U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                   Form 10-KSB

     |X|  Annual report under section 13 or 15(d) of the Securities Exchange Act
          of 1934 for the fiscal year ended December 31, 1996.

     |_|  Transition report under section 13 or 15(d) of the Securities Exchange
          Act of 1934 for the transition period from             to
                                                     -----------     -----------
Commission file number:  0-6292

                         AAROW ENVIRONMENTAL GROUP, INC.
                      (Formerly RAIN FOREST - MOOSE, LTD.)
                 (Name of small business issuer in its charter)

         Nevada                                             73-1491593
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

     5703 South Hewitt
     Johnson, Arkansas                                         72741
(Address of principal executive offices)                     (Zip Code)

Issuer's telephone number:  (501) 444-8688

Securities to be registered under Section 12(b) of the Act:

Title of each class                   Name of each exchange on which registered
       None                                               None

Securities to be registered under Section 12(g) of the Act:
                                  Common Stock
                                (Title of class)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
such shorter period that the registrant was required to file such reports),  and
has been subject to such filing requirements for the past 90 days. Yes   No X
                                                                      --    --

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not 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-KSB
or any amendment to this Form 10-KSB. |_|

     Issuer's revenues for its most recent fiscal year was $404,056.

     The voting stock is not trading or quoted;  therefore, the aggregate market
value of the voting stock held by non-affiliates  based upon the average bid and
asked prices is not available or determinable.

     The  number  of  outstanding  of  Common  Stock  as of  June 1,  1997,  was
9,312,622.

                     Transitional Small Business Disclosure
                               Format (Check one):
                                   Yes   No X
                                      --    --



<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
<S>                                                                                                             <C>
                                                                                                                PAGE

Part I   -1-
Item 1.  Description of Business................................................................................-1-
         General................................................................................................-1-
         Background.............................................................................................-1-
                  Reincorporation Merger........................................................................-1-
                  RFM Arkansas Acquisition......................................................................-1-
         Business...............................................................................................-2-
         Marketing..............................................................................................-2-
         Contractual Arrangements...............................................................................-2-
         Competition............................................................................................-2-
         Government Regulation..................................................................................-3-
         Environmental Matters..................................................................................-3-
         Employees..............................................................................................-3-
Item 2.  Description of Property................................................................................-3-
Item 3.  Legal Proceedings......................................................................................-3-
Item 4.  Submission of Matters to a Vote of Security Holders....................................................-3-

Part II.........................................................................................................-3-
Item 5.  Market for Common Equity and Related Stockholders Matters..............................................-3-
Item 6.  Management's Discussion and Analysis or Plan of Operation..............................................-4-
         Results of Operations..................................................................................-4-
         Liquidity and Capital Resources........................................................................-6-
Item 7.  Financial Statements...................................................................................-7-
Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................-7-

Part III........................................................................................................-7-
Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act......................................................-7-
Item 10.  Executive Compensation................................................................................-8-
         Compensation of Directors..............................................................................-8-
         Stock Option Plan......................................................................................-8-
         Officer and Director Liability.........................................................................-9-
Item 11.  Security Ownership of Certain Beneficial Owners and Management.......................................-10-
Item 12.  Certain Relationships and Related Transactions.......................................................-10-
Item 13.  Exhibits and Reports on Form 8-K.....................................................................-11-
(a)  Exhibits..................................................................................................-11-
(b)  Reports on Form 8-K.......................................................................................-11-
</TABLE>



<PAGE>


Part I

Item 1.  Description of Business.

General

         Aarow Environmental Group, Inc., a Nevada corporation (the "Company" or
"Aarow  Environmental"),  through  its  wholly-owned  subsidiary,  Rain Forest -
Moose, Ltd., an Arkansas corporation ("RFM Arkansas") , develops,  manufactures,
markets and distributes  absorbent  products,  principally Peat Moose Absorbent,
and provides disposal  services for end users of such absorbent  products and is
licensed to incinerate the absorbent  products.  The absorbent  products are for
both industrial and home use.

         The temporary  executive offices of Aarow  Environmental are located at
5703 South Hewitt,  Johnson,  Arkansas 72741,  and the telephone number of Aarow
Environmental is (501) 444-8688.

Background

         Rendezvous   Trails  of  America,   Inc.   (formerly   Holiday  Resorts
International,   Inc.),   the  former  parent  of  Aarow   Envireonmental,   was
incorporation in April 1970. Since 1986, RTA became inactive and did not conduct
any operations or activities through 1995.

         Reincorporation  Merger. Aarow Environmental was incorporated in Nevada
on February 21, 1996, as Rain Forest - Moose, Ltd., a wholly-owned subsidiary of
Rendezvous Trails of America,  Inc., an Oklahoma corporation formed in June 1970
("RTA").  The name of Company was changed  from Rain Forest  -Moose.,  Ltd.,  to
Aarow Environmental  Group, Ltd., on June 13, 1997. Pursuant to an Agreement and
Plan of  Merger,  dated  February  23,  1996,  RTA  merged  with and into  Aarow
Environmental  as the  surviving  corporation.  The  merger of RTA with and into
Aarow  Environmental  effectively changed the state of domicile of RTA to Nevada
as a result of Aarow  Environmental  being  the  surviving  corporation  and was
accounted for as a  reorganization  of entities  under common  control which was
recorded at historical cost.  Pursuant to the Agreement and Plan of Merger, each
outstanding  share of common stock of RTA was converted into one share of Common
Stock, $.001 par value, of Aarow Environmental.  Furthermore,  on March 5, 1996,
Aarow  Environmental  split each share of its outstanding  Common Stock into two
shares,  which  effectively  resulted in 4,606,234  shares of Common Stock being
issued and outstanding.

         RFM  Arkansas  Acquisition.  Pursuant to a Plan of  Reorganization  and
Agreement  of  Merger,  dated  March 5, 1996,  RFM  Acquisition  Corporation  of
Oklahoma,  Inc., an Oklahoma  corporation and  wholly-owned  subsidiary of Aarow
Environmental  ("Acquisition  Corporation")  merged  with and into Rain Forest -
Moose,  Ltd., an Arkansas  corporation ("RFM Arkansas" or "Subsidiary"),  and as
the  surviving   corporation,   became  a   wholly-owned   subsidiary  of  Aarow
Environmental (the "RFM Arkansas  Acquisition").  Under the terms of the Plan of
Reorganization  and  Agreement  of  Merger,  Aarow  Environmental  issued to the
shareholders  of RFM Arkansas  3,012,468  shares of Common  Stock and  3,000,000
shares  of  Series I  Convertible  Preferred  Stock of  Aarow  Environmental  in
exchange for the issued and outstanding  capital stock of RFM Arkansas.  The RFM
Arkansas  Acquisition  was  accounted  for as a  reverse  acquisition  of  Aarow
Environmental  by RFM Arkansas.  Therefore,  the results of operations and other
historical information of Aarow Environmental presented in this Report are those
of RFM Arkansas.  See "Item 12. Certain Relationships and Related Transactions."
Upon consummation of the RFM Arkansas Acquisition, the directors and officers of
RFM Arkansas became the directors and officers of Aarow Environmental.

Business

         The  Company,   through  RFM  Arkansas,  its  wholly-owned  subsidiary,
develops, manufactures,  markets and distributes absorbent products, principally
Peat  Moose  Absorbent,  and  provides  disposal  services  for end users of the
absorbent  products and is licensed to  incinerate  the  absorbent  products for
energy  recovery.  The absorbent  products are for both industrial and home use.

                                       1
<PAGE>

Peat Moose Absorbent is an absorbent  product  consisting of a young blond grade
of Canadian  sphagnum  peat  dehydrated  at the  Company's  manufacturing  plant
located in the choska bottoms near Coweta,  Oklahoma.  The  dehydration  process
reduces the moisture content of the sphagnum peat to less than 10 percent and is
then  blended  with  certain  additives.  These  additives  consists  of  sodium
bicarbonate  used as a neutralizer and flammable vapor  suppressant,  an anionic
surfactant  that allows  absorption  of water based  materials  after any oil or
hydrocarbon has been absorbed, and a rich, natural organic compost soil enhancer
in fertilizer  form which  consists of a  proprietary  product which aids in the
decomposition of hydrocarbons and accelerates the rate of remediation.  The Peat
Moose Absorbent is packaged and sold in various  container  quantities and forms
including in loose fill bags, dip pads, cotton covered socks,  boxed spill kits,
plastic drums and acrylic-ceramic contains.

         The Company provides,  as a service to its customers in connection with
the sale of the Peat Moose Absorbent products,  an incineration disposal service
for the used Peat Moose Absorbent products which generally contain  hydrocarbons
and other  environmentally  hazardous  wastes  absorbed by and contained in such
used products.  This  incineration  disposal service is provided without cost to
the  customer  and  user  of the  Peat  Moose  Absorbent  products,  other  than
transportation  to the disposal  facility and  represents  an `end of liability"
disposal service.

         The  Company's  manufacturing  and  incineration  plant is  located  in
Coweta, Oklahoma and is licensed by the federal Environmental  Protection Agency
and the Environmental  Quality  Department of Oklahoma to operate and incinerate
the used Peat Moose Products in industrial furnace. Forensic drug testing begins
with specimen collection conducted under carefully controlled conditions.

Marketing

         The Company markets its products directly to consumers through both the
Company's   marketing  personnel  and  independent   distributors.   Independent
distributors  are generally are  independent  contractors  and are provided with
sales  promotional  materials.  All  advertising,  promotional and  solicitation
materials used by distributors  must be approved by the Company prior to use. At
June 1, 1997, RFM Arkansas had 38 independent distributors.

Contractual Arrangements

         RFM Arkansas sells its products without a formal  contract,  other than
pursuant  to a price list.  Because RFM  Arkansas  does not  currently  have any
long-term contracts, the Company is not dependent to any significant degree upon
any one customer or contractual relationship with a customer, the termination of
which would have a material adverse effect upon the Company.

Competition

         The products  manufactured  and distributed by the Company compete with
other  absorbent  products  primarily on the basis of technical  superiority and
price. The Company believes that its products compete favorably in each of these
categories.  Many of the Company's  competitors have greater financial resources
than the Company and manufacturer and have diversity of other products.

Government Regulation


         The operations of the Company are subject to various federal, state and
local  regulation  which  affect  businesses  generally,  such as taxes,  postal
regulations, labor laws, and environment and zoning regulations and ordinances.

Environmental Matters

         The  incineration  services  provided  by the  Company  are  subject to
federal,  state and local  regulation.  Failure to comply with current or future
federal,  state or local environmental laws or regulations could have a material
adverse  effect on the  Company.  The Company  believes  that it has  adequately
warned its employees of potential risks associated with working at the Company's
manufacturing and incineration facilities and has provided a workplace safe from
hazard,  as required by the Occupational  Safety and Health  Administration  and
certain Oklahoma laws.
                                       2
<PAGE>

Employees
Prior to May 12, 1997,  the Company had six  full-time  employees,  of which two
were  employed in  manufacturing,  and four were employed in sales and marketing
and  administrative  positions,  none  of  which  are  represented  by  a  labor
organization.  On May 12, 1997, a new President  and Secretary  were elected for
the  Company  and the total  number of  employees  was  reduced to six.


Item 2.  Description of Property.

         The Company maintains  temporary executive office at 5703 South Hewitt,
Johnson  Arkansas  72741.  Prior to May 12,  1997,  the Company  maintained  its
executive offices at 4031 B Delmon Lane,  Springdale,  Arkansas 72762-2179.  The
Company  believes  permanent  office space is available under favorable terms in
the Springdale - Johnson, Arkansas area.

         The  Company's  manufacturing  and waste  incineration  facilities  are
located  in  approximately  5,000  square  feet of space at  Highway  104 South,
Coweta,  Oklahoma.  The Company  considers its current  manufacturing  and waste
incineration  facilities to be adequate for its current needs;  however,  as the
Company's product sales volume increases, it may be necessary to either relocate
such facilities or establish  additional  manufacturing  and waste  incineration
facilities in other locations.

Item 3.  Legal Proceedings

         The Company does not have any pending litigation.

Item 4.  Submission of Matters to a Vote of Security Holders

         During the fourth  quarter of the fiscal year ended  December 31, 1996,
the Company did not submit any matters to a vote of its shareholders through the
solicitation of proxies or otherwise.

Part II

Item 5.  Market for Common Equity and Related Stockholders Matters

         There is not a market for the Company's  Common Stock as of the date of
this report, and there has not been any trading of the Common Stock of RTA since
1986. On June 11, 1997, there were approximately  1,157 holders of the Company's
Common Stock.

         The Company's  dividend policy is to retain its earnings to support the
expansion  of its  operations.  The Board of  Directors  of the Company does not
intend to pay cash dividends on the Common Stock in the foreseeable  future. Any
future cash dividends will depend on future earnings, capital requirements,  the
Company's  financial condition and other factors deemed relevant by the Board of
Directors.  The Company's  future earnings and cash flow currently are dependent
principally  upon the operating  results of RFM Arkansas and such dependency may
continue indefinitely in the future.

Item 6.  Management's Discussion and Analysis or Plan of Operation

         The  following  discussion  should  be read  in  conjunction  with  the
financial statements and notes thereto appearing elsewhere in this Report.

         Rendezvous   Trails  of  America,   Inc.   (formerly   Holiday  Resorts
International, Inc.), the former parent of Aarow Environmental was incorporation
in  April  1970.  Since  1986,  RTA  became  inactive  and did not  conduct  any
operations or activities through 1995 and, as of December 31, 1995, did not have
any assets or  liabilities.  Pursuant to an Agreement and Plan of Merger,  dated
February 23, 1996, RTA merged with and into Aarow Environmental as the surviving
corporation.  See "Item 1.  Description  of  Business-Background-Reincorporation
Merger." The merger of RTA with and into Aarow Environmental effectively changed
the state of domicile of RTA to Nevada as a result of Aarow  Environmental being
the surviving  corporation and was accounted for as a reorganization of entities
under common  control  which was recorded at historical  cost.  RFM Arkansas was
formed  on March 15,  1994.  As a result of the RFM  Arkansas  Acquisition,  RFM
Arkansas  became a  wholly-owned  subsidiary  of Aarow  Environmental  which was
accounted for as a reverse  acquisition of Aarow  Environmental  by RFM Arkansas
under the purchase method of accounting. Therefore, the following discussion and
analysis of results of operations discussed below are only those of RFM Arkansas
prior  to  the  RFM  Arkansas   Acquisition.   See  "Item  1.   Description   of
BusinessABackgroundARFM    Arkansas   Acquisition"   and   "Item   12.   Certain
Relationships and Related Transactions."

                                       3
<PAGE>

Results of Operations

     The following  table sets forth selected  results of operations for the for
the fiscal  years ended  December 31,  1995,  and  December 31, 1996,  which are
derived from the audited  financial  statements  of RFM  Arkansas.  See "Item 1.
Description of Business-Background-RFM Arkansas Acquisition."
<TABLE>
<CAPTION>


                                              For the Fiscal Year Ended     For the Fiscal Year Ended
                                                   December 31, 1995             December 31, 1996
<S>                                           <C>          <C>       <C>            <C>
                                              Amount       Percent   Amount         Percent

Sales income ..............................   $ 630,194    100.00%   $ 404,056      100.0%
                                              ---------    ------    ---------      ------
Cost of Sales:
    Materials .............................     137,232      21.8%     113,269       28.0%
    Warehouse labor .......................     105,645      16.8%      49,202       12.2%
    Freight ...............................       2,091        .3%       1,183         .3%
                                              ---------     ------    ---------      -----
        Total Cost of Sales ...............     244,968      38.9%     163,654       40.5%
                                              ---------     ------    ---------      -----
Gross Profit ..............................     385,226      61.1%     240,402       59.5%
                                              ---------     ------    ---------      -----
Operating Expenses ........................     318,069      50.5%     290,044       71.8%
                                              ---------     ------    ---------      -----
Income or (loss) from operations ..........      67,157      10.6%     (49,642)      12.3%
                                              ---------     ------    ---------      -----
Other Income and (expense):
    Interest income .......................         120        --          934         .2%
    Interest Expense ......................      (9,365)      1.5%      (4,463)       1.1%
    Payroll Tax Penalties and Interest ....      (2,087)       .3%     (16,017)       4.0%
    Extraordinary Item ....................        --          --      (33,493)       8.3%
                                              ---------     ------    ---------      -----
         Total other income and (expense) .     (11,332)      1.8%     (53,039)      13.1%
                                              ---------     ------    ---------      -----
Net Income or (Loss) ......................   $  55,825       8.8%   ($102,681)      25.4%
                                              ---------     ------    ---------      -----
</TABLE>


         Comparison of Fiscal 1995 and 1996

         Sales income  decreased  to $404,056 in 1996 from  $630,194 for 1995, a
decrease of 36 percent.  The decrease in sales was  primarily  the result of the
loss of $119,282 worth of finished  inventory to fire on August 8, 1996, and the
resultant  effect on the Company's cash flow and operations.  This inventory was
insured  by Loyds of London  for cost less a $100  deductible.  A claim has been
filed and the Company  expects  payment  from the  insurer for the full  insured
amount.  The  decreased  sales  during  1996  resulted  in total  costs of sales
decreasing  to $163,654 in 1996,  compared to $244,968  for 1995,  a decrease of
33%.  The  decrease in total cost of sales  resulted  from (i) a 17% decrease in
cost of  materials  from  $137,232 in 1995,  to  $113,269,  in 1996,  (ii) a 53%
decrease in warehouse  labor cost from $105,645 in 1995 to $49,202 in 1996,  and
(iii) a 43%  decrease  in the cost of freight  from  $2,091 in 1995 to $1,183 in
1996. Gross profit decreased 37% from $385,226 in 1995 to $240,044 in 1996.

         Operating  expenses  decreased  from  $385,226 in 1995 to $290,044  for
1996, a 24% decrease.  The decrease in operating  expenses was the result of the
reduced operations following August 8, 1996, causality loss.

                                       4
<PAGE>

     The Company  experienced a $49,642 loss from operations in 1996 as compared
to a $67,157 gain from operations in 1995.

         Interest expense decreased from $9,365 in 1995 to $4,463 in 1996, a 52%
decrease.  Payroll tax penalties and interest  increased to $16,546 in 1996 from
$2,087 in 1995, a 793% increase.  The Company also  experienced an extraordinary
loss of $33,493 as the result of being required to write off as not  collectable
a loan to the  former  president  of the  Company.  Such items  combined  with a
$49,642  loss  from  operations  resulted  in the a  $102,681  loss  for 1996 as
compared with net income of $55,825 for 1995.

         Quarterly Results of Operations

         RFM Arkansas'  operations are affected by seasonal  trends  principally
based  upon  weather  conditions  affecting  the oil and gas and  transportation
industries. In RFM Arkansas' experience,  sales volume tends to be higher in the
second,  third and  fourth  calendar  quarters  and lower in the first  quarter.
Because the general and administrative  expenses associated with maintaining and
adding to RFM Arkansas'  manufacturing  work force are relatively fixed over the
short term,  RFM  Arkansas'  margins tend to increase in periods of higher sales
volume and  decrease in periods of lower  sales  volume.  These  effects are not
always apparent because of the impact and timing of factors which are beyond the
control of RFM Arkansas. Nevertheless, RFM Arkansas' results of operations for a
particular  calendar quarter may not be indicative of the results to be expected
during other quarters.

         Income Taxes

         Prior to the RFM Arkansas  Acquisition,  RFM Arkansas,  for federal and
state income tax purposes,  was taxed as a pass-through entity, and income taxes
were not imposed at RFM Arkansas's level of taxation.
Therefore, no provision for income taxes has been made.

Liquidity and Capital Resources

         Historically,  RFM Arkansas has financed its growth from borrowings and
shareholder  contributions.  Net cash provided by operating  activities  totaled
$38,020 in 1996,  as compared  with net cash  provided by  operating  activities
totaled  $34,772 in 1995.  As of December  31,  1996,  the Company had a working
capital of  deficit  of $1,984,  compared  to  working  capital of  $95,100,  at
December 31, 1995. The working  capital  deficit is the result of the suspension
of operations  following the August 8, 1996,  casualty loss and the write-off of
the  note in the  amount  of  $33,493.  Additional  net cash is  expected  to be
provided by the recovery of the  insurance  claim for the  casualty  loss in the
amount  of  $119,182,   and  the  resumption  of  manufacturing   and  marketing
activities.
         During 1996, the Company experienced operating difficulties as a result
of lack of working capital  following the August 8, 1996,  casualty loss and the
operational  decline.  The  Company  also  experienced  a period  of  inadequate
management until the election of new management for the Company on May 12, 1997.
The new Management for the Company has begun a plan to recapitalize  the Company
and  to  reestablish  the  relationships  with  its  distributors.  There  is no
assurance  that the Company will be  successful  in its efforts to implement its
plan for recapitalization and the resumption of full operations.  If the Company
is  unsuccessful  in its efforts,  it may be  necessary to undertake  such other
actions as may be appropriate to preserve asset value.

         As of December 31, 1996,  RFM  Arkansas  had two  long-term  loans from
Springdale  Bank & Trust Company (the  "Bank"),  which were secured by certain a
vehicle and inventory and accounts receivable, bear interest at 10.5 percent per
annum, and required monthly principal and interest  installment payments of $535
through May 1998 and  monthly  interest  payments.  At December  31,  1996,  the
outstanding   principal   balance  of  these  loans  were  $9,372  and  $30,000,
respectively. On February 24, 1997, Springdale Bank and Trust called the note in
the  amount of $9,372  which  was in  default  and  obtained  possession  of the
collateral which was a 1990 GMC truck. At December 31, 1995, RFM Arkansas had an

                                       5
<PAGE>


equipment loan with Anchor Financial Corp.  secured by office  equipment,  bears
interest at 21 percent per annum, and requiring  monthly  principal and interest
installment payments of $354 through June 1997. The outstanding principal amount
of this loan at December  31,  1996,  was  $1,173.  At December  31,  1995,  RFM
Arkansas  also had two  unsecured  loans with U.S.  Equipment &  Services,  Inc.
(which is wholly-owned by Monica Pilkington,  who was, prior to May 12, 1997, an
executive  officer  and  the  wife  of  the  President,  a  Director  and  major
shareholder  of the Company) and with Dan  Pilkington  (who was prior to May 12,
1997,  the  President,  Director and major  shareholder  of the Company) each of
which bore interest at 7.5 percent per annum, and which were due on demand.  The
outstanding   principal   amounts  of  these  loans  were  $8,409  and  $17,319,
respectively,  at December 31, 1995.  During 1996,  it was  determined  that Dan
Pilkington  had had  unauthorized  loans to himself  which  resulted in the note
receivable write-off in the amount of $33,493. In connection with the resolution
of the note  receivable  from Dan  Pinkington,  the loans from U.S.  Equipment &
Services, Inc., and from Dan Pinkington were also discharged.




Item 7.  Financial Statements

         The response to this Item is set forth herein in a separate  section of
this Report, beginning on page F-2

Item 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

         There have been no  disagreements  of the type  required to be reported
under this Item between management of the Company and its independent accountant
during 1995 and 1996.

Part III

Item 9.  Directors,   Executive   Officers,   Promoters  and  Control   Persons;
Compliance with Section 16(a) of the Exchange Act.

         The following table sets forth certain information with respect to each
executive  officer and director of Rain Forest and RFM  Arkansas.  Directors are
generally elected at the annual shareholders'  meeting and hold office until the
next annual  shareholders'  meeting and until their  successors  are elected and
qualified. Executive officers are elected by the Board of Directors and serve at
its discretion. The Bylaws of the Company authorize the Board of Directors to be
constituted  of not less than one and such number as the Board of Directors  may
from time to time  determine  by  resolution  or election.  The Board  currently
consists of three members.


<TABLE>
<CAPTION>
<S>                                           <C>           <C>                         <C>
Name                                           Age             Position with Aarow      Position with RFM Arkansas
                                                                   Environmental
---------------------                          ---          --------------------------  --------------------------
Stan Sisemore(1)..............................  49          President, Chief Executive  President, Chief Executive
                                                            Officer, and Chairman       Officer, and Chairman
                                                            of the Board                of the Board
Jeff Martin(1)(2).............................  35          Executive Vice President    Executive Vice President
                                                            and Director                and Director
Lloyd Phillips(1).............................  51          Secretary and Director      Secretary and Director

</TABLE>


     (1)  As the  holders of 1/3 each of the  outstanding  Series I  Convertible
          Preferred Stock, Mr. Sisemore,  Mr. Martin,  and Mr. Phillips combined
          hold  approximately 58 percent of the outstanding voting rights of the
          shareholders of the Company.  Therefore, Mr .Sisemore, Mr. Martin, and
          Mr.  Phillips acting in unison may be able to elect all members of the
          Board of Directors of the Company. See "Item 11. Security Ownership of
          Certain Beneficial Owners and Management."

     (2)  Member of the Stock Option Committee. See "AStock Option Plan," below.

          The  executive  officers of the Company and RFM Arkansas  devote their
full-time to the Company's business.

                                       6
<PAGE>

         The following is a brief description of the business  background of the
executive officers and directors of the Rain Forest and RFM Arkansas:

         Stan  Sisemore  has been  Chairman  of the Board,  President  and Chief
Executive Officer,  and a Director of the Company and RFM Arkansas since May 12,
1997. Mr. Sisemore also serves as a menber of the Stock Option  Committee.  From
April 1995, Mr.  Sisemore  served as marketing  director of the Company and will
continue to also  function in that  capacity.  From April 1991 until April 1995,
Mr. Sisemore served as Executive Vice President of Magnadyne Industries, Inc., a
company  holding over 25 patents  related to Magnetic D.C. Motor  technology and
Magnetic  Energy.  He is also a stockholder in Magnadyne.  Mr. Sisemore has been
involved in marketing and  manufacturing  for twenty years and has been involved
in product  development  for the past ten years.  During his employment with the
Company he has been involved in the development of the absorbent program for the
Company.

         Jeff Martin is Executive  Vice  President and a Director of the Company
and RFM Arkansas and serves as a member of the Stock Option Committee.  Prior to
becoming  employed  with the Company and RFM  Arkansas in  September  1994,  Mr.
Martin  was  employed  by First  Brands  Corporation  as  operations  manager of
packaging plant operations which  responsibilities  included safety, quality and
production coordinator and as Industrial Engineer at Wire Mold Corporation where
he was responsible for product enhancement.. Mr. Martin received an Associate of
Arts Degree in 1993 from Mississippi  County Community  College and attended the
University of Arkansas with studies focused on engineering.

         Lloyd  Phillips was elected as Secretary  and a Director of the Company
on May 12,  1997.  Prior to his  employment  with the Company Mr.  Phillips  was
president of a large  manufactured  homes  company and has been  involved in the
management and development of the poultry and egg industry for the past eighteen
years. Mr.
Phillips has also has a broad background in sales and marketing.

         During 1996 and until his removal in March,  1997, Dan Pilkington  held
the positions of Chairman of the Board, President and Chief Executive Officer of
the Company and of RFM Arkansas.

Item 10.  Executive Compensation

         The following table sets forth certain  information with respect to the
total cash  compensation,  paid or accrued,  of the President of the Company and
RFM  Arkansas  and  each  of  executive   officer  that  during  1996   received
compensation in excess of $100,000.  Because Rendezvous Trails of America,  Inc.
(the former  parent of Aarow  Environmental)  was in active  during 1993 through
1996,  its  President and other  executive  officers were not paid any executive
compensation  nor was any accrued  during such years.  Furthermore,  because the
Company and RFM Arkansas were,  inactive  during much of 1996, the President and
other   executive   officers  of  RFM  Arkansas  were  not  paid  any  executive
compensation nor was any accrued during 1996.

<TABLE>
<CAPTION>

                                                                                                Annual Compensation
                                                                                              ---------------------
<S>                                                      <C>             <C>             <C>           <C>
                                                                                                          All Other
Name and Principal Position                               Year(1)        Salary(2)       Bonus(3)      Compensation
---------------------------                               ------         ---------       --------      ------------
Dan Pilkington..........................................  1996.......         $--           $ --              $ --
   President and Chief Executive Officer                  1995.......         $--           $ --              $ --
   of RFM Arkansas

</TABLE>

(1)  The  executive  officers,  including  the  President,  were  not  paid  any
     executive  compensation during 1993 or 1994 nor was any accrued during such
     year.
(2)  Dollar  value of base salary  (both cash and  non-cash)  earned  during the
     year.
(3)  Dollar value of bonus (both cash and non-cash) earned during the year.

Compensation of Directors

         The directors of Aarow  Environmental and RFM Arkansas are employees of
Aarow Environmental and are not currently  compensated for attending meetings of
directors  and  committees  of  the  Board  of  Directors,  but  are  reimbursed
out-of-pocket expenses.

                                       7
<PAGE>

Stock Option Plan

         The company established the Rain Forest - Moose, Ltd. 1996 Stock Option
Plan (the "Stock Option Plan" or the "Plan") in February 1996. The Plan provides
for the issuance of incentive  stock  options  ("ISO  Options")  with or without
stock  appreciation   rights  ("SARs")  and  nonincentive  stock  options  ("NSO
Options")  with or without SARs to  employees  and  consultants  of the Company,
including employees who also serve as directors of the Company. The total number
of shares of Common Stock authorized and reserved for issuance under the Plan is
2,500,000.
Options have not been granted under the Plan as of the date of this Report.

         The Stock Option  Committee,  which is  currently  comprised of Messrs.
Sisemore and Martin,  administers  and  interprets the Plan and has authority to
grant options to all eligible employees and determine the types of options, with
or without SARs, granted, the terms,  restrictions and conditions of the options
at the time of grant, and whether SARs, if granted,  are exercisable at the time
of exercise of the Option to which the SAR is attached.

         The option price of the Common Stock is  determined by the Stock Option
Committee, provided such price may not be less than the fair market value of the
shares on the date of grant of the option.  The fair market  value of a share of
the Common Stock is  determined  by averaging the closing high bid and low asked
quotations  for such share on the date of grant of the option or, if not quoted,
by the Stock Option Committee.  Upon the exercise of an option, the option price
must be paid in  full,  in cash  or with an SAR.  Subject  to the  Stock  Option
Committee's  approval,  upon  exercise  of an  option  with an SAR  attached,  a
participant may receive cash, shares of Common Stock or a combination of both in
an amount or having a fair  market  value equal to the excess of the fair market
value,  on the date of exercise,  of the shares for which the option and SAR are
exercised over the option exercise price.

         Options  granted  under the Plan may not be exercised  until six months
after the date of the grant and rights under an SAR may not be  exercised  until
six months  after the SAR is attached to an option,  if not attached at the time
of the grant of the option,  except in the event of death or  disability  of the
participant. ISO Options and any SARs are exercisable only by participants while
actively  employed as an employee or a consultant by Rain Forest or a subsidiary
of Rain Forest, except in the case of death,  retirement or disability.  Options
may be  exercised  at any time  within  three  months  after  the  participant's
retirement or within one year after the  participant's  disability or death, but
not beyond the  expiration  date of the option.  No option may be granted  after
December 28, 2005. Options are not transferable except by will or by the laws of
descent and distribution.

Officer and Director Liability

         The  Certificate  and Bylaws of Aarow  Environmental  provide  that the
Company shall indemnify its directors and officers to the full extent  permitted
by the Nevada General  Corporation Law. Under such  provisions,  any director or
officer,  who in his capacity as such, is made or threatened to be made, a party
to any  suit  or  proceeding,  may be  indemnified  if the  Board  of  Directors
determines  such  director  or  officer  acted in good  faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the Company.
The Certificate and Bylaws of the Company and the Nevada General Corporation Law
further provide that such  indemnification  is not exclusive of any other rights
to which such individuals may be entitled under the Certificate,  the Bylaws, an
agreement, vote of shareholders or disinterested directors or otherwise. Insofar
as  indemnification  for  liabilities  arising under the Act may be permitted to
directors  and  officers  of  Aarow  Environmental  pursuant  to  the  foregoing
provisions,  or  otherwise,  Aarow  Environmental  has been  advised that in the
opinion of the  Commission  such  indemnification  is against  public  policy as
expressed in the Act and is, therefore, unenforceable.

                                       8
<PAGE>

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     The following  table  presents  certain  information  as to the  beneficial
ownership of the Common  Stock and Series I  Convertible  Preferred  Stock as of
June 11, 1997, of (i) each person who is known to Aarow  Environmental to be the
beneficial owner of more than five percent  thereof,  (ii) each current director
and executive  officer of Aarow  Environmental,  and (iii) all current executive
officers and directors as a group,  together with their  percentage  holdings of
the outstanding shares. All persons listed have sole voting and investment power
with respect to their shares unless otherwise indicated,  and there is no family
relationship   between  the   executive   officers   and   directors   of  Aarow
Environmental.

<TABLE>
<CAPTION>


                                                               Series I Convertible
                                                                  Preferred Stock               Common Stock
                                                          ---------------------------   -------------------------
<S>                                                       <C>             <C>           <C>            <C>
                                                                Shares     Percent of         Shares   Percent of
                                                          Beneficially          Share   Beneficially        Share
                                                                 Owned    Outstanding          Owned    Ownership
                                                          ------------    -----------   ------------   ----------
Stanley   L.   Sisemore(1)...............................    1,000,000          33.3%      4,605,000       25.15%

Jeff    Martin...........................................    1,000,000          33.3%      3,250,000       17.75%

Lloyd   W.   Phillips....................................    1,000,000          33.3%      3,000,000       16.38%

Executive Officers and Directors as a group
    (three persons)(1)...................................    3,000,000         100.0%     10,855,000       59.28%

</TABLE>

     (1) With respect to the Common Stock,  includes  9,000,000  shares issuable
upon conversion of the Series I Convertible Preferred Stock.


Item 12.  Certain Relationships and Related Transactions

         Set forth below is a description of  transactions  entered into between
Aarow Environmental and RFM Arkansas and certain of its officers, directors, and
shareholders  during the last two  years.  Certain  of these  transactions  will
continue in effect and may result in conflicts  of interest  between the Company
and such  individuals.  Although  these  persons  have  fiduciary  duties to the
Company  and its  shareholders,  there can be no  assurance  that  conflicts  of
interest will always be resolved in favor of the Company.

         Pursuant to a Plan of  Reorganization  and  Agreement of Merger,  dated
February 23, 1996, Dan Pilkington and Jeff Martin  exchanged their shares of the
capital  stock of RFM Arkansas for  1,597,468 and 250,00 shares of Common Stock,
respectively,  and Mr.  Pilkington  also received  3,000,000  shares of Series I
Convertible Preferred Stock. See "Item 1. Description of BusinessABackgroundAFRM
Arkansas  Acquisition." The Series I Convertible  Preferred Stock is convertible
into  9,000,000  shares of Common Stock of Rain Forest.  In connection  with RFM
Arkansas  Acquisition  and the  transactions  related  thereto,  an  independent
determination  of fairness and  reasonableness  of the terms of the transactions
was not obtained;  however,  the transactions were negotiated on an arms'-length
basis by the respective parties and are believed to have been fair by respective
parties and management of Rain Forest.

         From time to time Dan Pilkington,  the former President and Chairman of
the Board,  has made loans to RFM  Arkansas  in the form of due on demand  loan,
which bear  interest at the rate of 7.5 percent per annum.  At December 31, 1994
and 1995, the aggregate outstanding principal amounts of such loans were $32,171
and $17,319, respectively. At December 31, 1996, these loans had been discharged
in connection with the resolution of unauthorized  loans from the Company to Mr.
Pilkington.

         U.S.  Equipment  &  Services,  Inc.,  which is  wholly  owned by Monica
Pilkington who is an a former executive  officer of Aarow  Environmental and RFM
Arkansas and the wife of Mr. Pilkington, made an unsecured loan to RFM Arkansas,
which bears interest at the rate of 7.5 percent per annum.  At December 31, 1994
and 1995, the outstanding  principal amount of such loan was $17,362 and $8,409,
respectively.  At  December  31,  1996,  these  loans  had  been  discharged  in
connection  with the  resolution of  unauthorized  loans from the Company to Mr.
Pilkington

                                       9
<PAGE>

Item 13.  Exhibits and Reports on Form 8-K

     2.1  Agreement  and Plan of Merger  between  Rendezvous  Trails of America,
          Inc., Rain Forest - Moose, Ltd., dated February 23, 1996.*

     2.2  Plan of  Reorganization  and  Agreement  of Merger among Rain Forest -
          Moose,  Ltd., a Nevada  corporation,  RFM  Acquisition  Corporation of
          Oklahoma,  Inc., Rain Forest - Moose,  Ltd., an Arkansas  corporation,
          Dan  Pilkington,  Jeff Martin,  Stan  Sisemore,  Jim Anderson and Bill
          Hooten, dated March 5, 1996.*

     3.1  Articles  of  Incorporation  of Rain  Forest - Moose,  Ltd.,  a Nevada
          corporation.*

     3.2  Bylaws of Rain Forest - Moose, Ltd.*

     4.1  Form of Certificate of Common Stock of Rain Forest - Moose, Ltd.*

     4.2  Agreement and Plan of Merger among Rendezvous Trails of America, Inc.,
          and Rain Forest - Moose,  Ltd.,  dated  February  23,  1996,  filed as
          Exhibit 2.1 hereto.*

     4.3  Plan of  Reorganization  and  Agreement  of Merger among Rain Forest -
          Moose,  Ltd., a Nevada  corporation,  RFM  Acquisition  Corporation of
          Oklahoma,  Inc., Rain Forest - Moose,  Ltd., an Arkansas  corporation,
          Dan  Pilkington,  Jeff Martin,  Stan  Sisemore,  Jim Anderson and Bill
          Hooten, dated March 5, 1996, filed as Exhibit 2.2 hereto.*

     4.4  Certificate of the Powers Designation,  Rights and Preferences for the
          Series I  Convertible  Preferred  Stock of Rain Forest - Moose,  Ltd.,
          dated March 5, 1996.*

     4.4  Registration  Rights Agreement  between Rain Forest - Moose,  Ltd. and
          Dan Pilkington, dated March 5, 1996.*

     4.5  Rain Forest - Moose, Ltd. 1996 Stock Option Plan, adopted February 21,
          1996.*

     10.1 Agreement  and Plan of Merger  between  Rendezvous  Trails of America,
          Inc. and Rain Forest - Moose,  Ltd., dated February 23, 1996, filed as
          Exhibit 2.1 hereto.*

     10.2 Plan of  Reorganization  and  Agreement  of Merger among Rain Forest -
          Moose,  Ltd., a Nevada  corporation,  RFM  Acquisition  Corporation of
          Oklahoma,  Inc., Rain Forest - Moose,  Ltd., an Arkansas  corporation,
          Dan  Pilkington,  Jeff Martin,  Stan  Sisemore,  Jim Anderson and Bill
          Hooten, dated January 19, 1996, filed as Exhibit 2.2 hereto.*

     21.1 Subsidiary of Registrant.*

     27   Financial Data Schedule

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

*        Incorporated by reference to Form 10-KSB dated March 8, 1996

(b)  Reports on Form 8-K
         There were no reports on Form 8-K filed with the Commission  during the
last quarter of 1996.

                                       10
<PAGE>

SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                                  AAROW ENVIRONMENTAL GROUP INC.
                                                              (Registrant)


                                                     By: /S/STANLEY L. SISEMORE
                                                  ------------------------------
                                                  Stanley L: Sisemore, President
Date:  June   ,1997

                                       11
<PAGE>



         In accordance  with the Exchange Act, this Report has been signed below
by the following  persons on behalf of the  Registrant and in the capacities and
on the dates indicated.

    Name                                    Title                     Date


                            Chief Executive Officer, President and
  /S/STANLEY L. SISEMORE    Chairman of the Board                   June __,1997
------------------------
    Stanley L. Sisemore


                            Executive Vice President
  /S/JEFF MARTIN            and Director                            June __,1997
------------------------
    Jeff Martin



  /S/LLOYD W. PHILLIPS      Secretary                               June __,1997
------------------------
    Lloyd W. Phillips






                                       12
<PAGE>




                          INDEX TO FINANCIAL STATEMENTS


AAROW ENVIRONMENTAL GROUP, INC.
 Independent Auditors Report.............................................  F-2

 Balance Sheet, December 31, 1996 and 1995...............................  F-3

 Statements of Income and Retained Earnings for the Twelve Months Ended
 December 31, 1996 and the Twelve Months Ended December 31, 1995.........  F-4

 Statements of Cash Flows for the Twelve Months Ended December 31, 1996
 and the Twelve Months Ended December 31, 1995...........................  F-5

 Notes to Financial Statements...........................................  F-6













                                      F-1
<PAGE>











                         AAROW ENVIRONMENTAL GROUP, INC.
                       ( Formerly RAIN FOREST MOOSE, LTD.)
                              FINANCIAL STATEMENTS

              For the Twelve Months Ended December 31, 1996 and the
                      Twelve Months Ended December 31, 1995




                                       F-2
<PAGE>







                           INDEPENDENT AUDITORS REPORT



To the Board of Directors
and Stockholders of
Rain Forest Moose, LTD
Springdale, AR


I have audited the  accompanying  balance  sheets of Rain Forest Moose,  Ltd. (a
public  corporation)  as of  December  31,  1996 and  December  31, 1995 and the
related statements of income and retained earnings, cash flows, and supplemental
information  for the  years  then  ended.  These  financial  statements  are the
responsibility of the Company's  management.  My responsibility is to express an
opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of Rain Forest  Moose,  Ltd. as of
December 31, 1996 and December  31, 1995 and the results of its  operations  and
its cash flows for the years then ended in conformity  with  generally  accepted
accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
company  will  continue  as a  going  concern.  As  discussed  in  Note 5 to the
financial statements,  the Company's significant operating loss, working capital
deficit,  and lack of  adequate  management  raise  substantial  doubt about its
ability to continue as a going concern.  The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.






Springdale, AR
June 2, 1997


                                      F-3
<PAGE>



RAIN FOREST MOOSE, LTD
BALANCE SHEET
As of December 31, 1996 and December 31, 1995
<TABLE>
<CAPTION>
<S>                                                                      <C>         <C>

                                                                          Dec. 31,    Dec. 31,
                                                                              1996       1995
                                                                          --------   --------
Assets

Current Assets:
Cash and Cash Equivalents .............................................   $  2,147   $  3,008
Accounts Receivable ...................................................          0     50,227
Employee Receivables ..................................................          0      1,972
Prepaid Expenses ......................................................          0        822
Inventory .............................................................     31,626    154,898
Insurance Claim .......................................................    119,182          0
                                                                          --------   --------
                                                   TOTAL CURRENT ASSETS   $152,954   $210,927

PROPERTY, PLANT AND EQUIPMENT (net of  accumulated
                    depreciation of $ 23,730 and $ 11,158 respectively)     46,005     57,525

Other Assets
Organization Costs (net of accumulated
         amortization of  $ 1,575 and $ 675) ..........................      2,925      3,825
                                                                          --------   --------

                                                           TOTAL ASSETS   $201,884   $272,277
                                                                          ========   ========

Liabilities and Stockholders Equity

Current Liabilities:
Bank Overdraft ........................................................   $      0   $  2,151
Accounts Payable ......................................................     20,309     15,603
Payroll Taxes Payable .................................................     67,005     32,325
Sales Tax Payable .....................................................          0         31
Accrued Interest Payable ..............................................        733      1,313
Current Portion of Long Term Notes ....................................     66,891     64,404
                                                                          --------   --------
         TOTAL CURRENT LIABILITIES ....................................   $154,938   $115,827

LONG TERM LIABILITIES .................................................      3,654     10,477
                                                                          --------   --------
TOTAL LIABILITIES .....................................................   $158,592   $126,304

Stockholders Equity
Common Stock at Dec. 31, 1996, $ 0.001 par value, 30,000,000 shares ...   $  7,619   $      5
     authorized,  9,312,622 shares issued and outstanding
Convertible Preferred Stock, $0.001 par value, 5,000,000 shares .......      3,000          0
     authorized, 3,000,000 shares issued and outstanding,
     one share convertible for three shares common
Paid in Capital .......................................................     99,881    110,495
Retained Earnings .....................................................    (67,208)    35,473
                                                                          --------   --------
TOTAL STOCKHOLDERS EQUITY .............................................   $ 43,292   $145,973
                                                                          --------   --------

         TOTAL LIABILITIES AND STOCKHOLDERS EQUITY ....................   $201,884   $272,277
                                                                          ========   ========
</TABLE>



SEE ACCOUNTANTS REPORT AND NOTES
RAIN FOREST MOOSE, LTD

                                      F-4
<PAGE>

STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Twelve Months Ended December 31, 1996 and
the Twelve Months Ended December 31, 1995
<TABLE>
<CAPTION>
<S>                                                        <C>                   <C>


                                                                Dec. 31              Dec. 31,
                                                                 1996                  1995
                                                           ---------------       ---------------
Sales Income                                               $       404,056       $       630,194

Cost of Sales
         Materials                                         $       113,269       $       137,232
         Warehouse Labor                                            49,202               105,645
         Freight                                                     1,183                 2,091
                                                           ---------------       ---------------
Total Cost of Sales                                        $       163,654       $       244,968
                                                           ---------------       ---------------

         GROSS PROFIT                                      $       240,402       $       385,226

Operating Expenses                                                 290,044               318,069
                                                           ---------------       ---------------

         GAIN  OR (LOSS) FROM OPERATIONS                   ($       49,642)      $        67,157

Other Income and (Expenses)
         Interest Income                                   $           934       $           120
         Interest Expense                                  (         4,463)      (         9,365)
         Payroll Tax Penalties and Interest                (        16,017)      (         2,087)
                                                           ----------------      ----------------
Total Other Income and (Expense)                           ($       19,546)      ($       11,332)
                                                           ----------------      ----------------

         INCOME OR (LOSS) BEFORE
         EXTRAORDINARY ITEM                                ($       69,188)      $        55,825

         Extraordinary Item-Note Receivable                (        33,493)                    0
                                                           ----------------      ---------------

         NET INCOME OR (LOSS)                              ($      102,681)      $        55,825

Retained Earnings at Beginning of Year                              35,473       (        20,352)
                                                           ---------------       ----------------

         RETAINED EARNINGS AT END OF YEAR                  ($       67,208)      $        35,473
                                                           ================      ===============


</TABLE>


SEE ACCOUNTANTS REPORT AND NOTES
RAIN FOREST MOOSE, LTD
STATEMENTS OF CASH FLOWS

                                      F-5
<PAGE>

For the Twelve Months Ended December 31, 1996 and
the Twelve Months Ended December 31, 1995
<TABLE>
<CAPTION>
<S>                                                                                   <C>                   <C>

                                                                                          Dec. 31,              Dec. 31,
                                                                                            1996                  1995
                                                                                      ---------------       ----------
         CASH FLOWS FROM OPERATING ACTIVITIES
Net Income or (Loss)                                                                  ($      102,681)      $        55,825
     Adjustments to reconcile net loss to net cash provided
     by operating activities
Depreciation                                                                                   12,572                 9,732
     Amortization                                                                                 900                   675
     Extraordinary Item-Note Receivable                                                        33,493                     0
     (Increase) decrease in:
Accounts Receivable                                                                            50,227       (        47,226)
Employee Receivable                                                                             1,972       (           400)
Prepaid Expenses                                                                                  822       (           822)
Inventory                                                                                     123,272       (        24,672)
Insurance Claim                                                                       (       119,182)                    0
Increase (decrease) in:
Bank Overdraft                                                                        (         2,151)                1,722
Accounts Payable                                                                                4,706                 7,417
Payroll Taxes Payable                                                                          34,681                32,325
Sales Taxes Payable                                                                   (            31)                   31
Accrued Interest Payable                                                              (           580)                  165
                                                                                      ----------------      ---------------
              NET CASH PROVIDED (USED)
              BY OPERATING ACTIVITIES                                                 $        38,020       $        34,772

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of Equipment                                                            ($        1,052)      ($       52,612)
     Organization Costs                                                                             0       (         4,500)
     Extraordinary Item-Note Receivable                                               (        33,493)                    0
                                                                                      ----------------      ---------------
              NET CASH PROVIDED (USED)
              BY INVESTING ACTIVITIES                                                 ($       34,545)      ($       57,112)

CASH FLOWS FROM FINANCING ACTIVITIES
     New borrowings
     Long-Term                                                                         $            0        $       27,205
     Short-Term                                                                                     0                80,900
Debt Reduction
     Long-Term                                                                        (         4,336)      (        82,757)
                                                                                ----------------------        --------------
              NET CASH PROVIDED (USED)
              BY FINANCING ACTIVITIES                                                 ($        4,336)      $        25,348
                                                                                      ----------------      ---------------

              NET INCREASE (DECREASE) IN CASH                                         ($          861)      $         3,008

CASH AT BEGINNING OF YEAR                                                                       3,008                     0
                                                                                      ---------------       ---------------
              CASH AT END OF YEAR                                                     $         2,147       $         3,008
                                                                                      ===============       ===============
SUPPLEMENTAL DISCLOSURES
Interest Paid                                                                         $         4,463       $         9,365

</TABLE>

SEE ACCOUNTANTS REPORT AND NOTES

                                      F-6
<PAGE>



         RAIN FOREST MOOSE, LTD
         NOTES TO FINANCIAL STATEMENTS
         For the Twelve Months Ended December 31, 1996 and
         the Twelve Months Ended December 31, 1995

         STATEMENT OF  SIGNIFICANT ACCOUNTING ASSUMPTIONS

         Nature of Business

         The Company develops,  manufactures,  markets and distributes absorbent
         products,  principally  Peat Moose  Absorbent,  and  provides  disposal
         services  for end users of the  absorbent  products  and is licensed to
         incinerate the absorbent  products for energy  recovery.  The absorbent
         products are for both  industrial and home use. Peat Moose Absorbent is
         an  absorbent  product  consisting  of a young  blond grade of Canadian
         sphagnum  peat  which has been  dehydrated  and  blended  with  certain
         additives. The most significant additive is a proprietary product which
         aids in the  decomposition  of hydrocarbons and accelerates the rate of
         remediation.  The Peat Moose  Absorbent is packaged and sold in various
         container  quantities  and forms  including  loose fill bags, dip pads,
         cotton   covered   socks,   boxed   spill  kits,   plastic   drums  and
         acrylic-ceramic containers.

         Basis of Accounting

         The  financial   statements  of  Rain  Forest  Moose,   Ltd,  a  public
         corporation,  have been  prepared on the accrual  basis of  accounting.
         Using this method, revenue and expenses are recognized when incurred.

         Inventory

         Inventory is carried at the lower of cost or market and consists of raw
         materials and ready to sell products.

         Property and Equipment

         Property and Equipment are recorded at acquisition  cost.  Depreciation
         is computed  using straight line methods by charging  against  earnings
         amounts  sufficient  to amortize  the cost of the  related  assets over
         their estimated useful lives.

         Income Taxes

         No  allowance  has been made for income tax  expense for the year ended
         December  31, 1995  because the company was a  recognized  subchapter S
         corporation  and as such the  income  from the  corporation  was passed
         through to the stockholders and taxed on their personal returns.







         SEE ACCOUNTANTS REPORT

                                      F-7
<PAGE>



         RAIN FOREST MOOSE, LTD
         NOTES TO FINANCIAL STATEMENTS
         For the Twelve Months Ended December 31, 1996 and
         the Twelve Months Ended December 31, 1995

         Note-1: Insurance Claim

         On  August  8,  1996 a fire  destroyed  $  119,282  worth  of  finished
         inventory.  This inventory was insured by Loyds of London for cost less
         a $ 100  deductible.  The company has submitted a claim for payment and
         expects payment from the insurer for the full insured amount.

         Note-2:  Property , Plant and Equipment

         All assets are recorded at original  cost.  Depreciation  is calculated
         using the  straight  line  method,  lives are five  years for autos and
         office  equipment,   seven  years  for   manufacturing   equipment  and
         furniture,  and 10 years for  Leasehold  Improvements.  A  schedule  of
         assets is as follows:


<TABLE>
<CAPTION>
                                                     December 31, 1996
         <S>                                         <C>                   <C>                   <C>
                                                                               Accum.                 Depr.
                                                          Cost                  Depr.                Expense
                                                     -------------         -------------         -----------
         Auto                                        $      42,639         $      13,563         $       7,750
         Office Equipment                                   14,139                 5,953                 2,888
         Equipment                                           8,061                 3,030                 1,444
         Leasehold Improvements                              4,896                 1,184                   490
                                                     -------------         -------------         -------------
         Total                                       $      69,735         $      23,730         $      12,572
                                                     =============         =============         =============
</TABLE>

         The autos are pledged as  collateral  to  Springdale  Bank and Trust of
Springdale, AR.
<TABLE>
<CAPTION>
                                                     December 31, 1995
         <S>                                         <C>                   <C>                   <C>
                                                                               Accum.                 Depr.
                                                          Cost                  Depr.                Expense
                                                     -------------         -------------         -----------
         Auto                                        $      42,639         $       5,813         $       5,813
         Office Equipment                                   13,387                 3,065                 2,337
         Equipment                                           8,061                 1,586                1,2,15
         Leasehold Improvements                              4,896                   694                   367
                                                     -------------         -------------         -------------
         Total                                       $      68,683         $      11,158         $       9,732
                                                     =============         =============         =============
</TABLE>


         The autos are pledged as  collateral  to  Springdale  Bank and Trust of
Springdale, AR.







         SEE ACCOUNTANTS REPORT

                                      F-8
<PAGE>



         RAIN FOREST MOOSE, LTD
         NOTES TO FINANCIAL STATEMENTS
         For the Twelve Months Ended December 31, 1996 and
         the Twelve Months Ended December 31, 1995


         Note-3: The company's Long Term debt consists of the following:

<TABLE>
<CAPTION>
         <S>                                                                 <C>                   <C>

                                                                                 Dec. 31,                  Dec. 31,
                                                                                   1996                      1995
                                                                             ----------------      ----------------
         Anchor Financial, 21 % interest, $ 354.39 per month                 $          1,173      $          5,462
         Maturity Date:  6-30-1997
         Secured by computer printers and a copier

         Springdale Bank & Trust, 10.25%, $ 534.58 per month                            9,372                13,691
         Maturity Date:  5-10-98
         Secured by 90 GMC truck

         Springdale Bank & Trust, 10.25%, Monthly Int. Only                            60,000                30,000
         Maturity Date  6-21-97
         Secured by Inventory and A/R

          U.   S. Equipment, Inc. 7.5%, Payable on Demand                                   0                 8,409
         Maturity Date Payable on Demand
         Unsecured

         Note Payable Dan Pilkington, 7.5%, Payable on Demand                                                17,319
         Maturity Date Payable on Demand
         Unsecured

         Current Portion of Long Term debt                                   (         66,891)     (         64,404)
                                                                             -----------------     -----------------

         Long Term debt, less current portion                                $          3,654      $         10,477
                                                                             ================      ================
</TABLE>


         The  following is a summary of principal  maturities  of long term debt
during the next five years:

                  1997                                          $         66,891
                  1998                                                     3,654

       Note-4: Related Party Transactions and Extraordinary Item-Note Receivable

         At December 31, 1996 Dan  Pilkington  was the president of the Company.
         As president, Mr. Pilkington made various unauthorized loans to himself
         which totaled $ 33,493.  These transactions were originally recorded as
         a note  receivable  from  officer.  It has been  determined  that  this
         receivable  is  not   collectable   and  is  being   recognized  as  an
         extraordinary item on the December 31, 1996 income statement.




         SEE ACCOUNTANTS REPORT

                                      F-9
<PAGE>



         RAIN FOREST MOOSE, LTD
         NOTES TO FINANCIAL STATEMENTS
         For the Twelve Months Ended December 31, 1996 and
         the Twelve Months Ended December 31, 1995

         Note-5:  Going Concern

         As shown in the  accompanying  financial  statements,  the  Company has
         incurred a sizable loss for the year ended  December 31, 1996 and has a
         deficit in working capital. Due to inadequate management there has been
         a reduction in the number of  distributors  for the  Company's  product
         resulting in a  corresponding  drop in overall  sales.  As discussed in
         Note 6 the existing  president at December 31, 1996 was removed and new
         officers  were  elected.  The  new  management  has  begun  a  plan  to
         recapitalize the Company and to reestablish the  relationship  with the
         distributors.  There  can be no  assurance  that  the  Company  will be
         successful  in its efforts to  implement  this plan.  If the Company is
         unsuccessful  in its efforts,  it may be  necessary  to undertake  such
         other  actions as may be  appropriate  to  preserve  asset  value.  The
         financial  statements do not include any adjustments  that might result
         from the outcome of this uncertainty.

         Note-6:  Subsequent Events

         Subsequent to the balance sheet date the president at December 31, 1996
         was replaced and a new president, officers, and board of directors were
         elected on May 12, 1997.

         On February 24, 1997 Springdale Bank and Trust, a note holder, called a
         note in the amount of $ 9,372 that was in default.  Springdale Bank and
         Trust obtained possession of the collateral which was a 90 GMC truck.










         SEE ACCOUNTANTS REPORT

                                      F-10
<PAGE>











                            SUPPLEMENTAL INFORMATION









                                      F-11

<PAGE>


RAIN FOREST MOOSE, LTD
NOTES TO FINANCIAL STATEMENTS
For the Twelve Months Ended December 31, 1996 and
the Twelve Months Ended December 31, 1995
                                          Dec. 31,              Dec. 31,
                                              1996                  1995
                                   ---------------          ------------
Operating Expenses
Accounting                         $        21,371          $      2,666
Advertising                                    100                 7,617
Amortization                                   900                   675
Auto & Truck                                11,391                22,448
Bank Charges                                    98                 2,206
Contributions                                  500                11,313
Contract Labor                              20,094                     0
Depreciation                                12,572                 9,732
Dues & Subscriptions                           641                 1,020
Entertainment                                    0                 5,350
Equipment Rental                               171                 6,361
Insurance                                    9,316                 7,112
Management Expense                           1,345                   350
Miscellaneous                                  739                 1,514
Office Expense                               7,307                 3,684
Office Salaries                             31,435                44,261
Payroll Tax Expense                          8,166                 9,837
Postage                                      1,664                   204
Rent                                        25,483                28,454
Repairs                                        285                   399
Sales Commission                            26,103                72,111
Supplies                                    22,453                 6,767
Taxes & Licenses                               189                 3,446
Telephone                                   24,026                24,587
Travel                                      59,499                38,337
Unemployment Taxes                           1,776                 4,687
Utilities                                    2,420                 2,931
                                  ----------------          ------------
                                   $       290,044          $    318,069
                                  ================          ============


SEE ACCOUNTANTS REPORT

                                      F-12
<PAGE>