7%
One PNC Plaza
249 Fifth Avenue
Pittsburgh, PA 15222
Yerac Associates, L.P. ........................ 516,018(8) 16.0% 8.1%
45 Belden Place
San Francisco, CA 94104
All directors, executive officers and the
director nominee as a group
(13 persons).................................. 2,333,061(9) 49.0% 35.2%
</TABLE>
- --------
* Less than 1%.
(1) Includes options to purchase 105,706 shares of Common Stock that currently
are exercisable. Also includes 1,182 shares of Common Stock currently held
by a company controlled by Mr. Wolfington. Excludes shares held by Yerac
Associates, L.P., a limited partnership of which Mr. Wolfington is a
limited partner, with respect to which shares Mr. Wolfington has no voting
or investment power. Mr. Wolfington's address is c/o Carey International,
Inc., 4530 Wisconsin Avenue, N.W., Washington, D.C. 20016.
(2) Includes options to purchase 105,706 shares of Common Stock that currently
are exercisable. Excludes shares held by Yerac Associates, L.P., a limited
partnership of which Mr. Dailey is a limited partner,with respect to which
shares Mr. Dailey has no voting or investment power. Mr. Dailey's address
is c/o Carey International, Inc., 4530 Wisconsin Avenue, N.W., Washington,
D.C. 20016.
(3) Includes options to purchase 32,018 shares of Common Stock that currently
are exercisable.
(4) Represents options to purchase shares of Common Stock that currently are
exercisable.
(5) Includes the following number of shares of Common Stock held by the
following venture capital funds, as to which Mr. Hambrecht disclaims
beneficial ownership: H&Q Ventures International C.V. (175,197 shares);
H&Q London Ventures (444,093 shares); H&Q Ventures IV (175,197 shares);
Hamquist (10,727 shares); Hambrecht & Quist, Inc. (21,454 shares); and
Hambrecht & Quist Group (9,773 shares). Also includes (i) 85,816 shares of
Common Stock with respect to which Mr. Hambrecht shares record and

40
<PAGE>

beneficial ownership with Hamco Capital Corp. and (ii) 22,803 shares of
Common Stock with respect to which Mr. Hambrecht shares record and
beneficial ownership with the Hambrecht 1980 Revocable Trust. See "Certain
Transactions." Mr. Hambrecht's address is c/o Hambrecht & Quist, Inc., One
Bush Street, San Francisco, CA 94104.
(6) David McL. Hillman is Executive Vice President of PNC Capital Corp. Mr.
Hillman disclaims beneficial ownership of the shares held by PNC Capital
Corp.
(7) This entity shares the same address as H&Q London Ventures.
(8) Includes shares of Common Stock issuable upon exercise of a warrant to
purchase 86,003 shares of Common Stock at a price of approximately $4.65
per share. The warrant is exercisable at any time until September 1, 2001.
(9) See Notes 1, 2, 3, 4, 5 and 6. Also includes 45,253 shares of Common Stock
issuable upon exercise of the vested portions of options held by other
executive officers of the Company.

41
<PAGE>

CERTAIN TRANSACTIONS

During 1993, for an aggregate purchase price of $850,000, the Company
acquired 85 shares of non-voting redeemable preferred stock of CLI Fleet, Inc.
("CLI Fleet") a privately-held finance company formed for the purpose of
financing the chauffeured vehicle service industry. As a holder of CLI Fleet
preferred stock, the Company is currently entitled to receive an annual
dividend of $500 per share. The Company waived the right to receive any
dividends accrued in respect of its preferred stock through April 30, 1996,
but during 1995 received referral fees totalling $100,000 from CLI Fleet. Also
during 1995, CLI Fleet redeemed 10 shares of preferred stock held by the
Company for an aggregate redemption price of $100,000. The remaining shares of
preferred stock are subject to mandatory redemption by redemption payments of
$100,000, $100,000 and $550,000 in May 1998, 1999 and 2000, respectively.
Under the terms of an agreement with CLI Fleet, commencing in April 1997, the
Company has an exclusive option to purchase all of the outstanding shares of
common stock of CLI Fleet at a purchase price equal to the greater of $187,500
or CLI Fleet's liquidating value as determined by an independent appraisal.

To date, CLI Fleet has provided financing to the Company's independent
operators, without recourse to the Company, for both initial fees due under
the Company's independent operator agreements and with respect to vehicles
purchased by independent operators. Each of the Company's owned and operated
chauffeured vehicle service companies has entered into a Finance & Service
Agreement with CLI Fleet, which provides that the Company will recommend and
refer independent operators to CLI Fleet for financing of vehicles. To date,
CLI Fleet also has purchased from the Company notes receivable due from
independent operators in exchange for cash or demand notes on a non-recourse
basis. The Company sold $378,733, $1,762,345 and $1,015,897 of independent
operator notes receivable to CLI Fleet for cash of $378,733, $1,290,899 and
$733,793 and demand promissory notes of $0, $471,446 and $282,104 in 1994,
1995 and 1996, respectively. These promissory notes are due on demand,
although monthly principal payments generally are received. These notes bear
interest at rates ranging from 5% to 7%. The Company generally no longer sells
notes receivables from independent operators to CLI Fleet, although CLI Fleet
continues to provide vehicle financing to the Company's independent operators.

In connection with the Recapitalization, the exercise price of a warrant
issued to PNC will be reduced from $6.14 to $4.65 per share. In addition, upon
the closing of this offering, Carey will repay approximately $912,000 of the
$3.8 million in principal outstanding on its subordinated note held by PNC and
apply the balance of the outstanding principal to pay the purchase price for
616,544 shares of Common Stock to be issued to PNC upon exercise of the
warrant held by it. David McL. Hillman, a director of the Company, is
Executive Vice President of PNC. Also in connection with the Recapitalization,
IBJS Capital Corporation ("IBJS") will receive $1.0 million in connection with
the redemption of 10,000 shares of Series F Preferred Stock (representing all
of the outstanding shares of such series) and 3,000 shares of Series G
Preferred Stock held by IBJS.

In connection with the Recapitalization, the exercise price of a warrant to
purchase 86,003 shares of Common Stock owned by Yerac will be reduced from
$6.14 to $4.65 per share. In addition, Yerac will convert the entire
outstanding balance of a $2.0 million subordinated note held by it into
approximately 430,000 shares of Common Stock. From the net proceeds of this
offering, the Company will repay approximately $1.1 million of additional
outstanding indebtedness to Yerac. Messrs. Wolfington and Dailey are limited
partners of Yerac. See "Use of Proceeds" and "Principal Stockholders."

In connection with the Recapitalization, the Company will redeem 22,000
shares of Series A Preferred Stock held by entities affiliated with Hambrecht
& Quist Group (collectively "H&Q") for an aggregate of $1.1 million in cash
plus 44,974 shares of Common Stock. Also in connection with the
Recapitalization, (i) the conversion price of the Series G Preferred Stock
will be reduced from $7.41 to approximately $6.14, and (ii) H&Q will receive
900,089 shares of Common Stock as a result of the conversion of 5,500 shares
of Series B Preferred Stock and 31,864 shares of Series G Preferred Stock.
William R. Hambrecht, a director of the Company, is a director and chairman of
Hambrecht & Quist Group and Hamco Capital Corporation, and a general partner
of Hambrecht & Quist Venture Partners which, in turn, is the general partner
of H&Q London Ventures, H&Q Ventures International C.V., and H&Q Ventures IV.
Mr. Hambrecht also is a trustee of The Hambrecht 1980 Revocable Trust. See
"Principal Stockholders."

42
<PAGE>

Vincent A. Wolfington, the Company's Chairman and Chief Executive Officer,
and Don R. Dailey, the Company's President, each has personally guaranteed
certain indebtedness of the Company in the original principal amount of $4.5
million. The outstanding balance of this indebtedness totalled approximately
$3.7 million as of February 28, 1997. The Company paid Messrs. Wolfington and
Dailey $45,000 each during 1996 as a fee for guaranteeing such indebtedness.
The Company will use part of the net proceeds of this offering to repay the
entire outstanding amount of such indebtedness, and following the repayment
the guarantees will be terminated. In connection with the Recapitalization,
Messrs. Wolfington and Dailey will receive $20,250 and $13,650, respectively,
and 7,569 shares and 5,123 shares of Common Stock, respectively, as a result
of the redemption of the shares of Series A Preferred Stock and the conversion
of the shares of Series G Preferred Stock beneficially owned by each of them.

43
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, $.01 par value per share, and 1,000,000 shares of Preferred
Stock, $.01 par value per share ("Preferred Stock"). The following summary
description of the Common Stock and the Preferred Stock is qualified by
reference to the Company's Amended and Restated Certificate of Incorporation
included as an exhibit to the Registration Statement of which this Prospectus
is a part.

COMMON STOCK

As of the date of this Prospectus, there are 3,215,844 outstanding shares of
Common Stock and outstanding options and warrants to purchase an aggregate of
1,002,108 shares of Common Stock. Upon the closing of this offering, the
holder of a convertible promissory note of the Company having an outstanding
principal balance of $400,000 will convert the note into 43,001 shares of
Common Stock. In addition, as of February 28, 1997, the Company was obligated
under another convertible promissory note having an aggregate outstanding
principal balance of $95,000 which, under certain circumstances, is
convertible into 10,212 shares of Common Stock upon the closing of this
offering. A total of 94,170 shares of Common Stock are reserved for issuance
under the 1987 Plan, 388,647 shares are reserved for issuance under the 1992
Plan, 650,000 shares of Common Stock are reserved for issuance under the 1997
Plan and 100,000 shares of Common Stock are reserved for issuance under the
Directors' Plan. Holders of Common Stock are entitled to one vote for each
share held of record on all matters to be submitted to a vote of the
stockholders, and do not have cumulative voting rights. Subject to preferences
that may be applicable to any outstanding shares of Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends, if any, as may
be declared from time to time by the Board of Directors of the Company out of
funds legally available therefor. The Company's agreements with its principal
lenders prohibit dividend payments. See "Dividend Policy." All outstanding
shares of Common Stock are, and the shares to be sold in this offering when
issued and paid for will be, fully paid and nonassessable and the holders
thereof will have no preferences or conversion, exchange or pre-emptive
rights. In the event of any liquidation, dissolution or winding-up of the
affairs of the Company, holders of Common Stock will be entitled to share
ratably in the assets of the Company remaining after payment or provision for
payment of all of the Company's debts and obligations and liquidation payments
to holders of outstanding shares of Preferred Stock, if any.

PREFERRED STOCK

After the completion of this offering, no shares of Preferred Stock of the
Company will be issued and outstanding. Thereafter, Preferred Stock may be
issued in one or more series without further stockholder authorization, and
the Board of Directors is authorized to fix and determine the terms,
limitations and relative rights and preferences of the Preferred Stock, to
establish series of Preferred Stock and to fix and determine the variations as
among series. Preferred Stock, if issued, would have priority over the Common
Stock with respect to dividends and to other distributions, including the
distribution of assets upon liquidation, and may be subject to repurchase or
redemption by the Company. The Board of Directors, without approval of the
holders of the Common Stock, can issue Preferred Stock with voting and
conversion rights (including multiple voting rights) which could adversely
affect the rights of holders of Common Stock. In addition to having a
preference with respect to dividends or liquidation proceeds, Preferred Stock,
if issued, may be entitled to the allocation of capital gains from the sale of
the Company's assets. Although the Company has no present plans to issue any
shares of Preferred Stock following the closing of this offering, the issuance
of shares of Preferred Stock, or the issuance of rights to purchase such
shares, may have the effect of delaying, deferring or preventing a change in
control of the Company or an unsolicited acquisition proposal.

CLASSIFIED BOARD OF DIRECTORS

The Restated Certificate of Incorporation and By-laws of the Company provide
for the Board of Directors to be divided into three classes of directors, as
nearly equal in number as is reasonably possible, serving staggered terms so
that directors' initial terms will expire either at the 1998, 1999 or 2000
annual meeting of stockholders. Starting with the 1998 annual meeting of
stockholders, one class of directors will be elected each year for a three-
year term. See "Management."

44
<PAGE>

The Company believes that a classified Board of Directors will help to
assure the continuity and stability of the Board of Directors and the
Company's business strategies and policies as determined by the Board of
Directors, since a majority of the directors at any given time will have had
prior experience as directors of the Company. The Company believes that such
continuity and stability, in turn, will permit the Board of Directors to
represent more effectively the interests of its stockholders.

With a classified Board of Directors, at least two annual meetings of
stockholders, instead of one, generally will be required to effect a change in
the majority of the Board of Directors. As a result, a provision relating to a
classified Board of Directors may discourage proxy contests for the election
of directors or purchases of a substantial block of the Common Stock because
the provision could operate to prevent a rapid change in control of the Board
of Directors. The classification provision also could have the effect of
discouraging a third party from making a tender offer or otherwise attempting
to obtain control of the Company. Under the DGCL, unless a corporation's
certificate of incorporation otherwise provides, a director on a classified
board may be removed by the stockholders of the corporation only for cause.

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER PROPOSALS AND STOCKHOLDER
NOMINATIONS OF DIRECTORS

The By-laws establish an advance notice procedure with regard to the
nomination by the stockholders of the Company of candidates for election as
directors (the "Nomination Procedure") and with regard to other matters to be
brought by stockholders before a meeting of stockholders of the Company (the
"Business Procedure").

The Nomination Procedure requires that a stockholder give written notice to
the Secretary of the Company, delivered to or mailed and received at the
principal executive offices of the Company not less than 60 days nor more than
90 days prior to the meeting, in proper form, of a planned nomination for the
Board of Directors. Detailed requirements as to the form and timing of that
notice are specified in the By-laws. If the Chairman determines that a person
was not nominated in accordance with the Nomination Procedure, such person
will not be eligible for election as a director.

Under the Business Procedure, a stockholder seeking to have any business
conducted at any meeting must give written notice to the Secretary of the
Company, delivered to or mailed and received at the principal executive
offices of the Company not less than 60 days nor more than 90 days prior to
the meeting, in proper form, subject to the requirements of the proxy
solicitation rules under the Securities Exchange Act of 1934. Detailed
requirements as to the form and timing of that notice are specified in the By-
laws. If the Chairman determines that the other business was not properly
brought before such meeting in accordance with the Business Procedure, such
business will not be conducted at such meeting.

Although the By-laws do not give the Board of Directors any power to approve
or disapprove of stockholder nominations for the election of directors or of
any other business desired by stockholders to be conducted at an annual or any
other meeting, the By-laws (i) may have the effect of precluding nominations
for the election of directors or precluding the conduct of business at a
particular annual meeting if the proper procedures are not followed or (ii)
may discourage or deter a third party from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain
control of the Company, even if the conduct of such solicitation or such
attempt might be beneficial to the Company and its stockholders.

OTHER PROVISIONS

Special Meetings of the Stockholders of the Company. The Company's By-laws
provide that a special meeting of the stockholders of the Company only may be
called by the Chairman of the Board, or by order of the Board of Directors.
That provision prevents stockholders from calling a special meeting of
stockholders and potentially limits the stockholders' ability to offer
proposals to the annual meetings of stockholders, if no special meetings are
otherwise called by the Chairman or the Board.

Amendment of the By-laws. The Company's Restated Certificate of
Incorporation provides that the By-laws only may be amended by a vote of the
Board of Directors or by a vote of at least 75% of the outstanding shares of
the Company's stock entitled to vote in the election of directors.

45
<PAGE>

No Action by Written Consent. The Company's Restated Certificate of
Incorporation does not permit the Company's stockholders to act by written
consent. As a result, any action to be taken by the Company's stockholders
must be taken at a duly called meeting of the stockholders.

DELAWARE ANTI-TAKEOVER STATUTE

The Company is subject to Section 203 of the DGCL which, with certain
exceptions, prohibits a Delaware corporation from engaging in any of a broad
range of business combinations with any "interested stockholder" for a period
of three years following the date that such stockholder became an interested
stockholder, unless: (a) prior to such date, the Board of Directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (b) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are directors and officers
and (ii) by employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (c) on or after such date,
the business combination is approved by the Board of Directors and authorized
at an annual or special meeting of stockholders by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder. An "interested stockholder" is defined as any person
that is (y) the owner of 15% or more of the outstanding voting stock of the
corporation or (z) an affiliate or associate of the Company and was the owner
of 15% or more of the outstanding voting stock of the Company at any time
within the three-year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of this offering and the acquisition of Manhattan
Limousine, the Company will have 6,377,026 shares of Common Stock outstanding.
Of these shares, 2,900,000 shares sold pursuant to this offering (3,335,000
shares if the Underwriters exercise their over-allotment option in full) will
be freely tradeable without restriction under the Securities Act, except for
any shares which may be acquired by an "affiliate" of the Company (as that
term is defined in Rule 144). The 3,477,026 remaining shares constitute
"restricted securities" within the meaning of Rule 144 and, except for shares
held by affiliates of the Company and the 218,181 shares issued in connection
with the acquisition of Manhattan Limousine, will be eligible for sale in the
open market subject to the applicable requirements of Rule 144(k) described
below.

Following the completion of this offering, if issued upon the conversion of
an outstanding convertible note and the exercise of outstanding warrants,
274,165 shares of Common Stock also will be restricted securities within the
meaning of Rule 144 and will be eligible for sale in the open market subject
to the applicable requirements of Rule 144 discussed below.

Also following the completion of this offering, there will be a total of
888,155 shares of Common Stock issuable upon the exercise of outstanding
options under the Company's Equity Plans and Directors' Plan and an additional
344,662 shares of Common Stock reserved for future award or grant under such
plans. The Company intends to file a registration statement on Form S-8 to
register the issuance of shares under the Equity Plans and Directors' Plan.
Common Stock issued after the effective date of such registration statement
upon exercise of outstanding vested options granted pursuant to the Equity
Plans and Directors' Plan, other than Common Stock issued to affiliates of the
Company, would be available for immediate resale in the open market.

In general, under Rule 144, if a period of at least one year has elapsed
between the later of the date on which restricted securities were acquired
from the Company and the date on which they were acquired from an affiliate,
then the holder of such restricted securities (including an affiliate) is
entitled to sell that number of shares within any three-month period that does
not exceed the greater of (i) one percent of the then outstanding shares of
the Common Stock or (ii) the average weekly reported volume of trading of the
Common Stock during the four calendar weeks preceding such sales. Sales under
Rule 144 also are subject to certain requirements pertaining to the manner of
such sales, notices of such sales and the availability of current public
information

46
<PAGE>

concerning the Company. Any shares not constituting restricted securities sold
by affiliates must be sold in accordance with the foregoing volume limitations
and other requirements but without regard to the one year holding period.
Under Rule 144(k), if a period of at least two years has elapsed from the
later of the date on which restricted securities were acquired from the
Company and the date on which they were acquired from the affiliate, a holder
of such restricted securities who is not an affiliate at the time of the sale
and has not been an affiliate for at least three months prior to the sale
would be entitled to sell the shares immediately without regard to the volume
limitations and other conditions described above.

The Company and the beneficial owners of at least 4,000,000 shares of Common
Stock (including all of the Company's officers and directors and those
individuals who will be issued Common Stock in the Manhattan Limousine
acquisition) have agreed that they will not offer, sell, contract to sell,
pledge, grant any option for the sale of, or otherwise dispose or cause the
disposition of any shares of Common Stock or securities convertible into or
exchangeable or exercisable for such shares, for a period of 180 days after
the date of this Prospectus without the prior written consent of Montgomery
Securities, except for (i) in the case of the Company, Common Stock issued
pursuant to any employee or director benefit plan described herein or in
connection with acquisitions or (ii) in the case of directors and executive
officers, the exercise of stock options pursuant to benefit plans described
herein and shares of Common Stock disposed of as bona fide gifts, subject in
each case to any remaining portion of the 180-day period applying to shares so
issued or transferred. In evaluating any request for a waiver of the 180-day
lock-up period, Montgomery Securities will consider, in accordance with their
customary practice, all relevant facts and circumstances at the time of the
request, including, without limitation, the recent trading market for the
Common Stock, the size of the request and, with respect to a request by the
Company to issue additional equity securities, the purpose of such an
issuance. The holder of 218,181 shares of Common Stock to be issued in
connection with the acquisition of Manhattan Limousine will be entitled to
certain demand and piggy-back registration rights one year after completion of
this offering.

After the offering, sales of substantial amounts of Common Stock by existing
stockholders could have an adverse impact on the prevailing market price of
the Common Stock. No predictions can be made as to the effect, if any, that
market sales of shares by existing stockholders or the availability of such
shares for future sale will have on the market price of shares of Common Stock
prevailing from time to time.

47
<PAGE>

UNDERWRITING

The Underwriters named below (the "Underwriters"), represented by Montgomery
Securities and Ladenburg Thalmann & Co. Inc. (the "Representatives"), have
severally agreed, subject to the terms and conditions in the underwriting
agreement (the "Underwriting Agreement") by and between the Company and the
Underwriters, to purchase from the Company the number of shares of Common
Stock indicated below opposite their respective names, at the initial public
offering price less the underwriting discount set forth on the cover page of
this Prospectus. The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares of Common Stock, if
they purchase any.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Montgomery Securities............................................
Ladenburg Thalmann & Co. Inc. ...................................
---------
Total........................................................ 2,900,000
=========
</TABLE>

The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public on the terms set forth on
the cover page of this Prospectus. The Underwriters may allow selected dealers
a concession of not more than $ per share; and the Underwriters may allow,
and such dealers may reallow, a concession of not more than $ per share to
certain other dealers. After the initial public offering, the public offering
price and other selling terms may be changed by the Representatives. The
Common Stock is offered subject to receipt and acceptance by the Underwriters,
and to certain other conditions, including the right to reject orders in whole
or in part.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a
maximum of 435,000 additional shares of Common Stock to cover over-allotments,
if any, at the same price per share as the initial shares to be purchased by
the Underwriters. To the extent that the Underwriters exercise such over-
allotment option, the Underwriters will be committed, subject to certain
conditions, to purchase such additional shares in approximately the same
proportion as set forth in the above table. The Underwriters may purchase such
shares only to cover over-allotments made in connection with this offering.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including civil liabilities under
the Securities Act, or will contribute to payments the Underwriters may be
required to make in respect thereof.

The Company's officers and directors and certain of the shareholders of the
Company (including the holders of shares issued in connection with the
acquisition of Manhattan Limousine) who, immediately following this offering,
collectively will beneficially own an aggregate of at least 4,000,000 shares
of Common Stock (including shares issuable upon the exercise of outstanding
options and warrants), have agreed that for a period of 180 days after the
date of this Prospectus they will not, without the prior written consent of
Montgomery Securities, directly or indirectly sell, offer, contract or grant
any option to sell, pledge, transfer, establish an open put equivalent
position or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable or
exercisable for or convertible into shares of Common Stocks. The Company has
also agreed not to issue, offer, sell, grant options to purchase or otherwise
dispose of any of the Company's equity securities for a period of 180 days
after the effective date of this offering without the prior written consent of
Montgomery Securities, except for securities issued by the Company in
connection with

48
<PAGE>

acquisitions and for grants and exercises of stock options, subject in each
case to any remaining portion of the 180-day period applying to shares so
issued or transferred. In evaluating any request for a waiver of the 180-day
lock-up period, Montgomery Securities will consider, in accordance with their
customary practice, all relevant facts and circumstances at the time of the
request, including, without limitation, the recent trading market for the
Common Stock, the size of the request and, with respect to a request by the
Company to issue additional equity securities, the purpose of such an
issuance. See "Shares Eligible for Future Sale."

In connection with this offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M under the Securities Exchange Act of
1934, pursuant to which such persons may bid for or purchase Common Stock for
the purpose of stabilizing its market price. The Underwriters also may create
a short position for the account of the Underwriters by selling more Common
Stock in connection with the offering than they are committed to purchase from
the Company, and in such case may purchase Common Stock in the open market
following completion of this offering to cover all or a portion of such short
position. The Underwriters may also cover all or a portion of such short
position, up to 435,000 shares of Common Stock, by exercising the
Underwriters' over-allotment option referred to above. In addition, Montgomery
Securities, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in this offering), for the account of the
other Underwriters, the selling concession with respect to Common Stock that
is distributed in this offering but subsequently purchased for the account of
the Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.

The Representatives have informed the Company that the Underwriters do not
expect to make sales of Common Stock offered by this Prospectus to accounts
over which they exercise discretionary authority in excess of 5% of the number
of shares of Common Stock offered hereby.

In recognition of financial advisory services provided to the Company prior
to this offering, the Company has agreed to issue to each of Montgomery
Securities and Ladenburg Thalmann & Co. Inc. warrants (the "Warrants") to
purchase 67,500 shares of Common Stock, exercisable for a period of five years
commencing on the date of this offering, at a price equal to 120% of the
initial offering price, subject to adjustment in certain events. Each Warrant
contains certain registration rights relating to the shares issuable
thereunder.

The Company also has agreed to issue warrants to purchase an aggregate of
15,000 shares of Common Stock to LP Associates, William Russell and Michael
Press as a finder's fee in connection with this offering. These warrants will
contain identical terms to the Warrants.

Prior to this offering, there has been no public trading market for the
Common Stock. Consequently, the initial public offering price of the Common
Stock has been determined by negotiations between the Company and the
Representatives. Among the factors considered in such negotiations were the
history of, and the prospects for, the Company and the industry in which the
Company competes, an assessment of the Company's management, its financial
conditions, its past and present earnings and the trend of such earnings, the
prospects for future earnings of the Company, the present state of the
Company's development, the general condition of the economy and the securities
markets at the time of this offering and the market prices of and demand for
publicly traded common stock of comparable companies in recent periods.

49
<PAGE>

LEGAL MATTERS

The validity of the shares offered will be passed upon for the Company by
Nutter, McClennen & Fish, LLP, Boston, Massachusetts. Certain legal matters
will be passed upon for the Underwriters by Fulbright & Jaworski L.L.P., New
York, New York.

EXPERTS

The consolidated financial statements of the Company as of November 30, 1995
and 1996 and for each of the three years in the period ended November 30, 1996
included in this Prospectus have been included herein in reliance on the
report, which includes an explanatory paragraph relating to the restatement of
such financial statements, of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.

The combined financial statements of Manhattan Limousine as of September 30,
1996 and for the year ended September 30, 1996 included in this Prospectus
have been included herein in reliance on the report, which includes an
explanatory paragraph relating to the restatement of such financial
statements, of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.

The financial statements of Speed 6060 Limited (formerly Camelot Barthropp
Limited) as of and for the years ended December 31, 1994 and December 31,
1995, included in this Prospectus have been included herein in reliance on the
report of Coopers & Lybrand, Chartered Accountants and Registered Auditors,
given on the authority of that firm as experts in accounting and auditing.

The financial statements of Camelot Barthropp Limited (formerly Speed 6060
Limited) as of December 31, 1995 and for the period from August 4, 1995 to
December 31, 1995, included in this Prospectus have been included herein in
reliance on the report of Coopers & Lybrand, Chartered Accountants and
Registered Auditors, given on the authority of that firm as experts in
accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act and the rules and regulations promulgated
thereunder, with respect to the Common Stock offered hereby. This Prospectus
omits certain information contained in the Registration Statement, and
reference is made to the Registration Statement and the exhibits and schedules
thereto for further information with respect to the Company and the Common
Stock offered hereby. Statements contained in this Prospectus concerning the
provisions or contents of any contract, agreement or any other document
referred to herein are not necessarily complete with respect to each such
contract, agreement or document filed as an exhibit to the Registration
Statement, reference is made to such exhibit for a more complete description
of the matters involved, and each such statement shall be deemed qualified by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1204, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of the Registration Statement or any part thereof may be obtained from
such office, upon payment of the fees prescribed by the Commission. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that submit electronic filings to the Commission.

50
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CAREY INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Balance Sheet as of February 28, 1997........................... F-3
Pro Forma Statement of Operations for three months ended February 28,
1997..................................................................... F-4
Pro Forma Statement of Operations for the year ended November 30, 1996.... F-5
Notes to Pro Forma Consolidated Financial Statements...................... F-6
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Consolidated Financial Statements
Balance Sheet as of February 28, 1997..................................... F-8
Statements of Operations for three months ended February 29, 1996 and
February 28, 1997........................................................ F-9
Statements of Cash Flows for three months ended February 29, 1996 and
February 28, 1997........................................................ F-10
Note to Consolidated Financial Statements................................. F-11
Audited Consolidated Financial Statements
Report of Independent Accountants......................................... F-15
Balance Sheets as of November 30, 1995 and 1996........................... F-16
Statements of Operations for the years ended November 30, 1994, 1995 and
1996..................................................................... F-17
Statements of Changes in Stockholders' Equity for the years ended November
30, 1994, 1995
and 1996................................................................. F-18
Statements of Cash Flows for the years ended November 30, 1994, 1995 and
1996..................................................................... F-19
Notes to Consolidated Financial Statements................................ F-20
MANHATTAN INTERNATIONAL LIMOUSINE NETWORK, LTD. AND AFFILIATE
Combined Financial Statements
Report of the Independent Accountants..................................... F-36
Balance Sheets as of September 30, 1996 and December 31, 1996
(unaudited).............................................................. F-37
Statements of Operations for the year ended September 30, 1996 and the
three months ended
December 31, 1996 (unaudited)............................................ F-38
Statements of Cash Flows for the year ended September 30, 1996 and the
three months ended
December 31, 1996 (unaudited)............................................ F-39
Notes to Combined Financial Statements.................................... F-40
CAMELOT BARTHROPP LIMITED
Audited Financial Statements
Report of the Independent Accountants..................................... F-46
Statement of Operations for the period from August 4, 1995 to December 31,
1995..................................................................... F-47
Balance Sheet at December 31, 1995........................................ F-48
Notes to the Financial Statements......................................... F-49
SPEED 6060 LIMITED
Audited Financial Statements
Report of the Independent Accountants..................................... F-58
Statements of Operations for the years ended December 31, 1994 and 1995... F-59
Balance Sheets at December 31, 1994 and 1995.............................. F-60
Notes to the Financial Statements......................................... F-61
</TABLE>

F-1
<PAGE>

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION
The Pro Forma Consolidated Balance Sheet as of February 28, 1997 and the Pro
Forma Consolidated Statement of Operations for the year ended November 30,
1996 and for the three months ended February 28, 1997 are based on the
historical consolidated financial statements of Carey International, Inc. and
subsidiaries (the "Company"), Manhattan International Limousine Network Ltd.
and Affiliate ("Manhattan Limousine") and Camelot Barthropp Limited. The Pro
Forma Consolidated Balance Sheet has been prepared assuming the acquisition of
Manhattan Limousine occurred on February 28, 1997. For purposes of the Pro
Forma Balance Sheet, the Combined Balance Sheet of Manhattan Limousine as of
December 31, 1996, its most recent quarter-end, has been combined with the
Consolidated Balance Sheet of the Company as of February 28, 1997.

The Pro Forma Consolidated Statement of Operations for the year ended
November 30, 1996 and for the three months ended February 28, 1997 have been
prepared assuming the acquisitions of Camelott Barthropp Limited and Manhattan
Limousine occurred on December 1, 1995. For purposes of the Pro Forma
Consolidated Statements of Operations for the year ended November 30, 1996 and
the three months ended February 28, 1997, Manhattan Limousine's Statement of
Operations for the year ended September 30, 1996 has been combined with the
Consolidated Statement of Operations of the Company for the year ended
November 30, 1996 and Manhattan Limousine's Statement of Operations for the
three months ended December 31, 1996 has been combined with the Consolidated
Statement of Operations of the Company for the three months ended February 28,
1997. The Pro Forma Consolidated Statements of Operations also reflect the
issuance of 2,192,695 shares of Common Stock (at the estimated initial public
offering price of $11.00 per share, net of estimated underwriting discounts)
required to: (i) repay certain existing debt of the Company, (ii) pay the cash
portion of the purchase price for Manhattan Limousine, (iii) repay certain
debt assumed in connection with the acquisition of Manhattan Limousine, and
(iv) redeem certain preferred stock of the Company. The Pro Forma Consolidated
Statement of Operations also reflects the issuance of an aggregate of
2,821,253 shares of Common Stock in connection with (i) the acquisition of
Manhattan Limousine (at the estimated initial public offering price of $11.00
per share), (ii) the issuance of shares of Common Stock as part of the
Recapitalization and (iii) the conversion of certain debt into Common Stock
upon the closing of the initial public offering. These 5,013,948 shares are
assumed to have been issued, the debt repaid or converted and the preferred
stock redeemed at the beginning of the period presented, and thus interest
expense attributable to such debt has been eliminated.

The Pro Forma Consolidated Balance Sheet reflects the assumed issuance as of
February 28, 1997 of 2,900,000 shares of Common Stock in this offering at the
estimated initial public offering price of $11.00 per share, and the
application of the proceeds (net of estimated underwriting discounts and
offering expenses payable by the Company) to: (i) repay certain existing debt
of the Company, (ii) pay the cash portion of the purchase price for the
acquisition of Manhattan Limousine, (iii) repay certain debt assumed in
connection with the acquisition of Manhattan Limousine and (iv) redeem certain
preferred stock of the Company, with the remaining net proceeds added to
working capital.

The Pro Forma Consolidated Financial Statements do not purport to represent
what the Company's actual results of operations or financial position would
have been had the acquisitions occurred as of such dates, or to project the
Company's results of operations or financial position for any period or date,
nor does it give effect to any matters other than those described in the notes
thereto. In addition, the allocation of purchase price to the assets and
liabilities of Manhattan Limousine is preliminary and the final allocation may
differ from the amounts reflected herein. The Pro Forma Consolidated Financial
Statements should be read in conjunction with the other financial statements
and notes thereto included elsewhere in this Prospectus.

F-2
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
FEBRUARY 28, 1997
-------------------------------------------------------------------------------------------
ACTUAL
------------------------
MANHATTAN ACQUISITION RECAPITALIZATION OFFERING
COMPANY LIMOUSINE ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS(1) PRO FORMA
----------- ----------- ----------- ---------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents............ $ 1,458,633 $ 24,932 $ (24,932)(4) $ -- $28,369,224 $ 7,396,580
(7,607,622)
(7,060,000)
(3,747,703)
(4,015,952)(6)
Accounts receivable,
net.................... 7,474,537 2,550,658 (2,550,658)(4) -- -- 7,474,537
Notes receivable from
contracts, current
portion................ 434,562 478,707 -- -- -- 913,269
Prepaid expenses and
other current assets... 2,663,215 51,499 -- -- (1,227,563) 1,487,151
----------- ----------- ----------- ---------- ----------- -----------
Total current
assets............. 12,030,947 3,105,796 (2,575,590) -- 4,710,384 17,271,537
Fixed assets, net....... 3,179,839 735,108 1,250,000 (5) -- -- 5,164,947
Notes receivable from
contracts, excluding
current portion........ 1,256,900 7,498,445 -- -- -- 8,755,345
Franchise rights, net... 5,289,286 -- -- -- -- 5,289,286
Trade name and contract
rights, net............ 6,637,275 -- -- -- -- 6,637,275
Goodwill, net........... 7,230,853 -- 19,677,031 (5) -- -- 26,907,884
Deferred tax assets..... 2,461,573 -- -- -- -- 2,461,573
Deposits and other
assets................. 1,291,556 1,227,814 (1,204,927)(4) -- (99,439)(3) 1,215,004
----------- ----------- ----------- ---------- ----------- -----------
Total assets........ $39,378,229 $12,567,163 $17,146,514 $ -- $ 4,610,945 $73,702,851
=========== =========== =========== ========== =========== ===========
LIABILITIES AND STOCK-
HOLDERS' EQUITY
Current portion of notes
payable................ $ 3,967,163 $ 2,769,013 $(1,685,964)(4) $ -- $(3,193,148) $ 5,489,026
4,740,000 (5) (908,038)
(200,000)(2)
Payable to seller....... -- -- 7,060,000 (5) -- (7,060,000) --
Current portion of
capital leases......... 210,227 -- -- -- -- 210,227
Current portion of
subordinated notes
payable................ 660,000 -- -- -- (660,000)(6) --
Accounts payable and
accrued expenses....... 8,222,819 4,375,872 (182,000)(4) -- (925,339) 11,491,352
----------- ----------- ----------- ---------- ----------- -----------
Total current
liabilities........ 13,060,209 7,144,885 9,932,036 -- (12,946,525) 17,190,605
Notes payable, excluding
current portion........ 5,527,830 2,445,743 520,000 (5) -- (4,414,474) 1,039,434
(200,000)(2)
(2,839,665)
Capital leases,
excluding current
portion................ 679,215 -- -- -- -- 679,215
Subordinated notes
payable, excluding
current portion........ 5,120,000 -- -- (4,867,548)(6) (252,452)(6) --
Deferred rent and other
long-term liabilities.. 74,307 866,401 (466,624)(4) -- -- 474,084
Deferred tax
liabilities............ 1,444,163 -- -- -- -- 1,444,163
Deferred revenue........ 6,628,564 6,871,236 -- -- -- 13,499,800
Stockholders' equity:
Preferred stock....... 1,115,400 -- -- (775,050)(6) (340,350)(6) --
Common stock.......... 6,558 1,100 (1,100)(5) 25,600 (6) 29,000 63,770
2,182 (5) 430 (2)
Additional paid in
capital.............. 7,357,064 176,940 (176,940)(5) 5,616,998 (6) 28,038,000 41,046,300
2,397,818 (5) (2,763,150)(6)
399,570(2)
Accumulated deficit... (1,635,081) (4,939,142) 4,939,142 (4,5) -- (99,439)(3) (1,734,520)
----------- ----------- ----------- ---------- ----------- -----------
Total stockholders'
equity............. 6,843,941 (4,761,102) 7,161,102 4,867,548 25,264,061 39,375,550
----------- ----------- ----------- ---------- ----------- -----------
Total liabilities
and stockholders'
equity........... $39,378,229 $12,567,163 $17,146,514 $ -- $ 4,610,945 $73,702,851
=========== =========== =========== ========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these pro forma consolidated
financial statements.

F-3
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FEBRUARY 28, 1997
------------------------------------------------------------------------------------
ACTUAL
-----------------------
MANHATTAN ACQUISITION RECAPITALIZATION OFFERING
COMPANY LIMOUSINE ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
----------- ---------- ----------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenue, net............ $14,141,383 $5,471,384 $ -- $ -- $ -- $19,612,767
Cost of revenue......... 9,756,260 3,393,076 -- -- -- 13,149,336
----------- ---------- --------- -------- -------- -----------
Gross profit.......... 4,385,123 2,078,308 -- -- -- 6,463,431
Selling, general and
administrative
expense................ 3,819,432 1,491,857 (46,865)(7) -- 37,500 (12) 5,503,401
201,477 (8) --
----------- ---------- --------- -------- -------- -----------
Operating income
(loss)............... 565,691 586,451 (154,612) -- (37,500) 960,030
Other income (expense)
Interest expense...... (392,347) (224,810) (28,281)(9) 125,000(11) 379,199 (12) (141,239)
Interest and other
income............... 147,285 16,500 -- -- -- 163,785
----------- ---------- --------- -------- -------- -----------
Income before provision
for income taxes....... 320,629 $ 378,141 $(182,893) $125,000 $341,699 982,576
========== ========= ======== ========
Provision for income
taxes.................. 153,223 412,682 (13)
----------- -----------
Net income ............. $ 167,406 $ 569,894
=========== ===========
Pro forma net income per
common share........... $ .10 (14)
===========
Weighted average shares
outstanding............ 5,971,960 (14)
===========
</TABLE>

The accompanying notes are an integral part of these pro forma consolidated
financial statements.

F-4
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED NOVEMBER 30, 1996
--------------------------------------------------------------------------------------------------
ACTUAL
-----------------------------------
CAMELOT
BARTHROPP MANHATTAN ACQUISITION RECAPITALIZATION OFFERING
COMPANY LIMITED LIMOUSINE ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
----------- --------- ----------- ----------- ---------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue, net............ $59,505,698 $ 938,656 $18,438,547 $ -- $ -- $ -- $78,882,901
Cost of revenue......... 40,438,449 865,336 11,040,017 -- -- -- 52,343,802
----------- --------- ----------- -------- -------- ---------- -----------
Gross profit.......... 19,067,249 73,320 7,398,530 -- -- -- 26,539,099
Selling, general and
administrative
expense................ 15,077,553 211,097 5,821,899 (874,475)(7) -- 150,000 (12) 21,191,984
805,910 (8) --
----------- --------- ----------- -------- -------- ---------- -----------
Operating income
(loss)............... 3,989,696 (137,777) 1,576,631 68,565 -- (150,000) 5,347,115
Other income (expense)
Interest expense...... (1,704,187) (21,375) (881,854) (76,608)(9) 500,000(11) 1,504,370 (12) (679,654)
Interest and other
income............... 426,349 -- 66,000 (66,000)(10) -- -- 426,349
----------- --------- ----------- -------- -------- ---------- -----------
Income before provision
(benefit) for income
taxes.................. 2,711,858 $(159,152) $ 760,777 $(74,043) $500,000 $1,354,370 5,093,810
========= =========== ======== ======== ==========
Provision (benefit) for
income taxes........... (104,246) 2,154,682 (13)
----------- -----------
Net income ............. $ 2,816,104 $ 2,939,128
=========== ===========
Pro forma net income per
common share........... $ .49 (14)
===========
Weighted average shares
outstanding............ 6,023,785 (14)
===========
</TABLE>

The accompanying notes are an integral part of these pro forma consolidated
financial statements.

F-5
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

To date, all of the Company's acquisitions have been accounted for under the
purchase method of accounting with the results of the acquired companies
included in the Company's statements of operations beginning on the date of
the acquisition.

(1) Gives effect to the sale by the Company of 2,900,000 shares of Common
Stock in this offering at an estimated offering price of $11.00 per
share. After estimated underwriting discounts and commissions and
offering expenses of $3.8 million, of which approximately $300,000 has
been paid, the estimated net proceeds of $28.4 million will be applied
to: (i) the repayment of certain existing debt of the Company of $7.6
million, (ii) the repayment of the cash portion of the purchase price for
the acquisition of Manhattan Limousine of $7.1 million, (iii) the
repayment of $3.7 million of debt assumed upon the acquisition of
Manhattan Limousine and (iv) the redemption of certain preferred stock of
the Company for $3.1 million and the repayment of subordinated debt of
approximately $912,000 as part of the Recapitalization (see Note 6,
below). The balance of the net proceeds, estimated to be approximately
$5.9 million, will be added to working capital.

(2) Gives effect to the conversion of $400,000 of debt into Common Stock at
the election of the debt holder.

(3) Reflects the elimination of approximately $99,000 of capitalized
financing fees related to certain debt repaid out of the net proceeds of
the offering.

(4) Gives effect to the retention by the stockholders of Manhattan Limousine
of certain assets and liabilities consisting of: (i) cash of
approximately $25,000, (ii) $2.6 million of accounts receivable, net,
(iii) $1.2 million of deposits and other assets, (iv) debt of $1.7
million collateralized by accounts receivable and (v) certain liabilities
of approximately $649,000.

(5) Gives effect to the acquisition of Manhattan Limousine for $14.2 million,
as if such acquisition occurred on February 28, 1997. The adjustments
reflect: (i) a cash payment of $7.1 million, (ii) promissory notes issued
in the aggregate amount of $4.7 million and (iii) the issuance of $2.4
million of Common Stock. After taking into account all acquisition
adjustments, the liabilities of Manhattan Limousine exceed its assets.
Accordingly, the allocation of the purchase price to the estimated fair
value of the assets and liabilities assumed will result in the
recognition by the Company of $19.7 million in goodwill. As part of the
fair value allocation, the Company valued the facility at which Manhattan
Limousine operates at its estimated fair market value of $1.1 million and
certain radio frequencies used in the conduct of Manhattan Limousine's
business at their estimated fair market value of $200,000. In January
1997, Manhattan Limousine increased the mortgage on this facility by
approximately $520,000 to $800,000. The entire mortgage was included in
the acquired liabilities.

(6) Gives effect to the Recapitalization, which will be implemented upon the
closing of the IPO. Pursuant to the Recapitalization: (i) the $2.0
million subordinated convertible note dated September 1, 1991, and $2.9
million of the $3.8 million subordinated note dated July 30, 1992 will be
converted or exchanged for an aggregate of 1,046,559 shares of Common
Stock, (ii) the Series A Preferred Stock will be redeemed in part for
$2.1 million and converted in part into 86,003 shares of Common Stock,
(iii) all of the Series F and 3,000 shares of the Series G Preferred
Stock will be redeemed for $1.0 million and (iv) the remaining Series G
Preferred Stock and the Series B Preferred Stock will be converted into
an aggregate of 1,427,509 shares of Common Stock.

(7) Gives effect to the elimination from the Combined Statement of Operations
of Manhattan Limousine of: (i) a one-time charge related to advances to a
non-combined affiliate of Manhattan Limousine which were approximately
$7,000 and $218,000 for the three months ended February 28, 1997 and the
year ended November 30, 1996, respectively, (ii) redundant administrative
and other costs immediately identifiable at the time of the acquisition
(relating to salary and benefits of a stockholder of Manhattan Limousine
and members of his family which will not be incurred by the Company) of
approximately $40,000 and $591,000 for the three months ended February
28, 1997 and the year ended November 30, 1996, respectively, and
(iii) approximately $65,000 for the year ended November 30, 1996 of
financing fees associated with debt retained by a stockholder of
Manhattan Limousine.

F-6
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(8) Gives effect to (i) the amortization of approximately $164,000 and
$656,000 for the three months ended February 28, 1997 and the year ended
November 30, 1996, respectively, of goodwill recognized with respect to
the acquisition of Manhattan Limousine, and (ii) $37,500 and $150,000 for
the three months ended February 28, 1997 and the year ended November 30,
1996, respectively, of consulting fees to be paid pursuant to a
consulting agreement entered into in connection with the acquisition of
Manhattan Limousine. Goodwill will be amortized over a 30-year period.

(9) Gives effect to an increase in interest associated with the promissory
notes in the aggregate amount of $4.8 million used to acquire Manhattan
Limousine and the increase of $520,000 in Manhattan Limousine's mortgage
note in January 1997, both of which will be repaid out of the proceeds of
the offering. Also gives effect to a decrease in interest expense
associated with the debt retained by a stockholder of Manhattan
Limousine.

(10) Gives effect to the elimination of interest income related to a note
receivable retained by a stockholder of Manhattan Limousine.

(11) Reflects the elimination of approximately $125,000 and $500,000 for the
three months ended February 28, 1997 and the year ended November 30,
1996, respectively, of interest on certain debt converted into Common
Stock.

(12) Reflects directors' and officers' insurance costs the Company anticipates
to incur in connection with being a public registrant and the elimination
of approximately $379,000 and $1.5 million for the three months ended
February 28, 1997 and the year ended November 30, 1996, respectively, of
interest on certain current and long-term debt repaid from the proceeds
of this offering or converted into Common Stock.

(13) Reflects the estimated provision for income taxes at an assumed rate of
42.0% and 42.3% for the three months ended February 28, 1997 and the year
ended November 30, 1996, respectively, after giving consideration to
nondeductible goodwill expense.

(14) Pro forma net income per share was computed by dividing the pro forma net
income for the three months ended February 28, 1997 and the year ended
November 30, 1996 by the pro forma weighted average number of shares
outstanding for each of the periods. Pro forma weighted average shares
outstanding include common share equivalents, and give retroactive effect
as of December 1, 1995 for the following: (i) the repayment of certain
existing debt of the Company, (ii) the payment of the cash and stock
portions of the purchase price for the acquisition of Manhattan
Limousine, (iii) the repayment of $3.7 million of debt assumed upon the
acquisition of Manhattan Limousine, (iv) the redemption of certain
preferred stock of the Company for $3.1 million and the repayment of
subordinated debt of the Company in the principal amount of approximately
$912,000 as part of the Recapitalization and (v) increasing the weighted
average common shares outstanding by the number of common shares
resulting from such conversion of $400,000 of convertible debt and
$4,867,546 of subordinated debt and the partial conversion of the Series
A and G Preferred Stock. Pursuant to Securities and Exchange Commission
Staff Accounting Bulletin (SAB) No. 83, the common equivalent shares
issued by the Company during the 12 months preceding the anticipated
effective date of the Registration Statement relating to the Company's
initial public offering, using the treasury stock method and an assumed
public offering price of $11.00 per share, have been included in the
calculation of pro forma net income per share. All share numbers give
effect to the reverse stock split of one-for-2.3255 that is part of the
Recapitalization.

F-7
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
FEBRUARY 28,
1997
------------
(UNAUDITED)
<S> <C>
ASSETS
Cash and cash equivalents......................................... $ 1,458,633
Accounts receivable, net of allowance for doubtful accounts of
$546,000......................................................... 7,474,537
Notes receivable from contracts, current portion.................. 434,562
Prepaid expenses and other current assets......................... 2,663,215
-----------
Total current assets.......................................... 12,030,947
Fixed assets, net of accumulated depreciation and amortization of
$2,593,000....................................................... 3,179,839
Notes receivable from contracts, excluding current portion........ 1,256,900
Franchise rights, net of accumulated amortization of $1,788,000... 5,289,286
Trade name, trademark and contract rights, net of accumulated
amortization of $1,020,000....................................... 6,637,275
Goodwill and other intangible assets, net of accumulated
amortization of $894,000......................................... 7,230,853
Deferred tax assets............................................... 2,461,573
Deposits and other assets......................................... 1,291,556
-----------
Total assets................................................ $39,378,229
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of notes payable.................................. $ 3,967,163
Current portion of capital leases................................. 210,227
Current portion of subordinated notes payable..................... 660,000
Accounts payable and accrued expenses............................. 7,297,480
Accrued offering costs............................................ 925,339
-----------
Total current liabilities..................................... 13,060,209
Notes payable, excluding current portion.......................... 5,527,830
Capital leases, excluding current portion......................... 679,215
Subordinated notes payable, excluding current portion............. 5,120,000
Deferred tax and other long-term liabilities...................... 1,518,470
Deferred revenue.................................................. 6,628,564
Commitments and contingencies
Stockholders' equity:
Preferred stock................................................. 1,115,400
Class A common stock, $.01 par value; 314,000 authorized shares,
none issued and outstanding.................................... --
Common stock, $.01 par value; 9,512,950 authorized shares,
655,773 issued and outstanding shares.......................... 6,558
Additional paid-in capital...................................... 7,357,064
Accumulated deficit............................................. (1,635,081)
-----------
Total stockholders' equity.................................... 6,843,941
-----------
Total liabilities and stockholders' equity.................. $39,378,229
===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-8
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue, net....................................... $11,557,885 $14,141,383
Cost of revenue.................................... 7,903,979 9,756,260
----------- -----------
Gross profit................................... 3,653,906 4,385,123
Selling, general and administrative expense........ 3,360,726 3,819,432
----------- -----------
Operating income............................... 293,180 565,691
Other income (expense):
Interest expense............................... (422,222) (392,347)
Interest income................................ 23,168 28,174
Gain on sales of fixed assets.................. 59,399 119,111
----------- -----------
Income (loss) before provision for income taxes.... (46,475) 320,629
Provision for income taxes......................... 11,722 153,223
----------- -----------
Net income (loss).................................. $ (58,197) $ 167,406
=========== ===========
Pro forma net income per common share.............. $ .07
===========
Weighted average common shares outstanding......... 3,518,083
===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-9
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).................................. $ (58,197) $ 167,406
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation and amortization of fixed assets.... 217,307 267,496
Amortization of intangible assets................ 248,721 239,760
Gain on sales of fixed assets.................... (59,399) (119,111)
Provision for deferred taxes..................... -- 46,500
Change in deferred revenue....................... 426,999 447,417
Changes in operating assets and liabilities
Accounts receivable............................ 1,442,819 2,667,195
Notes receivable from contracts................ (493,135) (519,510)
Prepaid expenses, deposits and other assets.... (128,394) (695,335)
Accounts payable and accrued expenses.......... (1,897,456) (2,829,078)
Deferred rent and other long-term liabilities.. (2,791) (36,974)
---------- ----------
Net cash used in operating activities........ (303,526) (364,234)
---------- ----------
Cash flows from investing activities:
Proceeds from sales of fixed assets................ 194,540 274,949
Purchases of fixed assets.......................... (62,406) (145,554)
Acquisitions of chauffeured vehicle service compa-
nies.............................................. (1,120,417) (35,812)
---------- ----------
Net cash provided by (used in) investing ac-
tivities.................................... (988,283) 93,583
---------- ----------
Cash flows from financing activities:
Principal payments under capital lease obliga-
tions............................................. (101,778) (50,016)
Payments of notes payable.......................... (798,571) (1,224,976)
Proceeds from notes payable........................ 1,085,000 400,000
Payment of offering costs.......................... -- (150,000)
Redemption of Series E preferred stock............. (97,500) --
---------- ----------
Net cash provided by (used in) financing ac-
tivities.................................... 87,151 (1,024,992)
---------- ----------
Net decrease in cash and cash equivalents............ (1,204,658) (1,295,643)
Cash and cash equivalents at beginning of period..... 1,438,659 2,754,276
---------- ----------
Cash and cash equivalents at end of period........... $ 234,001 $1,458,633
========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-10
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.BACKGROUND AND ORGANIZATION

General

Carey International, Inc. (the "Company") is one of the world's largest
chauffeured vehicle service companies, providing services through a worldwide
network of owned and operated companies, licensees and affiliates serving 420
cities in 65 countries. The Company owns and operates service providers in the
form of wholly-owned subsidiaries in the following cities: New York (Carey
Limousine N.Y., Inc.), San Francisco (Carey Limousine SF, Inc.), Los Angeles
(Carey Limousine L.A., Inc.), London (Carey UK Limited), Washington, D.C.
(Carey Limousine D.C., Inc.), South Florida (Carey Limousine Florida, Inc.)
and Philadelphia (Carey Limousine Corporation, Inc.). In addition, the Company
generates revenues from licensing the "Carey" name, and from providing central
reservations, billing, sales and marketing services to its licensees. The
Company's worldwide network also includes affiliates in locations in which the
Company has neither owned and operated locations nor licensees.

Acquisitions and licensees

The Company is engaged in a program of acquiring chauffeured vehicle service
businesses, including licensees operating under the Carey name and trademark.
These acquisitions are accounted for as purchases. The carrying value of the
assets acquired is determined by the negotiated purchase price. In addition to
acquiring licensees operating under the Carey name, the Company has acquired
chauffeured vehicle service businesses in cities in which the Company
operates. In 1995, these acquisitions included chauffeured vehicle service
companies operating in Washington, D.C., Miami, West Palm Beach and San
Francisco. In 1996, the Company acquired a chauffeured vehicle service company
in London, England.

Reverse stock split

On February 25, 1997, the Board of Directors authorized management of the
Company to file a Registration Statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock in an
initial public offering (the "IPO"). The Board of Directors, at the same
meeting and subject to stockholder approval, authorized a reverse stock split
of approximately one-for-2.3255 of the outstanding shares of the Company's
common stock. A majority of the Company's stockholders have approved the
reverse stock split. All references to common stock, options, warrants and per
share data have been restated to give effect to the reverse stock split. The
Board of Directors also authorized a Recapitalization Plan (see Note 7) on
February 25, 1997.

2.BASIS OF PRESENTATION

The consolidated financial statements include the financial statements of
the Company and its subsidiaries. All significant intercompany balances and
transactions have been eliminated.

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

The consolidated financial statements and notes do not include all of the
disclosures made in the Company's consolidated financial statements for the
years ended November 30, 1994, 1995 and 1996, which should be read in
conjunction with these statements. The financial information included herein
has not been audited. However,

F-11
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)
in the opinion of management, the statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of the periods reflected. The results for these
periods are not necessarily indicative of the results for the full fiscal
year.

Pro forma net income per common share

Consistent with Staff Accounting Bulletin 1B-2, the Company has recalculated
historical weighted average common shares outstanding and net income per
common share to give effect to the following matters pursuant to the
Recapitalization (see Note 7). The recalculated net income per common share is
determined by (i) adjusting net income to reflect the elimination in interest
expense, net of taxes, resulting from the conversion of $4,867,546 of
subordinated debt into common stock and (ii) increasing the weighted average
common shares outstanding by the number of common shares resulting from the
conversion of such debt, as well as the partial conversion of the Series A
Preferred Stock.

3.ACQUISITIONS

On February 29, 1996, the Company acquired the common stock of a chauffeured
vehicle service company in London, England for approximately $1,500,000. The
acquisition was financed through the incurrence of $950,000 in debt and a
payment of $550,000. Additional contingent consideration of up to $1,000,000
may be payable with respect to each of the two years in the period ending
February 28, 1998 based on the level of revenues referred to the acquired
company by the seller. As of February 28, 1997, the Company has paid $278,304
in contingent consideration in the acquisition of the London company. On March
28, 1997, the Company made an additional payment of approximately $270,000 for
contingent consideration in the acquisition of the London company. In
addition, the Company is required to pay a standard commission to the seller
of the acquired chauffeured vehicle service company for business referral,
which is expensed as incurred.

The Company has historically accounted for all of its acquisitions as
purchases. The net assets acquired and results of operations have been
included in the financial statements as of and from, respectively, the
effective dates of the acquisitions. Total consideration is allocated to the
assets acquired based upon their estimated fair values with any remaining
consideration, including contingent consideration when paid, allocated to
either franchise rights or goodwill. In the periods ended February 29, 1996
and February 28, 1997, the following acquisition activity was recorded by the
Company:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1997
------------ ------------
<S> <C> <C>
Fair Value of Net Assets and Liabilities Ac-
quired:
Receivables and other assets..................... $ 632,554 $ --
Fixed assets..................................... 928,377 --
Franchise rights................................. 16,072 --
Goodwill......................................... 65,865 35,812
Trade liabilities................................ (522,451) --
---------- -------
Fair value of assets and liabilities acquired.... $1,120,417 $35,812
========== =======
Cash payments (exclusive of $223,695 cash ac-
quired in 1996)................................. $1,120,417 $35,812
========== =======
</TABLE>

4.COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company is subject to various legal
actions which are not material to the financial position, the results of
operations or cash flows of the Company.

F-12
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)

The Company, certain of the Company's subsidiaries and certain officers and
directors of the Company were named in a civil action filed on May 15, 1996 in
the United States District Court for the Eastern District of Pennsylvania
entitled "Felix v. Carey International, Inc., et al." The plaintiff's
complaint, which purports to be a class action, alleges that the plaintiff and
others similarly situated suffered monetary damages as a result of
misrepresentations by the various defendants in their use of a surface
transportation billing charge. The plaintiff seeks damages in excess of $1
million on behalf of the class for each of the counts in the complaint
including fraud, negligent misrepresentation and violations of the Racketeer
Influenced and Corrupt Organizations law of 1970, which permits the recovery
of treble damages and attorneys' fees. A class has not yet been certified in
this case. The Company filed a motion to dismiss that was denied, and
subsequently has filed an answer denying any liability in connection with this
complaint. The Company has agreed to indemnify and defend its offices and
directors who were named as defendants in the case, subject to conditions
imposed by applicable law. The Company has reached a tentative settlement with
the plaintiff and plaintiff's counsel, which is subject to court approval and
acceptance by the proposed class. The Company does not believe that this
litigation will have a material adverse effect on the financial condition,
results of operations or cash flows of the Company.

5.NOTES PAYABLE

Pursuant to an agreement with the lender dated March 24, 1997, the Company
extended the maturity dates of the $750,000 and $200,000 bank lines of credit
to March 31, 1998. The borrowings under these lines of credit have accordingly
been included in non-current notes payable in the accompanying consolidated
balance sheet.

6.NET INCOME PER COMMON SHARE

Net income per common share, on a historical basis, are as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
FEBRUARY 29, FEBRUARY 28,
1996 1997
------------ ------------
<S> <C> <C>
Net income (loss) available to common sharehold-
ers............................................ $ (58,197) $ 167,406
Weighted average common shares outstanding...... 2,419,185 2,430,436
Net income (loss) per common share.............. $ (.02) $ .07
</TABLE>

Common equivalent shares are included in the per share calculations where
the effect of their inclusion would be dilutive. Common equivalent shares
consist of shares issuable upon (a) the conversion of Series B, F and G
preferred stock and (b) the assumed exercise of vested outstanding stock
options and warrants. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin (SAB) No. 83, the common equivalent shares issued by the
Company during the twelve months preceding the anticipated effective date of
the Registration Statement relating to the Company's initial public offering,
using the treasury stock method and an assumed public offering price of $11.00
per share, have been included in the calculation of net income per common
share.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128). FAS
128 simplifies the existing earnings per share (EPS) computations under
Accounting Principles Board Opinion No. 15, "Earnings Per Share," revises
disclosure requirements, and increases the comparability of EPS data on an
international basis. In simplifying the EPS computations, the presentation of
primary EPS is replaced with basic EPS, with the principal difference being
that common stock equivalents are not considered in computing basic EPS. In
addition, FAS 128 requires dual presentation of basic and diluted EPS. FAS 128
is effective for financial statements issued for periods ending after December
15, 1997. The Company's pro forma basic EPS under FAS 128 would have been
$0.26 and dilutive EPS under FAS 128 would not differ significantly from the
reported pro forma net income per share.

F-13
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS--(CONTINUED)

7.RECAPITALIZATION AND EQUITY PLANS

On February 25, 1997, pursuant to an agreement reached in May 1996, the
Board of Directors authorized a recapitalization (the "Recapitalization"),
which will be implemented at the time of the IPO. Under the Recapitalization,
the $2,000,000 subordinated convertible note dated September 1, 1991 and the
$3,780,000 subordinated note dated July 30, 1992 will be converted or
exchanged for 1,046,559 shares of common stock and payment of $912,454. The
Series A preferred stock will be converted in part into 86,003 shares of
common stock and redeemed in part for $2,103,500. All of the Series F
preferred stock and 3,000 shares of the Series G preferred stock will be
redeemed for an aggregate of $1,000,000. The remaining preferred stock will be
converted into 1,427,509 shares of common stock. As a result of the
Recapitalization, preferred stock with a liquidation preference of $11,154,900
and subordinated debt with a principal amount of $5,780,000 will be converted
in part into 2,560,071 shares of common stock and repaid or redeemed in part
for $4,015,952 in cash. All of the cash amounts will be paid out of the
proceeds of the IPO.

On February 25, 1997, the Board of Directors adopted the 1997 Equity
Incentive Plan (the "1997 Plan"). A total of 650,000 shares of common stock
are reserved for issuance under the 1997 Plan. The Board of Directors also
granted options to purchase at the IPO price a total of 411,500 shares of
common stock under the 1997 Plan, such grants to be effective upon the
execution of an underwriting agreement in connection with the IPO.

Also on February 25, 1997, the Board of Directors adopted the Stock Plan for
Non-Employee Directors (the "Directors' Plan"). A total of 100,000 shares of
common stock of the Company are reserved for issuance under the Directors'
Plan. Options to purchase at the IPO price a total of 22,500 shares of common
stock will be granted under the Directors' Plan, such grants to be effective
upon the execution of an underwriting agreement in connection with the IPO.

Also on February 25, 1997, the Board of Directors approved amendments to the
Company's Certificate of Incorporation increasing the number of authorized
shares of the Company's Common Stock from 9,512,950 to 20,000,000, and
increasing the number of authorized shares of the Company's preferred stock
from 173,050 to 1,000,000.

8.SUBSEQUENT EVENT

On March 1, 1997, the Company entered into an agreement to purchase the
stock of Manhattan International Limousine Network Ltd. and an affiliated
company (collectively, "Manhattan Limousine"). Manhattan Limousine is one of
the largest providers of chauffeured vehicle services in the New York
metropolitan area. The Company expects to consummate the acquisition at the
time of the IPO. If the acquisition of Manhattan Limousine is not completed by
May 20, 1997, the Company has agreed to pay additional purchase price in the
amount of $7,500 for each day after such date until the closing of the
acquisition, up to an aggregate of $675,000.

F-14
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Carey International, Inc.

We have audited the accompanying consolidated balance sheets of Carey
International, Inc. and Subsidiaries as of November 30, 1995 and 1996, and the
related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended
November 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Carey
International, Inc. and Subsidiaries as of November 30, 1995, and 1996, and
the results of their operations and their cash flows for each of the three
years in the period ended November 30, 1996, in conformity with generally
accepted accounting principles.

As discussed in Note 16 to the consolidated financial statements, the
accompanying consolidated balance sheet as of November 30, 1995, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the two years in the period ended November 30, 1995
have been restated for a change in the revenue recognition method.

Washington, D.C.
January 31, 1997, except for
Notes 1, 2 and 18 as to which
the date is March 1, 1997

F-15
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
NOVEMBER 30,
------------------------
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................ $ 1,438,659 $ 2,754,276
Accounts receivable, net of allowance for doubtful
accounts of $294,000 in 1995 and $535,000 in 1996... 9,023,016 10,141,732
Notes receivable from contracts, current portion..... 659,609 402,751
Prepaid expenses and other current assets............ 364,741 1,936,961
----------- -----------
Total current assets............................. 11,486,025 15,235,720
Fixed assets, net of accumulated depreciation of
$2,779,000 in 1995 and $2,619,000 in 1996........... 2,185,071 3,379,246
Notes receivable from contracts, excluding current
portion............................................. 193,298 769,201
Franchise rights, net of accumulated amortization of
$1,494,000 in 1995 and $1,729,000 in 1996........... 5,533,956 5,348,264
Trade name, trademark and contract rights, net of
accumulated amortization of $781,000 in 1995 and
$973,000 in 1996.................................... 6,876,578 6,685,135
Goodwill and other intangible assets, net of
accumulated amortization of $574,000 in 1995 and
$827,000 in 1996.................................... 7,113,684 7,262,203
Deferred tax assets.................................. 892,993 2,461,573
Deposits and other assets............................ 1,615,316 1,384,787
----------- -----------
Total assets................................... $35,896,921 $42,526,129
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of notes payable..................... $ 4,585,703 $ 5,131,227
Current portion of capital leases.................... 206,031 199,224
Current portion of subordinated notes payable........ 100,000 440,000
Accounts payable and accrued expenses................ 8,000,972 11,196,949
----------- -----------
Total current liabilities........................ 12,892,706 16,967,400
Notes payable, excluding current portion............. 7,361,749 5,188,742
Capital leases, excluding current portion............ 74,879 663,030
Subordinated notes payable, excluding current
portion............................................. 5,780,000 5,340,000
Deferred rent and other long-term liabilities........ 148,195 111,281
Deferred tax liabilities............................. 1,001,480 1,402,611
Deferred revenue..................................... 4,726,134 6,181,147
Commitments and contingencies
Stockholders' equity:
Preferred stock.................................... 1,212,900 1,115,400
Class A common stock, $.01 par value; authorized
314,000 shares, none issued and outstanding.......
Common stock, $.01 par value; authorized 9,512,950
shares, issued and outstanding, 655,773 shares.... 6,558 6,558
Additional paid-in capital......................... 7,357,064 7,357,064
Accumulated deficit................................ (4,664,744) (1,807,104)
----------- -----------
Total stockholders' equity....................... 3,911,778 6,671,918
----------- -----------
Total liabilities and stockholders' equity..... $35,896,921 $42,526,129
=========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-16
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenue, net........................... $35,525,309 $43,483,947 $59,505,698
Cost of revenue........................ 24,953,904 29,942,961 40,438,449
----------- ----------- -----------
Gross profit......................... 10,571,405 13,540,986 19,067,249
Selling, general and administrative
expense............................... 9,486,797 12,419,062 15,077,553
----------- ----------- -----------
Operating income..................... 1,084,608 1,121,924 3,989,696
Other income (expense):
Interest expense..................... (1,348,883) (1,682,884) (1,704,187)
Interest income...................... 172,641 259,852 156,695
Gain (loss) on sale of fixed assets.. (18,359) 130,913 269,654
----------- ----------- -----------
Income (loss) before provision for
income taxes.......................... (109,993) (170,195) 2,711,858
Provision (benefit) for income taxes .. 19,000 25,000 (104,246)
----------- ----------- -----------
Net income (loss)...................... $ (128,993) $ (195,195) $ 2,816,104
=========== =========== ===========
Pro forma net income per common share.. $ .89
===========
Weighted average common shares
outstanding........................... 3,510,020
===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-17
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
--------------
SERIES A SERIES B SERIES E SERIES F SERIES G ADDITIONAL TOTAL
PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK STOCK STOCK STOCK STOCK SHARES $ CAPITAL DEFICIT EQUITY
--------- --------- --------- --------- --------- ------- ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
November 30,
1993........... $420,700 $95,800 $266,250 $100,000 $498,900 623,091 $6,231 $7,335,796 $(4,336,178) $4,387,499
Accretion of
redeemable
preferred
stock.......... -- -- 8,750 -- -- -- -- (8,750) -- --
Redemption of
Series E
preferred
stock.......... -- -- (62,500) -- -- -- -- -- -- (62,500)
Payment of
accrued
dividends...... -- -- (26,250) -- -- -- -- -- -- (26,250)
Payment of
Series E
dividends...... -- -- -- -- -- -- -- -- (4,378) (4,378)
Net loss........ -- -- -- -- -- -- -- -- (128,993) (128,993)
-------- ------- -------- -------- -------- ------- ------ ---------- ----------- ----------
Balance at
November 30,
1994........... 420,700 95,800 186,250 100,000 498,900 623,091 6,231 7,327,046 (4,469,549) 4,165,378
Accretion of
redeemable
preferred
stock.......... -- -- 4,375 -- -- -- -- (4,375) -- --
Redemption of
Series E
preferred
stock.......... -- -- (62,500) -- -- -- -- -- -- (62,500)
Payment of
accrued
dividends...... -- -- (30,625) -- -- -- -- -- -- (30,625)
Issuance of
stock.......... -- -- -- -- -- 32,682 327 34,393 -- 34,720
Net loss........ -- -- -- -- -- -- -- -- (195,195) (195,195)
-------- ------- -------- -------- -------- ------- ------ ---------- ----------- ----------
Balance at
November 30,
1995........... 420,700 95,800 97,500 100,000 498,900 655,773 6,558 7,357,064 (4,664,744) 3,911,778
Redemption of
Series E
preferred
stock.......... -- -- (97,500) -- -- -- -- -- -- (97,500)
Cumulative
effect of
currency
translation.... -- -- -- -- -- -- -- -- 41,536 41,536
Net income...... -- -- -- -- -- -- -- -- 2,816,104 2,816,104
-------- ------- -------- -------- -------- ------- ------ ---------- ----------- ----------
Balance at
November 30,
1996........... $420,700 $95,800 $ -- $100,000 $498,900 655,773 $6,558 $7,357,064 $(1,807,104) $6,671,918
======== ======= ======== ======== ======== ======= ====== ========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-18
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................... $ (128,993) $ (195,195) $ 2,816,104
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Depreciation and amortization of fixed
assets............................... 1,233,267 1,265,934 1,100,320
Amortization of intangible assets..... 641,309 712,348 1,062,406
(Gain) loss on sales of fixed assets.. 18,359 (130,913) (269,654)
Deferred income tax benefit........... -- -- (1,370,557)
Change in deferred revenue............ 184,220 237,306 1,455,013
Changes in operating assets and
liabilities:
Accounts receivable.................. (962,523) (2,516,952) (486,162)
Notes receivable from contracts...... (519,155) 11,000 (1,052,838)
Prepaid expenses, deposits and other
assets.............................. (433,963) (192,666) (660,870)
Accounts payable and accrued
expenses............................ 679,233 3,389,540 2,003,427
Deferred rent and other long-term
liabilities......................... (10,407) 87,490 (36,914)
----------- ----------- -----------
Net cash provided by operating
activities......................... 701,347 2,667,892 4,560,275
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of fixed assets..... 172,747 565,510 862,980
Purchases of fixed assets.............. (445,967) (615,117) (1,134,910)
Software development costs............. -- (203,529) --
Redemption of investment in affiliate.. -- 100,000 --
Acquisitions of chauffeured vehicle
service companies, net of cash
acquired.............................. (114,521) (3,949,393) (1,730,232)
----------- ----------- -----------
Net cash used in investing
activities......................... (387,741) (4,102,529) (2,002,162)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds upon sale of notes receivable
from independent operators............ 378,733 1,493,399 733,793
Principal payments under capital lease
obligations........................... (384,181) (436,169) (243,485)
Preferred stock dividends.............. (30,628) (30,625) --
Payment of notes payable............... (2,277,466) (2,658,521) (3,867,747)
Proceeds from notes payable............ 1,119,515 3,106,808 2,232,443
Issuance of common stock............... -- 34,720 --
Redemption of Series E preferred
stock................................. (62,500) (62,500) (97,500)
----------- ----------- -----------
Net cash provided by (used in)
financing activities............... (1,256,527) 1,447,112 (1,242,496)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ (942,921) 12,475 1,315,617
Cash and cash equivalents at beginning
of year................................ 2,369,105 1,426,184 1,438,659
----------- ----------- -----------
Cash and cash equivalents at end of
year................................... $ 1,426,184 $ 1,438,659 $ 2,754,276
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-19
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND AND ORGANIZATION

General

Acquisitions and franchises

Reverse Stock Split

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements include the financial statements of
the Company and its subsidiaries. All significant intercompany balances and
transactions have been eliminated.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all short-term investments with original maturities of
three months or less to be cash equivalents.

F-20
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Notes receivable from contracts

An important component of the Company's operating strategy involves the
preferred use of non-employee independent operators chauffeuring their own
vehicles rather than employee chauffeurs operating Company-owned vehicles.

Each independent operator enters into an agreement with the Company to
provide prompt and courteous service to the Company's customers with a
properly maintained, late model vehicle which he or she owns and for which he
or she pays all of the maintenance and operating expenses, including gasoline.
The Company, under the independent operator agreement, agrees to bill and
collect all revenues and remit to the independent operator 60% to 65% of
revenues, as defined in the agreement. Each new operator agrees to pay a one-
time fee generally ranging from $30,000 to $45,000 to the Company under the
terms of the independent operator agreement. Through 1996, the term of the
independent operator agreement generally ranged from 10 years to perpetuity.
(See "Revenue recognition").

The Company typically receives a promissory note from the independent
operator as payment for the one-time fee due under the terms of the Standard
Independent Operator Agreement (see Note 4) and records the note in notes
receivable from contracts. The notes evidencing such financing generally were
sold on a non-recourse basis by the Company to third party finance companies
(see Note 11) in exchange for cash and promissory notes. Since September 1996,
the Company has ceased selling notes to third parties. Such promissory notes
due from finance companies have also been recorded in notes receivable from
contracts in the consolidated balance sheets.

Concentration of credit risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash
equivalents, accounts receivable and notes receivable from contracts. The
Company maintains its cash and cash equivalents with various financial
institutions. In order to limit exposure to any one institution, the Company's
cash equivalents are composed mainly of overnight repurchase agreements
collateralized by U.S. Government securities. Accounts receivable are
generally diversified due to the large number of entities comprising the
Company's customer base and their dispersion across many different industries
and geographies. The Company performs ongoing credit evaluations of its
customers, and may require credit card documentation or prepayment of selected
transactions. Notes receivable from contracts are also geographically
dispersed and are supported by the underlying base of revenue serviced by each
respective independent operator (see Notes 4 and 11). The Company performs
ongoing evaluations of each independent operator's productivity and payment
capacity and has utilized third-party financing to reduce credit exposure.

Fixed assets

Furniture, equipment, vehicles, leasehold improvements and land and building
are stated at cost. Equipment under capital leases is stated at the lower of
the present value of minimum lease payments or the fair market value at the
inception of the lease. Depreciation on furniture, equipment, vehicles and
leasehold improvements is calculated on the straight-line method over the
estimated useful lives of the assets, generally three to five years. The
building owned by the Company is depreciated over 40 years on a straight-line
basis. Sales and retirements of fixed assets are recorded by removing the cost
and accumulated depreciation from the accounts. Gains or losses on sales and
retirements of property are reflected in results of operations.

Intangible assets

Effective September 1, 1991, the Company acquired the Carey name and
trademark and the contract rights to all royalty fee payments by various Carey
licensees for a purchase price of $7 million. These assets are held by Carey
Licensing, Inc. and are being amortized over 40 years.

F-21

<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has acquired chauffeured vehicle service companies, all of which
have been accounted for as purchases. For each business acquired which is a
licensee of the Company, the excess of cost over the fair market value of the
net assets acquired is allocated to franchise rights in the consolidated
balance sheet. With respect to acquired businesses which are not licensees of
the Company, the excess of cost over the net assets acquired is allocated to
goodwill. Additional purchase price attributable to the operating performance
of the acquired entities is recorded as goodwill or franchise rights when
determined (see Note 13). Goodwill and franchise rights are amortized over 30
years using the straight-line method. Such amortization is included in
selling, general and administrative expense in the consolidated statement of
operations. The Company evaluates the recoverability of its intangible assets
based on estimated undiscounted cash flows over the lesser of the remaining
amortization periods or calculated lives, giving consideration to revenue
expected to be realized. This determination is based on an evaluation of such
factors as the occurrence of a significant change in the environment in which
the business operates or the expected future net cash flows (undiscounted and
without interest). There have been no adjustments to the carrying value of
intangible assets resulting from this evaluation.

Revenue recognition

Chauffeured vehicle services--The Company's principal source of revenue is
from chauffeured vehicle services provided by its operating subsidiaries. Such
revenue, net of discounts, is recorded when such services are provided. The
Company, through the Carey International Reservation System ("CIRS"), has a
central reservation system capable of booking reservations on behalf of its
licensees and affiliates. Under most circumstances, central reservations are
billed by the Company to the customer when the Company receives a service
invoice from the licensee or affiliate that provided the service. At such
time, the Company also records the gross revenue for the transaction.

Fees from licensees--The Company charges an initial license fee under its
domestic license agreement and records the fee as revenue on signing of the
agreement. The Company also charges its domestic licensees monthly franchise
and marketing fees equal to stated percentages of monthly revenues, as defined
in the licensing agreement. Monthly fees to domestic licensees are generally
less than 10% of the licensee's monthly revenues. The Company records such
fees as revenues as they are charged to the licensees.

International licensees and the Company's domestic and international
affiliates historically have not paid fees to the Company, but have instead
given a discount on business referred to them through CIRS. Such discounts
reduce the amount of service invoices to the Company from such licensees and
affiliates for services provided to customers whose reservations have been
booked and invoiced centrally by the Company.

Independent operator fees--The Company enters into contracts with
independent operators ("Standard Independent Operator Agreements") to provide
chauffeured vehicle services exclusively to the Company's customers. When
independent operator agreements are executed, the Company defers revenue equal
to the amount of the one-time fees and recognizes the fees as revenue over the
terms of the contracts or over 20 years for perpetual contracts. Upon
termination of an independent operator agreement, the remaining deferred
revenue associated with the specific contract, less any amounts due from the
independent operator deemed uncollectible, is recognized as revenue.

Income taxes

The provision for income taxes includes income taxes currently payable and
the change during the year in the net deferred tax liabilities or assets.
Deferred income tax liabilities and assets are determined based on the
differences between the financial statement and tax bases of liabilities and
assets using enacted tax rates in effect for the year in which the differences
are expected to reverse. A valuation allowance is provided to reduce the net
deferred tax asset, if any, to a level which, more likely than not, will be
realized.

F-22

<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Pro forma net income per common share

Consistent with Staff Accounting Bulletin 1B-2, the Company has recalculated
historical weighted average common shares outstanding and net income per
common share to give effect to the following matters pursuant to the
Recapitalization (see Note 18). The recalculated net income per common share
is determined by (i) adjusting net income available to common shareholders to
reflect the elimination in interest expense, net of taxes, resulting from the
conversion of $4,867,546 of subordinated debt into common stock and (ii)
increasing the weighted average common shares outstanding by the number of
common shares resulting from the conversion of such debt, as well as the
partial conversion of the Series A Preferred Stock.

Stock-based compensation

In October 1995, the Financial Accounting Standards Boards issued Statement
of Financial Accounting Standards No. 123 ("SFAS 123") Accounting for Stock-
Based Compensation, which is effective for the Company's financial statements
for fiscal years beginning after December 15, 1995. SFAS 123 allows companies
to either account for stock-based compensation under the new provisions of
SFAS 123 or under the provisions of Accounting Principles Board Opinion No. 25
("APB 25"), Accounting for Stock Issued to Employees. The Company will
continue to apply the provisions of APB 25 and provide pro forma disclosure in
the notes to the financial statements.

Foreign operations

The Consolidated Balance Sheets include foreign assets and liabilities of
$3.7 million and $2.7 million as of November 30, 1996. The net effects of
foreign currency transactions reflected in income were immaterial. Assets and
liabilities of the Company's foreign operations are translated into United
States dollars using exchange rates in effect at the balance sheet date and
results of operations items are translated using the average exchange rate
prevailing throughout the period.

Reclassifications

Certain accounts in 1994 and 1995 have been reclassified to conform with the
1996 presentation.

3. FEES FROM LICENSEES

The total of all domestic license fees, franchise fees and marketing fees
earned in each of 1994, 1995 and 1996 was $1,466,588, $1,228,472 and
$2,180,540, respectively. Amounts due from licensees of $46,520 and $143,041
at November 30, 1995 and 1996, respectively, are included in accounts
receivable in the consolidated balance sheets of the Company.

4. TRANSACTIONS WITH INDEPENDENT OPERATORS

The Company recorded approximately $1,153,000, $1,130,000 and $2,371,000 in
1994, 1995 and 1996, respectively, as deferred revenue relating to fees from
new agreements with independent operators. Amounts of deferred revenue
recognized as revenues in 1994, 1995 and 1996 amounted to approximately
$969,000, $889,000 and $936,000, respectively.

Notes receivable from contracts include approximately $305,000 and $917,000
at November 30, 1995 and 1996, respectively, for amounts due from independent
operators and approximately $548,000 and $255,000 at November 30, 1995 and
1996, respectively, for amounts due from a related party financing company
(see Note 11).

F-23
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

In the normal course of business, the Company's independent operators are
responsible for financing their own vehicles through third parties. From time
to time, the Company has arranged lease and purchase financing for certain
vehicles and has in turn leased back such vehicles to independent operators on
terms and conditions similar to those under which the Company is obligated (see
Note 5).

5. FIXED ASSETS

Fixed assets consist of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------
1995 1996
---------- ----------
<S> <C> <C>
Vehicles.............................................. $2,692,079 $2,337,947
Equipment............................................. 1,699,803 2,200,094
Furniture............................................. 319,597 525,202
Leasehold improvements................................ 252,366 404,888
Land and building..................................... -- 529,634
---------- ----------
4,963,845 5,997,765
Less accumulated depreciation and amortization........ 2,778,774 2,618,519
---------- ----------
Net fixed assets...................................... $2,185,071 $3,379,246
========== ==========
</TABLE>

The Company is obligated under various vehicle and equipment capital leases.
Vehicles and equipment under capital leases included in fixed assets are as
follows:

<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------
1995 1996
-------- ----------
<S> <C> <C>
Equipment............................................... $444,983 $1,048,633
Vehicles................................................ 352,796 621,420
-------- ----------
797,779 1,670,053
Less accumulated amortization........................... 536,713 561,871
-------- ----------
$261,066 $1,108,182
======== ==========
</TABLE>

6. NOTES PAYABLE

Notes payable consist of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------
1995 1996
---------- ----------
<S> <C> <C>
Bank revolving credit/term loan dated April 13, 1995,
modified December 1, 1996. Collateralized by accounts
receivable of the Company and the pledge of common
stock of the Company's U.S. subsidiaries. Interest only
payable until June 30, 1996; beginning July 1, 1996,
quarterly principal payments are required in an amount
sufficient to amortize the outstanding balance over a
four-year period. Interest is payable monthly at a
floating rate based on the Wall Street Journal prime
plus 1.25% (9.5% at November 30, 1996). This loan is
guaranteed by the Chairman of the Board and the
President of the Company............................... $4,500,000 $3,937,500
Note payable dated September 1, 1991, at an annual rate
of interest of 7.74%, collateralized by the assets of
Carey Licensing, Inc. Pursuant to an agreement with the
lender effective November 30, 1996, principal payments
of $220,000 are due quarterly from December 31, 1996
through December 31, 1997 and a final principal payment
of $240,000 is due March 1, 1998....................... 2,220,000 1,340,000
</TABLE>

F-24
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------
1995 1996
--------- ---------
<S> <C> <C>
Bank line of credit of $1,000,000, dated October 17, 1994,
and collateralized by accounts receivable of Carey NY and
an assignment of license agreement between the Parent and
Carey NY; due April 30, 1997. Interest is payable monthly
at a variable interest rate of .75% above the bank's
prime rate (9.0% at November 30, 1996)................... 990,000 990,000
Various installment notes payable, with interest rates
ranging from 9% to 14.5%, collateralized by certain
vehicles and equipment of the Company's subsidiaries;
principal and interest are payable monthly over 36-month
terms.................................................... 693,002 254,279
Installment notes payable to sellers under acquisition
agreements dated various dates from June 30, 1994 to
September 8, 1995. Interest rates range from 7.5% to
8.5%. Interest is generally payable monthly. Principal is
payable in varying installments.......................... 2,339,418 1,305,574
Convertible note payable to seller under acquisition
agreement dated September 30, 1993 at an annual rate of
7.5%, interest payable quarterly; principal due in two
equal annual installments of $116,667 on January 2, 1996
and 1997. The note was repaid in January 1997............ 233,333 116,666
Bank line of credit of $200,000, dated October 31, 1995 at
a variable interest rate (10% at November 30, 1995),
collateralized by accounts receivable of Carey DC. This
facility was refinanced by a term loan with the same bank
on March 1, 1996......................................... 200,000 --
Amount payable to a seller under acquisition agreement
dated January 1, 1995. Due 30 days after receipt of an
audit of the predecessor company. Amount of the payment
is subject to reduction based on the results of the
audit. The audit has been completed and the amount was
subsequently reduced in 1996 to $210,821 and has been
repaid................................................... 250,000 --
Note payable to bank, dated September 30, 1995, payable in
monthly installments of $4,167 plus interest. Interest
rate is variable at bank's prime plus 1% (10.0% at
November 30, 1996)....................................... 241,667 191,717
Note payable to bank, dated August 30, 1993,
collateralized by accounts receivable, fixed assets and
intangible assets of Carey DC; monthly payments of $9,401
for principal and interest through August 31, 1996.
Interest rate is fixed at 8%. This note was refinanced on
March 1, 1996 by a term loan with the same bank.......... 90,631 --
Note payable to bank dated October 17, 1994,
collateralized by accounts receivable and fixed assets of
Carey NY. Principal and interest payments of $2,848 are
payable monthly. Remaining balance is due October 17,
1999. Interest rate is fixed at 9.25%.................... 189,401 149,001
Bank line of credit of $750,000, dated February 26, 1996
collateralized by accounts receivable of Carey Licensing,
Inc.; due March 31, 1997. Interest is payable monthly at
1% above the Wall Street Journal's "Prime Rate" (9.25% at
November 30, 1996)....................................... -- 750,000
Bank line of credit of $200,000, dated February 26, 1996,
collateralized by accounts receivable of Carey FLA.; due
March 31, 1997. Interest is payable monthly at 1% above
Wall Street Journal's "Prime Rate" (9.25% at November 30,
1996).................................................... -- 200,000
Note payable to bank, dated March 1, 1996, collateralized
by accounts receivable of Carey DC. Monthly payments of
$12,735 of principal and interest through March 1, 2001.
Interest is payable monthly at .5% above the bank's Prime
Rate (9.5% at November 30, 1996)......................... -- 662,053
</TABLE>

F-25
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1995 1996
----------- ----------
<S> <C> <C>
Note payable to bank, dated May 10, 1996, collateralized
by the land and building held by Carey DC; monthly
payments of $3,863 of principal and interest are due
through April 10, 2001 and a balloon payment of
$375,468 on May 10, 2001. Interest fixed at 8.75%...... -- 423,179
----------- ----------
Total notes payable..................................... 11,947,452 10,319,969
Less current installments............................... 4,585,703 5,131,227
----------- ----------
Long-term portion....................................... $ 7,361,749 $5,188,742
=========== ==========
Subordinated notes payable consist of the following:

Subordinated convertible note dated September 1, 1991,
with the principal of $2,000,000 due on August 30,
2000; interest payable quarterly at a fixed rate of
7.74%. After September 1, 1992, this debt is
convertible into shares of common stock of the Company
at the discretion of the holder at a conversion price
of $6.14. A warrant for the purchase of 86,003 shares
of common stock of the Company was issued in connection
with the note. The warrant is exercisable immediately,
expires at the earlier of the third anniversary of an
initial public offering or November 30, 2001, and has
an exercise price of $6.14 per share. The note contains
certain antidilutive provisions which lower its
conversion price in the event dilutive securities are
subsequently issued by the Company at prices below the
note's conversion price. The warrant has not been
exercised. The terms of the agreement have been
modified as part of the Recapitalization (see Note
18).................................................... $ 2,000,000 $2,000,000
Subordinated note dated July 30, 1992; interest only
payable quarterly until September 30, 1995. The
interest rate is fixed at 12%. Principal of $220,000
was paid on September 30, 1995. Pursuant to an
agreement with the lender dated November 30, 1996, no
further payments of principal are due until June 30,
1997, when $220,000 is due. Thereafter, quarterly
principal payments of $220,000 are due until March 31,
1998. On June 30, 1998, the loan balance of $2,240,000
is due. A warrant for the purchase of 616,544 shares of
Class A common stock or common stock was issued, in
connection with the note. The warrant is exercisable
immediately, has an exercise price of $6.14 per share
and expires at the earlier of the fifth anniversary of
the repayment of the note in full or July 30, 2000. The
warrant contains certain antidilutive provisions which
lower the exercise price in the event dilutive
securities are subsequently issued by the Company at
prices below the warrant exercise price. The warrant
has not been exercised. The terms of the agreement have
been modified as part of the Recapitalization (see Note
18).................................................... 3,780,000 3,780,000
Convertible note payable to seller under acquisition
agreement, dated September 30, 1992; interest payable
quarterly at a fixed rate of 7.74%. The note was repaid
in September, 1996. ................................... 100,000 --
----------- ----------
Total subordinated notes payable........................ 5,880,000 5,780,000
Less current installments............................... 100,000 440,000
----------- ----------
Subordinated notes payable, excluding current install-
ments.................................................. $ 5,780,000 $5,340,000
=========== ==========
</TABLE>

F-26
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Future annual principal payments on all notes payable at November 30, 1996 are
as follows:

<TABLE>
<CAPTION>
EAR ENDING NOVEMBER 30:Y
- ------------------------
<S> <C>
1997............................................................ $ 5,571,227
1998............................................................ 5,622,403
1999............................................................ 1,486,254
2000............................................................ 881,183
2001 and thereafter............................................. 2,538,902
-----------
$16,099,969
===========
</TABLE>

Certain loan agreements, principally the Company's line of credit agreement,
contain restrictive covenants which include financial ratios related to
working capital, debt service coverage, debt to net worth and maintenance of a
minimum tangible net worth, and submission of audited financial statements,
prepared in accordance with generally accepted accounting principles, within
120 days after the end of the fiscal year. Additionally, these covenants
restrict the Company's capital expenditures and prohibit the payment of
dividends on the Company's common and preferred stock, except for the Series E
preferred stock. The Company did not meet certain covenants related to the
timely submission of financial statements, working capital, debt to net worth
and maintenance of a minimum tangible net worth at November 30, 1996. The
Company obtained waivers for compliance with these covenants through and
including November 30, 1996.

The carrying value of notes payable approximates the current value of the
notes payable at November 30, 1996. (See Note 17 for discussions of the fair
value for the subordinated debt). Interest paid during the years ended
November 30, 1994, 1995, and 1996 was approximately $1,358,000, $1,662,000 and
$1,682,000, respectively.

7. LEASES

The Company has several noncancelable operating leases, primarily for office
space and equipment, that expire over the next five years. Certain of the
Company's facilities are under operating leases which provide for rent
adjustments based on increases of defined indexes, such as the Consumer Price
Index. These agreements also typically include renewal options.

F-27
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Future minimum lease payments under noncancelable operating leases and the
present value of future minimum capital lease payments as of November 30, 1996
are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING NOVEMBER 30 LEASES LEASES
----------------------- -------- ----------
<S> <C> <C>
1997................................................... $233,778 $1,395,093
1998................................................... 171,653 1,277,009
1999................................................... 155,984 662,698
2000................................................... 155,984 245,746
2001................................................... 138,659 219,128
Thereafter............................................. 138,169 --
-------- ----------
Total minimum lease payments........................... 994,227 $3,799,674
==========
Less estimated executory costs......................... 5,189
--------
989,038
Less amount representing interest (at rates ranging
from 9% to 12%)....................................... 126,784
--------
Present value of net minimum capital lease payments.... 862,254
Less current portion of obligations under capital
lease................................................. 199,224
--------
Obligations under capital leases, excluding current
portion............................................... $663,030
========
</TABLE>

During the years ended November 30, 1994, 1995 and 1996 the Company
recognized $1,004,818, $508,724 and $252,355, respectively, of sublease rental
revenue under vehicle sublease arrangements with independent operators and
others.

During the years ended November 30, 1994, 1995 and 1996, the Company entered
into capital lease obligations of $79,414, $346,666 and $810,993,
respectively, related to the acquisition of vehicles and equipment.

Total rental expense for operating leases in 1994, 1995 and 1996 was
$1,023,372, $1,314,301 and $2,203,490, respectively.

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses is composed of the following:

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1995 1996
---------- -----------
<S> <C> <C>
Trade accounts payable............................... $5,222,306 $ 5,341,834
Accrued expenses and other liabilities............... 2,332,681 4,570,975
Gratuities payable................................... 445,985 458,801
Accrued offering costs............................... -- 825,339
---------- -----------
$8,000,972 $11,196,949
========== ===========
</TABLE>

F-28
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. INCOME TAXES

The provision (benefit) for income taxes is composed of the following:

<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------------
1994 1995 1996
------- ------- -----------
<S> <C> <C> <C>
Federal:
Current...................................... $14,000 $15,000 $ 1,043,689
Deferred..................................... -- -- (1,220,799)
------- ------- -----------
14,000 15,000 (177,110)
------- ------- -----------
State and local:
Current...................................... 5,000 10,000 78,251
Deferred..................................... -- -- (149,758)
------- ------- -----------
5,000 10,000 (71,507)
------- ------- -----------
Foreign:
Current...................................... -- -- 144,371
------- ------- -----------
Total income tax provision (benefit)........... $19,000 $25,000 $ (104,246)
======= ======= ===========
</TABLE>

The Company's tax provision (benefit) for the years ended November 30, 1994,
1995 and 1996, respectively, differs from the statutory rate for federal
income taxes as a result of the tax effect of the following factors:

<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
------------------------------
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
Statutory rate.......... 34.0% 34.0% 34.0%
State income tax, net of
federal benefit........ (2.8) (2.4) (3.5)
Goodwill amortization... (13.0) (13.0) .8
Non-deductible life
insurance.............. (9.9) (23.8) .4
Meals and entertainment
expenses............... (12.2) (36.5) 1.5
Valuation allowance..... (13.4) 28.1 (38.5)
Other................... -- (1.1) 1.5
-------- -------- --------
(17.3)% (14.7)% (3.8)%
======== ======== ========
</TABLE>

The source and tax effects of temporary differences are composed of the
following:

<TABLE>
<CAPTION>
NOVEMBER 30,
------------------------
1995 1996
----------- -----------
<S> <C> <C>
Allowance for bad debts............................ $ 108,000 $ 176,000
Net operating loss carryforward.................... 266,000 --
Deferred revenue................................... 1,701,000 2,040,000
Deferred state taxes and other..................... 425,000 558,000
----------- -----------
Gross deferred tax asset........................... 2,500,000 2,774,000
Valuation allowance................................ (1,499,000) --
----------- -----------
1,001,000 2,774,000
----------- -----------
Amortization of intangible assets.................. (951,000) (1,350,000)
Other.............................................. (50,000) (53,000)
----------- -----------
Gross deferred tax liability....................... (1,001,000) (1,403,000)
----------- -----------
Net deferred tax asset............................. $ -- $ 1,371,000
=========== ===========
</TABLE>

F-29

<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

A valuation allowance was provided in 1994 and 1995 to reduce the net
deferred tax asset to $0. In the fourth quarter of 1996, the Company concluded
that it was more likely than not that the net deferred tax asset would be
realized and therefore recorded a deferred tax benefit from the reversal of
the valuation allowance of $1,499,000.

Income taxes paid during the years ended November 30, 1994, 1995 and 1996
amounted to $0, $10,375 and $210,437, respectively.

10. PREFERRED STOCK

The Company has the following series of preferred stock:

<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------
1995 1996
---------- ----------
<S> <C> <C>
Series A, par value $10.00, authorized 43,000 shares,
issued and outstanding 42,070 shares (liquidation
preference of $4,207,000 and non-cumulative
dividends of $7.00 per share per annum when declared
by the Board of Directors).......................... $ 420,700 $ 420,700
Series B, par value $10.00, authorized 10,000 shares,
issued and outstanding 9,580 shares (liquidation
preference of $958,000 and non-cumulative dividends
of $5.00 per share per annum when declared by the
Board of Directors)................................. 95,800 95,800
Series E, par value $10.00, authorized 50 shares,
issued and outstanding 12.5 shares at November 30,
1995 (liquidation preference of $97,500)............ 97,500 --
Series F, par value $10.00, authorized 10,000 shares,
issued and outstanding 10,000 shares (liquidation
preference of $1,000,000 and non-cumulative
dividends of $5.00 per share per annum when declared
by the Board of Directors).......................... 100,000 100,000
Series G, par value $10.00, authorized 110,000
shares, issued and outstanding 49,890 shares
(liquidation preference of $4,989,900 and non-
cumulative dividends of $5.00 per share per annum
when declared by the Board of Directors)............ 498,900 498,900
---------- ----------
$1,212,900 $1,115,400
========== ==========
</TABLE>

At the option of preferred stockholders or upon the closing of an
underwritten public offering yielding net proceeds to the Company of at least
$10,000,000 and having an offering price of at least $14.81 per share, each
share of Series B, F and G preferred stock is convertible into the number of
shares of common stock equal to 500, 100 and 100 divided by the conversion
price, respectively. The conversion price as of November 30, 1996 was $7.216,
$7.406 and $7.406 for Series B, F and G preferred stock, respectively. The
Company has reserved 663,759, 135,025 and 633,393 shares of common stock,
respectively, for conversion of the Series B, F, and G preferred stock.
Antidilutive provisions lower the conversion price if certain securities are
issued by the Company at a price below the respective conversion prices then
in effect. The Company must redeem, on a pro rata basis, the outstanding
shares of Series A preferred stock plus for $100 per share any declared and
unpaid dividends upon the completion of an initial public offering yielding
net proceeds to the Company of at least $10,000,000. Series A, B and G
preferred stock have voting rights and Series F preferred stock is non-voting,
except under certain circumstances. (See Note 18 for discussion of the
Recapitalization, pursuant to which all of the preferred stock will be
redeemed or converted into common stock.)

F-30

<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11. RELATED-PARTY TRANSACTIONS

The Company has invested $750,000 in non-voting redeemable preferred stock
of a privately-held finance company formed for the purpose of providing
financing to the chauffeured vehicle services industry. This entity provides
financing to the Company's independent operators, without recourse to the
Company, for both automobiles and amounts due under independent operator
agreements. The Company sold $378,733, $1,762,345 and $1,015,897 of
independent operator notes receivable to this related-party finance company
for cash of $378,733, $1,290,899 and $733,793 and demand promissory notes of
$0, $471,446 and $282,104 in 1994, 1995 and 1996, respectively. The unpaid
balances of the promissory notes were $547,930 and $255,664 at November 30,
1995 and 1996, respectively, and are included in notes receivable from
contracts. These promissory notes are due on demand and, generally, monthly
principal payments are received by the Company. These notes generally bear
interest rates of 7%.

It is not practicable to estimate the fair value of the preferred stock
investment in a privately-held company. As a result, the Company's investment
in the privately-held finance company noted above is carried at its original
cost (less redemptions) of $750,000. At April 30, 1996, the total assets
reported by the privately-held company were $10,502,234 and stockholders'
equity was $1,108,448, revenues were $1,088,720 and net income was $96,681.

Pursuant to a stock ownership agreement between the common stockholders of
the related-party finance company and the Company, the Company has an option
to purchase all of the outstanding common stock of the affiliate at $12,500
per common share or market value, if higher. The option is not exercisable
until April 15, 1998.

A guarantee fee of $45,000 has been paid to both the Chairman of the Board
and the President of the Company for guaranteeing certain indebtedness (see
Note 6).

12. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company is subject to various legal
actions which are not material to the financial position, results of
operations or cash flows of the Company.

The Company, certain of the Company's subsidiaries and certain officers and
directors of the Company were named in a civil action filed on May 15, 1996 in
the United States District Court for the Eastern District of Pennsylvania
entitled "Felix v. Carey International, Inc., et al." The plaintiff's
complaint, which purports to be a class action, alleges that the plaintiff and
others similarly situated suffered monetary damages as a result of
misrepresentations by the various defendants in their use of a surface
transportation billing charge. The plaintiff seeks damages in excess of $1
million on behalf of the class for each of the counts in the complaint
including fraud, negligent misrepresentation and violations of the Racketeer
Influenced and Corrupt Organizations law of 1970, which permits the recovery
of treble damages and attorneys' fees. A class has not yet been certified in
this case. The Company filed a motion to dismiss that was denied, and
subsequently has filed an answer denying any liability in connection with this
complaint. The Company has agreed to indemnify and defend its officers and
directors who were named as defendants in the case, subject to conditions
imposed by applicable law. The Company has reached a tentative settlement with
the plaintiff and plaintiff's counsel, which is subject to court approval and
acceptance by the proposed class. The Company does not believe that this
litigation will have a material adverse effect on the financial condition,
results of operations or cash flows of the Company.

13. ACQUISITIONS

In December 1994, the Company acquired certain assets and liabilities of a
chauffeured vehicle service company in Boca Raton, Florida and consolidated
the operations within its existing operations in West Palm Beach.
Subsequently, the Company acquired an additional chauffeured vehicle service
company in Boca Raton

F-31
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(in August 1995) and the Carey licensee in Fort Lauderdale--Miami (in April
1995) and consolidated the two additional businesses into the Carey South
Florida operations.

In January 1995, the Company acquired certain assets and liabilities of the
Carey licensee in San Francisco, California ("Carey SF"). Subsequently, the
Company acquired the business of two additional chauffeured service companies
(in May and August 1995) and combined the acquired operations with those of
Carey SF.

In April 1995, the Company acquired certain assets and liabilities of a
chauffeured vehicle service company in the Washington, DC area and combined
the acquired operations with those of Carey Limousine D.C., Inc.

In February 1996, the Company acquired the common stock of a chauffeured
vehicle service company in London, England for approximately $1,500,000. The
acquisition was financed through the incurrence of $950,000 in debt and a
payment of $550,000. Additional contingent consideration of up to $1,000,000
may be payable with respect to each of the two years ending February 28, 1998
based on the level of revenues referred to the acquired company by the seller.
As of November 30, 1996, the Company has paid $278,304 in contingent
consideration in the acquisition of the London company. In addition, the
Company is required to pay a standard commission to the seller of the acquired
chauffeured vehicle service company for business referral, which will be
expensed as incurred.

All acquisitions have been accounted for as purchases. The net assets
acquired and results of operations have been included in the financial
statements as of and from, respectively, the effective dates of the
acquisitions. The total consideration was allocated to the assets acquired
based upon their estimated fair values with any remaining consideration
allocated to either franchise rights or goodwill, as follows:

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-----------------------------
1994 1995 1996
------- ---------- ----------
<S> <C> <C> <C>
NET ASSETS PURCHASED
Receivables and other assets.............. $ -- $ -- $ 632,554
Fixed assets.............................. -- 1,703,521 928,377
Franchise rights.......................... -- 1,527,402 89,243
Goodwill.................................. 75,000 4,697,958 447,269
Accounts payable and accrued expenses..... -- -- (367,211)
------- ---------- ----------
Fair value of assets acquired............. $75,000 $7,928,881 $1,730,232
======= ========== ==========
CONSIDERATION
Cash (exclusive of $223,695 cash acquired
in 1996)................................. $75,000 $3,633,620 $1,730,232
Capital leases assumed related to vehicle
acquisitions............................. -- 346,666 --
Notes assumed related to vehicle acquisi-
tions.................................... -- 895,571 --
Uncollateralized promissory notes issued
to sellers............................... -- 3,053,024 --
------- ---------- ----------
Total consideration..................... $75,000 $7,928,881 $1,730,232
======= ========== ==========
</TABLE>

Certain of these acquisitions require the payment of contingent
consideration based on percentages of annual net revenue of the acquired
entities over a defined future period. The Company paid $39,521, $315,773 and

F-32

<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
$291,755 in the years ended November 30, 1994, 1995 and 1996, respectively, in
contingent consideration and increased goodwill by the same amounts (see Note
2) which is reflected in the table above.

Of the total uncollateralized promissory notes issued to sellers in 1995,
two notes totaling $303,000 were subject to reduction based upon the results
of the acquired entities (see Note 6). The two notes were repaid in 1996 for
approximately $211,000 and the difference of approximately $92,000 reduced by
recorded goodwill.

The unaudited pro forma summary consolidated results of operations assuming
all the acquisitions had occurred for the purposes of the 1995 summary at the
beginning of fiscal 1995, and for the purposes of the 1996 summary at the
beginning of fiscal 1996, are as follows:

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue.......................................... $ 51,490,000 $ 60,444,000
Cost of revenue.................................. (35,089,000) (41,304,000)
Other expense, net............................... (16,256,000) (16,570,000)
Benefit (provision) for income taxes............. (58,000) 164,000
------------ ------------
Net income....................................... $ 87,000 $ 2,734,000
============ ============
Net income per common share...................... $ .04 $ 1.13
============ ============
Weighted average common shares outstanding....... 2,387,954 2,422,373
============ ============
</TABLE>

14. 401(K) PLAN

The Company sponsors (but has made no contributions to) a defined
contribution plan established pursuant to Section 401(k) of the Internal
Revenue Code for the benefit of employees of the Company.

15. STOCK OPTION PLANS

On December 1, 1987, the Company established a Stock Option Plan (the "1987
Plan") that included all officers and key employees of the Company, non-
employee directors of the Company, and certain persons retained by the Company
as consultants. In accordance with the 1987 Plan, the Company's Board of
Directors may, from time to time, determine the persons to whom the stock
options are to be granted, the number of shares under option, the option price
and the manner in which payment of the option price shall be made. The 1987
Plan provides for the options to be exercised 25% each year beginning after
the year following the grant. The options are exercisable for a period of ten
years after the grant date. The total number of options authorized under the
1987 Plan is 193,506.

On July 28, 1992, the Company established a Stock Option Plan (the "1992
Plan") that included all officers and key employees of the Company, non-
employee directors of the Company, and certain persons retained by the Company
as consultants. In accordance with the 1992 Plan, the Company's Board of
Directors may, from time to time, determine the persons to whom the stock
options are to be granted, the number of shares under option, the option
price, the time or times during the exercise period at which each such option
will become exercisable, and the manner in which payment of the option price
shall be made. The options are exercisable for a period of ten years after
grant date. The total number of options authorized under the 1992 Plan is
388,647.

F-33

<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Stock activity under the 1987 Plan and the 1992 Plan is as follows:

<TABLE>
<CAPTION>
1987 PLAN 1992 PLAN
---------------------- ------------------
OPTION OPTION
PRICE PER PRICE PER
SHARES SHARE SHARES SHARE
------- ------------- ------- ---------
<S> <C> <C> <C> <C>
Balance, December 1, 1993........... 64,502 $ 1.44 385,139 $7.40
Granted............................. -- -- 17,372 7.40
Exercised........................... -- -- -- --
Forfeited........................... -- -- (13,932) --
------- ------------- ------- -----
Balance, November 30, 1994.......... 64,502 1.44 388,579 7.40
Granted............................. -- -- 12,900 7.40
Exercised........................... (32,681) -- -- --
Forfeited........................... (860) -- (60,984) --
------- ------------- ------- -----
Balance, November 30, 1995.......... 30,961 1.44 340,495 7.40
Granted............................. 38,701 4.65 47,017 4.65
Exercised........................... -- --
Forfeited........................... -- (3,010)
------- -------
Balance, November 30, 1996.......... 69,662 $1.44 - $4.65 384,502 $4.65
======= =======
Vested and exercisable at November
30, 1996........................... 30,961 $1.44 358,702 $4.65
======= ============= ======= =====
</TABLE>

In May 1996, the options granted under the 1992 Plan and a warrant to
purchase 86,003 shares of common stock (see Note 6) were repriced to $4.65.
The options and warrant were repriced at the determined fair market value as
of the date of repricing (see Note 18).

On February 25, 1997, the Board of Directors adopted the 1997 Equity
Incentive Plan and the Stock Plan for Non-Employee Directors (see Note 18).

16. REVENUE RECOGNITION METHOD

The Company enters into agreements with independent operators under which
the independent operator contracts to provide chauffeured vehicle services
exclusively to the Company's customers over a contract period pursuant to a
Standard Independent Operator Agreement. Upon signing the Standard Independent
Operator Agreement, the Company is entitled to receive a one-time fee from the
independent operator. Previously, the Company would recognize the one-time fee
as revenue upon signing of the independent operator agreement and when
collection of the fee was reasonably assured. In accordance with APB 20, the
financial statements have been retroactively restated to report such fees as
deferred revenue which are recognized as revenue over the terms of the
contracts (see Note 2). The effect of such restatements was to reduce 1994 and
1995 revenue, results of operations and stockholders' equity by $665,391 and
$1,144,511, respectively (net of income taxes of $0 and $586,680 for 1994 and
1995, respectively).

17. NET INCOME PER COMMON SHARE

Net income per common share, on a historical basis, are as follows:

<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------------------
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Net income (loss) available to common
shareholders.............................. $ (137,743) $ (199,570) $2,816,104
Weighted average common shares outstand-
ing....................................... 2,392,879 2,387,954 2,422,373
Net income (loss) per common share......... $ (.06) $ (.08) $ 1.16
</TABLE>

F-34
<PAGE>

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Common equivalent shares are included in the per share calculations where
the effect of their inclusion would be dilutive. Common equivalent shares
consist of common shares issuable upon (a) conversion of Series B, F and G
preferred stock and (b) the assumed exercise of outstanding stock options and
warrants. Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin (SAB) No. 83, the common equivalent shares issued by the Company
during the twelve months preceding the anticipated effective date of the
Registration Statement relating to the Company's initial public offering,
using the treasury stock method and an assumed public offering price of $11.00
per share, have been included in the calculation of net income per common
share.

Net income (loss) available to common shareholders is the net income (loss)
for the fiscal year less accretion of dividends on the Series E preferred
stock of $8,750, $4,376 and $0 for 1994, 1995 and 1996, respectively.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128). FAS
128 simplifies the existing earnings per share (EPS) computations under
Accounting Principles Board Opinion No. 15, "Earnings Per Share," revises
disclosure requirements, and increases the comparability of EPS data on an
international basis. In simplifying the EPS computations, the presentation of
primary EPS is replaced with basic EPS, with the principal difference being
that common stock equivalents are not considered in computing basic EPS. In
addition, FAS 128 requires dual presentation of basic diluted EPS. FAS 128 is
effective for financial statements issued for periods ending after December
15, 1997. The Company's pro forma basic EPS under FAS 128 would have been
$4.29 and dilutive EPS under FAS 128 would not differ significantly from the
reported pro forma net income per share.

18. SUBSEQUENT EVENTS

Also on February 25, 1997, the Board of Directors, subject to stockholder
approval, adopted the Stock Plan for Non-Employee Directors (the "Directors'
Plan"). A total of 100,000 shares of common stock of the Company are reserved
for issuance under the Directors' Plan. Options to purchase at the IPO price a
total of 22,500 shares of common stock will be granted under the Directors'
Plan, such grants to be effective upon the execution of an underwriting
agreement in connection with the IPO.

Also on February 25, 1997, the Board of Directors, approved amendments to
the Company's Certificate of Incorporation increasing the number of authorized
shares of the Company's Common Stock from 9,512,950 to 20,000,000, and
increasing the number of authorized shares of the Company's preferred stock
from 173,050 to 1,000,000.

F-35

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders
Manhattan International Limousine Network Ltd. and Affliliate

We have audited the accompanying combined balance sheet of Manhattan
International Limousine Network Ltd. and Affliliate (collectively, the
"Company") as of September 30, 1996, and the related combined statements of
operations and retained earnings (accumulated deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Manhattan
International Limousine Network Ltd. and Affliliate as of September 30, 1996,
and the combined results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.

As discussed in Note 10 to the combined financial statements, the
accompanying combined balance sheet as of September 30, 1996, and the related
combined statement of operations and retained earnings (accumulated deficit)
and cash flows for the year then ended have been restated.

COOPERS & LYBRAND L.L.P.

Washington, D.C.
March 1, 1997, except
for Note 10 as to which
the date is April 22, 1997

F-36
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE
COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1996
------------- ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents......................... $ 130,494 $ 24,932
Accounts receivable, net of allowances for doubt-
ful accounts of $181,000 and $192,000, respec-
tively........................................... 2,466,134 2,550,658
Receivables from independent operators, current
portion.......................................... 271,086 478,707
Prepaid expenses and other current assets......... 51,499 51,499
----------- -----------
Total current assets........................... 2,919,213 3,105,796
Fixed assets, net................................. 805,724 735,108
Receivables from independent operators, less cur-
rent portion..................................... 7,375,219 7,498,445
Other assets...................................... 1,221,885 1,227,814
----------- -----------
Total assets...................................... $12,322,041 $12,567,163
=========== ===========
<CAPTION>
LIABILITIES
<S> <C> <C>
Current portion of notes payable.................. $ 1,232,457 $ 2,769,013
Accounts payable, trade........................... 1,520,295 1,555,510
Accounts payable, independent operators........... 1,738,072 1,867,308
Accrued expenses.................................. 529,761 683,610
Other current liabilities......................... 240,059 269,444
----------- -----------
Total current liabilities...................... 5,260,644 7,144,885
Notes payable, less current portion............... 4,523,171 2,445,743
Other liabilities................................. 862,875 866,401
Deferred revenue.................................. 6,801,965 6,871,236
Commitments and contingencies
<CAPTION>
STOCKHOLDERS' DEFICIENCY
<S> <C> <C>
MILN common stock, $1 par value, 200 shares autho-
rized, 100 shares issued and outstanding......... 100 100
ILN common stock, $1 par value, 200 shares autho-
rized, 200 shares issued and outstanding......... 1,000 1,000
ILN additional paid-in capital.................... 176,940 176,940
<CAPTION>
Retained earnings (accumulated deficit):
<S> <C> <C>
MILN............................................ (5,439,073) (5,073,561)
ILN............................................. 134,419 134,419
----------- -----------
Total stockholders' deficiency................. (5,126,614) (4,761,102)
----------- -----------
Total liabilities and stockholders' deficien-
cy............................................ $12,322,041 $12,567,163
=========== ===========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-37
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

COMBINED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE THREE MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------ --------------------------
1996 1996
------------------ --------------------------
(UNAUDITED)
<S> <C> <C>
Revenues:
Service revenues, net.......... $17,218,728 $ 5,203,279
Interest from independent oper-
ator financing................ 1,219,819 268,105
----------- -----------
Total revenues................. 18,438,547 5,471,384
Cost of revenues................. 11,040,017 3,393,076
----------- -----------
Gross profit................... 7,398,530 2,078,308
Selling, general and administra-
tive expenses................... 5,821,899 1,491,857
----------- -----------
Operating income............... 1,576,631 586,451
Interest expense................. (881,854) (224,810)
Interest income.................. 66,000 16,500
----------- -----------
Income before provision for in-
come taxes.................... 760,777 378,141
Provision for income taxes....... 55,014 12,629
----------- -----------
Net income..................... 705,763 365,512
Accumulated deficit, beginning of
period.......................... (5,907,417) (5,304,654)
Distribution to S corporation
stockholder..................... (103,000) --
----------- -----------
Accumulated deficit, end of peri-
od.............................. ($5,304,654) ($4,939,142)
=========== ===========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-38
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEAR ENDED MONTHS ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1996
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income............................... $705,763 $ 365,512
Adjustments necessary to reconcile net
income
to net cash provided by operating
activities:
Depreciation and amortization........... 258,439 71,487
Change in deferred revenue.............. (279,625) 69,271
Changes in operating assets and
liabilities:
Accounts receivable.................... (377,793) (84,524)
Receivables from independent opera-
tors.................................. 139,363 (330,847)
Other assets........................... (103,240) (5,929)
Accounts payable and accrued expenses.. (152,519) 189,064
Accounts payable, independent opera-
tors.................................. 293,731 129,236
Other liabilities...................... (193,582) 32,911
-------- ---------
Net cash provided by operating
activities........................... 290,537 436,181
-------- ---------
Cash flows from investing activities:
Purchases of fixed assets................ (256,248) (871)
-------- ---------
Net cash used in investing
activities........................... (256,248) (871)
-------- ---------
Cash flows from financing activities:
Net borrowings (payments) on line of
credit.................................. 261,802 (179,003)
Proceeds from borrowings under notes
payable................................. 310,000 --
Principal payments on notes payable...... (412,643) (361,869)
Distribution to S corporation
stockholder............................. (103,000) --
-------- ---------
Net cash provided by (used in)
financing activities................. 56,159 (540,872)
-------- ---------
Net change in cash and cash equivalents... 90,448 (105,562)
Cash and cash equivalents, beginning of
period................................... 40,046 130,494
-------- ---------
Cash and cash equivalents, end of period.. $130,494 $ 24,932
======== =========
</TABLE>

The accompanying notes are an integral part of these combined financial
statements.

F-39
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS

1. BACKGROUND AND ORGANIZATION

Manhattan International Limousine Network Ltd. and its wholly-owned
subsidiary (collectively, "MILN") are engaged primarily in the business of
providing chauffeured vehicle services in New York City and the surrounding
areas, and providing reservation and billing services to both individual and
corporate customers worldwide through an affiliation with a network of
independent chauffeured vehicle service companies. International Limousine
Network Ltd. ("ILN") is an affiliated company (the "Affiliate") engaged in
sales and marketing activities exclusively on behalf of MILN.

The accompanying financial statements combine the accounts of MILN and ILN
because such entities are under common control. All intercompany transactions
have been eliminated. The combined entities are referred to herein as the
"Company."

ILN operates on a calendar year. As a result, the accompanying financial
statements as of and for the year ended September 30, 1996 include the effects
of combining the financial statements of ILN as of and for the year ended
December 31, 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

The Company considers all short-term investments with original maturities of
three months or less to be cash equivalents.

Receivables from Independent Operators and Accounts Payable, Independent
Operators

The Company enters into agreements with independent operators (franchisees)
under which the independent operator contracts to provide chauffeured vehicle
services exclusively to the Company's customers over the contract period. Upon
signing the agreement, the Company is entitled to receive a one-time fee from
the independent operator.

The Company generally receives a minimal down payment from the independent
operator together with a promissory note (see Note 3) and records the note as
a receivable from the independent operator, but does not recognize revenue at
that time. (See Revenue Recognition.) In addition, the Company collects all
billings for services rendered by the independent operator and has the right
to withhold and remit, from the independent operator's earnings, all payments
due to the Company and certain third parties for, among other things, note
payments, two-way radio charges and lease obligations on vehicles, on a
monthly basis. The Company is then obligated to remit the balance of the
independent operator's earnings on a monthly basis. The unpaid balance due to
independent operators at the end of a given period is reflected as accounts
payable, independent operators in the accompanying balance sheet.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk include cash and cash equivalents, accounts
receivable and receivables from independent operators. The Company maintains
its cash and cash equivalents with various financial institutions. Accounts
receivable are generally diversified due to the large number of entities
comprising the Company's customer base and their dispersion across many
different industries. The Company performs ongoing credit evaluations of its
customers, and may require credit card documentation or prepayment of certain
transactions. Receivables from independent operators are supported by the
underlying base of revenues serviced by each respective independent operator.
The Company performs ongoing evaluations of the productivity and payment
capacity of each independent operator in order to manage its credit risk.

F-40
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

Fixed Assets

Fixed assets are stated at cost. Depreciation on furniture, equipment,
vehicles and leasehold improvements is calculated on the declining balance
method over the estimated useful lives of the assets or the leaseholds,
generally three to five years. Buildings and improvements are depreciated on
the straight line method over 20 years. Sales and retirements of fixed assets
are recorded by removing the cost and accumulated depreciation from the
accounts. Gains and losses on sales of property are reflected in the results
of operations.

Intangible Assets

The Company owns Federal Communications Commission licenses to three radio
frequencies which it uses in the dispatch of vehicles used in its business.
The licenses have been fully amortized in prior years.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Service revenues include fees derived from chauffeured vehicle services
provided by the Company's independent operators. Revenue is recorded for
chauffeured vehicle services when those services are provided.

When the Company enters into an agreement with an independent operator, the
Company defers revenue equal to the amount of the contract and recognizes
those fees over the term of the contract, typically 20 years. Amortization of
deferred revenue is also included in independent operator service revenues in
the accompanying combined statements of operations. Upon termination of an
agreement, the remaining deferred revenue associated with the contract, less
any amounts due from the independent operators deemed uncollectible, is
recognized as revenue immediately.

As described above, the Company typically provides extended financing terms
to its independent operators for payment of the independent operator fee.
Interest income is recognized as earned over the term of the loan agreement
with the independent operator.

The Company provides reservation services to its customers for service in
other locations through its affiliation with a network of independent service
companies. Revenue related to services provided by a member of the network is
recognized as chauffeured vehicle service revenue when a gross service bill is
received from the member. The corresponding liability to the member, reduced
by the Company's discount, is recorded as a cost of revenue by the Company at
such time.

Income Taxes

For MILN, the provision for income taxes includes income taxes currently
payable and the change during the year in the net deferred tax assets or
liabilities. Deferred income tax assets and liabilities are determined based
on the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance is provided to
reduce the net deferred tax asset, if any, to a level which, more likely than
not, will be realized.

F-41
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

ILN has elected to be treated as an "S corporation" under provisions of the
Internal Revenue Code. As such, the income tax effects of ILN's operations are
borne directly by the stockholder, and no provision for ILN income taxes is
recorded in the accompanying financial statements.

Unaudited Interim Financial Statements

The combined financial statements as of and for the three-month period ended
December 31, 1996 are unaudited. In the opinion of management, those unaudited
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present the financial statements on a
basis substantially consistent with the annual audited financial statements
contained herein. All disclosures herein related to December 31, 1996 and for
the three-month period ended December 31, 1996 are unaudited.

3. TRANSACTIONS WITH INDEPENDENT OPERATORS

At the time the Company enters into an agreement with an independent
operator, the Company is entitled to receive a one-time fee. Those fees are
typically financed by the Company over 20 years at an interest rate of 15.75%
per annum. Independent operator fees are recognized as revenue ratably over
the terms of the agreements. In the opinion of management, the carrying value
of the loans approximates their fair value. Revenue recognized from
independent operator fees was $514,632 and $120,729 for the year ended
September 30, 1996 and for the three-month period ended December 31, 1996,
respectively.

The Company's independent operators are responsible for financing their own
vehicles through third parties. Under programs the Company has established
with several automotive leasing organizations, the Company guarantees lease
payments until the independent operator has made twelve monthly lease
payments. As of September 30, 1996, the Company's independent operators had
aggregate lease obligations of $2,203,158 under these programs.

4. FIXED ASSETS

Fixed assets consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1996
------------- ------------
<S> <C> <C>
Land............................................... $ 62,569 $ 62,569
Buildings and improvements......................... 676,730 676,730
Furniture, fixtures and equipment.................. 3,086,224 3,087,095
Vehicles........................................... 344,170 344,170
---------- ----------
4,169,693 4,170,564
Less accumulated depreciation...................... 3,363,969 3,435,456
---------- ----------
Net fixed assets................................... $ 805,724 $ 735,108
========== ==========
</TABLE>

Depreciation expense was $258,439 and $71,487 for the year ended September
30, 1996 and for the three-month period ended December 31, 1996, respectively.

F-42
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

5. NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1996
------------- ------------
<S> <C> <C>
Line of credit of up to $2,000,000 under agreement dated
December 27, 1994, collateralized by substantially all of
the Company's assets; availability up to 80% of eligible
accounts receivable at any date; interest payable monthly
at prime plus 6%. In addition to interest obligations,
agreement requires payment of annual facility fee equal
to 1% of total line, as well as monthly and quarterly
administration fees. The agreement terminates on December
27, 1997, after which it is automatically renewable
unless terminated by either party as of any anniversary
date, with 60 days prior written notice. Certain
stockholders of the Company are guarantors on the
Company's behalf......................................... $ 1,864,967 $ 1,685,964
First mortgage note on headquarters premises dated April
12, 1989, original principal of $1,200,000, subject to
fixed monthly installments of principal, and interest at
a rate of 14.75%......................................... 310,000 280,000
Various installment notes payable with interest rates
ranging from 10.75% to 14.75%, and collateralized by
certain independent operator agreements and receivables
from independent operators of the Company. Principal and
interest payments are due monthly over 60-month terms.... 3,228,364 2,947,702
Notes payable, collateralized by certain equipment,
principal and interest due monthly over terms of 24-39
months................................................... 352,297 301,090
----------- -----------
5,755,628 5,214,756
Less current portion 1,232,457 2,769,013
----------- -----------
Notes payable, less current portion $ 4,523,171 $ 2,445,743
=========== ===========
</TABLE>

In the opinion of management, the carrying amount of the notes payable
approximates their fair value. Aggregate principal payments under the Company's
note payable arrangements as of September 30, 1996 are due as follows:

<TABLE>
<S> <C>
1997.............................. $1,232,457
1998.............................. 2,747,898
1999.............................. 542,673
2000.............................. 588,368
2001.............................. 175,732
Thereafter........................ 468,500
----------
Total............................. $5,755,628
==========
</TABLE>

F-43
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

On January 17, 1997, the Company refinanced its existing mortgage note on
its headquarters facility. The new note has a principal balance of $800,000
and is due five years from the date of origination. Interest is incurred at a
rate of 10.75% for the first year, after which the rate becomes variable at
prime plus 2.5%. Interest and principal payments are due monthly based on a
15-year amortization, with a balloon payment due at maturity.

6. INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE THREE
ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1996
------------- --------------
<S> <C> <C>
Federal--Current................................ $ 15,845 $ --
State and local--Current........................ 39,169 12,629
--------- ---------
Total income tax provision...................... $ 55,014 $ 12,629
========= =========
</TABLE>

The Company's effective income tax rates differed from the applicable
Federal statutory rate due to the following:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE THREE
ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1996
------------- -------------
<S> <C> <C>
Federal statutory rate.......................... 34% 34%
State and local income taxes.................... 13 13
Effect of income of S corporation............... (9) --
Reduction as a result of deferred tax asset val-
uation allowance............................... (43) (57)
Other, primarily nondeductible travel and enter-
tainment....................................... 12 13
--- ---
Effective income tax rate....................... 7% 3%
=== ===
</TABLE>

As of September 30, 1996, for federal income tax purposes, the Company had
net operating loss (NOL) carryforwards of $1,955,055 available to offset
future taxable income, which expire from 2004 to 2010.

The source and tax effects of temporary differences are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1996
------------- ------------
<S> <C> <C>
NOL carryforwards................................. $ 914,574 $ 671,685
Revenue recognition of independent operator fees.. 857,606 793,672
Valuation allowance............................... (1,772,180) (1,465,357)
----------- -----------
Net deferred tax asset (liability)................ $ -- $ --
=========== ===========
</TABLE>

Income taxes paid amounted to $14,505 and $0 for the year ended September
30, 1996 and for the three-month period ended December 31, 1996, respectively.

F-44
<PAGE>

MANHATTAN INTERNATIONAL LIMOUSINE NETWORK LTD. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

7. RELATED PARTY TRANSACTIONS

Included in other noncurrent liabilities are loans from officers of the
Company with remaining principal balances of $358,444 and $294,944 as of
September 30, 1996 and December 31, 1996, respectively. The loans have
interest rates of 12.5% and are payable in equal installments of principal and
interest over terms of 15 years. Aggregate principal payments under the loans
were due as follows as of September 30, 1996:

<TABLE>
<S> <C>
1997......................... $ 77,786
1998......................... 10,781
1999......................... 12,209
2000......................... 13,825
2001......................... 15,656
Thereafter................... 228,187
--------
Total........................ $358,444
========
</TABLE>

During the year ended September 30, 1996 and the three-month period ended
December 31, 1996, the Company took one-time charges related to advances to a
non-combined affiliate of approximately $218,000 and $7,000, respectively,
which are included in selling, general and administrative expenses.

8. CONTINGENCIES

The Company is involved in various legal actions which arise in the normal
course of business. Management of the Company does not believe the ultimate
resolution of these actions will have a material effect on the financial
position, results of operations or cash flows of the Company.

9. MAJOR CUSTOMER

The Company has one customer which accounted for approximately 18.0% of
service revenues for the year and three-month periods ended September 30, 1996
and December 31, 1996, respectively.

10. RESTATEMENTS

The Company enters into agreements with independent operators under which
the independent operator contracts to provide chauffeured vehicle services
exclusively to the Company's customers over a contract period. Upon signing
the contract, the Company is entitled to receive a one-time fee from the
independent operator. Previously, the Company recognized the one-time fee as
revenue upon signing of the agreement. In accordance with Opinion No. 20 of
the Accounting Principles Board, "Accounting Changes", the financial
statements have been retroactively restated to report such fees as deferred
revenue which are recognized as revenue over the terms of the contracts (see
Note 2). The effects of such restatements were to increase results of
operations and stockholders' equity by $5,996 and $252,541 for the year ended
September 30, 1996 and the three-month period ended December 31, 1996,
respectively. The Company uses a network of independent service companies to
provide chauffeured vehicle services to its customers. Certain previously
unrecognized costs related to these services have been retroactively recorded.
The effects of such restatements were to decrease results of operations by
$301,984 and $151,565 for the year ended September 30, 1996 and the three-
month period ended December 31, 1996, respectively, and to increase
stockholders' deficiency by $432,671 and $584,236 as of September 30, 1996 and
December 31, 1996, respectively.

11. SUBSEQUENT EVENT

On March 1, 1997, the stockholders of MILN and ILN agreed to sell their
stock to Carey International, Inc., a company providing chauffeured vehicle
services.

F-45
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors of Camelot Barthropp Limited (formerly Speed 6060 Limited):

We have audited the accompanying balance sheet of Camelot Barthropp Limited
as of December 31, 1995, and the related statement of operations for the
period from August 4, 1995 to December 31, 1995, all expressed in pounds
sterling. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with United Kingdom auditing standards
which do not differ in any significant respect from United States generally
accepted auditing standards. These standards require that we plan and perform
our audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Camelot Barthropp Limited as of December
31, 1995, and the results of its operations for the period from August 4, 1995
to December 31, 1995, in conformity with accounting principles generally
accepted in the United Kingdom (which differ in certain respects from
generally accepted accounting principles in the United States--see note 16).

Coopers & Lybrand
Chartered Accountants and Registered
Auditors

London, England

February 26, 1996, except notes 15 and 16
which are dated February 25, 1997

F-46
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
NOTE 1995
---- ---------
(Pounds)
<S> <C> <C>
Revenues--continuing operations.................................. 1,266,924
Other operating income........................................... 4 7,700
---------
1,274,624
Expenditures--continuing operations
Vehicle operating costs........................................ 97,119
Other external charges......................................... 362,520
Staff costs.................................................... 3 423,286
Depreciation................................................... 4 114,914
Other operating charges........................................ 4 163,363
---------
1,161,202
---------
Net income on ordinary activities before taxation................ 113,422
Tax on ordinary activities....................................... 5 60,256
---------
Net income on ordinary activities after taxation................. 53,166
Dividends payable................................................ --
---------
Net income retained.............................................. 53,166
=========
</TABLE>

The Company has no recognized gains or losses other than the income above and
therefore no separate statement of total recognized gains and losses has been
presented.

There is no difference between the income on ordinary activities before
taxation and the retained income for the period stated above and their
historical cost equivalents.

The Company was incorporated on August 4, 1995, and as a result, there are no
comparative figures.

The accompanying notes are an integral part of these financial statements.

F-47
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

BALANCE SHEET AT DECEMBER 31, 1995

<TABLE>
<CAPTION>
NOTE 1995
---- ---------
(Pounds)
<S> <C> <C>
Fixed assets
Tangible assets................................................ 6 659,293
---------
Current assets
Inventories.................................................... 7 9,747
Receivables.................................................... 8 548,103
Called up share capital not paid............................... 911,000
Cash at bank and in hand....................................... 366,912
---------
1,835,762
Current liabilities.............................................. 9 1,530,889
---------
Net current assets............................................... 304,873
---------
964,166
=========
Represented by:
Shareholders' equity
Called up share capital........................................ 11 92,000
Share premium account.......................................... 11 819,000
Retained earnings.............................................. 12 53,166
---------
Total shareholders' equity................................... 964,166
=========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-48
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

1. BASIS OF PREPARATION

The accompanying financial statements of Camelot Barthropp Limited
(previously Speed 6060 Limited) have been prepared in conformity with
accounting principles generally accepted in the United Kingdom ("U.K. GAAP"),
and are presented under the historical cost convention. These principles
differ in certain material respects from generally accepted accounting
principles in the United States ("U.S. GAAP"); see note 16. All amounts are
expressed in pounds sterling ("(Pounds)").

The accompanying financial statements do not represent the U.K. statutory
financial statements of Camelot Barthropp Limited, as certain
reclassifications and changes in presentation and disclosure have been made to
the U.K. financial statements prepared on a statutory basis in order to
conform, more closely with accounting presentation and disclosure requirements
applicable in the United States. The financial statements of Camelot Barthropp
Limited for the period from August 4, 1995 to December 31, 1995, on which the
auditors' report was unqualified, were the first prepared since its
incorporation. These were not full statutory financial statements and
therefore have not been delivered to the Registrar of Companies in England and
Wales.

The ultimate parent undertaking of Camelot Barthropp Limited was The Savoy
Hotel PLC, a company incorporated under the laws of England throughout the
period from August 4, 1995 to December 31, 1995, of these financial
statements.

2. ACCOUNTING POLICIES

USE OF ESTIMATES

Preparation of financial statements in conformity with U.K. GAAP requires
management to make estimates and assumptions that affect the reported 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 for an accounting period. Such estimates and assumptions could
change in the future as more information becomes known or circumstances alter,
such that Camelot Barthropp Limited's actual results may differ from the
amounts reported and disclosed in the financial statements.

DEPRECIATION

Depreciation is provided so as to write off the cost being the market value
of motor vehicles acquired from a fellow subsidiary undertaking less the
estimated residual value of fixed assets over their expected useful lives.

Depreciation on a straight line basis, mainly at the following annual rates:

<TABLE>
<S> <C>
Motor vehicles --25%
Furniture and equipment --10%-20%
Improvements to premises --10%
</TABLE>

INVENTORIES

Inventories are valued at the lower of cost or net realizable value.

DEFERRED TAXATION

Provision is made for deferred taxation using the liability method at
current taxation rates on all material timing differences to the extent that
it is probable that a liability or asset will crystallize.

REVENUES

Revenues represent the invoiced value of services provided, excluding sales
related taxes.

F-49
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

FOREIGN CURRENCIES

Assets and liabilities in foreign currencies have been translated into
sterling at the rates ruling at the balance sheet date.

OPERATING LEASES

Rentals paid under operating leases are charged to operations on a straight
line basis over the lease term.

PENSION COSTS

The Company contributes into both defined benefit and defined contribution
schemes. An appropriate share of the costs of the pension schemes administered
by the parent undertaking, which are a defined benefit scheme and a defined
contribution scheme, are charged to operations for this Company in respect of
staff who are members of these schemes. Full details of these schemes are
disclosed in the financial statements of The Savoy Hotel PLC. The pension cost
charge for defined contribution schemes represents the amounts payable to
insurance companies in respect of the funds for the year to December 31.

F-50
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

3. STAFF COSTS

<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 4, 1995 TO
DECEMBER 31, 1995
-------------------
(Pounds)
<S> <C>
Wages and salaries.......................................... 391,924
Social security costs....................................... 28,242
Pension costs............................................... 3,120
---------------
(Pounds)423,286
===============
Pension costs comprise:
Payments to funded defined contribution schemes........... 320
Charges in respect of group scheme........................ 2,800
---------------
(Pounds) 3,120
===============

The average weekly number of employees during the period was as follows:

NUMBER
---------------
Chauffeurs and support staff................................ 43
Administration.............................................. 6
---------------
49
===============
Directors' remuneration was as follows:
Remuneration as executives................................ Nil
Pension contributions..................................... Nil
Compensation for loss of office........................... Nil
---------------
(Pounds) Nil
===============
Emoluments excluding pension:
Chairman's emoluments..................................... (Pounds) Nil
===============
Highest paid director's emoluments........................ (Pounds) Nil
===============
</TABLE>

The number of directors (including the chairman and highest paid director)
who received emoluments (excluding pension contributions) in the following
ranges was:

<TABLE>
<S> <C>
NUMBER
------
(Pounds)0-(Pounds)5,000............. 4
======
</TABLE>

No director waived emoluments in respect of the period ended December 31,
1995.

The statement of operations for the period from August 4, 1995 to December
31, 1995 includes no head office management recharges from the parent
undertaking in respect to the services provided by the directors of Camelot
Barthropp Limited and other corporate overheads.

F-51
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

4. INCOME ON ORDINARY ACTIVITIES BEFORE TAXATION

<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 4, 1995 TO
DECEMBER 31, 1995
------------------
(Pounds)
<S> <C>
The income on ordinary activities before taxation is stated
after charging:
Marketing recharge from parent........................... 27,484
Depreciation............................................. 114,914
Operating leases--hire of plant and machinery............ 4,217
--other operating leases................................. 10,000
=======
and after crediting:
Rent receivable.......................................... 5,526
Sundry income............................................ 417
Gain on disposal of tangible fixed assets................ 1,757
Other operating income................................... 7,700
=======
</TABLE>

5. TAXATION

<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 4, 1995 TO
DECEMBER 31, 1995
------------------
(Pounds)
<S> <C>
UK corporation tax on ordinary activities for the period at
33%....................................................... 60,256
======
</TABLE>

6. TANGIBLE FIXED ASSETS

<TABLE>
<CAPTION>
SHORT LEASEHOLD MOTOR FURNITURE AND
PREMISES VEHICLES EQUIPMENT TOTAL
--------------- -------- ------------- --------
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C>
Cost
At August 4, 1995............ -- -- -- --
Additions.................... 7,591 763,686 57,952 829,229
Disposals.................... -- (55,022) -- (55,022)
----- ------- ------ -------
At December 31, 1995......... 7,591 708,664 57,952 774,207
----- ------- ------ -------
Accumulated depreciation
At August 4, 1995............ -- -- -- --
Charge for the Year.......... 770 104,144 10,000 114,914
Disposals.................... -- -- -- --
----- ------- ------ -------
At December 31, 1995......... 770 104,144 10,000 114,914
----- ------- ------ -------
Net Book Value
At December 31, 1995......... 6,821 604,520 47,952 659,293
===== ======= ====== =======
</TABLE>

F-52
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

7.INVENTORIES

<TABLE>
<CAPTION>
1995
---------
(Pounds)
<S> <C>
Raw materials and consumables:
Vehicle spare parts.............................................. 5,369
Petrol and oil................................................... 4,378
---------
9,747
=========

8.RECEIVABLES--AMOUNTS FALLING DUE WITHIN ONE YEAR

Trade receivables.................................................. 337,960
Amounts owed by parent undertaking................................. 155,164
Other receivables.................................................. 4,784
Prepayments and accrued income..................................... 50,195
---------
548,103
=========

9.CURRENT LIABILITIES--AMOUNTS FALLING DUE WITHIN ONE YEAR

Trade accounts payable............................................. 95,414
Borrowings from parent undertaking................................. 230,607
Borrowings from fellow subsidiary.................................. 936,674
Corporation tax.................................................... 60,256
Other taxes and social security.................................... 73,542
Other creditors.................................................... 5,605
Accruals........................................................... 128,791
---------
1,530,889
=========
</TABLE>

10.DEFERRED TAXES

Provision for deferred taxes has been made in the financial statements in
accordance with the Company's accounting policy. The provision and the full
potential liability are as follows:

<TABLE>
<CAPTION>
1995
------------------------
POTENTIAL
PROVISION LIABILITY
--------- --------------
<S> <C> <C>
Accelerated capital allowances..................... -- (Pounds)17,875
=== ==============
</TABLE>

11.SHARE CAPITAL AND SHARE PREMIUM

<TABLE>
<CAPTION>
1995
--------
(Pounds)
<S> <C>
Authorized:
Ordinary Shares of (Pounds)1...................................... 100,000
=======
</TABLE>

F-53
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

The Company was incorporated on August 4, 1995 with 1,000 Ordinary Shares of
(Pounds)1 each. On August 30, 1995 the authorized share capital of the Company
was increased by 99,000 Ordinary Shares of (Pounds)1 each.

<TABLE>
<CAPTION>
NUMBER NOMINAL SHARE TOTAL
ISSUED VALUE PREMIUM CONSIDERATION
------ ------- ------- -------------
<S> <C> <C> <C> <C>
Allotted, called up and fully paid:
Ordinary Shares of (Pounds)1............ 92,000 92,000 819,000 911,000
====== ====== ======= =======
</TABLE>

On August 8, 1995, 1,000 shares were issued to The Savoy Hotel PLC at par.
On August 30, a further 91,000 shares were issued to The Savoy Hotel PLC at a
price of (Pounds)10.00 per share

12. RETAINED EARNINGS

<TABLE>
<CAPTION>
1995
--------
(Pounds)
<S> <C>
At August 4, 1995................................................... --
Retained income for the period...................................... 53,166
-------
At December 31, 1995................................................ 53,166
=======

13. RECONCILIATION OF MOVEMENTS ON SHAREHOLDERS' EQUITY

<CAPTION>
1995
--------
(Pounds)
<S> <C>
Opening shareholders' equity........................................ --
Issue of share capital.............................................. 92,000
Share premium....................................................... 819,000
Total recognized gains for the period............................... 53,166
-------
Closing shareholders' equity........................................ 964,166
=======
</TABLE>

14. FINANCIAL COMMITMENTS

a) The Company has annual commitments under operating leases as set out
below:

<TABLE>
<CAPTION>
1995
------------------
LAND AND
BUILDINGS OTHER
--------- --------
(Pounds) (Pounds)
<S> <C> <C>
Leases which expire:
In the next year...................................... -- 3,363
In the second to fifth years.......................... -- 5,504
After five years...................................... -- --
--- -----
-- 8,867
=== =====
</TABLE>

b) Capital commitments:

<TABLE>
<CAPTION>
1995
--------
(Pounds)
<S> <C>
Capital expenditure contracted for but not provided in the fi-
nancial statements............................................ --
===
Capital expenditure approved by the directors but not con-
tracted for................................................... --
===
</TABLE>

F-54
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

15. POST BALANCE SHEET EVENTS

The parent undertaking sold Camelot Barthropp Limited to Carey
International, Inc. for an initial consideration of (Pounds)788,843. Further
consideration of (Pounds)672,752 will become payable on the parent undertaking
providing certain thresholds of business for Camelot Barthropp Limited are
achieved during the period to March 31, 1998.

16. SUMMARY OF DIFFERENCES BETWEEN U.K. AND U.S. GAAP

The financial statements are prepared in accordance with accounting
principles generally accepted in the United Kingdom ("U.K. GAAP"). These
accounting principles differ in certain material respects from the accoounting
principles generally accepted in the United States ("U.S. GAAP"). Described
below are the material differences between U.K. GAAP and U.S. GAAP affecting
the net income and shareholders' equity which are set forth in the tables that
follow.

TRANSFER OF ASSETS BETWEEN FELLOW SUBSIDIARIES

Under U.K. GAAP, assets can be transferred from one subsidiary to a fellow
subsidiary with the same parent undertaking, at their fair value. The
difference between the fair value and the historical cost of these assets will
result in an intragroup gain or loss in the statement of operations of the
subsidiary selling the assets. The assets would remain at their fair value in
the subsidiary that acquired the assets and the associated depreciation charge
would be provided on these fair values. Under U.S. GAAP, assets can only be
transferred from one subsidiary to a fellow subsidiary with the same parent
undertaking, at their historical cost. As a result, under U.S. GAAP, no
intragroup gain or loss would arise from the transaction, the assets would
remain at historical cost and the associated depreciation charge would be
provided on these historical costs.

ALLOCATION OF EXPENSES IN A "CARVE OUT" SITUATION

Under U.K. GAAP, certain costs incurred by the parent undertaking may not be
reflected in the subsidiary financial statements; however, disclosure of this
fact is generally provided in the subsidiary financial statements. Under U.S.
GAAP, historical income statements of a subsidiary should reflect all costs
incurred by the parent undertaking on its behalf, such as officer salaries and
corporate overheads.

DEFERRED TAXES

Under U.K. GAAP, deferred taxation is accounted for using the liability
method to the extent that it is considered probable that a liability will
crystallize in the foreseeable future. Under U.S. GAAP, deferred taxation is
provided for on all temporary differences and carryforwards. Deferred tax
assets are recognised to the extent that it is more likely than not that they
will be realized. Where doubt exists as to whether a deferred tax asset will
be realized, an appropriate valuation allowance is established.

STOCK SUBSCRIPTIONS

Under U.K. GAAP the amount of the shares issued, including those issued
pursuant to a stock subscription receivable, is shown on the face of the
balance sheet. Any subscription receivable due on these shares would be shown
separately in the balance sheet. Under U.S. GAAP, the net amount of the shares
being the amount of the shares issued after deducting any subscriptions
receivable therefrom, is shown on the face of the balance sheet.

F-55
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

The effect of the above noted differences between U.K. and U.S. GAAP are as
follows:

(A)NET INCOME

The approximate effects on net income of material differences between U.K.
and U.S. GAAP are as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
AUGUST 4, 1995 TO
DECEMBER 31, 1995
--------------------
(Pounds)
<S> <C>
Net income reported under U.K. GAAP................... 53,166
Transfer of assets -- depreciation adjustment......... 15,590
Allocation of expenses................................ (21,170)
Deferred taxes........................................ (17,875)
Tax effect of U.S. GAAP reconciling adjustments....... 1,844
--------
Net income reported in accordance with U.S. GAAP...... 31,555
========

(B)SHAREHOLDERS' EQUITY

The approximate effects on shareholders' equity of material differences
between U.K. and U.S. GAAP are as follows:

<CAPTION>
AT DECEMBER 31, 1995
--------------------
(Pounds)
<S> <C>
Shareholders' equity reported under U.K. GAAP......... 964,166
Gain on transfer of assets--fixed assets.............. (112,500)
--amounts payable..................................... 112,500
--depreciation adjustment............................. 15,590
Allocation of expenses................................ (21,170)
Stock subscriptions................................... (911,000)
Deferred taxes........................................ (17,875)
Tax effect of U.S. GAAP reconciling adjustments....... 1,844
--------
Shareholders' equity reported in accordance with U.S.
GAAP................................................. 31,555
========
</TABLE>

F-56
<PAGE>

CAMELOT BARTHROPP LIMITED (FORMERLY SPEED 6060 LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE PERIOD FROM AUGUST 4, 1995 TO DECEMBER 31, 1995

(C)STATEMENTS OF CASH FLOWS

Under U.K. GAAP, wholly owned subsidiaries of a parent undertaking that are
established under the law of any European Community State are exempt from
including a statement of cash flows in their financial statements. Under U.S.
GAAP, the statement of cash flows is required and therefore is shown below:

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
AUGUST 4, 1995
TO DECEMBER 31, 1995
--------------------
(Pounds)
<S> <C>
Cash flows from operating activities
Net income.......................................... 31,555
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of fixed assets..... 99,324
Gain on sale of fixed assets...................... (1,757)
Change in operating assets and liabilities:
Receivables..................................... (548,103)
Inventories..................................... (9,747)
Current liabilities............................. 738,861
--------
Net cash provided by operating activities..... 310,133
--------
Cash flows from investing activities:
Proceeds from gain of fixed assets.................. 56,779
--------
Net cash provided by investing activities..... 56,779
--------
Net increase in cash and cash equivalents............. 366,912
Cash and cash equivalents at beginning of year........ --
--------
Cash and cash equivalents at end of year.............. 366,912
========
</TABLE>

F-57
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Directors of Speed 6060 Limited (formerly Camelot Barthropp Limited):

We have audited the accompanying balance sheets of Speed 6060 Limited as of
December 31, 1994 and 1995, and the related statements of operations for each
of the two years in the period ended December 31, 1995, all expressed in
pounds sterling. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with United Kingdom auditing standards
which do not differ in any significant respect from United States generally
accepted auditing standards. These standards require that we plan and perform
our audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Speed 6060 Limited as of December 31, 1994
and 1995, and the results of its operations for each of the two years in the
period ended December 31, 1995, in conformity with accounting principles
generally accepted in the United Kingdom (which differ in certain respects
from generally accepted accounting principles in the United States--see note
16).

Coopers & Lybrand
Chartered Accountants and Registered
Auditors

London, England
February 26, 1996, except note 16
which is dated February 28, 1997

F-58
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

<TABLE>
<CAPTION>
NOTE 1994 1995
---- --------- ---------
(Pounds) (Pounds)
<S> <C> <C> <C>
Revenues--discontinued operations................... 2,694,693 1,849,242
Other operating income.............................. 4 79,056 38,142
--------- ---------
2,773,749 1,887,384
--------- ---------
Expenditures--discontinued operations
Vehicle operating costs........................... 329,701 216,200
Other external charges............................ 537,423 403,330
Staff costs....................................... 3 1,086,203 710,084
Other operating charges........................... 4 647,327 509,688
--------- ---------
2,600,654 1,839,302
--------- ---------
Operating income.................................... 173,095 48,082
Gain on the disposal of fixed assets to a fellow
subsidiary......................................... -- 112,500
--------- ---------
Income on ordinary activities before tax............ 173,095 160,582
Tax on ordinary activities.......................... 5 62,252 30,604
--------- ---------
Net income on ordinary activities after taxation.... 110,843 129,978
Dividend payable.................................... 110,000 275,000
--------- ---------
Net income (loss) retained.......................... 843 (145,022)
========= =========
</TABLE>

The Company has no recognized gains or losses other than the income (losses)
above and therefore no separate statement of total recognized gains and losses
has been presented.

There is no difference between the income on ordinary activities before
taxation for the years stated above and their historical cost equivalents.

The Company ceased trading at close of business on August 31, 1995 and
consequently the statement of operations for 1995 only reflects the results to
this date.

The accompanying notes are an integral part of these financial statements.

F-59
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

BALANCE SHEETS AT DECEMBER 31, 1994 AND 1995

<TABLE>
<CAPTION>
NOTE 1994 1995
---- --------- --------
(Pounds) (Pounds)
<S> <C> <C> <C>
Fixed assets
Tangible assets..................................... 6 848,058 --
--------- -------
Current assets
Inventories......................................... 7 19,650 --
Receivables......................................... 8 377,519 936,674
Cash at bank and in hand............................ 220,248 --
--------- -------
617,417 936,674
Current liabilities--amounts falling due within one
year................................................. 9 415,112 31,333
--------- -------
Net current assets.................................... 202,305 905,341
--------- -------
Total assets less current liabilities............. 1,050,363 905,341
========= =======
Represented by:
Shareholders' equity
Called up share capital............................. 11 43,329 43,329
Retained earnings................................... 12 1,007,034 862,012
--------- -------
Total shareholders' equity........................ 1,050,363 905,341
========= =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-60
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

1. BASIS OF PREPARATION

The accompanying financial statements of Speed 6060 Limited (formerly
Camelot Barthropp Limited) have been prepared in conformity with accounting
principles generally accepted in the United Kingdom ("U.K. GAAP"), and are
presented under the historical cost convention. These principles differ in
certain material respects from generally accepted accounting principles in the
United States ("U.S. GAAP"); see note 16. All amounts are expressed in pounds
sterling ("(Pounds)").

The accompanying financial statements do not represent the U.K. statutory
financial statements of Speed 6060 Limited, as certain reclassifications and
changes in presentation and disclosure have been made to the U.K. financial
statements prepared on a statutory basis in order to conform, more closely
with accounting presentation and disclosure requirements applicable in the
United States. The financial statements of Speed 6060 Limited for the year
ended December 31, 1995, on which the auditors' report was unqualified, were
the latest financial statements to have been delivered to the Registrar of
Companies in England and Wales.

The ultimate parent undertaking of Speed 6060 Limited was The Savoy Hotel
PLC, a company incorporated under the laws of England throughout the period
being January 1, 1994 to December 31, 1995, of these financial statements.

2. ACCOUNTING POLICIES

USE OF ESTIMATES

Preparation of financial statements in conformity with U.K. GAAP requires
management to make estimates and assumptions that affect the reported 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 for an accounting period. Such estimates and assumptions could
change in the future as more information becomes known or circumstances alter,
such that Speed 6060 Limited's actual results may differ from the amounts
reported and disclosed in the financial statements.

DEPRECIATION

Depreciation is provided so as to write off the cost less estimated residual
value of fixed assets over their expected useful lives.

Depreciation is provided on a straight line basis, mainly at the following
annual rates:

<TABLE>
<S> <C>
Motor vehicles --25%
Furniture and equipment --10%-20%
Improvements to premises --10%
</TABLE>

INVENTORIES

Inventories are valued at the lower of cost or net realizable value.

DEFERRED TAXATION

F-61
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

REVENUES

Revenues represent the invoiced value of services provided, excluding sales
related taxes.

FOREIGN CURRENCIES

Assets and liabilities in foreign currencies have been translated into
sterling at the rates ruling at the balance sheet date.

LEASES

Assets held under capital leases are capitalized in the balance sheet and
are depreciated over their useful lives. The interest element of the
repayments is charged to operations over the period of the contract on a
straight line basis. Rentals paid under operating leases are charged to
operations on a straight line basis over the lease term.

PENSION COSTS

The Company contributes into both defined benefit and defined contribution
schemes. An appropriate share of the costs of the pension schemes administered
by the Parent Undertaking, which are a defined benefit scheme and a defined
contribution scheme, are charged to operations for this Company in respect of
staff who are members of these schemes. Full details of these schemes are
disclosed in the financial statements of The Savoy Hotel PLC. The pension cost
charge for defined contribution schemes represents the amounts payable to
insurance companies in respect of the funds for the year to December 31.

F-62
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

3.STAFF COSTS

<TABLE>
<CAPTION>
1994 1995
----------------- ---------------
(Pounds) (Pounds)
<S> <C> <C>
Wages and salaries....................... 1,002,012 653,498
Social security costs.................... 74,588 50,508
Other pension costs...................... 9,603 6,078
----------------- ---------------
(Pounds)1,086,203 (Pounds)710,084
================= ===============
Other pension costs comprise:
Payments to funded defined contribution
schemes................................. 1,160 640
Charges in respect of group scheme....... 8,443 5,438
----------------- ---------------
(Pounds) 9,603 (Pounds) 6,078
================= ===============
The average weekly number of employees during the year was as follows:
<CAPTION>
NUMBER NUMBER
----------------- ---------------
<S> <C> <C>
Chauffeurs and support staff........... 40 39
Administration......................... 6 5
----------------- ---------------
46 44
================= ===============
Directors' remuneration was as follows:
Remuneration as executives............. Nil Nil
Pension contributions.................. Nil Nil
Compensation for loss of office........ Nil Nil
----------------- ---------------
(Pounds) Nil (Pounds) Nil
----------------- ---------------
Emoluments excluding pension scheme contributions:
Chairman's emoluments.................. (Pounds) Nil (Pounds) Nil
================= ===============
Highest paid directors' emoluments..... (Pounds) Nil (Pounds) Nil
================= ===============
</TABLE>

The number of directors (including the chairman and highest paid director)
who received emoluments (excluding pension contributions) in the following
ranges was:

<TABLE>
<CAPTION>
NUMBER NUMBER
------ ------
<S> <C> <C>
(Pounds)0-(Pounds)5,000........................................ 5 4
=== ===
</TABLE>

No director waived emoluments in respect of the years ended December 31,
1994 and 1995.

The statements of operations for the years ended December 31, 1994 and 1995
include no head office management recharges from the parent undertaking in
respect to the services provided by the directors of Speed 6060 Limited and
other corporate overheads.

F-63
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

4.INCOME ON ORDINARY ACTIVITIES BEFORE TAXATION

The income on ordinary activities before taxation is stated after charging:
<TABLE>
<CAPTION>
1994 1995
-------- --------
(Pounds) (Pounds)
<S> <C> <C>
Auditors' remuneration...................................... 10,000 6,000
Marketing recharge from parent.............................. -- 49,001
Depreciation................................................ 343,428 215,588
Operating leases--hire of plant and machinery............... 9,332 6,155
--other............................................... 35,250 20,000
======= =======
and after crediting:
Rent receivable............................................. 14,182 9,027
Sundry income............................................... 1,388 438
Gain on disposal of tangible fixed assets................... 63,486 28,677
Other operating income...................................... 79,056 38,142
======= =======

5.TAXATION

UK corporation tax on income on ordinary activities for the
years at 33%............................................... 63,000 31,333
UK corporation tax credit in respect of previous years...... (748) (729)
------- -------
62,252 30,604
======= =======
</TABLE>

In 1995, the primary reason for the difference between the effective tax
rate (19%) and the nominal rate of UK corporation tax (33%) is that the
transfer of the traded assets of the Company was intra-group and therefore not
subject to corporation tax.

F-64
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

6.TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
SHORT FURNITURE
LEASEHOLD MOTOR AND
PREMISES VEHICLES EQUIPMENT TOTAL
--------- ---------- --------- ----------
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C>
Cost
At January 1, 1994............... 36,675 1,464,752 92,233 1,593,660
Additions........................ -- 402,593 49,053 451,646
Disposals........................ -- (382,634) (249) (382,883)
Fully depreciated assets......... (11,355) -- (34,031) (45,386)
------- ---------- -------- ----------
At December 31, 1994............. 25,320 1,484,711 107,006 1,617,037
------- ---------- -------- ----------
Additions........................ -- 115,800 8,075 123,875
Disposals........................ (25,320) (1,600,511) (115,081) (1,740,912)
------- ---------- -------- ----------
At December 31, 1995............. -- -- -- --
======= ========== ======== ==========
Accumulated Depreciation
At January 1, 1994............... 25,234 709,265 54,039 788,538
Charge for the year.............. 2,310 319,191 21,927 343,428
Disposals........................ -- (317,352) (249) (317,601)
Fully depreciated assets......... (11,355) -- (34,031) (45,386)
------- ---------- -------- ----------
At December 31, 1994............. 16,189 711,104 41,686 768,979
Charge for the year.............. 1,540 197,965 16,083 215,588
Disposals........................ (17,729) (909,069) (57,769) (984,567)
------- ---------- -------- ----------
At December 31, 1995............. -- -- -- --
======= ========== ======== ==========
Net Book Value
At December 31, 1994............. 9,131 773,607 65,320 848,058
======= ========== ======== ==========
At December 31, 1995............. -- -- -- --
======= ========== ======== ==========
</TABLE>

In 1995, in accordance with the transfer agreement whereby the assets and
business of the Company were transferred, an exceptional gain on disposal of
(Pounds)112,500 was made. This gain specifically related to the transfer of
motor vehicles which were transferred at fair market value. All other assets
were transferred at net book value.

7.INVENTORIES
<TABLE>
<CAPTION>
1994 1995
-------- --------
(Pounds) (Pounds)
<S> <C> <C>
Raw materials and consumables:
Vehicle spare parts........................................... 15,605 --
Petrol and oil................................................ 4,045 --
------- -------
19,650 --
======= =======

8.RECEIVABLES--AMOUNTS FALLING DUE WITHIN ONE YEAR

Trade receivables............................................. 184,969 --
Amounts owed by parent undertaking............................ 104,027 --
Amounts owed by fellow subsidiary............................. -- 936,674
Other receivables............................................. 4,224 --
Prepayments and accrued income................................ 84,299 --
------- -------
377,519 936,674
======= =======
</TABLE>

F-65
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

9.CURRENT LIABILITIES--AMOUNTS FALLING DUE WITHIN ONE YEAR

<TABLE>
<CAPTION>
1994 1995
-------- --------
(Pounds) (Pounds)
<S> <C> <C>
Trade accounts payable..................................... 76,057 --
Borrowings from parent undertaking......................... 34,915 --
Corporation tax............................................ 63,000 31,333
Other taxes and social security............................ 49,699 --
Other creditors............................................ 11,299 --
Capital lease installments................................. 4,638 --
Accruals................................................... 65,504 --
Dividends payable.......................................... 110,000 --
------- ------
415,112 31,333
======= ======
</TABLE>

10.DEFERRED TAXES

Provision for deferred taxes has been made in the financial statements in
accordance with the Company's accounting policy. The provision and the full
potential liability are as follows:

<TABLE>
<CAPTION>
1994 1995
------------------------- -------------------
POTENTIAL POTENTIAL
PROVISION LIABILITY PROVISION LIABILITY
--------- --------------- --------- ---------
<S> <C> <C> <C> <C>
Accelerated capital
allowances................. -- (Pounds) 15,534 -- --
</TABLE>

11.SHARE CAPITAL

<TABLE>
<CAPTION>
1994 1995
-------- --------
(Pounds) (Pounds)
<S> <C> <C>
Authorized:
"A' Ordinary Shares of (Pounds)1......................... 20,000 20,000
"B' Ordinary Shares of (Pounds)1......................... 30,000 30,000
------ ------
50,000 50,000
====== ======
Allotted, called up and fully paid:
"A' Ordinary Shares of (Pounds)1......................... 17,329 17,329
"B' Ordinary Shares of (Pounds)1......................... 26,000 26,000
------ ------
43,329 43,329
====== ======
</TABLE>

12.RETAINED EARNINGS

<TABLE>
<CAPTION>
1994 1995
--------- ---------
(Pounds) (Pounds)
<S> <C> <C>
At January 1.......................................... 1,006,191 1,007,034
Transfer to (from) retained earnings.................. 843 (145,022)
--------- ---------
At December 31........................................ 1,007,034 862,012
========= =========

13.RECONCILIATION OF MOVEMENTS ON SHAREHOLDERS' EQUITY

<CAPTION>
1994 1995
--------- ---------
(Pounds) (Pounds)
<S> <C> <C>
Opening shareholders' equity.......................... 1,049,520 1,050,363
Total recognized (losses)/gains for the financial
year................................................. 843 (145,022)
--------- ---------
Closing shareholders' equity.......................... 1,050,363 905,341
========= =========
</TABLE>

F-66
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

14.FINANCIAL COMMITMENTS

a) The Company has annual commitments under operating leases as set out
below:

<TABLE>
<CAPTION>
1994 1995
------------------ ------------------
LAND AND LAND AND
BUILDINGS OTHER BUILDINGS OTHER
--------- -------- --------- --------
(Pounds) (Pounds) (Pounds) (Pounds)
<S> <C> <C> <C> <C>
Leases which expire:
In the next year.................... 30,000 360 -- --
In the second to fifth years........ -- 9,038 -- --
After five years.................... -- -- -- --
------ ----- --- ---
30,000 9,398 -- --
====== ===== === ===
</TABLE>

b) Capital commitments:

The Company has no capital commitments at December 31, 1994 and 1995

15.GUARANTEE

The Company has entered into a Composite Accounting Agreement with Barclays
Bank PLC under which it has executed an unlimited guarantee in respect of the
bank overdraft and other banking facility of the Parent Undertaking and
certain Fellow Subsidiary Undertakings.

16.SUMMARY OF DIFFERENCES BETWEEN U.K. AND U.S. GAAP

The financial statements are prepared in accordance with accounting
principles generally accepted in the United Kingdom ("U.K. GAAP"). These
accounting principles differ in certain material respects from the accounting
principles generally accepted in the United States ("U.S. GAAP"). Described
below are the material differences between U.K. GAAP and U.S. GAAP affecting
the net income and shareholders' equity which are set forth in the tables that
follow:

Transfer of assets between fellow subsidiaries

Under U.K. GAAP, assets can be transferred from one subsidiary to a fellow
subsidiary with the same parent undertaking, at their fair value. The
difference between the fair value and the historical cost of these assets will
result in an intragroup gain or loss in the statement of operations of the
subsidiary selling the assets. The assets would remain at their fair value in
the subsidiary that acquired the assets. Under U.S. GAAP, assets can only be
transferred from one subsidiary to a fellow subsidiary with the same parent
undertaking, at their historical cost. As a result, under U.S. GAAP no
intragroup gain or loss would arise from the transaction, and the assets would
remain at historical cost.

Allocation of expenses in a "carve out" situation

Under U.K. GAAP, certain costs incurred by the parent undertaking may not be
reflected in the subsidiary financial statements; however, disclosure of the
fact is generally provided in the subsidiary financial statements. Under U.S.
GAAP, historical statements of operations of a subsidiary should reflect all
costs incurred by the parent undertaking on its behalf, such as officer
salaries and corporate overheads.

F-67
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

Deferred taxes

Proposed dividends

Under U.K. GAAP dividends paid and proposed are usually shown on the face of
the statement of operations as an appropriation of current year earnings.
Proposed dividends are provided on the basis of recommendation by the
directors and may include dividends that are subject to subsequent approval by
shareholders before they are declared. Under U.S. GAAP, only dividends
approved during the current year are included in the statement of operations.

The effect of the above noted differences between U.K. and U.S. GAAP are as
follows:

(A) NET INCOME

The approximate effects on net income (loss) of material differences between
U.K. and U.S. GAAP are as follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER 31,
--------------------
1994 1995
--------- ---------
(Pounds) (Pounds)
<S> <C> <C>
Net income reported under U.K. GAAP....................... 110,843 129,978
Gain on transfer of assets................................ -- (112,500)
Allocation of expenses.................................... (68,350) (42,341)
Deferred taxes............................................ 2,161 15,534
Tax effect of U.S. GAAP reconciling adjustments........... 22,556 13,973
-------- ---------
Net income reported in accordance with U.S. GAAP.......... 67,210 4,644
======== =========
</TABLE>

(B) SHAREHOLDERS' EQUITY

The approximate effects on shareholders' equity of material differences
between U.K. and U.S. GAAP are as follows:

<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------
1994 1995
--------- --------
(Pounds) (Pounds)
<S> <C> <C>
Shareholders' equity reported under U.K. GAAP............ 1,050,363 905,341
Gain on transfer of assets............................... -- (112,500)
Allocation of expenses................................... (68,350) (110,691)
Deferred taxes........................................... (15,534) --
Proposed dividend........................................ 110,000 --
Tax effect of U.S. GAAP reconciling adjustments.......... 22,556 36,529
--------- --------
Shareholders' equity reported in accordance with U.S.
GAAP.................................................... 1,099,035 718,679
========= ========
</TABLE>

F-68
<PAGE>

SPEED 6060 LIMITED (FORMERLY CAMELOT BARTHROPP LIMITED)

NOTES TO THE FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
----------------- -----------------
(Pounds) (Pounds)
<S> <C> <C>
Cash flows from operating activities:
Net income................................ 67,210 4,644
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of fixed as-
sets..................................... 343,428 215,588
Gain on sale of fixed assets.............. (63,486) (28,677)
Change in operating assets and liabili-
ties:
Receivables............................. 54,058 166,047
Inventories............................. 3,797 19,650
Current liabilities..................... (79,729) (156,918)
-------- --------
Net cash provided by operating activi-
ties................................. 325,278 220,334
-------- --------
Cash flows from investing activities:
Proceeds from sale of fixed assets........ 128,768 68,293
Purchases of fixed assets................. (451,646) (123,875)
Net cash used in financing activi-
ties................................. (322,878) (55,582)
-------- --------
Cash flows from financing activities:
Dividends paid.......................... -- (385,000)
Net cash used in financing activi-
ties................................. -- (385,000)
-------- --------
Net increase (decrease) in cash and cash
equivalents.............................. 2,400 (220,248)
Cash and cash equivalents at beginning of
year..................................... 217,848 220,248
-------- --------
Cash and cash equivalents at end of year.. 220,248 --
======== ========
</TABLE>

F-69
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given
or made, such information or representations must not be relied upon as having
been authorized by the Company or any of the Underwriters. This Prospectus
does not constitute an offer to sell or the solicitation of any offer to buy
any security other than the shares of Common Stock offered by this Prospectus,
nor does it constitute an offer to sell or a solicitation of any offer to buy
the shares of Common Stock by anyone in any jurisdiction in which such offer
or solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that information contained herein is correct as of any time
subsequent to the date hereof.

-------------------

TABLE OF CONTENTS

-------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 7
Acquisition of Manhattan Limousine....................................... 13
Recapitalization......................................................... 13
Use of Proceeds.......................................................... 14
Dilution................................................................. 15
Capitalization........................................................... 16
Dividend Policy.......................................................... 16
Selected Consolidated Financial Data..................................... 17
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 18
Business................................................................. 24
Management............................................................... 34
Principal Stockholders................................................... 40
Certain Transactions..................................................... 42
Description of Capital Stock............................................. 44
Shares Eligible for Future Sale.......................................... 46
Underwriting............................................................. 48
Legal Matters............................................................ 50
Experts.................................................................. 50
Additional Information................................................... 50
Index to Financial Statements............................................ F-1
</TABLE>

---------------

Until , 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Common Stock offered hereby, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as Underwriters and with respect to their unsold allotments or
subscriptions.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

2,900,000 SHARES

CAREY INTERNATIONAL, INC.

COMMON STOCK

---------------

PROSPECTUS

---------------

Montgomery Securities

Ladenburg Thalmann & Co. Inc.

, 1997

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimated
except the Securities and Exchange Commission registration fee, the NASD
filing fee and the Nasdaq listing fee.

<TABLE>
<S> <C>
SEC registration fee.......................................... $ 13,138
NASD filing fee............................................... 4,836
Nasdaq listing fee............................................ 38,546
Printing and engraving expenses............................... 500,000
Legal fees and expenses....................................... 550,000
Accounting fees and expenses.................................. 350,000
Blue sky fee.................................................. 5,000
Transfer agent and registrar fees............................. 5,000
Miscellaneous................................................. 133,480
----------
TOTAL..................................................... $1,600,000
==========
</TABLE>

The Company will bear all of the foregoing fees and expenses.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is a Delaware corporation. Reference is made to Section 145 of
the DGCL, as amended, which provides that a corporation may indemnify any
person who was or is a party to or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceedings, had no reasonable cause to believe his or her conduct was
unlawful. Section 145 further provides that a corporation similarly may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite an adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper. The Company's Restated Certificate of
Incorporation further provides that the Company shall indemnify its directors
and officers to the full extent permitted by the law of the State of Delaware.

The Company's Certificate of Incorporation provides that the Company's
directors shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent

II-1
<PAGE>

that exculpation from liability is not permitted under the DGCL as in effect
at the time such liability is determined.

The Certificate of Incorporation also provides that each person who was or
is made a party to, or is involved in, any action, suit, proceeding or claim
by reason of the fact that he or she is or was a director, officer or employee
of the Registrant (or is or was serving at the request of the Registrant as a
director, officer, trustee employee or agent of any other enterprise including
service with respect to employee benefit plans) shall be indemnified and held
harmless by the Registrant, to the full extent permitted by Delaware law, as
in effect from time to time, against all expenses (including attorneys' fees
and expenses), judgments, fines, penalties and amounts to be paid in
settlement incurred by such person in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim.

The rights to indemnification and the payment of expenses provided by the
Certificate of Incorporation do not apply to any action, suit, proceeding or
claim initiated by or on behalf of a person otherwise entitled to the benefit
of such provisions. Any person seeking indemnification under the Certificate
of Incorporation shall be deemed to have met the standard of conduct required
for such indemnification unless the contrary shall be established. Any repeal
or modification of such indemnification provisions shall not adversely affect
any right or protection of a director or officer with respect to any conduct
of such director or officer occurring prior to such repeal or modification.

The Company maintains an indemnification insurance policy covering all
directors and officers of the Company and its subsidiaries.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

(1) In April and October, 1995, two of the Company's employees purchased
8,600 and 24,080 shares of Common Stock, respectively, for approximately $1.44
per share upon the exercise of options granted under the 1987 Stock Option
Plan.

(2) The Company granted options to purchase Common Stock pursuant to the
1987 and 1992 Stock Option Plans to individuals who were employees at the time
of grant on the following dates and in the indicated amounts: October 28, 1994
(8,600 shares); February 29, 1996 (12,900 shares); June 1, 1996 (47,017
shares); and June 10, 1996 (12,900 shares). In addition, the Company granted
an option to purchase 12,900 shares of Common Stock pursuant to the 1992 Stock
Option Plan to one of its directors on March 30, 1995. The Company also
granted an option to purchase 12,900 shares of Common Stock pursuant to the
1992 Stock Option Plan to a consultant on June 10, 1996.

(3) In June 1994, in connection with the acquisition of a chauffeured
vehicle service company, the Company issued a Convertible Promissory Note to
Nicholas C. Newman in the original principal amount of $190,000. Under certain
circumstances, any and all of the outstanding principal balance under the Note
is convertible into shares of Common Stock at a conversion price of $9.30 per
share.

(4) In August 1995, in connection with the acquisition of a chauffeured
vehicle service company, the Company issued a Convertible Promissory Note to
D.E.M. Investments in the original principal amount of $600,000. The current
principal balance outstanding under the Note will be converted into shares of
Common Stock upon the closing of this offering at a conversion price of $9.30
per share.

The securities issued in the foregoing transactions were not registered
under the Securities Act in reliance upon exemptions from registration set
forth in Section 4(2) of the Securities Act.

II-2
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS

(A) EXHIBITS. Unless otherwise indicated, the following exhibits will be
filed by amendment to this Registration Statement.

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- ----------
<C> <S> <C>
1 Form of Underwriting Agreement
*2.1 Stock Purchase Agreement dated as of March 1, 1997,
by and among Carey International, Inc., Alfred J.
Hemlock and Lupe C. Hemlock
*2.2 Agreement and Plan of Merger dated as of March 1,
1997, by and among Carey International, Inc.,
Manhattan International Limousine Network Ltd., MLC
Acquisition Corporation and Michael Hemlock
*3.1 Form of Amended and Restated Certificate of
Incorporation of the Company
*3.2 Amended and Restated Bylaws of the Company
4.1 Specimen Stock Certificate
4.2 Form of Warrants
*4.3 Carey International, Inc. Common Stock Purchase
Warrant dated September 1, 1991, issued to Yerac
Associates, L.P.
+4.4 Form of Registration Rights Agreement between Carey
International, Inc. and Michael Hemlock
*5 Opinion of Nutter, McClennen & Fish, LLP
*10.1 1997 Equity Incentive Plan
*10.2 1992 Stock Option Plan
*10.3 1987 Stock Option Plan
*10.4 Stock Plan for Non-Employee Directors
*10.5 Lease dated July 5, 1989 for 4530 Wisconsin Avenue,
Washington, D.C., between Carey International, Inc.
and 4530 Wisconsin Associates, as lessor, including
Addendum, Exhibit B and Exhibit C; and Second
Amendment to Lease dated August 6, 1993, including
Exhibit A
*10.6 Form of Escrow Agreement by and among Michael
Hemlock, Alfred J. Hemlock, Lupe C. Hemlock and a
bank to be named
*10.7 Current form of Standard Master License Agreement
*10.8 Current form of Standard International License
Agreement
*10.9 Form of Promissory Notes in connection with
Acquisition of Manhattan Limousine
*10.10 Current form of Standard Independent Operator
Agreement
+11 Statements Regarding Computation of Per Share
Earnings
*21 Subsidiaries of the Registrant
+23.1 Consent of Coopers & Lybrand L.L.P.
+23.2 Consent of Coopers & Lybrand L.L.P.
+23.3 Consent of Coopers & Lybrand, Chartered Accountants
and Registered Auditors
+23.4 Consent of Coopers & Lybrand, Chartered Accountants
and Registered Auditors
*23.5 Consent of Nutter, McClennen & Fish, LLP (contained
in Exhibit 5)
*23.6 Consent of Nicholas J. St. George
*24 Power of Attorney (contained in the signature page to
this Registration Statement)
*27 Financial Data Schedule
</TABLE>
- --------
* Previously filed.
+ Filed herewith.

II-3
<PAGE>

(B) FINANCIAL STATEMENT SCHEDULE:

The following Financial Statement Schedule is filed as part of this
Registration Statement.

Report of Independent Accountants

Schedule VIII--Valuation and Qualifying Accounts

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A under the Securities
Act and contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 2 TO REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF WASHINGTON, THE DISTRICT OF COLUMBIA, ON THE 5TH DAY OF MAY 1997.

Carey International, Inc.

/s/ Vincent A. Wolfington
By: _________________________________
VINCENT A. WOLFINGTON
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

/s/ Vincent A. Wolfington Chairman of the
- ------------------------------------- Board and Chief May 5, 1997
VINCENT A. WOLFINGTON Executive Officer

/s/ Don R. Dailey* President and
- ------------------------------------- Director May 5, 1997
DON R. DAILEY

/s/ David H. Haedicke* Chief Financial
- ------------------------------------- Officer May 5, 1997
DAVID H. HAEDICKE

/s/ Paul A. Sandt* Principal Accounting
- ------------------------------------- Officer May 5, 1997
PAUL A. SANDT

/s/ David McL. Hillman* Director
- ------------------------------------- May 5, 1997
DAVID MCL. HILLMAN

/s/ William R. Hambrecht* Director
- ------------------------------------- May 5, 1997
WILLIAM R. HAMBRECHT

/s/ Robert W. Cox* Director
- ------------------------------------- May 5, 1997
ROBERT W. COX

/s/ Vincent A. Wolfington
*By: ________________________________
VINCENT A. WOLFINGTON
ATTORNEY-IN-FACT

Powers of Attorney have been filed with this Registration Statement.

II-5

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Carey International, Inc.

In connection with our audits of the consolidated financial statements of
Carey International, Inc. and Subsidiaries as of November 30, 1995 and 1996,
and for each of the three years in the period ended November 30, 1996, which
financial statements are included in the Prospectus, we have also audited the
consolidated financial statement schedule listed in Item 16(b) of Part II of
the Registration Statement herein.

In our opinion, this consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information required
to be included therein.

Coopers & Lybrand L.L.P.

Washington, D.C.
January 31, 1997, except for
Notes 1, 2 and 18 as to
which the date is March 1, 1997

1
<PAGE>

SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS

CAREY INTERNATIONAL, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
BALANCE AT BEGINNING CHARGED TO COSTS DEDUCTIONS-- BALANCE AT END
DESCRIPTION OF PERIOD AND EXPENSE WRITE-OFFS OF PERIOD
----------- -------------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Year ended November 30,
1996
Reserve and allowance
from asset accounts:
Allowance for doubtful
accounts............. $293,796 $498,786 $(257,174) $535,408
Year ended November 30,
1995
Reserve and allowance
from asset accounts:
Allowance for doubtful
accounts............. $203,872 $391,964 $(302,040) $293,796
Year ended November 30,
1994
Reserve and allowance
from asset accounts:
Allowance for doubtful
accounts............. $219,979 $251,733 $(267,840) $203,872
</TABLE>

2
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- ----------
<C> <S> <C>
1 Form of Underwriting Agreement
*2.1 Stock Purchase Agreement dated as of March 1, 1997,
by and among Carey International, Inc., Alfred J.
Hemlock and Lupe C. Hemlock
*2.2 Agreement and Plan of Merger dated as of March 1,
1997, by and among Carey International, Inc.,
Manhattan International Limousine Network Ltd., MLC
Acquisition Corporation and Michael Hemlock
*3.1 Form of Amended and Restated Certificate of
Incorporation of the Company
*3.2 Amended and Restated Bylaws of the Company
4.1 Specimen Stock Certificate
4.2 Form of Warrants
*4.3 Carey International, Inc. Common Stock Purchase
Warrant dated September 1, 1991, issued to Yerac
Associates, L.P.
+4.4 Form of Registration Rights Agreement between Carey
International, Inc. and Michael Hemlock
*5 Opinion of Nutter, McClennen & Fish, LLP
*10.1 1997 Equity Incentive Plan
*10.2 1992 Stock Option Plan
*10.3 1987 Stock Option Plan
*10.4 Stock Plan for Non-Employee Directors
*10.5 Lease dated July 5, 1989 for 4530 Wisconsin Avenue,
Washington, D.C., between Carey International, Inc.
and 4530 Wisconsin Associates, as lessor, including
Addendum, Exhibit B and Exhibit C; and Second
Amendment to Lease dated August 6, 1993, including
Exhibit A
*10.6 Form of Escrow Agreement by and among Michael
Hemlock, Alfred J. Hemlock, Lupe C. Hemlock and a
bank to be named
*10.7 Current Form of Standard Master License Agreement
*10.8 Form of Standard International License Agreement
*10.9 Form of Promissory Notes in connection with
Acquisition of Manhattan Limousine
*10.10 Current Form of Standard Independent Operator
Agreement
+11 Statements Regarding Computation of Per Share
Earnings
*21 Subsidiaries of the Registrant
+23.1 Consent of Coopers & Lybrand L.L.P.
+23.2 Consent of Coopers & Lybrand L.L.P.
+23.3 Consent of Coopers & Lybrand, Chartered Accountants
and Registered Auditors
+23.4 Consent of Coopers & Lybrand, Chartered Accountants
and Registered Auditors
*23.5 Consent of Nutter, McClennen & Fish, LLP (contained
in Exhibit 5)
*23.6 Consent of Nicholas J. St. George
*24 Power of Attorney (contained in the signature page to
this Registration Statement)
*27 Financial Data Schedule
</TABLE>
- --------
* Previously filed.
+ Filed herewith.

<PAGE>

EXHIBIT 4.4
-----------

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the "Agreement") is made as of
________ ___, 1997, by and among Carey International, Inc., a Delaware
corporation ("Carey"), and Michael Hemlock, a resident of Hewlett, New York
("MH").

RECITALS

A. Pursuant to an Agreement and Plan of Merger dated as of March 1, 1997,
1997 by and among Carey, Manhattan International Limousine Network Ltd.
("MILN"), a New York corporation, MILN Acquisition Corporation ("Acquisition"),
a Delaware corporation, and MH (the "Merger Agreement"), Acquisition will merge
with and into MILN (the "Merger"), with the result that MILN will be a wholly-
owned subsidiary of Carey;

B. In consideration of the Merger, Carey is issuing and transferring to
MH, among other things, the Shares (as defined below); and

C. Carey has agreed to provide MH with certain rights to require Carey to
register for public distribution the Shares.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

1. Certain Definitions

As used in this Agreement, the following terms shall have the following
respective meanings:

"Commission" means the Securities and Exchange Commission, or any other
----------
federal agency at the time administering the Securities Act (as defined below).

"Common Stock" means shares of Common Stock, par value $.01 per share, of
------------
Carey.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any similar federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.

"IPO" means the initial public offering of shares of the Common Stock under
---
a registration statement filed with the Commission pursuant to the Securities
Act on or about the date hereof.

"Registrable Shares" means any Shares held by a Stockholder (as defined
------------------
below) together with any securities issued or issuable with respect to any
Shares held by a Stockholder
<PAGE>

by way of stock dividend, stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise.

"Registration Statement" means a registration statement (as defined in the
----------------------
Securities Act) on Form S-1, or any other registration form permitting a
secondary distribution, other than registration statements on Form S-4 or S-8,
or their successors, on which shares of Common Stock are to be registered for
resale for the account of any stockholder, but excluding a registration
statement to be used for the resale of shares of Common Stock by institutional
investors which acquired such shares or securities convertible into such shares
after the date hereof in a transaction not registered under the Securities Act.

"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.

"Selling Stockholder" means any of the Stockholders (as defined below) who
-------------------
requests or joins in any registration of Registrable Shares hereunder.

"Shares" means any Shares of Common Stock (as defined below) issued by
------
Carey to MH pursuant to the terms of the Merger Agreement.

"Stockholders" means MH and any family investment company or limited
------------
partnership to which MH transfers any Shares.

2. Sale or Transfer of Shares.

(a) The Stockholders shall not sell or transfer any Shares (other than the
transfer of Shares from MH to a family investment company or limited partnership
in connection with which the transferee agrees to be bound to the same extent as
MH by the provisions of Section 6 of the Merger Agreement to the full extent of
the transferred Shares and any proceeds thereof) unless either (i) they first
shall have been registered under the Securities Act, or (ii) Carey first shall
have been furnished with a written opinion of legal counsel (which counsel and
opinion, in form and substance, shall be reasonably satisfactory to Carey), to
the effect that the proposed sale or transfer is exempt from the registration
requirements of the Securities Act.

(b) Each certificate representing the Shares shall bear one or all of the
following legends:

-2-
<PAGE>

(i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS. NEITHER SUCH SHARES NOR ANY PORTION
THEREOF OR INTEREST THEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE CORPORATION
SHALL HAVE RECEIVED EVIDENCE OF SUCH EXEMPTION SATISFACTORY TO THE
CORPORATION (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION).

(ii) any legend required by the laws of the State of Delaware or
applicable state securities laws.

(c) The legend required pursuant to Section 2(b)(i) shall be removed from
the certificates representing any Shares, at the request of the holder thereof,
(i) at such time as they become eligible for resale pursuant to Rule 144(k)
under the Securities Act, (ii) following their sale pursuant to a Registration
Statement, or (iii) at such time as they are sold pursuant to Rule 144 under the
Securities Act, or any other exemption from the Securities Act, in a transaction
that complies with Section 2(a)(ii).

3. Demand Registrations.

(a) At any time or times, but in any event subject to the limitations set
forth in Section 3(d), after Carey becomes eligible to file a Registration
Statement on Form S-3 (or any successor form relating to secondary offerings),
any Stockholder may request Carey, in writing, to effect the registration of
Registrable Shares on Form S-3 (or such successor form) at Carey's expense.
Upon receipt of any such request, Carey shall promptly give written notice of
such proposed registration to all Stockholders. Each such Stockholder shall
have the right, by giving written notice to Carey within thirty (30) days after
Carey provides its notice, to elect to have included in such registration such
of its Registrable Shares as such Stockholder may request in such notice of
election. Thereupon, Carey shall, as expeditiously as possible, use its best
efforts to effect the registration on Form S-3 (or such successor form) of all
Registrable Shares which Carey has been requested to register. Any offering of
Registrable Shares under the Registration Statement on Form S-3 (or successor
form) shall not be underwritten. If at any time after thirteen months following
the date first set forth above, Carey shall be ineligible to file a Registration
Statement on Form S-3 (or any successor form

-3-
<PAGE>

relating to secondary offerings), Carey shall use its best efforts to effect the
requested registration on any available registration form promulgated pursuant
to the Securities Act.

(b) If at the time of any request to register Registrable Shares pursuant
to this Section 3, Carey is engaged or has fixed plans to engage within sixty
(60) days of the time of the request in a registered public offering (by filing
a Registration Statement with the Commission) or is engaged in any other
activity which, in the good faith determination of Carey's Board of Directors,
would be adversely affected by the requested registration to the material
detriment of Carey, then Carey may at its option direct that such request be
delayed (i) in the case of a registered public offering, for such period as the
underwriters require with respect to any other Carey shareholder holding as many
or more shares of Common Stock, not to exceed six (6) months from the effective
date of such offering or (ii) in the case of another material activity, a period
not exceed six (6) months from the date of commencement of such activity, as the
case may be, such right to delay a request to be exercised by Carey not more
than once in any one-year period.

(c) Notwithstanding Section 3(a), (i) Carey need not include any
Registrable Shares owned by any Stockholder in any Registration Statement
provided for under this Section if in the opinion of counsel for Carey
reasonably satisfactory to the Stockholder, registration of such shares under
the Securities Act is not necessary for the Stockholder to dispose of all of
such shares in the public market in compliance with the Securities Act; provided
that, in such case, the opinion of such counsel shall be in writing addressed to
the Stockholder and shall be rendered within twenty (20) days after Carey
receives the Stockholder's request for registration or the Stockholder's notice
of election to have included in a registration some or all of the Stockholder's
Registrable Shares; and (ii) Carey shall not be required to effect the
registration under this Agreement of a number of Registerable Shares which is
less than twenty-five percent (25%) of the total number of Shares issued by
Carey.

(d) Carey shall not be required to effect more than two registrations
pursuant to paragraph (a) above, provided, however, that each such obligation
shall be deemed satisfied only when a registration statement covering all of the
Registrable Shares specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by such holders, shall have
become effective.

4. "PIGGYBACK" REGISTRATION.

(a) If at any time Carey delays a requested registration pursuant to
Section 3(b) and proposes to file, during the period that such registration is
delayed, a Registration Statement registering the sale of any shares of Common
Stock owned by any Carey shareholder, it will, prior to such filing, give
written notice to all Stockholders holding Registrable Shares of its intention
to do so, and, upon the written request of any Stockholder given within fifteen
(15)

-4-
<PAGE>

days after Carey provides such notice (which request shall state the intended
method of disposition of such Registrable Shares), Carey shall use its best
efforts to cause all Registrable Shares which Stockholders have requested Carey
to register to be registered under the Securities Act; provided, however, that
Carey shall have the right to postpone or withdraw any registration effected
pursuant to this Section 4 without obligation to any Stockholder.

(b) In connection with any offering under this Section 4 involving an
underwriting, Carey shall not be required to include any Registrable Shares in
such underwriting unless the requesting Stockholders accept the terms of the
underwriting as agreed upon between Carey and the underwriters selected by
Carey.

(c) If, in the opinion of the managing underwriter, the registration of all
or part of the Registrable Shares which Stockholders have requested to be
included pursuant to this Section 4 would materially and adversely affect such
public offering, then Carey shall be required to include in the underwriting
only that number of Registrable Shares, if any, which the managing underwriter
believes may be sold without causing such adverse effect. If the number of
Registrable Shares to be included in the underwriting in accordance with the
foregoing is less than the total number of shares which the Stockholders have
requested to be included, then the Stockholders who have requested registration
shall participate in the underwriting pro rata based upon their total ownership
of the aggregate number of shares requested to be included in such registration
by the Stockholders and by any stockholders who have requested that their shares
be included in such registration (or in any proportion as agreed upon by all
stockholders requesting registration).

(d) A Stockholder's rights to register any Registrable Shares or receive
any notice with respect to such Registrable Shares pursuant to this Section 4
shall terminate in the event that (i) all Registrable Shares are registered
pursuant to Article 3 of this Agreement, or (ii) Carey effects a registration
pursuant to Section 4(a) above with respect to such Registrable Shares;
provided, however, that Carey shall only be deemed to have effected a
registration pursuant to Section 4(a) with respect to such Registrable Shares
when a Registration statement covering such Registrable Shares is filed with the
Commission and becomes effective.

5. Registration Procedures.

If and whenever Carey is required by the provisions of this Agreement to
use its best efforts to effect the registration of any of the Registrable Shares
under the Securities Act, Carey shall as expeditiously as possible:

(a) use its best efforts to prepare and file with the Commission within
sixty (60) days from receipt of a request pursuant to Section 3(a) a
Registration Statement with respect to

-5-
<PAGE>

such Registrable Shares and use its best efforts to cause that Registration
Statement to become effective;

(b) prepare and file with the Commission any amendments and supplements to
the Registration Statement and the prospectus included in the Registration
Statement as may be necessary to keep the Registration Statement effective for a
period of not less than one hundred eighty (180) days from the effective date;

(c) furnish to each Selling Stockholder such number of copies of the
Registration Statement and prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Stockholder may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Shares owned by such Stockholder;

(d) use its best efforts to register or qualify the Registrable Shares
covered by the Registration Statement under the securities or blue sky laws of
such states as the Selling Stockholders shall reasonably request and shall be
required under applicable law, and do any and all other acts and things that may
be reasonably necessary to enable the Selling Stockholders to consummate the
public sale or other disposition in such jurisdictions of the Registrable Shares
owned by the Selling Stockholders; provided, however, that Carey shall not be
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction;

(e) immediately notify each Selling Stockholder, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus contained
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing and provide the Selling Stockholders with
revised prospectuses; and

(f) make available for inspection by each Selling Stockholder, and any
attorney, accountant or other agent retained by a Selling Stockholder, all
financial and other records, pertinent corporate documents and properties of
Carey, and cause Carey's officers, directors and employees to supply all
information reasonably requested by such Selling Stockholder, attorney,
accountant or agent in connection with such Registration Statement.

6. Allocation of Expenses.

Carey will pay all Registration Expenses (as defined below) of all
registrations under this Agreement; provided, however, that if a registration is
withdrawn at the request of the

-6-
<PAGE>

Selling Stockholders, the Selling Stockholders shall pay the Registration
Expenses of such registration pro rata in accordance with the number of their
Registrable Shares included in such registration. For purposes of this Section,
the term "Registration Expenses" shall mean all expenses incurred by Carey in
complying with this Agreement, including, without limitation, all registration
and filing fees, exchange or NASDAQ listing fees, printing expenses, accounting
fees, fees and disbursements of counsel for Carey, state blue sky fees and
expenses of special audits incident to or required by such registration, but
excluding underwriting discounts and selling commissions relating to the
Registrable Shares and fees and disbursements of counsel to the Selling
Stockholders.

7. Indemnification.

(a) In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, Carey will indemnify and hold
harmless each Selling Stockholder, each underwriter of such Registrable Shares,
and each person, if any, who controls such Stockholder or underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities, joint or several, to which such Stockholder, underwriter
or controlling person may become subject under the Securities Act, the Exchange
Act, state securities laws or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or any offering circular or other
document related to such registration, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arise out
of or are based on any violation by Carey of any rule or regulation promulgated
under the Securities Act, the Exchange Act, state securities laws or otherwise,
applicable to Carey and relating to any action or registration required of the
Carey in connection with any such registration; and Carey will reimburse such
Stockholder, underwriter and each such controlling person for any legal or any
other expenses reasonably incurred by such Stockholder, underwriter or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Carey will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in (i) such Registration Statement, preliminary prospectus or final prospectus,
or any such amendment or supplement, in reliance upon and in conformity with
information furnished to Carey, in writing, by or on behalf of such Stockholder,
underwriter or controlling person specifically for use in the preparation
thereof or (ii) a preliminary prospectus, if a copy of a final prospectus
correcting any such untrue statement or omission was timely delivered to such
selling Stockholder.

-7-
<PAGE>

(b) In the event of any registration of any of the Registrable Shares under
the Securities Act pursuant to this Agreement, each Selling Stockholder,
severally and not jointly, will indemnify and hold harmless Carey, each
underwriter and each person, if any, who controls Carey or any such underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which Carey, such
underwriter or controlling person may become subject under the Securities Act,
Exchange Act, state securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission pertained to such Stockholder and was made in reliance
upon and in conformity with information furnished in writing to Carey by or on
behalf of such Stockholder, specifically for use in connection with the
preparation of such Registration Statement, prospectus, amendment or supplement;
provided, however, that the obligations of each Stockholder hereunder shall be
limited to the proportion of any such losses, claims, damages or liabilities
that are equal to the proportion that the public offering price of the
Registrable Shares sold by each such Stockholder bears to the total offering
price of all securities sold thereunder, but not in any event to exceed an
amount equal to the proceeds to each such Stockholder sold as contemplated
herein.

(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld). The failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 7, but as a result of any such failure, the Indemnifying Parties shall
not be liable to the Indemnified Party for the amount of actual damages caused
by such failure. The Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party shall pay such
expense if representation of such Indemnified Party by the counsel retained by
the Indemnifying Party would be inappropriate due to actual or potential
differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in the
defense of any such claim or litigation shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such

-8-
<PAGE>

Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.

8. Information by Selling Stockholders.

Each Selling Stockholder shall furnish to Carey such information regarding
such Stockholder and the distribution proposed by such Stockholder as Carey may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to herein.

9. "Lockup" Agreement.

If required by Carey and the managing underwriter of Common Stock or other
securities of Carey, each Stockholder shall agree not to sell or otherwise
transfer or dispose of any Registrable Shares or other securities of Carey held
by such Stockholder for a specified period of time (not to exceed one hundred
and eighty (180) days) following the effective date of a Registration Statement
(the "Stand-Off Period"). Such agreement shall be in writing in a form
satisfactory to Carey and such underwriter. Carey may impose stop-transfer
instructions with respect to the Registrable Shares or other securities subject
to the foregoing restriction until the end of the Stand-Off Period.

10. ASSIGNMENT; SUCCESSORS AND ASSIGNS. The rights and obligations of any
party to this Agreement shall not be assigned without the written consent of the
other parties, except that Carey shall have the absolute right to assign this
Agreement to an affiliated or successor entity. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors, heirs, personal representatives and assigns.

11. Termination. This Agreement shall terminate on the third anniversary
of the date hereof.

12. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by electronic facsimile transmission,
when mailed by registered or certified mail (postage prepaid, return receipt
requested) or delivered to a courier of national reputation to the respective
parties as follows:

-9-
<PAGE>

If to Carey:

Carey International, Inc.
4530 Wisconsin Avenue, N.W.
Washington, DC 20016
Fax: (202) 895-1201
Attention: Vincent A. Wolfington,
Chairman of the Board

with a copy to:

Nutter, McClennen & Fish, LLP
One International Place
Boston, Massachusetts 02110-2699
Fax: (617) 973-9748
Attention: James E. Dawson, Esq.

If to any Stockholder, to such Stockholder at:

200 Central Park South
New York, New York 10020
Fax: (718) 786-5461

with a copy to:

Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas
New York, NY 10036-6710
Fax: (212) 336-2222
Attention: Alan Gettner, Esq.

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).

13. Entire Agreement. This Agreement embodies the entire agreement
and the understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.

14. Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of

-10-
<PAGE>

this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of Carey and
the holders of more than 50% of the Registrable Shares. Any amendment or waiver
effected in accordance with this Section 14 shall be binding upon each holder of
any Shares or Registrable Shares, each future holder of all such securities and
Carey. No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term condition or provision.

15. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

16. Headings. The headings of the sections, subsections, and paragraphs
of this Agreement have been added for convenience only and shall not be deemed
to be a part of this Agreement.

17. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

18. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws, but not the laws of conflict of laws, of the
State of Delaware.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands under
seal as of the day and year first above written.

CAREY INTERNATIONAL, INC.

By: _______________________________________________
Title:

___________________________________________________
Michael Hemlock

-11-

<PAGE>

EXHIBIT 11

STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS

HISTORICAL EARNINGS PER
SHARE
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, FEBRUARY 29, FEBRUARY 28,
1994 1995 1996 1996 1997
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net income (loss)
available to
common shareholders:
Net income (loss)....... ($128,993) ($195,195) $2,816,104 ($58,197) $167,406
Preferred stock
dividends.............. (8,750) (4,375) -- -- --
--------- --------- ---------- --------- ---------
Net income (loss)
available to
common shareholders.... ($137,743) ($199,570) $2,816,104 ($58,197) $167,406
========= ========= ========== ========= =========
Common Stock and Common
Stock Equivalents:
Weighted average shares
outstanding............ 623,092 630,938 655,773 655,773 655,773
Convertible Securities:
Series B Preferred
Stock.................. 663,761 663,761 663,761 663,761 663,761
Series F Preferred
Stock.................. 135,025 135,025 135,025 135,025 135,025
Series G Preferred
Stock.................. 673,638 673,638 673,638 673,638 673,638
Options (calculated on
Treasury Method)
1987 Plan............... 24,561 11,790 21,374 18,186 26,908
Options and warrants
issued within one year
of the offering
(calculated on Treasury
Method):
Vested options repriced
or granted............. 207,020 207,020 207,020 207,020 209,549
Warrants repriced....... 65,782 65,782 65,782 65,782 65,782
--------- --------- ---------- --------- ---------
272,802 272,802 272,802 272,802 275,331
--------- --------- ---------- --------- ---------
Total common stock and
common
stock equivalents.... 2,392,879 2,387,954 2,422,373 2,419,185 2,430,436
========= ========= ========== ========= =========
Earnings (loss) per
common share............ ($0.06) ($0.08) $1.16 ($0.02) $0.07
========= ========= ========== ========= =========
</TABLE>
<PAGE>

STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS (CONTINUED)

PRO FORMA EARNINGS PER SHARE
TO GIVE EFFECT TO THE RECAPITALIZATION
(PRESENTED ON THE FACE OF THE NOVEMBER 30, 1996
AND FEBRUARY 28, 1997 HISTORICAL STATEMENT OF
OPERATIONS)
NOVEMBER 30, FEBRUARY 28,
1996 1997
------------ ------------
<S> <C> <C>
Pro forma net income:
Net income.......................................... $2,816,104 $ 167,406
Add back interest (tax affected) on debt
included in Recapitalization:
$2,867,546 portion of subordinated note
converted to stock in Recapitalization............. 92,879 23,220
$2,000,000 subordinated note converted
to stock in Recapitalization....................... 206,464 51,616
---------- ----------
Pro forma net income................................ $3,115,447 $ 242,242
========== ==========
Common Stock and Common Stock Equivalents:
Historical weighted average shares outstanding...... 2,422,373 2,430,436
Add back:
Less common stock equivalents included in
historical earnings per share:
Series B Preferred Stock............................ (663,761) (663,761)
Series F Preferred Stock............................ (135,025) (135,025)
Series G Preferred Stock............................ (673,638) (673,638)
Add effect of Recapitalization:
Series A Preferred Stock............................ 86,003 86,003
Series B Preferred Stock............................ 663,761 663,761
Series G Preferred Stock............................ 763,748 763,748
Shares for $2,867,546 of subordinated debt.......... 616,544 616,544
Shares for $2,000,000 of subordinated debt.......... 430,015 430,015
---------- ----------
Total pro forma common stock
and common stock equivalents....................... 3,510,020 3,518,083
========== ==========
Pro forma earnings per common share.................. $0.89 $0.07
========== ==========
</TABLE>
<PAGE>

STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS (CONTINUED)

PRO FORMA EARNINGS PER SHARE
TO GIVE EFFECT TO THE RECAPITALIZATION AND THE
OFFERING
(PRESENTED ON THE FACE OF THE PRO FORMA STATEMENT OF
OPERATIONS)
NOVEMBER 30, FEBRUARY 28,
1996 1997
------------ ------------
<S> <C> <C>
Pro forma net income................................. $2,939,128 $ 569,894
========== =========
Common Stock and Common Stock Equivalents:
Outstanding shares of the Company................... 655,773 655,773
Shares used to convert subordinated debt:
Shares for $2,867,546 of subordinated debt.......... 616,544 616,544
Shares for $2,000,000 of subordinated debt.......... 430,015 430,015
Shares used to convert preferred stock:
Series A Preferred Stock............................ 86,003 86,003
Series B Preferred Stock............................ 663,761 663,761
Series G Preferred Stock............................ 763,748 763,748
---------- ---------
Total outstanding shares of the Company............. 3,215,844 3,215,844
---------- ---------
Shares used to convert debt......................... 43,001 43,001
---------- ---------
Shares issued in acquisition of Manhattan
Limousine.......................................... 218,181 218,181
---------- ---------
Shares used to pay off existing debt of the Company
in connection with the offering.................... 803,546 743,658
Shares used to provide cash for purchase of
Manhattan Limousine................................ 690,127 690,127
Shares used to pay off debt assumed in Manhattan
Limousine acquisition.............................. 366,344 366,344
Shares used to pay off debt and redeem preferred
stock as part of Recapitalization.................. 392,566 392,566
---------- ---------
Shares used in offering............................. 2,252,583 2,192,695
---------- ---------
Total shares outstanding............................ 5,729,609 5,669,721
---------- ---------
Common stock equivalents (calculated on Treasury
Method):
Vested options outstanding.......................... 228,394 236,457
Warrants outstanding................................ 65,782 65,782
---------- ---------
Common stock equivalents............................ 294,176 302,239
---------- ---------
Total common stock and
common stock equivalents............................ 6,023,785 5,971,960
========== =========
Pro forma earnings per common share.................. $0.49 $0.10
========== =========
</TABLE>

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1
(File No. 333-22651) of our report dated January 31, 1997, except for Notes 1,2
and 18, as to which the date is March 1, 1997, on our audits of the
consolidated financial statements and financial statement schedule of Carey
International, Inc. and Subsidiaries as of November 30, 1996 and 1995 and for
each year in the three year period ended November 30, 1996, which includes an
explanatory paragraph relating to a restatement for a change in the revenue
recognition method. We also consent to the reference to our firm under the
caption "Experts."

/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.
Washington, D.C.
May 5, 1997

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1
(File No. 333-22651) of our report dated March 1, 1997, except for Note 10, as
to which the date is April 22, 1997, on our audit of the combined financial
statements of Manhattan International Limousine Network, Ltd. and Affiliate as
of September 30, 1996 and for the year then ended, which includes an explanatory
paragraph relating to a restatement for a change in the revenue recognition
method and to record previously unrecorded costs related to services provided by
independent service companies. We also consent to the reference to our firm
under the caption "Experts."

/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.
Washington, D.C.
May 5, 1997

<PAGE>

EXHIBIT 23.3

Consent of Independent Accountants

We consent to the inclusion in this registration statement on Form S-1 of our
report dated February 26, 1996, except for note 16 which is dated February 25,
1997, on our audits of the financial statements of Speed 6060 Limited (formerly
Camelot Barthropp Limited) for the years ended December 31, 1994 and
1995. We also consent to the reference to our firm under the caption "Experts".

/s/ Coopers & Lybrand
-------------------------
COOPERS & LYBRAND
Chartered Accountants and Registered
Auditors

London, United Kingdom
May 5, 1997

<PAGE>

Exhibit 23.4

Consent of Independent Accountants

We consent to the inclusion in this registration statement on Form S-1 of our
report dated February 26, 1996, except for notes 15 and 16 which are dated
February 25, 1997, on our audit of the financial statements of Camelot Barthropp
Limited (formerly Speed 6060 Limited) for the year ended December 31, 1995. We
also consent to the reference to our firm under the caption "Experts".

/s/ Coopers & Lybrand
--------------------------

Coopers & Lybrand
Chartered Accountants and
Registered Auditors

London, United Kingdom
May 5, 1997