SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
fiscal year ended December 31, 2009
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (No fee required)
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For the
transition period from ________________ to
____________
Commission
file number l-9224
Arrow
Resources Development, Inc.
(Name
of Small Business Issuer in Its Charter)
DELAWARE
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56-2346563
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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Carnegie
Hall Tower, 152 W. 57th Street,
27th Floor, New York, NY 10019
(Address
of Principal Executive Offices) (Zip Code)
212-262-2300
(Issuer’s
Telephone Number, including Area Code)
Securities
registered under Section 12(b) of the Exchange Act:
Title
of Each Class
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Name
of Each Exchange on Which Registered
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Common
stock - par value $0.00001
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OTC:
Bulletin Board
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Securities
registered under Section 12(g) of the Exchange Act: None
(Title
of Class)
(Title
of Class)
Check
whether the issuer; (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K o
Issuer’s
revenues for 2009, its most recent fiscal year, were $0 from continuing
operations.
The
number of freely tradable shares not held by affiliates is
98,818,007.
As of
April 13, 2010, the aggregate market value of voting stock held by
non-affiliates of the Issuer was approximately $1,976,360.
The
number of shares outstanding of each of the issuer’s classes of common equity,
as of April 13, 2010 are as follows:
Class
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Outstanding
at April 13, 2010
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Common
stock - par value $0.00001
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678,452,244
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DOCUMENTS
INCORPORATED BY REFERENCE
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Page
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PART
I
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Item
1.
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Description
of Business
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1
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Item
1A.
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Risk
Factors
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2
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Item
2.
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Properties
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7
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Item
3.
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Legal
Proceedings
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8
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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8
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PART
II
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Item
5.
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Market
for Common Equity and Related Stockholder Matters
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8
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Item
6.
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Selected
Financial Data
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Item
7.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
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10
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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Item
8.
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Financial
Statements
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19
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Item
9.
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Changes
In and Disagreements with Accountants on Accounting and Financial
Disclosure
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19
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Item
9A.
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Controls
and Procedures
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19
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Item
9B.
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Other
Information
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19
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PART
III
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Item
10.
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Directors,
Executive Officers, Promoters and Control Persons; Compliance With Section
16(a) of the Exchange Act
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20
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Item
11.
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Executive
Compensation
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21
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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25
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Item
13.
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Certain
Relationship and Related Transactions, and Director
Independence
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26
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Item
14.
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Principal
Accountant Fees and Services
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27
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Item
15.
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Exhibits
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29
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SIGNATURES
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31
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PART
I
Forward
Looking Statements
Certain
statements in this Annual Report on Form 10-K constitutes “forward-looking
statements” relating to the Company within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements regarding future events, our
financial performance and operating results, our business strategy and our
financing plans are forward-looking statements. In some cases, you can identify
forward-looking statements by terminology, such as
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“may,”
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“will,”
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“would,”
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“should,”
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“could,”
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“expect,”
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“intend,”
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“plan,”
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“anticipate,”
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“believe,”
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“estimate,”
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“predict,”
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“potential”
or
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“continue,”
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the
negative of such terms or other comparable terminology. These statements are
only predictions. Known and unknown risks, uncertainties and other factors could
cause actual results to differ materially from those contemplated by the
statements. In evaluating these statements, you should specifically consider
various factors, including the risks outlined under the Risk Factors set forth
herein. These factors may cause our actual results to differ materially from any
forward-looking statements.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. We are under no duty to update any of the forward-looking
statements after the date of this report to conform those statements to actual
results or to changes in our expectations.
Glossary
“Arrow” -
Arrow Resources Development, Inc. (also referred to as the “Company”), formerly
known as CNE Group, Inc. prior to the name change that occurred on or around
December 1, 2005.
“Arrow
Ltd.” - Arrow Resources Development, Ltd., a company organized under the laws of
Bermuda and a 100% owned subsidiary of Arrow. Arrow Ltd. was acquired by Arrow
on or around August 1, 2005.
“APR”
- Arrow Pacific Resources Group Limited, a British Virgin Islands company, is
currently the principal shareholder of the Company, owning 352,422,778 shares or
52%.
“GMPLH”
- Gerakan Masyarakat Pelestari Lingkungan Hidup, is a non-profit organization in
Indonesia founded by A. H. Moerdani and Hans Karundeng. GMPLH is an educational
organization that acts as project developer, fundraiser, and project expeditor
for agricultural and environmental projects throughout Indonesia.
“P.T.
Eucalyptus” - P.T. Eucalyptus Alam Lestari is an Indonesian registered company
owned by Hans Karundeng and is a wholly owned subsidiary of Arrow Pacific
Resources Group Limited (“APR”). This company is the Indonesian operating
company that is the interface between GMPLH and all of the operating units and
joint venture partners. P.T. Eucalyptus is responsible for the supervision of
the planning of all harvesting, land preparation, and the planning of both the
eucalyptus tree plantation and a large-scale agricultural
operation.
“Arrow
Pte.” - Arrow Pacific Resources (s) Pte. Ltd. is organized under the laws
of Singapore and is a wholly owned subsidiary of Arrow Pacific Resources Group
Limited (“APR”).
Item 1.
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Description
of Business.
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Arrow
Resources Development, Inc. (“Arrow”) was incorporated under the laws of the
State of Delaware in 1968. Unless the context requires otherwise, the term
“Company,” “our,” or “we” refers to Arrow Resources Development,
Inc.
GENERAL
The
principal business of Arrow is to provide marketing, sales, distribution,
corporate operations and corporate finance services for the commercial
exploitation of natural resources around the world.
Our
temporary corporate executive offices are located at
Carnegie Hall Tower, 152 W. 57th Street, 27th Floor, New York,
NY 10019 (212-262-2300) and our web site is www.arrowrd.com.
INTRODUCTION
We used
to be a telecommunications and recruiting company formally known as CNE Group,
Inc. We changed our name to Arrow Resources Development, Inc. on or around
December 1, 2005. The Company elected to shift its business focus from
telecommunications and recruiting to the worldwide commercial exploitation of
natural resources.
Arrow
Resources Development Inc. (herein “ARD,” “Arrow Inc.” or “the Company”) was
established in 2005, to serve as the corporate finance and management
infrastructure developer for large scale plantation/farming operations and
ethanol plants in Indonesia. These projects are first and foremost environmental
restorations and social engineering projects, being done in cooperation with the
central and local governments of Indonesia, in partnership with Gerakan
Masyarakat Pelestari Lingkungan Hidup (GMPLH), the largest nonprofit
organization in Indonesia, as well a group of Indonesian joint venture partners
that includes Arrow Pacific Resources Group Limited; a British Virgin Islands
registered company, PT Wika Realty Inc. an Indonesian publicly traded
construction and land development company and PT Mitrasarana Infrakomindo, a
public pension manager and natural resource development company. The government
of Indonesia has declared that 55,000,000 hectares (approximately 6% of the
country) to be “critical land”. Critical land is classified as land that has
been illegally harvested over last 50 years by approximately 25 million local
“farmers” who earn their living by cutting old-growth trees for their own use or
for sale, at a fraction of its value to local lumber companies. The goal of the
Arrow development team is to restore 3,000,000 hectares of this critical land in
Indonesia through the creation of eucalyptus/corn plantations, ethanol plants,
several large-scale farming (eucalyptus, corn, soy, rice, fish and chickens)
operations, and possibly several ethanol blending plants. It is anticipated that
these development will require approximately 6 - 8 years and when completed,
will create approximately 200,000 local jobs, along with many small local
business opportunities. Arrow has developed and maintains the corporate
operating structure, financial operations, sales and marketing infrastructure
and the administrative group to oversee its’ corporate citizenship programs.
Arrow has outlined the necessary public relations and communications programs to
sustain these rapidly growing operations. Arrow Resources, along with all of its
joint venture partners, are collectively referred to in this document as "the
Companies".
Arrow
Pacific Resources Group Limited (herein “Arrow Pacific” or “APR”), a British
Virgin Islands registered company, was founded by Hans Karundeng, an Indonesian
industrialist and financier, for the purpose of developing natural resource
assets controlled by his group of local Indonesian Companies that are developing
plantation/farming operations and ethanol production plants in Indonesia. Mr.
Karundeng is the principal stockholder of Arrow Inc., a member of the
advisory board of GMPLH and a board member of several prominent Indonesian
Companies. Arrow Pacific, through its local subsidiary Companies, has developed
and will manage these opportunities in Indonesia.
Arrow
Inc., along with its partners GMPLH and PT Eucalyptus Alam, an Indonesian
registered wholly owned subsidiary of Arrow Pacific Resources Group Limited,
have developed a synergy of agro-biotechnology and cutting edge
forestry/agricultural practices in response to the growing demand for timber and
farming products. When these practices are performed in a conscientious manner,
it provides humankind with one of the greatest sources for renewable and
ecologically sustainable resources. Paper, dimensional lumber, fiberboard,
particleboard, furniture, utensils, recreational areas, animal habitat, and
clean air are some of the many benefits that will be realized through the
implementation of these programs in Indonesia.
The
Companies are executing their plantation/farming operating plan through the
implementation of a sound land management system, promote and/or establish
infrastructural development programs and provide provisions for financial,
economic and social growth to the people in the development areas. It is
essential for these developments to take into consideration local bio-physical
environment conditions as well as the traditional and cultural beliefs of the
local villagers. In conjunction with local inhabitants, the Companies have
developed a plan that will maximize profits to the greatest potential of the
area, while increasing employment and constantly re-evaluating their
administrative and management programs. The Companies are working to achieve
superior safety performance, implement reliable harvesting, replanting and
farming processes, and become a leader in the industries of sustainable forestry
and farming as well as leaders in the development of socially conscious and
environmentally sensitive land development throughout the world.
Arrow
Pacific has entered into Marketing and Distribution Agreement with Arrow
Resources Development Ltd. (a Bermuda Limited Company), which is a wholly-owned
subsidiary of Arrow Resources Development Inc., that provides for Arrow to
receive 10% of the gross sales generated by all plantation operations from any
and all derivative products (e.g. corn, paper, pulp, chips), 5% of gross sales
generated from all ethanol plants and a 50% ownership interest in all ethanol
plants. Under this agreement, Arrow acts as collection and disbursement
consultant and agent for all operations. In the case of each plantation, Arrow
retains 10% and disburses the remaining 90% to Arrow Pacific's various business
units which becomes their gross revenues. In the case of the ethanol plants,
Arrow retains 5%, disburses all expensive tool suppliers and labor and develops
audited accounting to determine operating income for distribution on a 50-50
basis. The Companies’ Asian offices are in Singapore, Jakarta and
Kendari Indonesia and satellite offices at each plantation or plant location.
The following is a brief description of these transactions and
relationships.
THE
COMPANIES
Arrow
Pacific, through its Indonesian operating division, PT Tiga Daun Nusantara (a
locally registered Sulawesi company) is the principal operating company for the
initial plantation and ethanol plant location in Tenggara, Sulawesi. Gerakan
Masyarakat Pelestari Lingkungan Hidup (GMPLH), a large nonprofit organization
based in Indonesia, for the development of a plantation/farming operation that
will include 3 million hectares (ha) on the islands of Kalimantan and Sulawesi
in Indonesia. PT Wika Realty Inc. and Indonesian publicly traded construction
and land development company and PT Mitrasarana Infrakomindo, a public pension
manager and natural resource development company.
This
program of reforestation is built around the development of eucalyptus and corn
plantations, the development of ethanol plants as well as farming operations
designed to create a sustainable forestry and agricultural program. This program
will include local subsistence farming operations at each plantation for the
purpose of increasing and sustaining the income for local farmers. Through the
development these subsistence farms, which will be funded by revenue from the
programs, thousands of local farmers will plant and manage corn, rice and
soybean crops for local consumption and national distribution as well as fish
farms and chicken farms for local consumption and sale throughout the
country.
Arrow
Pacific and all its subsidiary Companies in Indonesia, along with GMPLH, have
executed Agency Agreements in August 2006 with Arrow Resources Development Ltd.
(the Bermuda registered wholly-owned subsidiary of our Resource Development Inc.
herein referred to as "Arrow Ltd.") providing that the Company will advise the
Companies on matters related to structured corporate finance, financial
administration, corporate management practice, marketing and distribution and
infrastructure. The Agency Agreements are for a term of 99 years while granting
the Company 10% of gross revenue.
PT Tiga
Daun Nusantara, a wholly owned subsidiary of Arrow Pacific Resources Group
Limited, has opened its research and development office in Ujung Pandang for the
purpose of developing genetically engineered eucalyptus tree saplings and corn
seedlings to be used at the initial plantation/farming sites. By synthesizing
aspects of American-style forestry and agricultural practices with these new
advances in bio-engineering, the Company's methodology produces a significant
increase in both quantity and quality of tree and corn, production. The
accelerated growth cycle for the eucalyptus trees produced by these processes
yield a continually renewable timber resource. Makassar, formerly known as Ujung
Pandang, is the provincial capital of South Sulawesi, Indonesia. It is
anticipated that this facility will be fully operational no later than the
fourth quarter of 2010.
The
Companies are poised to capitalize on the increasing demand of the raw materials
for the manufacturing of paper, timber products, and agricultural products as
well as the demand for ethanol in the local market and all the regional
developing international markets, most notably China. The region’s
rising standards of living have created a demand for larger quantities of
printed material, packaging, personal care paper products, industrial paper
supplies, corn, rice, soy and the production of energy such as ethanol. The
proximity of the Companies’ operations to these local and principal markets
enables them to supply these markets in a highly competitive manner due to
significantly reduce transportation costs.
The
Companies have two significant timing factors that enhance their competitive
advantage for the production of eucalyptus. The first of these factors is the
application of newly developed agro-biotechnology. The growth cycle of the
eucalyptus trees in the Companies plantation areas is significantly faster than
those of its competitors; 3 to 4 years, as opposed to a typical 10 to 12 years
on average. The technology also offers several other biological advantages. The
bio-engineered trees are more resistant to adverse weather and infestation, more
successful at growing in poor soil and are able to sustain growth without the
use of any toxic agro-chemicals. Several other lumbering operations in the
Pacific have been heavily scrutinized in the past for their heavy use of such
environmentally-degrading chemicals. The second factor is the proximity of the
operations to the equator. This unique geographical position provides a growing
season that lasts a full 12 months of each year, in comparison to the 7 to 8
month seasons of many of its competitors.
These
significant advantages are also applicable to the production of the company's
agricultural products, most notably corn. The climate and rainfall enable the
growth of approximately 2-3 crops of corn annually. This significant increase in
land usage lowers cost of the raw material and increases productivity while
reducing storage requirements and the amortization of fixed expenses associated
with a single crop.
The
Companies understand that any large-scale timber and agricultural operation
faces environmental and wildlife conservation concerns. In the interest of good
corporate citizenship, a plan has been developed to ensure that all operations
are sensitive to the environmental and ecological importance of transforming the
critical land into a sustainable and renewable timber resource in a responsible
manner. The Companies have consulted with their joint-venture partners GMPLH, to
develop socially sensitive and environmentally friendly programs for developing
these sustainable resources and large-scale farming operations. The Companies
have also assembled its own local team of highly qualified scientists,
bio-engineers and environmentalists for the development of its
technology Center. This team has also examined methods proposed to
establish a preserve for the relocation of wildlife, the preservation of
biodiversity, the investigation of potential medical benefit and the replanting
of several noble species.
On or
around August 1, 2005, Arrow Pacific Resources (s) Pte. Ltd. (“Arrow
Pte.”) entered into a Marketing and Distribution Agreement with Arrow Resources
Development Ltd. (“Arrow Ltd.”) (a Bermuda Limited Company), which is a
wholly-owned subsidiary of Arrow, that provided for both Companies to receive
10% of the gross sales generated by all plantation and mining operations and any
and all derivative products (e.g. corn, paper, pulp, chips). Under this
agreement, Arrow was to act as a consultant and agent for all operations. Arrow
was to retain 10% of their gross revenues.
The World
Bank and World Wildlife Federation have adopted forest management guidelines to
ensure economic, social and environmental benefits from timber and non-timber
products and the environmental services provided by forests. Most countries,
including Indonesia as of 2007, have adopted these guidelines as law in order to
promote economical development while combating the ongoing crisis of worldwide
deforestation.
It has
always been the policy of Arrow Pte to follow the international guidelines for
the harvesting of timber in virgin forests. In December 2007, Arrow Pte.
assessed that it would be unable to harvest the timber products in Papua, New
Guinea due to the fact that the widely accepted international guidelines of the
World Wildlife Federation had not been adopted by Papua, New Guinea. This fact
is adverse to the economic, social and environmental goals of Arrow Pte. because
with the amount of land that the project was allotted combined with the agreed
upon previous guidelines of the marketing and distribution agreement, yields
would be significantly reduced. Given the significant change in the economics of
the harvesting of the timber in Papua, New Guinea, Arrow Pte. has decided not to
pursue any further operations in Papua, New Guinea given that the above
restrictions cause a significant reduction in the volume of harvesting, which
results in a disproportionate cost to yield ration at the Papua, New Guinea site
which makes the project not economically feasible in the foreseeable
future.
Based on
the fact that Arrow Pte. is unable to fulfill their part of the agreement, the
Company has reached the conclusion that the marketing and distribution agreement
has no value. Therefore, the Company has fully impaired the value of the
agreement and recorded a loss on write-off of the marketing and distribution
agreement of $125,000,000 at December 31, 2007.
In April
of 2006, Arrow Ltd. entered into an agency agreement with APR to provide
marketing and distribution services for natural resource products. Arrow Ltd.
currently has an exclusive marketing and sales agreement with APR to market
corn, lumber and related products from land leased by GMPLH located in Indonesia
which is operated by APR and its subsidiaries. Under the agreement Arrow Ltd.
will receive a commission of 10% of gross sales derived from corn, lumber and
related products.
The
companies’ Asian offices are in Singapore, Jakarta and Kendari Indonesia and
their plantation/farming activities are in Indonesia. Hans Karundeng is a
director of the nonprofit organization GMPLH and is the principal stockholder of
Arrow, the principal stockholder on APR and principal stockholder of all the
Indonesian registered companies.
THE
ARROW COMPANIES - GENERAL
Arrow, as
part of the Management Agreement, has built and maintains all of the companies’
corporate finance activities, corporate operations structure, financial
management activities, international banking activities, supervision of all
accounting and auditing activities, corporate research and development
activities, maintenance of the companies’ global MIS, direction of all marketing
and sales activities and all the general administrative functions. Arrow has
also developed and maintained the companies’ scientific advisory team and
corporate citizenship programs. Additionally, the Company supervises all legal
and accounting activities necessary to retain its public listing.
Arrow
Pacific Resources Group Limited, a British Virgin Islands registered company,
was founded by Hans Karundeng in 2002, an Indonesian industrialist and
financier, for the purpose of developing natural resource assets controlled by a
non-profit organization through a group of Companies that are developing
plantation/farming operations in Indonesia.
Arrow
Pacific has, through their wholly-owned subsidiaries PT Tiga Daun Nusantara
(local operating company in Kendari), PT Eucalyptus Alam Lestari, PT Nusa Alam
Sejahtera , PT Sumbur Utama Alam, and PT Tunas Hamparan Hijau , (all Indonesian
registered Companies) have entered into agency agreements with Arrow Resources
Development Ltd. (a Bermuda Ltd. Company and wholly-owned subsidiary of Arrow
Resources Development, Inc.) to act as its corporate finance, financial
administration, corporate management practice, marketing and distribution and
infrastructure agent in Indonesia. These agreements provide for the Company to
receive 10% of the gross sales generated by all plantation/farming operations
and by any and all derivative products (e.g. paper, pulp,
chips). Under this agreement, ARD acts as the collection and
disbursement agent for all operations. ARD retains 10% of gross
revenues and disburses the remaining 90% to Arrow Pacific's various business
units which becomes their gross revenue. In the case of the ethanol plants,
Arrow collects all gross revenue from operations, retains 5% of the gross
revenue as part of its fee, then covers expenses to all suppliers through an
audited accounting system to determine net revenue for distribution on a 50-50
basis.
Arrow
Pacific Resources Group Limited operates, with its joint-venture partners, all
of the on-the-ground, day-to-day plantation operations, all infrastructural
development operations and all shipping operations as they relate to the overall
plan. Arrow Pacific is led by a team of highly qualified
professionals with experience in the fields of plantation management, material
science and analysis, agriculture, forestry and agro-law. The team has
contracted all labor, heavy equipment, transportation and
shipping. Several members of the team hold close affiliations with
organizations such as the Timber Association of Sabah, the National
Sub-committee on Fiscal Incentives of Forest Plantations in Malaysia and the
Scientific and Technical Committee of The Association Technique Internationale
des Bois Tepicaux.
PT Tiga
Daun Nusantara is an Indonesian registered company owned by Hans Karundeng that
is registered and licensed to operate in Kendari, Sulawesi. This
company is the Indonesian operating company acting as the local interface
between all of the operating units and joint venture partners. Tiga
Daun is responsible for the supervision and planning of all harvesting, land
preparation, and planning for both the eucalyptus tree plantation and a
large-scale agricultural operation. The Ministry Of Forestry in Indonesia
requires that local Companies receive operating licenses on each island. The
local Companies that will hold the licenses are P.T. Eucalyptus Alam Lestari,
which has formed PT Nusa Alam Sejahtera, PT Sumbur Utama Alam, PT Tiga Daun
Nusantara and PT Tunas Hamparan Hijau.
GMPLH is
one of the largest non-profit organizations in Indonesia. Founded by
A. H. Moerdani and Hans Karundeng being a director, GMPLH is an educational
organization that acts as a project developer, fundraiser, and project expeditor
for agricultural and environmental projects throughout
Indonesia. Since its inception in 1993, GMPLH has sponsored and
completed more than 25 large-scale agricultural and educational projects
resulting in the planting of more than 600 million trees throughout
Indonesia. GMPLH has been initially granted land licenses by the
Indonesian government for more than 1.8 million hectares (ha) (3.75 million
acres) for a program that will include 3 million ha as part of large-scale
reforestation and farming efforts.
INDUSTRY
The
planet’s consumption of forestry products has more than doubled over the last 30
years as global population continues to grow. The increased demand for forestry
products has also led to the need for increased protection of forests and
wildlife, and a more public participation in forestry management. The demand for
imported raw material for China’s low-cost timber manufacturing industries is
increasing sharply and establishing a more expansive market for international
suppliers. The forestry community in the Asia-Pacific region, where the
Companies’ plantation will be located, possesses an advantage in the industry of
greater periods of harvesting and re-growth in comparison to other countries
that experience periods of dormancy. This is primarily caused by adverse weather
and seasonal conditions. This enables growers in the region to cope with the
ever shifting goals and expectations associated with the rapid evolution of
social, economic and environmental issues that impact policies, legislation, and
institutions. The increase in demand was rapidly exploited in many areas by
timbering operations that stripped forests bare with no regard for their
environmental damage, or replenishing the timber resources being consumed. This
mercenary behavior was responded to with strict and immediate regulation and
monitoring of the industry by government environmental agencies and consumer
advocacy groups on lumbering operations worldwide. Despite the increase in
demand, the shortage of suppliers who are able to meet environmental standards
has caused the forestry industry to shrink by an estimated 9.4 million ha per
annum.
The
forestry industry involves harvesting, silviculture (the growing and cultivation
of trees), milling, value-added processing and manufacturing. Globally, the
industry is being pressured from many directions. Governments have attempted to
improve the forestry industry with privatizing measures, which transfer the
property rights through the sale of natural forests or planned forests. Only a
limited number of countries were involved in this practice in the 1970s and
1980s, and among them were Chile and China. In New Zealand, privatization began
in the late 1980s with the sale of 550,000 ha and in 2000, was shown to have 94%
of planted forests owned privately. Between 2000 and 2002, South Africa saw the
benefits of this system and estimated that 90,000 has became privatized.
Privatization typically consists of the management of natural forest concessions
or leases, volume permits or standing timber sales, outsourcing and
community-based approaches. Global paper consumption trends continue to edge
higher, confirming its utility as a low cost, high- performance and flexible
material. Paper has been labeled by many as “essential” for development and
modern living. Global consumption has increased by at least 25% during the 20th
century and by a factor of three in the last three decades alone.
The Asian
demand for timber and pulp supply has increased due to the rapid expansion of
its economy and one of the largest population densities. These increases have
led also to the increase in usage of computers requiring more printing paper,
higher living standards, and the usage of more books, magazines and packing
boxes. These same factors also drive the increased demand for Eucalyptus Oil,
which China uses over 70% of the world’s production, and is projected to
increase as well as the demand for the wood chips, which is one of the principal
ingredients for manufacturing chipboard. Many experts believe China’s demand for
such material will continue for the next 30 years.
The
international market’s demand for timber derivative products continues to rise
as economic factors drive the consumption of such goods forward. Household
production levels directly impact the consumption levels of chipboards. A
nationwide study in China determined 80% of the finished products available to
the market are developed in household processing level mills which cannot meet
the market demand. The insufficient rate in correlation with the high demand for
timber raw material is so great that outside sources need to be employed. Aside
from the growing demand for corn products in the Asian market, Indonesia is
currently importing 1.5 million metric tons of corn annually to sustain its
ever-growing production of ethanol and demand for animal feed
products.
OPERATING
MODEL
The
Companies have developed a synergy of agro-biotechnology and cutting edge
forestry/agricultural practices in response to the growing demand for timber and
farming products. When these practices are performed in a conscientious manner,
it provides humankind with one of the greatest sources for renewable and
ecologically sustainable energy. Paper, dimensional lumber, fiberboard,
particleboard, furniture, utensils, hydrocarbon fuel, recreational areas, animal
habitat, and clean air are some of the many benefits resulting from bio-diverse
forests.
The
Companies will execute their plantation/farming operating plan through the
implementation of a sound land management system, promote and/or establish
infrastructural development programs and provide provisions for financial,
economic and social growth to the people in the development areas. It is
essential for the development to take into consideration local bio-physical
environment conditions as well as the traditional and cultural beliefs of the
local villagers. In conjunction with local inhabitants, the Companies have
developed a plan that will maximize profits to the greatest potential of the
area, while increasing employment and constantly re-examining their
administrative and management programs. The Companies will work to achieve
superior safety performance, implement reliable harvesting, replanting and
farming processes, and become a leader of the industries of sustainable forestry
and farming as well as leaders in the development of socially conscious and
environmentally sensitive land development throughout the world.
The
Companies believe the effectiveness of any forest management system hinges on
the accuracy of obtaining pre-development information. They have commissioned
qualified and highly experienced foresters, surveyors and enumerators to conduct
surveys that will map out the harvestable area before the commencement of
development activities. The data obtained from these surveys will provide a
framework for the development of the infrastructure of the plantations. Local
inhabitants will be employed to operate the plantation/farming operations as
laborers and managers. There will also be teams of trainee plantation employees,
field doctors, security personnel, cooks and other basic labor to support the
large scale of operations being undertaken.
Possessing
a strong commitment to responsible environmental management practices, the
Companies will continuously monitor and improve the environmental outcomes of
its operations. In the interest of good corporate citizenship, a plan has been
developed to ensure that all operations are sensitive to the environmental and
ecological importance of transforming the virgin forests territories into a
sustainable and renewable timber resource in a responsible manner. The Companies
have consulted with the scientific and environmental communities regarding the
establishment of a preserve for the relocation of wildlife, the preservation of
biodiversity, the investigation of potential medical benefits and the replanting
of several noble species.
APR plans
to construct a large number of roads to connect the project areas with the
proposed factory area, harbor, camp site, local inhabitant living areas, and
other major sites that require transportation to and from on a frequent basis.
Throughout this phase, inventory and tree marking will take place. The data
obtained from these surveys will provide a framework for the development of the
infrastructure of the plantations. Local inhabitants will be employed to
participate in the operations of the plantation and, in some cases as
specialized loggers. There will also be teams of back-up plantation employees,
field doctors, security personnel, cooks and other basic labor to support the
large scale of operations being undertaken. In conjunction with the local
inhabitants, equipment specialists, as well as labor force specialist from
Indonesia and Singapore, APR has developed a fully operational on-the-ground
team ready to begin the first phase.
The
near-equatorial position of Indonesia ensures a good supply of rainwater for the
tree crops year-round with little or no seasonal change, aiding in maintaining
the consistent growth cycle of only 3-4 years. The specific location of the
government granted timberland concessions in Indonesia enables the trees to grow
with minimal interference from open-ocean earthquakes and large storms. The
concessions are protected from such conditions by the large islands, which act
as barriers at sea. Thus, the timberlands are all located in the areas most
conducive to growth, maintenance, transportation, and sale. The areas of
Southeast Asia allow eucalyptus tree and farming production to thrive due to the
steady weather patterns and no real winter season.
PRODUCTS
The
forestland that will be the site of APR’s plantation in Indonesia are lands that
have been classified by the government as "critical land" meaning land that has
been partially harvested illegally during the past 50 years and the Companies
have commissioned physical surveys on the target sites. The majority of the
noble species and selected hardwoods have been removed by illegal logging during
the past half-century. The general composition of the remaining species included
on the development sites are primarily whole new growth bushes, heavy brush and
some small little grove saplings which all are somewhat suitable for the
manufacture of paper and paper products.
Due to
the fact that all of the plantation and plant sites are considered "critical
land," the Companies have commissioned physical surveys on the target sites. The
majority of the noble species and selected hardwoods have been removed by
illegal logging during the past half-century. The general composition of the
remaining species included on the development sites are primarily whole new
growth bushes, heavy brush and some small little grove saplings which all are
somewhat suitable for the manufacture of paper and paper products.
LEGAL
The
Company was a party to a lawsuit where the plaintiff is alleged that he was
entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
to compensate him for services related to identifying financing for CNE,
based upon an agreement that was entered into between CNE and the plaintiff in
April 2005. On November 28, 2007, the Company settled the lawsuit with the
plaintiff. In full and final settlement of the claims asserted in the action,
the Company has paid the plaintiff $10,000 in cash and issued the plaintiff
200,000 shares of the Company’s common stock on December 21, 2007. The
settlement resulted in a loss on debt conversion of $2,000 during the year ended
December 31, 2008 because an estimated liability had been recognized prior to
2007.
In May
2006, the Company was advised that it was alleged to be in default of a
settlement agreement entered into in January of 2005 by CNE, its predecessor
company, related to the release of unrestricted, freely-tradable, non-legend
shares of stock. In August 2006, the plaintiffs, alleging the default, obtained
a judgment in the 17th Judicial Circuit Court Broward County, Florida for
approximately $1,000,000. On November 13, 2007, legal counsel engaged by
Management commenced an action on the Company’s behalf in the above Circuit
Court seeking to vacate and set aside the 2006 judgment asserting claims under
Rule 1.540(b) of the Florida Rules of Civil Procedure. Our counsel’s evaluation
is that the Company has only a limited chance of having the 2006 judgment opened
by the Court because Florida law provides very narrow grounds for opening a
judgment once a year has passed from its entry. The Courts are generally
reluctant to disturb final judgments and the Company’s grounds for opening the
judgment depend on the Court’s adopting a somewhat novel argument regarding such
matters. If, however, the Court does open the default judgment, the Company will
then have the opportunity to defend the 2006 action and, in such event, our
counsel believes that the Company has a reasonable chance of succeeding in
defending that claim, at least in part, based on the documents he has reviewed.
As of December 31, 2008, the Company has accrued $1,203,492 related to this
matter. As of December 31, 2009, the Company has accrued $1,266,695,
including accrued interest of $213,310, related to this matter.
HUMAN
RESOURCES
As of
December 31, 2009, our workforce consists of consultants. The majority of our
consultants are professional, technical or administrative personnel who possess
training and experience in finance, information management, and business
management. We have no union contracts. We believe that our relations with our
consultants are satisfactory. In addition we rely on the personnel of APR,
described below.
APR has
already assembled the necessary senior management and field operations personnel
required to initiate the project. The initial senior staff of APR and its
supporting clerical personnel are sufficient for operations in the first five
years. The initial senior management and field operations personnel of APR is
sufficient for operations for at least three years. During the initial
three-year period, APR will conduct an executive search for additional field
operations personnel and eventually the requisite personnel for the operation of
the paper mill. APR will be responsible for staffing field and production
operations.
Since the
projects in Indonesia are first and foremost an environmental restorations and
social engineering projects, the emphasis is on maximizing the use of local
labor and job creation. APR is developing its technical/agricultural production
center on Sulawesi Island which is staffed by highly qualified Indonesian
based professionals. All manual operations will employ local resident farmers
and their families and all hiring will be coordinated by GMPLH. This approach is
designed to reengineer large-scale farming communities and redeveloped long-term
farming infrastructure.
The
companies have assembled, through their joint venture partners, the necessary
senior management and field operations personnel required to initiate the
project. The initial senior staff and its supporting clerical personnel are
sufficient for operations in the first five years. The initial senior management
and field operations personnel are sufficient for operations for approximately
two years. During the initial two-year period, a human resource acquisition and
benefits program will be completed and structured to grow as the projects
grow.
Since the
health of the workers is not only based on physical conditions, special
attention also must be paid to safety, adequate standards of comfort,
sanitation, nutrition and general welfare. Adequate training, which is
appropriate for job requirements and satisfactory working conditions, is viewed
by the companies as a primary and effective motivator since these considerations
not only contribute to improved safety, but they also contribute to improved
efficiency. Plantation/farming projects normally place a high priority on
landowners' participation in resource development and give employment preference
to landowners whose dedication reflects the investment they have in the success
of their local economies.
Training
personnel will be required to maintain the highest level of safety for the
workers and the environment. The workers will receive training to identify
various tree species, measurement of trees, quality criteria for harvestable
trees and field organization for the pre-harvesting inventory. Training programs
for harvesting crews will consist of harvesting safety, proper cutting and
directional felling techniques, maintenance of chainsaw and chain sharpening,
field organization of harvesting activity, use of tree location maps and
criteria for deciding whether or not to fell a marked tree. Practical training
for extraction crews will consist of field considerations for reducing the
damage to the remaining forest stand, field organization of the extraction
activities, and use of tree location/extraction maps. Training programs for farm
workers will include proper soil tilling methods, proper seeding techniques,
fertilizer techniques and management, irrigation techniques, testing and
allocations, harvesting techniques and proper use of crop rotation.
COMPETITION
APR
principal plantation operations will be located in Indonesia in close proximity
to the Asian Pacific market enabling timber to be delivered with lower shipping
costs, and at higher profit. The distance for competitors to ship their products
includes a much greater cost and longer shipping period. These near-equatorial
locations ensures a good supply of rainwater for the tree crops, which aids in
developing a consistent growth cycle of only 3-4 years. The specific location of
the government granted timberland concessions, in Indonesia, enables the trees
to grow with minimal interference from open-ocean earthquakes and large storms.
Thus, the location of this timberland makes easier to transport and sell, and
easier to maintain.
The
existing forest industry is dominated by large foreign logging companies, or
landowning companies.
Australia
currently exports approximately 6.5 million tons of woodchips annually from
ports in Tasmania, Victoria and Western Australia. Australia’s stock in
plantations has risen rapidly over the past decade. Estimates show 455,000
hectares of new eucalyptus plantations have been established over the past 7
years. The Australian market competitors have relatively high entrance costs and
higher service fess with lower potential return. Their harvesting cycles
typically take 6 years or longer and environmental risks weigh heavily on the
yield.
Brazil
has 400 million hectares of tropical forests, and 7 million hectares of exotic
plantations comprised mainly of fast growing eucalyptus. The timber from these
plantations provides raw material for charcoal, and pulp and paper production.
Brazil accounts for 60% of total charcoal production although native woods are
mostly used for timber production; with an annual consumption rate around 250
million cubic meters.
Chile has
around 5.5 million hectares of productive native forest, mainly Nothofagus
hardwood species. Timber production from native hardwood amounts to 0.35 million
m3 /year,
and nearly 75% is used to produce chips for exports to Asian countries. Pine and
eucalyptus plantations cover 1.8 million hectares, with an annual expansion rate
of 7-10%. Pinewood accounts for 78% of total plantations; eucalyptus is growing
faster and a big surplus is expected within the next decade.
DEMOGRAPHICS
The
climate of Indonesia is reported to be monsoonal in nature, characterized by
high temperatures and humidity throughout the year. However, the specific
location of the timber concessions within these countries enables the trees to
grow with minimal interference from open-ocean earthquakes and large storms.
Operations in Indonesia are located inland, not on annual flood plains, not on
islands with historically high earthquake activity and where there are active
volcanoes present.
EMPLOYEES
As of
December 31, 2009, our workforce consists of consultants. The majority of our
consultants are professional, technical or administrative personnel who possess
training and experience in finance, information management, and business
management. We have no union contracts. We believe that our relations with our
consultants are satisfactory.
Our
future success depends in large part on our ability to retain key technical,
marketing, and management personnel, and to attract and retain qualified
employees and consultants. Competition for such personnel is intense, and the
loss of key consultants, as well as the failure to recruit and train additional
technical personnel in a timely manner, could have a material and adverse effect
on our operating results.
Our
success also depends, to a significant extent, upon the contribution of our
executive officers and other key consultants. We have agreements with our chief
executive officer, and maintain an informal stock plan whereby key personnel can
participate in our success. All of our personnel are eligible to participate in
this plan.
The
following discussion highlights certain of the risks we currently
face.
The
following factors, in addition to those discussed elsewhere in this document,
should be carefully considered. Securities of the Company involve a high degree
of risk and should be regarded as speculative. In addition to matters set forth
elsewhere in this Annual Report, potential investors should carefully consider
the risk factors described below relating to the business of the
Company.
LIMITED
OPERATING HISTORY
The
success of the Company cannot be guaranteed or accurately predicted. There is no
assurance that the Company will be able to operate profitably. Such prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered in the establishment of a product and service.
Arrow
began operations in approximately September, 2005, and to date has generated
$52,000 in revenues. The Company has no significant operating history. There is
no assurance that the Company will be able to operate and manage on a profitable
basis or that cash flow from operations will be sufficient to pay the operating
costs of the Company. The Company may need to raise additional capital to
finance its continued operations. The Company may seek additional financing
through debt or equity financings. There is no assurance that additional
financing will be available to the Company, or if available, that the financing
will be on terms acceptable to the Company. There is no assurance that the
Company’s estimate of its reasonably anticipated liquidity needs is accurate or
that new business developments or other unforeseen events will not occur that
will result in the need to raise additional funds. In the event that the Company
cannot raise needed capital, it will have a material adverse affect on the
Company. There is no assurance that the Company will achieve or sustain
profitability or positive cash flow from operating activities in the future or
that it will generate sufficient cash flow to service any debt
requirements.
SIGNIFICANT
CAPITAL REQUIREMENTS & DILUTION
The
Company’s capital requirements are and will continue to be significant. The
Company anticipates, based on management’s internal forecasts and assumptions
relating to its operations (including the costs associated with marketing), that
unless at least $1,500,000 is raised for working capital purposes, the Company’s
cash resources will not be sufficient to satisfy the Company’s contemplated cash
requirements and that additional financing may be needed to support the Company.
There can be no assurance that the Company will be able to obtain additional
financing on terms acceptable to the Company. To the extent that any financing
involves the sale of the Company’s equity securities, the interests of the
Company’s then existing shareholders could be substantially diluted. Dilution
will also occur when and if options to be granted to employees, consultants and
other third parties are exercised.
DEPENDENCE
ON ARROW PACIFIC RESOURCES GROUP LIMITED AND ITS OPERATING
SUBSIDIARIES
Our
revenues are currently entirely derived from sales of APR and its operating
subsidiaries products sales. APR will not be in a position to generate
sustainable timber sales until it has completed certain infrastructure
improvements in Indonesia. The infrastructure requirements will take APR a
maximum of one year to complete. Therefore, APR may not generate sustainable
sales of its products until the third quarter of 2010.
COMPETITION
The
Company anticipates competition on numerous fronts. Increased competition could
require the Company to respond to competitive pressures by establishing pricing,
marketing and other programs, or seeking out additional strategic alliances or
acquisitions, any of which could have a material adverse effect on the business,
prospects, financial condition and results of operations of the Company. The
Company could potentially have competitors with longer operating histories,
larger customer bases, greater brand recognition, and significantly greater
financial, marketing and other resources than the Company. Increased competition
may result in reduced operating margins, loss of market share, and a diminished
brand franchise, any of which would have a material adverse effect on the
Company. There is no assurance that the Company will be able to compete
successfully.
ABSENCE
OF DIVIDENDS & DIVIDEND POLICY
The
Company has never paid dividends on its Common Stock, but does anticipate paying
dividends on its Common Stock in the foreseeable future. The declaration and
payment of dividends by the Company are subject to the discretion of the
Company’s Board of Directors. Any determination as to the payment of dividends
in the future will depend upon results of operations, capital requirements,
restrictions in loan agreements, if any, and such other factors as the Board of
Directors may deem relevant.
OWNERSHIP
OF THE COMPANY
APR owns
52% of the Company’s stock. Hans Karundeng is the Chairman of APR. His son,
Rudolph, is a Director of the Company and is an 8% owner of the Company’s
stock.
DEPENDENCE
ON MANAGEMENT
The
success of the Company will largely be dependent upon the active participation
of its management. The Company does not currently have “Key Man” life insurance
on any of its current officers or employees, although the Company intends to
provide such insurance, based on availability of funds in the future. The
Company would pay all premiums for such “Key Man” life insurance. The time that
the officers and directors devote to the business affairs of the Company, and
the skill with which they discharge their responsibilities, will substantially
impact the Company’s success. Loss of the services of certain executive officers
of the Company could be expected to have a material adverse effect upon the
Company.
POSSIBLE
LOSS OF OR INABILITY TO ATTRACT KEY PERSONNEL
The
Company’s success depends largely on its ability to attract and retain highly
qualified managerial and industry personnel. There can be no assurance that the
Company will be successful in attracting or retaining these key personnel. The
loss of the services of key personnel could have a material adverse effect on
the Company.
GENERAL
ECONOMIC AND OTHER CONDITIONS
The
Company’s business may be adversely affected from time to time by such matters
as changes in economic, industrial and international conditions, changes in
taxes, changes in government regulations, prices and costs and other factors of
a general nature and in particular those changes which have an adverse material
effect on the natural resources industry or other industries in which the
Company becomes engaged to provide marketing, sales, distribution, corporate
operations and corporate finance services for the commercial exploitation of
natural resources around the world.
WE
MAY BE UNABLE TO CONTINUE AS A GOING CONCERN
These
consolidated financial statements are presented on the basis that the Company is
a going concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
period of time.
As shown
in the accompanying consolidated financial statements, the Company incurred a
net loss of $6,520,053 for the year ended December 31, 2009 and a net loss
during the development stage from inception in November 15, 2005 through
December 31, 2009 of $146,744,021. The Company’s operations are in the
development stage, and the Company had generated revenue of $52,000 since
inception. The Company’s existence in the current period has been dependent upon
advances from related parties and other individuals, and the sale of senior
notes payable.
We cannot
assure you when or if we will ever be able to operate on a positive cash flow
basis. If we are unable to achieve the level of revenues needed to attain a
positive cash flow, we may be required to take actions, including but not
limited to reducing our operations, seeking an acquisition and/or merging with
another entity, that could materially change and/or adversely affect our
business.
We have a
history of losses and we cannot assure you that we will be able to operate
profitably in the foreseeable future, if at all.
Our
inability to achieve or maintain profitability or positive cash flow
could:
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result
in disappointing financial results,
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impede
implementation of our growth
strategy,
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cause
the market price of our common stock to
decrease,
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impede
our ability to procure financing on acceptable terms or at all,
and
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otherwise
adversely affect our business and financial
condition.
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Under
certain circumstances we could incur an impairment loss that could adversely
affect our stockholders’ equity.
We will
require financing if our revenues do not meet our projections or our expenses
are greater than we anticipate, or to finance the further development of our
business. Our inability to obtain financing, if required, would have an adverse
effect on our business.
We may
need to obtain financing if our actual costs are higher than projected or our
contemplated future revenues fall below our current expectations, in order
to
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finance
more rapid expansion,
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increase
marketing and sales,
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develop
new or enhanced technology,
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respond
to competitive pressures,
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establish
strategic relationships, and/or
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provide
for working capital.
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If we
raise such financing by issuing equity or convertible debt securities, the
percentage ownership of our stockholders will be diluted. Any new debt or equity
securities could have rights, preferences and privileges senior to rights of our
common stock holders. We currently have no commitments for any such financing
and, accordingly, cannot assure you that such financing will be available when
and to the extent required or that, if available, it will be on terms acceptable
to us. If adequate financing is not available on acceptable terms, we may be
unable to finance the activities referred to above. In such event, our business
may be adversely affected.
Recently
enacted and proposed changes in securities laws and regulations will increase
our costs. The Sarbanes-Oxley Act of 2002 that became law in July 2002 has
required and will continue to require changes in some of our corporate
governance practices. We expect that the Sarbanes-Oxley Act will increase our
legal and financial compliance costs, and make some activities more difficult,
time consuming and/or more costly. We also expect that the Sarbanes-Oxley Act
will make it more costly to obtain director and officer liability insurance
coverage, and we may be required to accept reduced coverage or incur
substantially higher costs to obtain it. We currently do not have this coverage.
These new rules and regulations could also make it more difficult for us to
attract and retain qualified members of our board of directors, particularly to
serve on our audit committee, and qualified executive officers. In accordance
with the Sarbanes-Oxley Act, we have instituted a number of changes relating to
corporate governance practices including the certification of our consolidated
financial statements pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act
and adoption of certain internal controls. The Sarbanes-Oxley Act has provisions
that have implementation deadlines, including those related to Section 404
concerning internal control procedures. Implementation of those procedures will
require resources and a portion of our management’s time and
efforts.
Our
reported financial results may be adversely affected by changes in accounting
principles generally accepted in the United States.
We
prepare our financial statements in conformity with accounting principles
generally accepted in the United States. These accounting principles are subject
to interpretation by the Financial Accounting Standards Board, the American
Institute of Certified Public Accountants, the SEC and various bodies formed to
interpret and create appropriate accounting policies. A change in these policies
or interpretations could have a significant effect on our reported financial
results, and could affect the reporting of transactions completed before the
announcement of a change. For example, while current accounting rules allow us
to exclude the expense of employee stock options from our financial statements,
influential business policy groups, including the Financial Accounting Standards
Board, have suggested that the rules be changed to require these options to be
expensed.
Due to
the change in business activities of the Company in conjunction with the change
in control, we are no longer able to realize any benefit from net operating
losses carried forward of CNE Group, Inc. of approximately $30,000,000. The
Company currently has net operating losses of approximately $186,000 related to
development stage activity, which may be carried forward to future
periods.
Companies
generally, and our Company, specifically, rely heavily on stock options as a
major component of our employee compensation packages. If we are required to
expense options granted to our officers and employees, although our cash
position would not be affected, our income from continuing operations and our
stockholders’ equity would decrease and our stock price could be adversely
affected. In such event, we may have to decrease or eliminate option grants to
our officers and employees, which could negatively impact our ability to attract
and retain qualified employees and executive personnel. While the Company does
not currently have a stock option plan, such a plan may be established in the
future.
In
general, for purposes of the Code, an ownership change occurs when 5% or more
owners increase their ownership percentage by more than 50% over the lowest
percentage owned by those owners at any time during a testing period, which is
generally the three years prior to the increase in ownership by 5% or more
owners. The IRS has authority to treat warrants, options, contracts to acquire
stock, convertible debt interests and other similar interests as if they are
stock and stock as if it is not stock. In any event, it is possible that past
and/or future transactions affecting our equity could create an ownership change
and trigger this limitation on the use of our net operating loss.
RISKS
RELATED TO OUR BUSINESS
Our
business faces intense competition. If we fail to adequately meet this
competition, our business could be adversely affected.
Most of
our competitors have substantially greater financial, technical and marketing
resources; longer operating histories and greater name recognition to apply to
each of these factors, and in some cases have built significant reputations with
the customer base in the markets in which we compete. If we are unable to
successfully compete, our business, financial condition, and operating results
could be materially and adversely affected.
Because
we have fixed costs, any decline in our revenues could disproportionately and
adversely affect our financial condition and operating results.
Significant
portions of our costs are fixed, due in part to our fixed sales, engineering and
product support, and manufacturing facilities. As a result, relatively small
declines in revenue could disproportionately affect our operating results.
Changes in product demand, among other things, could adversely affect our
manufacturing capacity, which would adversely affect our business.
Our
business may suffer if we lose the services of our executive officers, or if we
cannot recruit and retain additional skilled personnel.
We depend
on the continued services and performance of Peter Frugone, our Chairman and
Chief Executive Officer, Rudolph Karundeng, one of our Directors, as well as
Senior Advisor, Hans Karundeng and his subsidiary operations for our future
success. If either Mr. Frugone or Mr. Rudolph Karundeng becomes unable
or unwilling to continue in his current position, our business and financial
conditions could be damaged. We are not the beneficiaries of any key person life
insurance covering them or any other executive.
RISKS
RELATED TO THE OWNERSHIP OF OUR COMMON STOCK
Your
ability to sell any common stock may be restricted, because there is a limited
trading market for these securities.
Although
our common stock is currently traded on the NASD OTC Bulletin Board, a liquid
market in our stock has been sporadic. Accordingly, you may not be able to sell
shares of our common stock when you want or at the price you want, if at
all.
In
addition, depending on several factors including, among others, the future
market price of our common stock, these securities are subject to the so-called
“penny stock” rules that impose additional sales practice and market making
requirements on broker-dealers who sell and/or make a market in such securities.
These factors could affect the ability or willingness of broker-dealers to sell
and/or make a market in our common stock and the ability of purchasers of our
common stock to sell their shares in the secondary market. A delisting could
also negatively affect our ability to raise capital in the future.
The
market price of our common stock may be volatile, which could adversely affect
the value of any common stock that you may own.
The
market price of our common stock may fluctuate significantly in response to the
following factors:
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variations
in our quarterly operating results;
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our
announcements of significant contracts, milestones or
acquisitions;
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our
relationships with other companies;
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our
ability to obtain capital
commitments;
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additions
or departures of our key personnel;
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sales
of our common stock by others or termination of stock transfer
restrictions;
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changes
in estimates of our financial condition by securities analysts;
and
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fluctuations
in stock market price and volume.
|
The last
three factors are beyond our control.
In the
past, following periods of volatility in the market price of a company’s
securities, securities class action litigation often has been instituted against
that company. Such litigation is expensive and diverts management’s attention
and resources. Any one of the factors noted above could have an adverse affect
on the value of our common stock.
Anti-takeover
provisions of the Delaware General Corporation Law and in our Certificate of
Incorporation could discourage a merger or other type of corporate
reorganization or a change in control, even if it could be favorable to the
interests of our stockholders.
The
Delaware General Corporation Law and our Certificate of Incorporation contain
provisions that may enable our management to retain control and resist a
takeover of our Company. These provisions generally prevent us from engaging in
a broad range of business combinations with an owner of 15%, 20% in the case of
our Certificate of Incorporation, or more of our outstanding voting stock for a
period of three years from the date that this person acquires his stock. Our
Certificate of Incorporation and our By Laws also require the affirmative vote
of at least 60% or our voting stockholders to effect certain actions, including,
under certain circumstances, the removal of directors, and provide for the
election of different classes of directors with the term of each class ending at
different times. Accordingly, these provisions could discourage or make more
difficult a change in control or a merger or other type of corporate
reorganization even if it could be favorable to the interests of our
stockholders.
Our
officers and directors exercise significant control over our affairs, which
could result in their taking actions that other stockholders do not approve
of.
Our
executive officers and directors, and persons or entities affiliated with them,
currently control approximately 17% of our outstanding common stock. These
stockholders, if they act together, may be able to exercise substantial
influence over all matters requiring approval by our stockholders, including the
election of directors and approval of significant corporate transactions. This
concentration of ownership may also delay or prevent a change in control of our
Company and might affect the market price of our common stock.
We have
never paid any cash dividends on our common stock and currently intend to retain
all future earnings, if any, to invest in our business.
If our
Board issues common stock, which it can do without stockholder approval, a
purchaser of our common stock could experience substantial
dilution.
Our Board
of Directors has the authority to issue up to 1 billion shares of common stock
and 10,000,000 shares of preferred stock and to issue options and warrants to
purchase shares of our common stock without stockholder approval. In the future,
we could issue additional shares of our common stock at values substantially
below the current market price for our common stock, which could substantially
dilute the equity ownership of holders of our common stock. In addition, our
Board could issue large blocks of our common stock to prevent unwanted tender
offers or hostile takeovers without any stockholder approval. Our ability to
issue preferred stock may adversely affect the rights of common stockholders and
be used as an anti-takeover device.
Our
Certificate of Incorporation authorizes our Board of Directors to issue up to
10 million shares of preferred stock without approval from our
stockholders. Accordingly, all of our common stock will be junior to any
preferred stock issued by us, and our Board has the right, without the approval
of common stockholders, to fix the relative rights and preferences of such
preferred stock. This could affect the rights of common stockholders regarding,
among other things, voting, dividends and liquidation. We could also use an
issuance of preferred stock to deter or delay a change in control that may be
opposed by our management, even if the transaction might be favorable to the
common stockholders.
The
Company might issue options and warrants in the future. The exercise of all of
the outstanding options and warrants would dilute the then-existing
stockholders’ percentage ownership of our common stock. Any sales resulting from
the exercise of options and warrants in the public market, such as sales by the
selling stockholders pursuant to this prospectus, could adversely affect
prevailing market prices for our common stock. Moreover, our ability to obtain
additional equity capital could be adversely affected since the holders of
outstanding options and warrants may exercise them at a time when we would also
wish to enter the market to obtain capital on terms more favorable than those
provided by such options and warrants. We lack control over the timing of any
exercise or the number of shares issued or sold if exercises occur.
Our
executive offices are located at Carnegie Hall Tower, 152 W. 57th
Street, 27th Floor,New
York, NY 10019 where we use office space, on a temporary basis, under a
management agreement with Empire Advisory, LLC.
Item 3.
|
Legal
Proceedings
|
The
Company was a party to a lawsuit where the plaintiff alleged that he was
entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
to compensate him for services related to identifying financing for CNE,
based upon an agreement that was entered into between CNE and the plaintiff in
April 2005. On November 28, 2007, the Company settled the lawsuit with the
plaintiff. In full and final settlement of the claims asserted in the action,
the Company has paid the plaintiff $10,000 in cash and issued the plaintiff
200,000 shares of the Company’s common stock having a fair value of $12,000,
based on the public traded share price on December 21, 2007. The settlement
resulted in a loss on debt conversion of $2,000 during the year ended December
31, 2007 because an estimated liability had been recognized prior to
2007.
In May
2006, the Company was advised that it was alleged to be in default of a
settlement agreement entered into in January of 2005 by CNE, its predecessor
company, related to the release of unrestricted, freely-tradable, non-legend
shares of stock. In August 2006, the plaintiffs, alleging the default, obtained
a judgment in the 17th Judicial Circuit Court Broward County, Florida for
approximately $1,000,000. On November 13, 2007, legal counsel engaged by
Management commenced an action on the Company’s behalf in the above Circuit
Court seeking to vacate and set aside the 2006 judgment asserting claims under
Rule 1.540(b) of the Florida Rules of Civil Procedure. Our counsel’s evaluation
is that the Company has only a limited chance of having the 2006 judgment opened
by the Court because Florida law provides very narrow grounds for opening a
judgment once a year has passed from its entry. The Courts are generally
reluctant to disturb final judgments and the Company’s grounds for opening the
judgment depend on the Court’s adopting a somewhat novel argument regarding such
matters. If, however, the Court does open the default judgment, the Company will
then have the opportunity to defend the 2006 action and, in such event, our
counsel believes that the Company has a reasonable chance of succeeding in
defending that claim, at least in part, based on the documents he has
reviewed. As of December 31, 2008, the Company has accrued $1,203,492
related to this matter. As of December 31, 2009, the Company has
accrued $1,266,695, including accrued interest of $213,310, related to this
matter.
Item 4.
|
Submission
of Matters to a Vote of
Security Holders.
|
On
November 20, 2007, the Board of Directors approved a private placement offering
(the "Offering") approximating $2,000,000 to accredited investors at $1.00 per
share of Series A Convertible Preferred Stock. The Offering consisted of the
Company's Series A Convertible Preferred Stock that will be convertible into our
common stock. These securities were not required to be and will not be
registered under the Securities Act of 1933. Shares issued under this placement
were not sold in the United States, absent registration or an applicable
exemption from registration. As of September 30, 2009, the Company received
$355,000 from investors towards 355,000 Series A Convertible Preferred Stock
shares issuable under subscription agreements covering the placement offering.
Each Series A Convertible Preferred Stock was convertible into 20 shares of the
Company’s Common Stock. The holders of the preferred stock had no voting rights
except as was required by Delaware law, no redemption rights, and no liquidation
preferences over the Common Stock holders. On November 3, 2009, the
355,000 Series A Convertible Preferred Stock were converted into 7,100,000
Common shares. As of December 31, 2009, there were no Series A
Convertible Preferred Stock outstanding.
On April
20, 2008, the Board of Directors approved a private placement offering (the
"Offering") approximating $2,000,000 to accredited investors at $1.00 per share
of Series C Convertible Preferred Stock. The Offering consisted of the Company's
Series C Convertible Preferred Stock that were convertible into our common
stock. These securities were not required to be and were not registered under
the Securities Act of 1933. Shares issued under this placement were not sold in
the United States, absent registration or an applicable exemption from
registration. As of September 30, 2009, the Company received $25,000 from
investors towards 25,000 Series C Convertible Preferred Stock shares issuable
under subscription agreements covering the placement offering. Each Series C
Convertible Preferred Stock is convertible into 20 shares of the Company’s
Common Stock. The holders of the preferred stock have no voting rights except as
may be required by Delaware law, no redemption rights, and no liquidation
preferences over the Common Stock holders. On November 3, 2009, the 25,000
Series C Convertible Preferred Stock were converted into 500,000 Common
shares. As of December 31, 2009, there was no Series C Convertible
Preferred Stock outstanding.
On
December 3, 2007, the Board of Directors approved a plan to compensate all
members of the Board of Directors at a rate of $50,000 per year and 250,000
shares of Company common stock effective January 1, 2007. This compensation plan
applies to any board member that belonged to the Board as of and subsequent to
January 1, 2007. Those board members that were only on the Board for part of the
year will received pro-rata compensation based on length of service. As of
December 31, 2009, none of the shares under this plan have been issued and the
Company has accrued $600,137 of cash and recorded additional paid-in capital of
$172,541 for stock compensation based on the fair value of 3,000,685 shares to
be issued to the members of the Board.
PART
II
Item 5.
|
Market
For Common Equity and Related Stockholder
Matters.
|
Exchange
Listing:
Our
common stock is listed on the NASD OTC: Bulletin Board (trading symbol ARWD.OB).
The number of record holders of our common stock as of April 13, 2010 was
approximately 321.
Equity
Sale Prices:
|
|
Common
Stock
|
|
|
|
High
Sales Price
|
|
|
Low
Sales Price
|
|
2009
|
|
|
|
|
|
|
1st
Quarter
|
|
$ |
0.10 |
|
|
$ |
0.02 |
|
2nd
Quarter
|
|
|
0.08 |
|
|
|
0.02 |
|
3rd
Quarter
|
|
|
0.09 |
|
|
|
0.04 |
|
4th
Quarter
|
|
|
0.05 |
|
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
1st
Quarter
|
|
$ |
0.08 |
|
|
$ |
0.03 |
|
2nd
Quarter
|
|
|
0.16 |
|
|
|
0.04 |
|
3rd
Quarter
|
|
|
0.13 |
|
|
|
0.04 |
|
4th
Quarter
|
|
|
0.11 |
|
|
|
0.04 |
|
The
number of freely tradable shares not held by affiliates is
98,818,007.
As of
April 13, 2010, the aggregate market value of voting stock held by
non-affiliates of the Issuer was approximately $1,976,360.
Dividends:
We have
not previously paid cash dividends on our common stock. The payments of future
dividends and the amount thereof will depend upon our earnings, financial
condition, capital requirements and such other factors as our Board of Directors
may consider relevant.
Item 6.
|
Selected
Financial Data.
|
Not
applicable.
Item 7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
GENERAL
We are a
holding company whose only operating subsidiary as of December 31, 2009 is Arrow
Ltd. The principal business of Arrow is to provide marketing, sales,
distribution, corporate operations and corporate finance services for the
commercial exploitation of natural resources around the world. Prior to November
2005, we used to be a telecommunications and recruiting company formally known
as CNE Group, Inc. The company elected to shift its business focus to the
worldwide commercial exploitation of natural resources.
ARROW
RESOURCES DEVELOPMENT, LTD.
In
August 2005, Arrow entered into an Agreement and Plan of Merger (“the
Agreement”) with its wholly-owned subsidiary, Arrow Ltd., in which Arrow
(formerly CNE) was required to issue 10 million shares of Series AAA
convertible preferred stock (“the Preferred Stock”) to Arrow Ltd.'s designees,
representing 96% of all outstanding equity of CNE on a fully diluted basis in
exchange for the Marketing and Distribution Agreement provided to the Company by
Arrow. Under the Agreement, the Company discontinued all former operations
(CareerEngine, Inc., SRC and US Commlink.) and changed its name to Arrow
Resources Development, Inc.
On
August 1, 2005, Arrow Ltd. entered into the Marketing Agreement with Arrow
Pte. and its subsidiaries in consideration for Arrow issuing a non-interest
bearing note (the “Note”) in the principal amount of $125,000,000 to Empire
Advisory, LLC, (“Empire”), acting as agent, due on or before December 31,
2005. Empire is Arrow Pte.'s merchant banker. The Note permitted the Company, as
Arrow's sole stockholder, to cause Arrow to repay the Note in cash or with
10,000,000 shares of the Company's non-voting Series AAA Preferred Stock.
However, in December 2008, Arrow Pte. assessed that it would be unable to
harvest the timber products in Papua, New Guinea due to the fact that the widely
accepted international guidelines of the World Wildlife Federation had not been
adopted by Papua, New Guinea.
This fact
is adverse to the economic, social and environmental goals of Arrow Pte. because
with the amount of land that the project was allotted combined with the agreed
upon previous guidelines of the marketing and distribution agreement, yields
would be significantly reduced. Given the significant change in the economics of
the harvesting of the timber in Papua, New Guinea, Arrow Pte. has decided not to
pursue any further operations in Papua, New Guinea given that the above
restrictions cause a significant reduction in the volume of harvesting, which
results in a disproportionate cost to yield ration at the Papua, New Guinea site
which makes the project not economically feasible in the foreseeable
future.
Based on
the fact that Arrow Pte. is unable to fulfill their part of the agreement, the
Company has reached the conclusion that the marketing and distribution agreement
has no value. Therefore, the Company has fully impaired the value of the
agreement and recorded a loss on write-off of the marketing and distribution
agreement of $125,000,000 at December 31, 2007. (See Note 6.)
On April
4, 2006 Arrow Resource Development Ltd. (the Company's Bermuda subsidiary)
entered into an agency agreement with APR in which the Company will provide
financial consultancy services to APR for an annual fee, payable as collected,
equal to 10% of APR's gross revenue payable commencing upon execution. The term
of the agreement is effective upon execution, shall remain in effect for
ninety-nine (99) years and shall not be terminated until the expiration of at
least ten (10) years. As of December 31, 2009, the Company has generated
$52,000 under this agreement.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
The
preparation of financial statements in accordance with U.S. generally accepted
accounting principles requires us to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of net revenue and expenses during the
reporting period. On an ongoing basis, we evaluate our estimates, including
those related to our allowance for doubtful accounts, inventory reserves, and
goodwill and purchased intangible asset valuations, and asset impairments. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting
policies, among others, affect the significant judgments and estimates we use in
the preparation of our consolidated financial statements.
ALLOWANCE
FOR DOUBTFUL ACCOUNTS, REVENUE RECOGNITION
We
evaluate the collectability of our accounts receivable based on a combination of
factors. In circumstances where we are aware of a specific customer's inability
to meet its financial obligations to us, we record a specific allowance to
reduce the net receivable to the amount we reasonably believe will be collected.
For all other customers, we record allowances for doubtful accounts based on the
length of time the receivables are past due, the prevailing business environment
and our historical experience. If the financial condition of our customers were
to deteriorate or if economic conditions were to worsen, additional allowances
may be required in the future.
We
recognize product revenue when persuasive evidence of an arrangement exists, the
sales price is fixed, the service is performed or products are shipped to
customers, which is when title and risk of loss transfers to the customers, and
collectability is reasonably assured.
VALUATION
OF GOODWILL, PURCHASED INTANGIBLE ASSETS AND LONG-LIVED ASSETS
The
Company’s only intangible asset was comprised of a marketing and distribution
agreement with Arrow Pte. In accordance with SFAS 142, “Goodwill and Other
Intangible Assets” this intangible agreement is no longer amortized; instead the
intangible is tested for impairment on an annual basis. The Company assesses the
impairment of identifiable intangibles and goodwill whenever events or changes
in circumstances indicate that the carrying value may not be recoverable.
Factors the Company considers to be important which could trigger an impairment
review include the following:
·
|
Significant
inability to achieve expected projected future operating
results;
|
·
|
Significant
changes in the manner in which the work is able to be performed what
increases costs;
|
·
|
Significant
negative impact on the
environment.
|
We
perform goodwill impairment tests on an annual basis and on an interim basis if
an event or circumstance indicates that it is more likely than not that
impairment has occurred. We assess the impairment of other amortizable
intangible assets and long-lived assets whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Factors
we consider important that could trigger an impairment review include
significant underperformance to historical or projected operating results,
substantial changes in our business strategy and significant negative industry
or economic trends. If such indicators are present, we evaluate the fair value
of the goodwill. For other intangible assets and long-lived assets we determine
whether the sum of the estimated undiscounted cash flows attributable to the
assets in question is less than their caring value. If less, we recognize an
impairment loss based on the excess of the carrying amount of the assets over
their respective fair values.
Fair
value of goodwill is determined by using a valuation model based on market
capitalization. Fair value of other intangible assets and long-lived assets is
determined by future cash flows, appraisals or other methods. If the long-lived
asset determined to be impaired is to be held and used, we recognize an
impairment charge to the extent the anticipated net cash flows attributable to
the asset are less than the asset's carrying value. The fair value of the
long-lived asset then becomes the asset's new carrying value, which we
depreciate over the remaining estimated useful life of the asset.
RECENT
ACCOUNTING PRONOUNCEMENTS
In
January 2010, the Company adopted FASB ASU No. 2010-06, Fair Value Measurement
and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements
(“ASU 2010-06”). These standards require new disclosures on the amount and
reason for transfers in and out of Level 1 and 2 fair value measurements. The
standards also require new disclosures of activities, including purchases,
sales, issuances, and settlements within the Level 3 fair value measurements.
The standard also clarifies existing disclosure requirements on levels of
disaggregation and disclosures about inputs and valuation techniques. These new
disclosures are effective beginning with the first interim filing in 2010. The
disclosures about the roll forward of information in Level 3 are required for
the Company with its first interim filing in 2011. The Company does not believe
this standard will impact their financial statements. Other ASU’s that have been
issued or proposed by the FASB ASC that do not require adoption until a future
date and are not expected to have a material impact on the financial statements
upon adoption.
Effective
July 1, 2009, the Company adopted The “FASB Accounting Standards
Codification” and the Hierarchy of Generally Accepted Accounting Principles (ASC
105-10), (formerly SFAS No. 168, The “FASB Accounting Standards
Codification” and the Hierarchy of Generally Accepted Accounting Principles).
This standard establishes only two levels of U.S. generally accepted accounting
principles (“GAAP”), authoritative and nonauthoritative. The Financial
Accounting Standard Board (“FASB”) Accounting Standards Codification (the
“Codification”) became the source of authoritative, nongovernmental GAAP, except
for rules and interpretive releases of the SEC, which are sources of
authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC
accounting literature not included in the Codification became nonauthoritative.
The Company began using the new guidelines and numbering system prescribed by
the Codification when referring to GAAP in the third quarter of fiscal 2009. As
the Codification was not intended to change or alter existing GAAP, it did not
have any impact on the Company’s condensed consolidated financial
statements.
In June
2009, the FASB issued FASB Accounting Standards Codification No 810, Consolidation. FASB
Accounting Standards Codification No 810 improves financial reporting by
enterprises involved with variable interest entities. FASB Accounting Standards
Codification No 810 is effective as of the beginning of each reporting entity’s
first annual reporting period that begins after November 15, 2009, for interim
periods within that first annual reporting period, and for interim and annual
reporting periods thereafter. The Company is evaluating the impact the adoption
of FASB Accounting Standards Codification No 810 will have on its financial
statements.
In June
2009, the FASB issued FASB Accounting Standards Codification No 860, Transfers and Servicing .
FASB Accounting Standards Codification No 860 improves the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferor’s continuing involvement, if any,
in transferred financial assets. FASB Accounting Standards Codification No 860
is effective as of the beginning of each reporting entity’s first annual
reporting period that begins after November 15, 2009, for interim periods within
that first annual reporting period and for interim and annual reporting periods
thereafter. The Company is evaluating the impact the adoption of FASB Accounting
Standards Codification No 860 will have on its financial
statements.
Effective
for the interim reporting period ending June 30, 2009, the Company adopted two
new accounting standard updates which were intended to provide additional
application guidance and enhanced disclosures regarding fair value measurements
and impairments of securities as codified in ASC 820 “Interim Disclosures about
Fair Value of Financial Instruments”. ASC 820 requires disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. ASC 820
requires related disclosures in summarized financial information at interim
reporting periods. ASC 820 was effective for the interim reporting period ending
June 30, 2009. The adoption of ASC 820 did not have a material impact on the
Company’s condensed consolidated financial statements.
Effective
June 15, 2009, the Company adopted a new accounting standard for subsequent
events, as codified in ASC 855. The update modifies the names of the two types
of subsequent events either as recognized subsequent events (previously referred
to in practice as Type I subsequent events) or non-recognized subsequent events
(previously referred to in practice as Type II subsequent events). In addition,
the standard modifies the definition of subsequent events to refer to events or
transactions that occur after the balance sheet date, but before the financial
statements are issued (for public entities) or available to be issued (for
nonpublic entities). It also requires the disclosure of the date through which
subsequent events have been evaluated. The update did not result in significant
changes in the practice of subsequent event disclosures, and therefore the
adoption did not have any impact on our condensed consolidated financial
statements. In accordance with ASC 855, the Company evaluated all
events or transactions that occurred after September 30, 2009 up through
November 19, 2009, the date the Company issued these condensed consolidated
financial statements. During this period, the Company had material
subsequent events as set forth in Note 12 to these condensed consolidated
financial statements.
In
October 2008, the FASB issued FSP SFAS No. 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset Is Not Active”, (“FSP 157-3”),
to clarify the application of the provisions of SFAS 157 in an inactive market
and how an entity would determine fair value in an inactive market. FSP 157-3
was effective upon issuance and applies to the Company’s current financial
statements. The application of the provisions of FSP 157-3 did not materially
affect the Company’s results of operations or financial condition for the year
ended December 31, 2008.
In June
2008, FASB ratified Accounting Standards Codification No 815, “Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own
Stock”. ASC 815 mandates a two-step process for evaluating whether an
equity-linked financial instrument or embedded feature is indexed to the
entity's own stock. Warrants that a company issues that contain a strike price
adjustment feature, upon the adoption of ASC 815, results in the instruments no
longer being considered indexed to the company's own stock. On
January 1, 2009, the Company adopted ASC 815 and re-evaluated its issued and
outstanding warrants that contain a strike price adjustment feature. The Company
reclassified certain warrants from equity to a derivative liability and used the
Black-Scholes valuation model to determine the fair market value of the
warrants. Based upon the Company’s re-evaluation, ASC 815 has had no
material impact on the Company’s condensed consolidated financial
statements.
In June
2008, the FASB issued FASB Accounting Standards Codification No 260 “Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities.” Under the FSP, unvested share-based payment awards
that contain rights to receive nonforfeitable dividends (whether paid or unpaid)
are participating securities, and should be included in the two-class method of
computing EPS. The FSP is effective for fiscal years beginning after December
15, 2008, and interim periods within those years, and did not expect to have a
significant impact on the Company’s results of operations, financial condition
or cash flows.
In May
2008, the FASB issued FASB Accounting Standards Codification No 944-605, Financial Guarantee Insurance
Contracts. Diversity exists in practice in accounting for financial
guarantee insurance contracts by insurance enterprise in FASB Accounting
Standards Codification No 944-605. This results in inconsistencies in the
recognition and measurement of claim liabilities. This Statement requires that
an insurance enterprise recognize a claim liability prior to an event of default
(insured event) when there is evidence that credit deterioration has occurred in
an insured financial obligation. This Statement requires expanded disclosures
about financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. The adoption of FASB Accounting Standards
Codification No 944-605 is not expected to have a material impact on the
Company’s financial position.
In April
2008, ASC issued ASC 350, “Determination of the Useful Life of Intangible
Assets". This amends the factors that should be considered in developing renewal
or extension assumptions used to determine the useful life of a recognized
intangible asset under ASC 350. The guidance is used for determining the useful
life of a recognized intangible asset shall be applied prospectively to
intangible assets acquired after adoption, and the disclosure requirements shall
be applied prospectively to all intangible assets recognized as of, and
subsequent to, adoption. The Company does not believe ASC 350 will materially
impact their financial position, results of operations or cash
flows.
ASC
470-20, “Accounting for Convertible Debt Instruments That May Be Settled in Cash
upon Conversion (Including Partial Cash Settlement)" (“ASC 470-20") requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer’s non-convertible debt borrowing rate. ASC 470-20 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis. The Company does not believe that the adoption of ASC 470-20 will have a
material effect on its financial position, results of operations or cash
flows.
In March
2008, ASC issued ASC 815, Disclosures about Derivative
Instruments and Hedging Activities”, (“ASC 815”). ASC 815 requires
enhanced disclosures about an entity’s derivative and hedging activities. These
enhanced disclosures will discuss: how and why an entity uses derivative
instruments; how derivative instruments and related hedged items are accounted
for and its related interpretations; and how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. ASC 815 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008. The Company does
not believe that ASC 815 will have an impact on their results of operations or
financial position.
RESULTS
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2009 AND 2008
In
November 2005, we discontinued and disposed of our subsidiaries except for Arrow
Ltd. in conjunction with the recapitalization of the Company. The Company had no
revenue during this period as Arrow Ltd. is still in the development stage. For
the year ended December 31, 2009, we incurred consulting fees of $4,296,832, of
which $4,161,526 was related to services provided by the Management Agreement
with Empire under which Empire provides the services of Chief Executive Officer
and administrative services to the Company and consulting services provided by
Hans Karundeng and Rudolph Karundeng under Engagement and Consulting Agreements.
For the year ended December 31, 2008, we incurred consulting fees of $4,229,796
of which, $3,723,711 was related to services provided by the Management
Agreement with Empire under which Empire provides the services of Chief
Executive Officer and administrative services to the Company and consulting
services provided by Hans Karundeng and Rudolph Karundeng under Engagement and
Consulting Agreements.
REVENUES
Revenue
for the years ended December 31, 2009 was none and $52,000 for the year ended
December 31, 2008 as the Company still is in development stage.
COST
OF GOODS SOLD
There was
no cost of goods sold for the years ended December 31, 2009 and 2008 as the
Company still is in development stage.
OTHER
EXPENSES
Compensation,
consulting and related costs increased to $4,296,832 for the year ended
December 31, 2009 as compared to $4,229,796 for the year ended December 31,
2008, $4,229,796 for the period from inception (November 15, 2005) to December
31, 2007, and $16,481,694 during the development stage for the period from
inception (November 15, 2005) to December 31, 2009. The increase was mostly due
to consulting fees for services provided by the Management Agreement with Empire
under which Empire provides the services of Chief Executive Officer and
administrative services to the Company and consulting services provided by Hans
Karundeng and Rudolph Karundeng under Engagement and Consulting
Agreements.
General
and administrative expenses decreased to $138,665 for the year ended December
31, 2009 and $168,433 for the year ended December 31, 2008, $554,177 for the
period from inception (November 15, 2005) to December 31, 2007, and $861,275 for
the period from inception (November 15, 2005) to December 31, 2009.
Directors’
compensation decreased to $235,000 for the year ended December 31, 2009,
$277,500 for the year ended December 31, 2008 and $772,678 for the period from
inception (November 15, 2005) to December 31, 2009. The decrease was due to
a December 3, 2007 resolution to compensate all members of the Board of
Directors on an annualized basis of $50,000 in cash and 250,000 shares in the
Company’s restricted common stock, effective January 1, 2007. The change is
also due to fluctuating share prices.
Delaware
franchise taxes amount were $420 for the years ended December 31, 2009 and
2008, $185,001 for the period from inception (November 15, 2005) to December 31,
2007 and $185,841 for the period from inception (November 15, 2005) to December
31, 2009. The Company is delinquent in its filing and payment of the Delaware
Franchise Tax report and, accordingly, is not in good standing. At December 31,
2009, the Company has estimated unpaid Delaware franchise taxes for the years
ended December 31, 2009, December 31, 2008, December 31, 2007, December 31, 2006
and 2005 in the amount of $420, $420, $57,652, $57,650 and $69,699,
respectively. The Company did not file their tax returns on time due to an
administrative oversight. The Company hopes to file the delinquent tax returns
in the second quarter of 2010 and pay the amount owned in full during the third
quarter of 2010.
Total
operating expenses during the development stage decreased to $4,670,917 for the
year ended December 31, 2009 and $4,676,149 for the year ended December 31,
2008, $8,954,422 for the period from inception (November 15, 2005) to December
31, 2007, and $18,301,488 for the period from inception (November 15, 2005) to
December 31, 2009.
The
Company was a party to a lawsuit where the plaintiff alleged that he was
entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
to compensate him for services related to identifying financing for CNE,
based upon an agreement that was entered into between CNE and the plaintiff in
April 2005. On November 28, 2007, the Company settled the lawsuit with the
plaintiff. In full and final settlement of the claims asserted in the action,
the Company has paid the plaintiff $10,000 in cash and issued the plaintiff
200,000 shares of the Company’s common stock having a fair value of $12,000,
based on the public traded share price on December 21, 2007. The settlement
resulted in a loss on debt conversion of $2,000 during the year ended December
31, 2007 because an estimated liability had been recognized prior to
2007.
In May
2006, the Company was advised that it was alleged to be in default of a
settlement agreement entered into in January of 2005 by CNE, its predecessor
company, related to the release of unrestricted, freely-tradable, non-legend
shares of stock. In August 2006, the plaintiffs, alleging the default, obtained
a judgment in the 17th Judicial Circuit Court Broward County, Florida for
approximately $1,000,000. On November 13, 2007, legal counsel engaged by
Management commenced an action on the Company’s behalf in the above Circuit
Court seeking to vacate and set aside the 2006 judgment asserting claims under
Rule 1.540(b) of the Florida Rules of Civil Procedure. Our counsel’s
evaluation is that the Company has only a limited chance of having the 2006
judgment opened by the Court because Florida law provides very narrow grounds
for opening a judgment once a year has passed from its entry. The
Courts are generally reluctant to disturb final judgments and the Company’s
grounds for opening the judgment depend on the Court’s adopting a somewhat novel
argument regarding such matters. If, however, the Court does open the
default judgment, the Company will then have the opportunity to defend the 2006
action and, in such event, our counsel believes that the Company has a
reasonable chance of succeeding in defending that claim, at least in part, based
on the documents he has reviewed. As of December 31, 2008, the Company has
accrued $1,203,492 related to this matter. As of December 31, 2009,
the Company has accrued $1,266,695, including accrued interest of $213,310,
related to this matter.
LIQUIDITY
AND CAPITAL RESOURCES
In
November 2005, we discontinued and disposed of our subsidiaries except for Arrow
Ltd. in conjunction with the recapitalization of the Company. The Company was
recapitalized by the conversion of $125,000,000 preferred convertible note
related to the purchase of the Marketing Agreement. As part of the
recapitalization plan, the Company settled all outstanding debt except for
$220,000. As of December 31, 2009 and December 31, 2008 the Company had $91 and
$16 of cash, respectively. We had losses of $6,520,053 for the year ended
December 31, 2009 and had zero revenue as of December 31, 2009. We had losses of
$5,360,576 for the year ended December 31, 2008 and had $52,000 revenue as of
December 31, 2008. In order for us to survive during the next twelve months we
will need to secure approximately $1,000,000 of debt or equity financing. We
expect to raise the additional financing in the future but there can be no
guarantee that we will be successful.
OFF-BALANCE
SHEET ARRANGEMENTS
At
December 31, 2009, we had no off-balance sheet arrangements.
OPERATING
ACTIVITIES
We used
$2,438,057 of cash in our operating activities during the year ended December
31, 2009. We had a net loss of $6,520,053. We had a decrease in stock-based
directors’ compensation to be issued of $35,000, accounts payable and accrued
expenses payable of $2,400,868 mostly related to compensation and management
fees, debt issue costs related to note payables of $720,000, common stock to be
issued for reset of previous subscription agreement by the Company of $44,400,
and common stock issued for debt conversion of $772,000. In addition, we had a
working capital deficiency of $18,523,033 at December 31, 2009. We did not have
any material commitments for capital expenditures as of December 31,
2009.
INFLATION
We
believe that inflation does not significantly impact our current
operations.
RECENT
TRANSACTIONS
On March
3, 2010, the Company received a $110,000 interest bearing advance from John
Marozzi. The Company will pay interest at the interest rate of 10% which shall
be payable at the time of repayment. The principal of this loan is mature and
payable not later than March 3, 2011. The Company has the
option to repay the loan in Company stock at a price based on a 50% discount off
the market price, calculated on the average closing price five days prior to
delivery of the stock.
On March
30, 2010, the Company received a $100,000 non-interest bearing advance from John
Frugone. The principal of this loan is mature and payable no later than March
30, 2012.
MANAGEMENT
The
Company has brought together a team of management and professionals with a
balance of experience in the fields plantation management, corporate finance,
corporate management and governance, marketing and sales, law, accounting and
international marketing. The team includes directors and advisors (Hans
Karundeng and Rudolph Karundeng) who are both members of the Company team and
senior management of APR.
On
October 29, 2009, the Company approved the formation of PT Arrow Resources
Development East and PT Arrow Renewable Energy as wholly-owned Indonesian
subsidiaries. The Company authorized Peter J. Frugone as CEO to form the above
mentioned subsidiaries.
CEO-President,
Chairman and Director - Peter J. Frugone
In
addition to the traditional investment banking skills related to sourcing,
valuation and negotiation, Mr. Frugone, 59, has significant experience in
hands-on operating roles at the senior levels, as well as strategic and advisory
roles as director of and consultant to small-cap and mid-cap companies. He has
overseen the processes of strategic planning and oversight, recruitment of
management executives, assisting with follow-on capital requirements, arranging
follow-on acquisitions, and assisting with realization of value through IPO,
public sale or sale or merger of the company. Mr. Frugone is experienced in
all phases of financial analysis, corporate re-engineering and restructuring,
information technology and Internet marketing, real estate financing and
development, and commercial/residential general
construction/management.
In 1991,
Mr. Frugone founded, and has since acted as the Managing Director of,
Empire Advisory LLC (formerly Electra Capital Corporation), and a boutique
consulting and investment bank specializing in small and medium sized
transactions ($1 million to $10 million). Empire has provided financial
consulting and investing banking services to over 300 clients, which has
resulted in the completion of more than 100 debt and equity placements with a
total value of $250 million.
From 1972
until 1989 Mr. Frugone was the CEO of Citadel Construction and Financial
Corporations. He started Citadel as a small home improvement company and
expanded to all phases of general construction, project management, and real
estate development with 1988 annual sales of $25 million. During that period
Citadel completed development projects of $105 million and construction projects
of over $400 million. Mr. Frugone started his career as an executive
trainee with Marine Midland Bank in 1967, rising to the position of Corporate
Trust Officer in charge of bond and coupon auditing. From 1969 to 1971
Mr. Frugone was a “baby bond” trader for Merrill Lynch Pierce Fenner and
Smith, then with Loeb Rhodes and Company and with Pershing and
Company.
Director
- John E. McConnaughy, Jr.
John E.
McConnaughy, Jr., 80, is Chairman and Chief Executive Officer of JEMC
Corporation, a personal holding company he founded in 1985. He was Chairman and
CEO of Peabody International Corp. from 1969 and in addition Chairman and CEO of
GEO International Corp. when it was spun off in 1981. He retired from the former
in February 1986 and the latter in October 1992.
At the
start of his tenure with Peabody International Corp., the Company had sales of
$23 million. During the next 11 years, he built sales to $85 million and ranked
8th of the Fortune 500 Companies in growth of earnings per share. He was named
outstanding Chief Executive Officer for the Environmental Control industry for
the years 1975, 1976 and 1978 by Financial World magazine.
Prior to
joining Peabody in 1969, Mr. McConnaughy served as Vice President of
European Consumer Products with the Singer Company. He was responsible for
operations in 16 countries and sales of $400 million. He had previously been
President of the Singer Company of Canada, Limited. Earlier, he held management
positions at Westinghouse Electric Corp. in its consumer group and portable
appliance divisions.
Mr. McConnaughy
served on the board of Fortune Natural Resources Corporation from 2000 through
January 30, 2004. On June 1, 2004, Fortune filed from protection under
Chapter 11 of the Federal Bankruptcy law in the United States Bankruptcy Court
for the Eastern District of Louisiana, Case No. 04-14112. The case is still
pending.
A
graduate of Denison University with a B.A. in Economics,
Mr. McConnaughy earned his M.B.A. in Marketing and Finance at Harvard’s
Graduate School of Business Administration. Mr. McConnaughy has been a
Director of Oxigene, Inc., Varsity Brands, Inc., Texstar Corporation, MAI
Corporation, Pets Choice Ltd., Akzona Corp., First Bank Corp. (New Haven),
Beringer Co., Inc., the Pullman Co., Moore McCormack Resources, Peabody
International Corp., DeVlieg Bullard, Inc., Mego Financial Corp., Trasact
International, Inc. and RateXchange, who changed their name to MCF Corporation.
Mr. McConnaughy currently serves on the boards of five other public
companies (Wave Systems, Inc., Allis-Chalmers Energy Inc., Overhill Farms inc.,
Consumer Portfolio Services, Inc. and Levcor International, Inc.)
He is
Chairman of the Board of Trustees and Executive Committee of the
Strang Cancer Prevention Center and is Chairman Emeritus of the
Harlem School of the Arts.
Director
- Rudolph Karundeng
Mr. Karundeng,
30, has assisted Hans Karundeng, helping start, maintain and oversee the
operations at a senior level of numerous projects throughout the world since
2000. His primary role in most of these projects was the acquisition of capital
through banking means as well as financial analysis of projects and transforming
their structure in order to be viable for funding by banks.
Since
receiving his degree in Economics from UCLA, Rudolph Karundeng has been Director
in numerous corporations throughout the world including Golden Summit Inc. a
small-cap company lender and loan facilitator, Du Motier International
Corporation, a note structure developer as well as a bank loan facilitation
consultant. During his tenure as a Director for these companies he has been
involved in facilitating the loans for 25 Clients, which had a loan range from
$100 Million to $1.8 Billion for various projects including mining,
manufacturing, and marketing.
Mr. Karundeng
is intimately involved with all the processes, equipment, and day to day
operations of each project in order to better help in cost and budget analysis
for each project. Through his family’s earlier background of mining and forestry
he has developed a strong base of knowledge for the day-to-day operations as
well as development, marketing and all forms of operations for coal mining, oil
refining, gas mining, and forestry. Another product of his tenure as Director of
these companies is Mr. Karundeng’s has developed his knowledge in Note
Structures as well as the laws that pertain to them in many areas of the world
including but not limited to United States, Europe, China, Singapore, and
Indonesia. He has facilitated the sale, usage, and the acquisition of Notes
throughout the world utilizing his many banking relationships throughout the
world to assist companies in moving a project forward.
Director
- James L. Rothenberg
Mr.
Rothenberg is an attorney who is licensed to practice in the State of New
York. He is also licensed to practice before the federal courts in the
Southern and Eastern Districts of New York. Since 1990, Mr. Rothenberg has
served as a case consultant and expert witness in securities litigation and
arbitration, criminal defense and employment matters. He is also a
consultant and a lecturer in securities market structure, exchange specialists
and NASD market makers. From 1996 through 2003, Mr. Rothenberg served as
counsel to Bear Wagner Specialists LLC, members of the New York Stock
Exchange. He is currently a member of the Federal Regulation of Securities
Committee, Litigation Committee and Broker-Dealer Subcommittee. From 1970
through 1973, Mr. Rothenberg was employed by the Securities and Exchange
Commission as an enforcement attorney in Washington DC and from 1973
through 1975 he was Chief Counsel and Manager of the Market Surveillance
Division of the New York Stock Exchange. From 1975 through 1985, Mr.
Rothenberg was a principal of Rothenberg Stuart Co., specialists on the New York
Stock Exchange. Effective close of business December 31, 2009, James
Rothenberg resigned from the Board of Directors.
Senior
Advisor - Hans Karundeng
Mr. Hans
Karundeng, 59, has been involved in a wide variety of business ventures
throughout his life. His first business activity was operating a bakery which
supplied bread to the city as well as neighboring cities and to this day is
still well known throughout Java, Indonesia. After selling his shares in the
business, he became involved in Timber and timber related products with the
company that has now become one of the largest paper and paper related products
manufacturer and supplier in the world, Asian Pulp and Paper. Mr. Karundeng
during this time, opened a company named P.T. Akal Rasa, which helped develop
low-income housing for an underdeveloped area in Indonesia.
Mr. Karundeng
then moved on and started a mid cap firm that built, maintained and sold real
estate. A by-product of this company was starting a Corporation Consultant
company with a large Engineering consultant arm which later became the 4th
largest in Indonesia. During the time of this company, Mr. Hans Karundeng
acquired the licensing right to repair and maintain the turbines for select Oil
companies in Indonesia, PLN (Electric company of Indonesia) and Telkom
(Tele-Communication company of Indonesia). Diversifying his portfolio he went
into Small saving and Loans, owning shares in a number of these
facilities.
Mr. Karundeng
has diversified his operations to include Sulfur Mining, Orange Plantation,
Shrimp Farming and Sand mining, as well as owning and operating an Air Cargo
company specializing in exporting Seafood to Japan and Hong Kong. During this
period he also had shares in a company that maintained 300,000 ha of Kasava for
animal feed for exportation.
During
the time of the expansion of his holdings, Mr. Karundeng also went into
larger dealings on the international level. Helped obtain large quantities of
Rice Donations to the Indonesian government from Thailand and Vietnam, and paved
the way for larger loan from the World Bank for Indonesia to help the
underdeveloped areas of Indonesia.
After
leaving Indonesia he became involved in the opening of the Indonesian Exim Bank
in NY, where he first started his international consultancy firm, which helped
his numerous clients achieve the level of competence in order to receive bank
loans either through corporate restructuring, cost analysis, or note
structuring.
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
We
conduct no hedging activity. We have no derivative contracts.
Item 8.
|
Financial
Statements.
|
Our
financial statements to be filed hereunder follow, beginning with page
F-1.
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
There
have been no disagreements concerning any matter of accounting principle or
financial statement disclosure between the Company and its independent auditor,
KBL LLP.
Item 9A.
|
Controls
and Procedures
|
Evaluation
of Disclosure Controls and Procedures
The
Company's Chief Executive Officer and acting Chief Financial Officer, who is the
same person, has evaluated the effectiveness of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) as of the fiscal period ending December 31, 2009 covered by this
amended Annual Report on Form 10-K. Based upon such evaluation, the Chief
Executive Officer and acting Chief Financial Officer has concluded that, as of
the end of such period, the Company's disclosure controls and procedures were
not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange
Act. This conclusion by the Company’s Chief Executive Officer and acting Chief
Financial Officer does not relate to reporting periods after December 31,
2009.
Management's
Report on Internal Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) of the Company. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America.
The
Company's internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States of
America, and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company;
and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company's assets that
could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management,
under the supervision of the Company's Chief Executive Officer and acting Chief
Financial Officer, conducted an evaluation of the effectiveness of internal
control over financial reporting based on the framework in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission. Based on this evaluation, management concluded that
the Company's internal control over financial reporting was not effective as of
December 31, 2009 under the criteria set forth in the in Internal
Control—Integrated Framework.
A
material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company's annual or interim financial
statements will not be prevented or detected on a timely basis. Management has
determined that material weaknesses exist due to a lack of segregation of
duties, resulting from the Company's limited resources.
This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this amended Annual Report on Form
10-K.
Changes
in Internal Control Over Financial Reporting
No change
in the Company's internal control over financial reporting occurred during the
quarter ended December 31, 2009, that materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.
Item 9B.
|
Other
Information.
|
N/A
Part
III
Item 10.
|
Directors,
Executive Officers, Promoters and Control Persons; Compliance With
Section 16 (a) of the Exchange
Act.
|
The
directors and executive officers of the Company are set forth below. All
directors hold office until the next annual meeting of stockholders, or until
their death, resignation, retirement, removal, disqualification, and until their
successors have been elected and qualified. Vacancies in the existing board are
filled by a majority vote of the remaining directors.
The
directors and executive officers of the Registrant as of December 31, 2009 were
as follows:
Name
and Address
|
|
Position
|
|
Tenure
|
|
Peter
J. Frugone
|
|
Chairman,
Chief Executive Officer and
|
2005
to Present
|
|
124
West 79th Street, Apt 14B
|
|
Director |
|
|
|
New
York, NY
|
|
|
|
|
|
|
|
|
|
|
|
Rudolph
Karundeng
|
|
Director
|
|
2005
to Present
|
|
19
Taman Serasi
|
|
|
|
|
|
Botanic
Garden View #01-25
|
|
|
|
|
|
|
|
|
|
|
|
John
E. McConnaughy Jr.
|
|
Director
|
|
2005
to Present
|
|
637
Valley Road
|
|
|
|
|
|
New
Canaan Ct.
|
|
|
|
|
|
|
|
|
|
|
|
James
Rothenberg
|
|
Director
|
|
10/15/2007
|
|
152
W. 57th Street, 27th Floor,
|
|
|
|
to
|
|
New
York, NY 10019
|
|
|
|
12/31/2009
|
|
BUSINESS
EXPERIENCE
PETER J.
FRUGONE. In addition to the traditional investment banking skills related to
sourcing, valuation and negotiation, Mr. Frugone, has significant
experience in hands-on operating roles at the senior levels, as well as
strategic and advisory roles as director of and consultant to small-cap and
mid-cap companies. He has overseen the processes of strategic planning and
oversight, recruitment of management executives, assisting with follow-on
capital requirements, arranging follow-on acquisitions, and assisting with
realization of value through IPO, public sale or sale or merger of the company.
Mr. Frugone is experienced in all phases of financial analysis, corporate
re-engineering and restructuring, information technology and Internet marketing,
real estate financing and development, and commercial/residential general
construction/management. In 1991, Mr. Frugone founded, and has since acted as
the Managing Director of, Empire Advisory LLC (formerly Electra Capital
Corporation), a boutique consulting and investment bank specializing in small
and medium sized transactions ($1 million to $10 million). Empire has provided
financial consulting and investing banking services to over 300 clients which
has resulted in the completion of more than 100 debt and equity placements with
a total value of $250 million. From 1972 until 1989 Mr. Frugone was the CEO of
Citadel Construction and Financial Corporations. He started Citadel as a small
home improvement company and expanded to all phases of general construction,
project management, and real estate development with 1988 annual sales of $25
million. During that period Citadel completed development projects of $105
million and construction projects of over $400 million. Mr. Frugone started his
career as an executive trainee with Marine Midland Bank in 1967, rising to the
position of Corporate Trust Officer in charge of bond and coupon auditing. From
1969 to 1971 Mr. Frugone was a "baby bond" trader for Merrill Lynch Pierce
Fenner and Smith, then with Loeb Rhodes and Company and with Pershing and
Company.
RUDOLPH
KARUNDENG. Mr. Karundeng has assisted Hans Karundeng, helping start,
maintain and oversee the operations at a senior level of numerous projects
throughout the world since 2000. His primary role in most of these projects was
the acquisition of capital through banking means as well as financial analysis
of projects and transforming their structure in order to be viable for funding
by banks Since receiving his degree in Economics from UCLA, Rudolph Karundeng
has been Director in numerous corporations throughout the world including Golden
Summit Inc. a small-cap company lender and loan facilitator, Du Motier
International Corporation, a note structure developer as well as a bank loan
facilitation consultant. During his tenure as a Director for these companies he
has been involved in facilitating the loans for 25 Clients, which had a loan
range from $100 Million to $1.8 Billion for various projects including mining,
manufacturing, and marketing. Mr. Karundeng is intimately involved with all
the processes, equipment, and day to day operations of each project in order to
better help in cost and budget analysis for each project. Through his family’s
earlier background of mining and forestry he has developed a strong base of
knowledge for the day-to-day operations as well as development, marketing and
all forms of operations for coal mining, oil refining, gas mining, and forestry.
Another product of his tenure as Director of these companies is
Mr. Karundeng’s has developed his knowledge in Note Structures as well as
the laws that pertain to them in many areas of the world including but not
limited to United States, Europe, China, Singapore, and Indonesia. He has
facilitated the sale, usage, and the acquisition of Notes throughout the world
utilizing his many banking relationships throughout the world to assist
companies in moving a project forward.
JOHN E.
MCCONNAUGHY, JR. Mr. McConnaughy is Chairman and Chief Executive Officer of
JEMC Corporation. He was Chairman and CEO of Peabody International Corp. from
1969 and in addition Chairman and CEO of GEO International Corp. when it was
spun off in 1981. He retired from the former in February 1986 and the latter in
October 1992. Prior to joining Peabody in 1969, Mr. McConnaughy served as
Vice President of European Consumer Products with the Singer Company. He was
responsible for operations in 16 countries and sales of $400 million. He had
previously been President of the Singer Company of Canada, Limited. Earlier, he
held management positions at Westinghouse Electric Corp. in its consumer group
and portable appliance divisions. Mr. McConnaughy currently serves on the boards
of five other public companies Allis-Chalmers Energy Inc.,(ASY,) Wave Systems
Corp. (WAVX), Arrow Resources Development, Inc, (OTC:BB ARWD) Levcor
International, Inc. (LEVC.OB) and Kinetitec Corporation. Mr. McConnaughy has
been a Director of Oxigene, Inc., Varsity Brands, Inc., Texstar Corporation, MAI
Corporation, Pets Choice Ltd., Akzona Corp., First Bank Corp. (New Haven),
Beringer Co., Inc., the Pullman Co., Moore McCormack Resources, Peabody
International Corp., DeVlieg Bullard, Inc., Mego Financial Corp., Trasact
International, Inc. and RateXchange, who changed their name to MCF Corporation.
and Fortune Natural Resources Corporation from 2000 through January 30,
2004.
JAMES L.
ROTHENBERG. Mr. Rothenberg is an attorney who is licensed to practice in the
State of New York. He is also licensed to practice before the federal
courts in the Southern and Eastern Districts of New York. Since 1990, Mr.
Rothenberg has served as a case consultant and expert witness in securities
litigation and arbitration, criminal defense and employment matters. He is
also a consultant and a lecturer in securities market structure, exchange
specialists and NASD market makers. From 1996 through 2003, Mr. Rothenberg
served as counsel to Bear Wagner Specialists LLC, members of the New York Stock
Exchange. He is currently a member of the Federal Regulation of Securities
Committee, Litigation Committee and Broker-Dealer Subcommittee. From 1970
through 1973, Mr. Rothenberg was employed by the Securities and Exchange
Commission as an enforcement attorney in Washington DC and from 1973
through 1975 he was Chief Counsel and Manager of the Market Surveillance
Division of the New York Stock Exchange. From 1975 through 1985, Mr.
Rothenberg was a principal of Rothenberg Stuart Co., specialists on the New York
Stock Exchange. Effective close of business December 31, 2009, James
Rothenberg resigned from the Board of Directors.
Audit
Committee Financial Expert
The Board
of Directors has determined that Mr. McConnaughy is an “audit committee
financial expert” (as defined in Item 401(e)(2) of Regulation S-B).
Mr. McConnaughy is independent as that term is used in
Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.
Compliance
with Section 16 (a) of the Exchange Act.
Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires the Company’s
directors, executive officers and holders of more than 10% of the Common Stock
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of the Common Stock. Based solely upon a
review of Forms 3, 4 and 5 furnished to the Company with respect to the year
ended December 31, 2009, to the best of the Company’s knowledge, the Company’s
directors, executive officers and holders of more than 10% of its Common Stock
timely filed the reports required by Section 16(a).
Code
of Ethics
The
Company has adopted a written Code of Ethics that applies to the Company’s
principal executive officer, principal financial officer, principal accounting
officer or controller and any persons performing similar functions. The Company
will provide a copy of its Code of Ethics to any person without charge upon
written request addressed to Arrow Resources Development, Inc. 152 W. 57th
Street, 27th Floor, New York, NY 10019, Attention: Shareholder
Relations.
Item 11.
|
Executive
Compensation.
|
The
following table sets forth the salaries of the Company’s executive officers for
the fiscal years ending December 31, 2009 and December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Compensation
|
|
|
|
|
|
|
|
|
|
|
Annual
Compensation
|
|
|
|
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Restricted
|
|
|
Restricted
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
Stock
|
|
|
Restricted
|
|
|
|
Underlying
|
|
|
|
LTIP
|
|
|
|
All
other
|
|
Name
and Principal
|
|
|
|
|
Salary
|
|
|
|
Bonus
|
|
|
|
Compensation
|
|
|
|
Award(s)
|
|
|
Stock
|
|
|
|
Options/
|
|
|
|
Payouts
|
|
|
|
Compensation
|
|
Position
|
|
Year
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
Award(s)
|
|
|
|
SARs
(#)
|
|
|
|
($)
|
|
|
|
($)
|
|
Peter
J. Frugone
|
|
2009(1)
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
50,000 |
|
|
$ |
- |
|
|
|
|
|
|
- |
|
|
$ |
- |
|
|
$ |
8,750 |
(1) |
Chairman,
CEO and Director
|
|
2008
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
19,375 |
|
Rudolph
Karundeng
|
|
2009(2)
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,750 |
(2) |
Director
|
|
2008
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
19,375 |
|
John
E. McConnaughy, Jr.
|
|
2009(3)
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,750 |
(3) |
Director
|
|
2008
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
19,375 |
|
James
Rothenberg
|
|
2009(4)
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,750 |
(4) |
Director
|
|
2008
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,375 |
|
(1)
|
As
part of Chairman's compensation that was approved by the Board of Director
on December 3, 2007, Mr. Frugone is entitled to 750,000 shares of the
Company's Common Stock which has fair market value of $43,125. At December
31, 2009, none of these shares were issued.
|
|
|
(2)
|
As
part of director's compensation that was approved by the Board of Director
on December 3, 2007, Mr. Karundeng is entitled to 750,000 shares of the
Company's Common Stock which has fair market value of $43,125. At December
31, 2009, none of these shares were issued.
|
|
|
(3)
|
As
part of director's compensation that was approved by the Board of Director
on December 3, 2007, Mr. McConnaughy is entitled to 750,000 shares of the
Company's Common Stock which has fair market value of $43,125. At December
31, 2009, none of these shares were issued.
|
|
|
(4)
|
As
part of director's compensation that was approved by the Board of Director
on December 3, 2007, Mr. Rothenberg is entitled to 552,740 shares of the
Company's Common Stock which has fair market value of $31,239. At December
31, 2009, none of these shares were issued. Effective close of
business December 31, 2009, Mr. Rothenburg resigned from the Board of
Directors
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
As of
April 13, 2010, there were 678,452,244 shares of the Company’s $0.00001 par
value per share common stock outstanding. The following table sets forth the
name, address, number of shares beneficially owned, and the percentage of the
Company's total outstanding common stock shares owned by: (i) each of the
Company's Officers and Directors; (ii) the Company's Officers and Directors as a
group; and (iii) other shareholders of 5% or more of the Registrant's total
outstanding common stock shares.
Name
and Address of Beneficial Owner (1)
|
|
Company
Position
|
|
Number
of Shares Owned
|
|
|
Percent
of Class
|
|
Peter
J. Frugone(2)
|
|
Chairman,
Chief Executive Officer and Director
|
|
|
750,000 |
|
|
|
0.1 |
% |
Rudolph
Karundeng(3)
|
|
Director
|
|
|
52,750,000 |
|
|
|
7.8 |
% |
John
E. McConnaughy Jr.(4)
|
|
Director
|
|
|
11,405,000 |
|
|
|
1.7 |
% |
James
Rothenberg(3)
|
|
Director
|
|
|
552,740 |
|
|
|
0.1 |
% |
John
Allen(6)
|
|
Former
Director (1/1/07 - 2/28/07)
|
|
|
39,726 |
|
|
|
0.0 |
% |
Robert
Levinson(7)
|
|
Former
Director (2/26/07 - 10/15/07)
|
|
|
158,219 |
|
|
|
0.0 |
% |
Arrow
Pacific Resources Group Limited(8)
|
|
|
|
|
352,422,778 |
|
|
|
51.9 |
% |
AIS
International Holdings Ltd.(9)
|
|
|
|
|
55,000,000 |
|
|
|
8.1 |
% |
World
Ocean Development Corp.(10)
|
|
|
|
|
35,000,000 |
|
|
|
5.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a Group (4 persons)
|
|
|
|
|
65,457,740 |
|
|
|
9.6 |
% |
(1)
|
As
used in this table, a beneficial owner of a security includes any person
who, directly or indirectly, through contract, arrangement, understanding,
relationship or otherwise has or shares (a) the power to vote, or direct
the voting of, such secrity or (b) investment power which includes the
power to dispose, or to direct the disposition of, such security. In
addition, a person is deemed to be the beneficial owner of a security if
that person has the right to acquire beneficial ownership of such
security.
|
|
|
(2)
|
Mr.
Frugone's address is 124 West 79th Street, Apt 1, New York, NY. Mr.
Frugone is entitled to 750,000 common shares related to directors'
compensation, none of which were issued as of December 31,
2009.
|
|
|
(3)
|
Mr.
Karundeng's address is 19 Taman Serasi, Botanic Garden View #01-25. Mr.
Karundeng is entitled to 750,000 common shares related to directors'
compensation, none of which were issued as of December 31,
2009. Mr. Karungdeng also holds 52,000,000 shares of the
Company's restricted shares, all of which are not exercisable as of
December 31, 2009.
|
|
|
(4)
|
Mr.
McConnaughy's address is 637 Valley Road, New Canaan Ct. Mr. McConnaughy
is entitled to 750,000 common shares related to directors' compensation,
none of which were issued as of December 31, 2009. Mr.
McConnaughy also holds 10,655,000 shares of the Company's restricted
shares, all of which are not exercisable as of December 31,
2009.
|
|
|
(5)
|
Mr.
Rothenberg is entitled to 552,740 common shares related to directors'
compensation, none of which were issued as of December 31,
2009. Effective close of business December 31, 2009, Mr.
Rothenberg resigned from the board of directors.
|
|
|
(6)
|
Mr.
Allen is entitled to 39,726 common shares related to directors'
compensation, none of which were issued as of December 31,
2009.
|
|
|
(7)
|
Mr.
Levinson is entitled to 158,219 common shares related to directors'
compensation, none of which were issued as of December 31,
2009.
|
|
|
(8)
|
Arrow
Pacific Resources Group Limited's address is 19 Taman Serasi, Botanic
Garden View #01-25. Arrow Pacific Resources Group Limited currently holds
349,370,000 shares of the Company's restricted shares, all of which are
not exercisable as of December 31, 2009.
|
|
|
(9)
|
AIS
International Holdings Ltd. currently holds 55,000,000 shares of the
Company's restricted shares, all of which are not exercisable as of
December 31, 2009.
|
|
|
(10)
|
World
Ocean Development Corp. currently holds 35,000,000 shares of the Company's
restricted shares, all of which are not exercisable as of December 31,
2009.
|
Item 13.
|
Certain
Relationships and Related
Transactions.
|
Other
than as listed below, we have not been a party to any transaction, proposed
transaction, or series of transactions in which the amount involved exceeds
$60,000, and in which, to our knowledge, any of our directors, officers, five
percent beneficial security holder, or any member of the immediate family of the
foregoing persons has had or will have a direct or indirect material
interest.
Item 14.
|
Principal
Accountant fees and Services.
|
Audit
Fees
Audit
fees for 2009 and 2008 incurred to KBL, LLP were $70,212 and $78,991. All
services provided by independent accountants were approved by the audit
committee. Audit Fees consist of fees billed for professional services
rendered for the audit of the Company’s annual statements, for review of interim
consolidated financial statements included in quarterly reports and services
that are normally provided by KBL LLP in connection with statutory and
regulatory filings or engagements.
Audit
Related Fees
The
Company did not incur audit related fees from KBL LLP in 2009 and 2008.
Audit-Related Fees consist of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of the
Company’s consolidated financial statements and are not reported under “Audit
Fees.”
Tax
Fees
The
Company did not incur tax fees from KBL LLP in 2009 and 2008. Tax Fees
consist of fees billed for professional services rendered for tax
compliance. These services include assistance regarding federal, state and
local tax compliance.
All Other
Fees
There
were no other fees for professional services rendered to the Company during the
fiscal years 2009 and 2008, other than the services reported above.
The
Company hereby furnishes the exhibits listed on the attached exhibit index.
Exhibits, which are incorporated herein by reference, may be inspected and
copied at the public reference facilities maintained by the SEC at Room 1024,
Washington, D.C. 20549. Copies of such material may be obtained by mail
from the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC also
maintains a website that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC at
the address http://www.sec.gov.
In
accordance with Section 13(a) or 15(d) of the Exchange Act, the registrant
has duly caused this amendment to its Form 10-K annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.
|
ARROW
RESOURCES DEVELOPMENT, INC.
|
|
|
|
|
|
|
By:
|
/
S/ PETER J. FRUGONE
|
|
|
|
Peter
J. Frugone
|
|
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
Dated:
April 15, 2010
|
By:
|
/
S/ PETER J. FRUGONE
|
|
|
|
Peter
J. Frugone
|
|
|
|
Principal
Accounting Officer
|
|
In
accordance with the Exchange Act, this amendment to the Form 10-K annual report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/
S/ PETER J. FRUGONE
|
|
President
and Chief Executive Officer and
|
|
April
15, 2010
|
Peter J. Frugone
|
|
Director
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
/
S/ PETER J. FRUGONE
|
|
Principal
Accounting Officer (principal
|
|
April
15, 2010
|
Peter J.
Frugone
|
|
financial
and accounting officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
/
S/ JOHN E. McCONNAUGHY , JR .
|
|
Director
|
|
April
15, 2010
|
John
E. McConnaughy, Jr.
|
|
|
|
|
ARROW
RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO CONSOLIDATED AUDITED FINANCIAL STATEMENTS
FOR
THE YEAR ENDED DECEMBER 31, 2009
Report
of Independent Registered Public Accounting Firm
|
|
|
F-1
|
|
|
|
|
Consolidated
financial statements:
|
|
|
|
Consolidated
Balance Sheets (At December 31, 2009 and 2008)
|
|
|
F-2
|
Consolidated
Statements of Operations (For the year ended December 31, 2009, December
31, 2008, the period from inception November 15, 2005 to December 31, 2007
and the period from inception November 15, 2005 to December 31,
2009)
|
|
|
F-3
|
Consolidated
Statements of Changes in Stockholders' (Deficit) Equity (For the years
ended December 31, 2009 and 2008) and the period from inception November
15, 2005 to December 31, 2009)
|
|
|
F-4
|
Consolidated
Statements of Cash Flows (For the year ended December 31, 2009, December
31, 2008, the period from inception November 15, 2005 to
December 31, 2007 and the period from inception November 15, 2005 to
December 31, 2009)
|
|
|
F-5
- F- 6
|
|
|
|
|
Notes
to the consolidated financial statements
|
|
|
F-7 - F-27
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders
Arrow
Resources Development, Inc.
New York,
New York
We have
audited the accompanying consolidated balance sheet of Arrow Resources
Development, Inc. and Subsidiaries (a development stage company) (“the Company”)
as of December 31, 2009 and 2008, and the related consolidated statements of
operations, cash flows, and changes in stockholders’ (deficit) equity, for the
year ended December 31, 2009, and for the period from inception (November 15,
2005) to December 31, 2009. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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 Arrow Resources Development,
Inc. and Subsidiaries as of December 31, 2009 and 2008, and the results of its
operations and its cash flows during the development stage for the year ended
December 31, 2009, and for the period from inception (November 15, 2005) to
December 31, 2009 in conformity with accounting principles generally accepted in
the United States.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 and 6 to
the consolidated financial statements, the Company has suffered recurring losses
from operations, and is dependent upon shareholders to provide sufficient
working capital to maintain continuity. These circumstances create substantial
doubt about the Company’s ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
KBL,
LLP
Certified
Public Accountants and Advisors
April 15,
2010
ARROW
RESOURCES DEVELOPMENT, INC. AND
SUBSIDIARIES
|
(A
DEVELOPMENT STAGE COMPANY)
|
Consolidated
Balance Sheets (during the development stage)
|
|
December
31, 2009
|
|
|
December
31, 2008
|
|
ASSETS
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
Cash
|
|
$ |
91 |
|
|
$ |
16 |
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
91 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
91 |
|
|
$ |
16 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ (DEFICIT)
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Accounts
and accrued expenses payable, including $6,446,791 and $5,019,628 due to
Company shareholders and directors, respectively
|
|
$ |
7,765,910 |
|
|
$ |
5,587,742 |
|
Estimated
liability for legal judgment obtained by predecessor entity
shareholder
|
|
|
1,266,695 |
|
|
|
1,203,492 |
|
Due
to related parties
|
|
|
7,401,519 |
|
|
|
5,890,687 |
|
Notes
payable, including accrued interest of $152,500 and $20,000 at December
31, 2009 and December 31, 2008, respectively
|
|
|
2,089,000 |
|
|
|
1,228,000 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
18,523,124 |
|
|
|
13,909,921 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
(DEFICIT)
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.00001 par value, 6 million shares authorized, no shares issued
or outstanding at December 31, 2009 and December 31, 2008
|
|
|
- |
|
|
|
- |
|
Preferred
stock Series A, $0.00001 par value, 2 million shares authorized, none and
355,000 shares to be issued at December 31, 2009 and December 31, 2008,
respectively
|
|
|
- |
|
|
|
355,000 |
|
Preferred
stock Series C, $0.00001 par value, 2 million shares authorized, none and
25,000 shares to be issued at December 31, 2009 and December 31, 2008,
respectively
|
|
|
- |
|
|
|
25,000 |
|
Common
stock to be issued, $0.00001 par value, 32,804,684 and 12,194,685 shares
to be issued at December 31, 2009 and December 31, 2008,
respectively
|
|
|
328 |
|
|
|
122 |
|
Common
stock, $0.00001 par value, 1 billion shares authorized, 678,452,244 and
655,243,240 issued and outstanding at December 31, 2009 and December 31,
2008, respectively
|
|
|
6,785 |
|
|
|
6,552 |
|
Additional
paid-in capital
|
|
|
128,213,875 |
|
|
|
125,927,389 |
|
Accumulated
deficit
|
|
|
(146,744,021 |
) |
|
|
(140,223,968 |
) |
|
|
|
|
|
|
|
|
|
Total
stockholders’ (deficit)
|
|
|
(18,523,033 |
) |
|
|
(13,909,905 |
) |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ (deficit)
|
|
$ |
91 |
|
|
$ |
16 |
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the
consolidated financial statements.
ARROW
RESOURCES DEVELOPMENT, INC. AND
SUBSIDIARIES
|
(A
DEVELOPMENT STAGE COMPANY)
|
Consolidated
Statement of Operations (During the Development
Stage)
|
|
|
For
the Year Ended December 31, 2009
|
|
|
For
the Year Ended December 31, 2008
|
|
|
Accumulated
During the Development Stage for the Period From Inception (November 15,
2005) to December 31, 2007
|
|
|
Accumulated
During the Development Stage for the Period From Inception (November 15,
2005) to December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
- |
|
|
$ |
52,000 |
|
|
$ |
$ - |
|
|
$ |
52,000 |
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees and services, including $4,161,526, $3,723,711, $7,555,470 and
$15,440,707 incurred to related parties, respectively
|
|
|
4,296,832 |
|
|
|
4,229,796 |
|
|
|
7,955,066 |
|
|
|
16,481,694 |
|
General
and administrative
|
|
|
138,665 |
|
|
|
168,433 |
|
|
|
554,177 |
|
|
|
861,275 |
|
Directors'
compensation
|
|
|
235,000 |
|
|
|
277,500 |
|
|
|
260,178 |
|
|
|
772,678 |
|
Delaware
franchise taxes
|
|
|
420 |
|
|
|
420 |
|
|
|
185,001 |
|
|
|
185,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
4,670,917 |
|
|
|
4,676,149 |
|
|
|
8,954,422 |
|
|
|
18,301,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations during the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
development
stage
|
|
|
(4,670,917 |
) |
|
|
(4,624,149 |
) |
|
|
(8,954,422 |
) |
|
|
(18,249,488 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from spin-off
|
|
|
52,491 |
|
|
|
- |
|
|
|
- |
|
|
|
52,491 |
|
Income
from forgiveness of debt
|
|
|
5,000 |
|
|
|
- |
|
|
|
- |
|
|
|
5,000 |
|
Gain
on write off of liabilities associated with predecessor entity not to be
paid
|
|
|
- |
|
|
|
- |
|
|
|
395,667 |
|
|
|
395,667 |
|
Loss
on legal judgement obtained by predecessor entity
shareholder
|
|
|
(63,203 |
) |
|
|
(150,107 |
) |
|
|
(1,053,385 |
) |
|
|
(1,266,695 |
) |
Penalty
for default of notes payable
|
|
|
(578,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
(578,000 |
) |
Loss
on write-off of marketing agreement
|
|
|
- |
|
|
|
- |
|
|
|
(125,000,000 |
) |
|
|
(125,000,000 |
) |
Loss
on settlement of predecessor entity stockholder litigation
|
|
|
- |
|
|
|
- |
|
|
|
(2,000 |
) |
|
|
(2,000 |
) |
Loss
on debt conversion
|
|
|
(250,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
(250,000 |
) |
Expenses
incurred as part of recapitalization transaction
|
|
|
- |
|
|
|
- |
|
|
|
(249,252 |
) |
|
|
(249,252 |
) |
Debt
issue costs including interest expense, of which $800,000, $536,320, none
and $1,336,320 is to be satisfied in Company Common Stock and none,
$32,000, none, and $32,000 incurred to related parties
|
|
|
(1,015,424 |
) |
|
|
(586,320 |
) |
|
|
- |
|
|
|
(1,601,744 |
) |
|
|
|
(1,849,136 |
) |
|
|
(736,427 |
) |
|
|
(125,908,970 |
) |
|
|
(128,494,533 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(6,520,053 |
) |
|
$ |
(5,360,576 |
) |
|
$ |
(134,863,392 |
) |
|
$ |
(146,744,021 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per weighted-average shares common stock
outstanding
|
|
$ |
(0.010 |
) |
|
$ |
(0.008 |
) |
|
$ |
$ (0.214 |
) |
|
$ |
(0.232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares of common stock outstanding
|
|
|
662,865,179 |
|
|
|
650,970,699 |
|
|
|
631,654,538 |
|
|
|
633,667,055 |
|
See
accompanying notes to the consolidated financial statements.
ARROW
RESOURCES DEVELOPMENT, INC. AND
SUBSIDIARIES
|
(A
DEVELOPMENT STAGE COMPANY)
|
Consolidated
Statement of Changes in Stockholders' (Deficit) Equity (During the
Development Stage)
|
|
|
Series
A Convertible Preferred Stock
|
|
|
Series
C Convertible Preferred Stock
|
|
|
Common
Stock
|
|
|
Common
Stock
|
|
|
|
Shares
to be issued
|
|
|
Amount
|
|
|
Shares
to be issued
|
|
|
Amount
|
|
|
Shares
to be issued
|
|
|
|
Amount
|
|
|
Shares
issued
|
|
|
Amount
|
|
Balance,
November 14, 2005 pursuant to recapitalization transaction
|
|
|
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
$ |
-- |
|
|
|
25,543,240 |
|
|
$ |
255 |
|
Common
stock conversion and settlement of senior note pursuant to
recapitalization transaction
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
624,000,000 |
|
|
|
6,240 |
|
Net
loss for the period from November 15, 2005 to December 31,
2005
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Balance,
December 31, 2005
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
|
$ |
- |
|
|
|
649,543,240 |
|
|
$ |
6,495 |
|
Common
stock to be issued for cash received by Company
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
985,000 |
|
|
|
|
10 |
|
|
|
-- |
|
|
|
-- |
|
Net
loss for the year
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Balance,
December 31, 2006
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
985,000 |
|
|
|
$ |
10 |
|
|
|
649,543,240 |
|
|
$ |
6,495 |
|
Common
stock to be issued for cash received by Company
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
500,000 |
|
|
|
|
5 |
|
|
|
-- |
|
|
|
-- |
|
Series
A Convertible Preferred Stock to be issued for cash received by
Company
|
|
|
280,000 |
|
|
|
280,000 |
|
|
|
- |
|
|
|
- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Common
stock issued in settlement of predecesor entity stockholder
litigation
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
- |
|
|
|
|
- |
|
|
|
200,000 |
|
|
|
2 |
|
Common
stock to be issued for directors' compensation
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,000,685 |
|
|
|
|
10 |
|
|
|
-- |
|
|
|
-- |
|
Net
loss for the year
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Balance,
December 31, 2007
|
|
|
280,000 |
|
|
$ |
280,000 |
|
|
|
- |
|
|
$ |
- |
|
|
|
2,485,685 |
|
|
|
$ |
25 |
|
|
|
649,743,240 |
|
|
$ |
6,497 |
|
Series
A Convertible Preferred Stock to be issued for cash received by
Company
|
|
|
75,000 |
|
|
|
75,000 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Series
C Convertible Preferred Stock to be issued for cash received by
Company
|
|
|
-- |
|
|
|
-- |
|
|
|
25,000 |
|
|
|
25,000 |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Common
Stock issued and to be issued for cash received by Company
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
305,000 |
|
|
|
|
|
3 |
|
|
|
250,000 |
|
|
|
3 |
|
Common
stock to be issued for directors' compensation
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,000,000 |
|
|
|
|
|
10 |
|
|
|
-- |
|
|
|
-- |
|
Debt
issue costs to be satisfied in Company Common Stock
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
4,704,000 |
|
|
|
|
|
47 |
|
|
|
3,000,000 |
|
|
|
30 |
|
Common
stock to be issued for purchase of common stock
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,000,000 |
|
|
|
|
|
10 |
|
|
|
-- |
|
|
|
-- |
|
Common
stock to be issued for consulting and marketing services
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
2,700,000 |
|
|
|
|
|
27 |
|
|
|
-- |
|
|
|
-- |
|
Common
stock issued for consulting and marketing services
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
-- |
|
|
|
2,250,000 |
|
|
|
23 |
|
Net
loss for twelve months ended December 31, 2008
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Balance,
December 31, 2008
|
|
|
355,000 |
|
|
$ |
355,000 |
|
|
|
25,000 |
|
|
$ |
25,000 |
|
|
|
12,194,685 |
|
|
|
|
$ |
122 |
|
|
|
655,243,240 |
|
|
$ |
6,552 |
|
Series
A Convertible Preferred Stock converted into common stock
|
|
|
(355,000 |
) |
|
|
(355,000 |
) |
|
|
- |
|
|
|
- |
|
|
|
-- |
|
|
|
|
|
-- |
|
|
|
7,100,000 |
|
|
|
71 |
|
Series
C Convertible Preferred Stock converted into common stock
|
|
|
- |
|
|
|
- |
|
|
|
(25,000 |
) |
|
|
(25,000 |
) |
|
|
-- |
|
|
|
|
|
-- |
|
|
|
500,000 |
|
|
|
5 |
|
Common
Stock to be issued for cash received by Company
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
2,500,000 |
|
|
|
|
|
25 |
|
|
|
-- |
|
|
|
-- |
|
Common
stock to be issued for directors' compensation
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,000,000 |
|
|
|
|
|
10 |
|
|
|
-- |
|
|
|
-- |
|
Debt
issue costs to be satisfied in Company Common Stock
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
16,000,000 |
|
|
|
|
|
160 |
|
|
|
-- |
|
|
|
-- |
|
Debt
issue costs satisfied in Company Common Stock
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
1,000,000 |
|
|
|
10 |
|
Common
stock issued for reset of previous subscription agreement
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
-- |
|
|
|
138,095 |
|
|
|
2 |
|
Common
stock to be issued for reset of previous subscription
agreement
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
1,109,999 |
|
|
|
|
|
11 |
|
|
|
- |
|
|
|
- |
|
Common
stock issued for debt conversion
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
14,470,909 |
|
|
|
145 |
|
Net
loss for the year ended December 31, 2009
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Balance,
December 31, 2009
|
|
|
0 |
|
|
$ |
0 |
|
|
|
0 |
|
|
$ |
0 |
|
|
|
32,804,684 |
|
|
|
|
$ |
328 |
|
|
|
678,452,244 |
|
|
$ |
6,785 |
|
See
accompanying notes to the consolidated financial statements.
ARROW
RESOURCES DEVELOPMENT, INC. AND
SUBSIDIARIES
|
(A
DEVELOPMENT STAGE COMPANY)
|
Consolidated
Statement of Changes in Stockholders' (Deficit) Equity (During the
Development Stage)
|
|
Additional
|
|
|
Accumulated
|
|
|
Total
|
|
|
Paid-in Capital
|
|
|
Deficit
|
|
|
|
|
Balance,
November 14, 2005 pursuant to recapitalization transaction
|
|
$ |
(2,674,761 |
) |
|
$ |
-- |
|
|
$ |
(2,674,506 |
) |
Common
stock conversion and settlement of senior note pursuant to
recapitalization transaction
|
|
|
125,907,967 |
|
|
|
-- |
|
|
|
125,914,207 |
|
Net
loss for the period from November 15, 2005 to December 31,
2005
|
|
|
-- |
|
|
|
(1,272,258 |
) |
|
|
(1,272,258 |
) |
Balance,
December 31, 2005
|
|
$ |
123,233,206 |
|
|
$ |
(1,272,258 |
) |
|
$ |
121,967,443 |
|
Common
stock to be issued for cash received by Company
|
|
|
984,990 |
|
|
|
-- |
|
|
|
985,000 |
|
Net
loss for the year
|
|
|
-- |
|
|
|
(3,514,445 |
) |
|
|
(3,514,445 |
) |
Balance,
December 31, 2006
|
|
$ |
124,218,196 |
|
|
$ |
(4,786,703 |
) |
|
$ |
119,437,998 |
|
Common
stock to be issued for cash received by Company
|
|
|
499,995 |
|
|
|
-- |
|
|
|
500,000 |
|
Series
A Convertible Preferred Stock to be issued for cash received by
Company
|
|
|
-- |
|
|
|
-- |
|
|
|
280,000 |
|
Common
stock issued in settlement of predecesor entity stockholder
litigation
|
|
|
11,998 |
|
|
|
-- |
|
|
|
12,000 |
|
Common
stock to be issued for directors' compensation
|
|
|
60,031 |
|
|
|
-- |
|
|
|
60,041 |
|
Net
loss for the year
|
|
|
-- |
|
|
|
(130,076,689 |
) |
|
|
(130,076,689 |
) |
Balance,
December 31, 2007
|
|
$ |
124,790,220 |
|
|
$ |
(134,863,392 |
) |
|
$ |
(9,786,650 |
) |
Series
A Convertible Preferred Stock to be issued for cash received by
Company
|
|
|
-- |
|
|
|
-- |
|
|
|
75,000 |
|
Series
C Convertible Preferred Stock to be issued for cash received by
Company
|
|
|
-- |
|
|
|
-- |
|
|
|
25,000 |
|
Common
Stock issued and to be issued for cash received by Company
|
|
|
104,996 |
|
|
|
-- |
|
|
|
105,002 |
|
Common
stock to be issued for directors' compensation
|
|
|
77,490 |
|
|
|
-- |
|
|
|
77,500 |
|
Debt
issue costs to be satisfied in Company Common Stock
|
|
|
536,243 |
|
|
|
-- |
|
|
|
536,320 |
|
Common
stock to be issued for purchase of common stock
|
|
|
49,990 |
|
|
|
-- |
|
|
|
50,000 |
|
Common
stock to be issued for consulting and marketing services
|
|
|
245,969 |
|
|
|
-- |
|
|
|
245,996 |
|
Common
stock issued for consulting and marketing services
|
|
|
122,481 |
|
|
|
-- |
|
|
|
122,504 |
|
Net
loss for twelve months ended December 31, 2008
|
|
|
-- |
|
|
|
(5,360,576 |
) |
|
|
(5,360,576 |
) |
Balance,
December 31, 2008
|
|
$ |
125,927,389 |
|
|
$ |
(140,223,968 |
) |
|
$ |
(13,909,905 |
) |
Series
A Convertible Preferred Stock converted into common stock
|
|
|
354,929 |
|
|
|
-- |
|
|
|
- |
|
Series
C Convertible Preferred Stock converted into common stock
|
|
|
24,995 |
|
|
|
-- |
|
|
|
- |
|
Common
Stock to be issued for cash received by Company
|
|
|
249,975 |
|
|
|
-- |
|
|
|
250,000 |
|
Common
stock to be issued for directors' compensation
|
|
|
34,990 |
|
|
|
-- |
|
|
|
35,000 |
|
Debt
issue costs to be satisfied in Company Common Stock
|
|
|
719,840 |
|
|
|
-- |
|
|
|
720,000 |
|
Debt
issue costs satisfied in Company Common Stock
|
|
|
79,990 |
|
|
|
-- |
|
|
|
80,000 |
|
Common
stock issued for reset of previous subscription agreement
|
|
|
5,523 |
|
|
|
-- |
|
|
|
5,525 |
|
Common
stock to be issued for reset of previous subscription
agreement
|
|
|
44,389 |
|
|
|
-- |
|
|
|
44,400 |
|
Common
stock issued for debt conversion
|
|
|
771,855 |
|
|
|
-- |
|
|
|
772,000 |
|
Net
loss for the year ended December 31, 2009
|
|
|
-- |
|
|
|
(6,520,053 |
) |
|
|
(6,520,053 |
) |
Balance,
December 31, 2009
|
|
$ |
128,213,875 |
|
|
$ |
(146,744,021 |
) |
|
$ |
(18,523,033 |
) |
See
accompanying notes to the consolidated financial statements.
ARROW
RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES
(A
DEVELOPMENT STAGE COMPANY)
|
Consolidated
Statement of Cash Flows (During the Development
Stage)
|
|
|
For
the Year Ended December 31, 2009
|
|
|
For
the Year Ended December 31, 2008
|
|
|
Accumulated
During the Development Stage for the Period From Inception (November 15,
2005) to December 31, 2007
|
|
|
Accumulated
During the Development Stage for the Period From Inception (November 15,
2005) to December 31, 2009
|
|
Net
loss
|
|
$ |
(6,520,053 |
) |
|
$ |
(5,360,576 |
) |
|
$ |
(134,863,392 |
) |
|
$ |
(146,744,021 |
) |
Adjustments
to reconcile net loss to net cash (used in) operating
activities:
|
|
|
|
|
|
Net
non-cash change in stockholders’ equity due to recapitalization
transaction
|
|
|
- |
|
|
|
- |
|
|
|
1,264,217 |
|
|
|
1,264,217 |
|
Loss
on write-off of marketing and distribution agreement
|
|
|
- |
|
|
|
- |
|
|
|
125,000,000 |
|
|
|
125,000,000 |
|
Common
stock issued for reset of previous scubscription agreement
|
|
|
5,525 |
|
|
|
- |
|
|
|
- |
|
|
|
5,525 |
|
Common
stock to be issued for reset of previous scubscription
agreement
|
|
|
44,400 |
|
|
|
- |
|
|
|
- |
|
|
|
44,400 |
|
Debt
issue costs to be satisfied in Company Common Stock
|
|
|
720,000 |
|
|
|
536,320 |
|
|
|
- |
|
|
|
1,256,320 |
|
Debt
issue costs satisfied in Company Common Stock
|
|
|