U.S. SECRUITIES AND EXCHANGE COMMSSION
                             Washington, D.C. 20549
                                   Form 10-KSB

X    Annual report under  section13 or 15(d) of the  Securities  Exchange Act of
     1934 for the fiscal year ended December 31, 1998.

     Transaction 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 of                (IRS Employer Identification No.)
incorporation or organization)  

       1317 S. Turner
   Springdale, Arkansas                                      72764
(Address of principal executive offices)                   (Zip Code)
Issuer's telephone number: (501) 927-1884

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  nondisclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements  incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. X

Issuer's revenues for its most recent fiscal year was $ 26,242.

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

The number of outstanding of Common Stock as of April 21, 1999, was 10,380,942

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



<PAGE>




                                TABLE OF CONTENTS

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

Part II                                                                      -4-
Item 5.  Market for Common Equity and Related Stockholders Matters           -4-
Item 6.  Management's Discussion and Analysis or Plan of Operation           -4-
         Results of Operations                                               -5-
         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                 -7-8-
Item 10. Executive Compensation                                              -9-
         Compensation of Directors                                           -9-
         Stock Option Plan                                                   -9-
         Officer and Director Liability                                     -10-
Item 11. Security Ownership of Certain Beneficial Owners and Management     -10-
Item 12. Certain Relationships and Related Transactions                     -11-
Item 13. Exhibits and Reports on Form 8-K                                   -11-
(a)  Exhibits                                                               -12-
(b)  Reports on Form 8-K                                                    -12-



<PAGE>


Part I

Item 1.  Description of Business.

General

    Aarow  Environmental  Group,  Inc., a Nevada  corporation  (the "Company" or
"Aarow Environmental"), though its wholly-owned subsidiary, Rain Forest - Moose,
Ltd., an Arkansas corporation ("RFM Arkansas"), develops, manufactures,  markets
and  distributes  a  core  of  products  and  services  which  address  specific
environmental issues. These issues are: Soil and Groundwater Remediation with an
emphasis on  bioremediation  (a form of  remediation  which  utilizes  microbial
bacteria to digest harmful  contaminants.)  Animal Waste Management  through the
development of and exclusive  marketing of a newly designed  processing  machine
that will tackle most of the problems  associated  with animal  waste.  Fuel and
Fluid  Management  by treating  various  fuels and fluids by exposing  them to a
compound magnetic field. The Company has a unique  configuration that has proven
to be far more  effective  over  conventional  methods in the  following  areas:
emissions reduction, controlling calcium scale build up, and fuel economy.

    The executive offices of Aarow  Environmental are located at 1317 S. Turner,
Springdale,  Arkansas, 72764, and the telephone number of Aarow Environmental is
(501) 927-1884.

Background

    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.

    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 the  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 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


                                        1


<PAGE>


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
the 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's  business is centered  around a core of products and services
which address specific environmental issues. These issues are:

    Soil and Groundwater  Remediation with an emphasis on bioremediation (a form
of   remediation   which   utilizes   microbial   bacteria  to  digest   harmful
contaminants.)  Along with this is the  Company's  Aarozorb  products  which are
environmentally preferred absorbent products.

     Animal Waste Management through the development of and exclusive  marketing
of a newly  designed  processing  machine  that will tackle most of the problems
associated  with animal waste.  In the year ended  December 31, 1998 the Company
incurred $ 86,770 in research and development  costs related to the Animal Waste
Management  machine.  This cost was incurred as the result of a  distributorship
agreement  entered  into on January 22, 1998 between AWM  Investments,  LLC. and
Aarow  Environmental  Group,  Inc.  This  agreement  gives  Aarow the  exclusive
worldwide  distribution rights for the AWM machine. The agreement  automatically
renews annually on the anniversary date.

    Fuel and Fluid  Management by treating  various fuels and fluids by exposing
them to a compound magnetic field. The Company has a unique  configuration  that
has proven to be far more effective over  conventional  methods in the following
areas:  emissions  reduction,  controlling  calcium  scale  build  up,  and fuel
economy.

Marketing

    The Company markets its products directly to consumers through the Company's
marketing personnel.

Contractual Arrangements

    Aarow  Environmental  Group,  Inc.  sells  its  products  without  a  formal
contract, other than pursuant to a price list. Because Aarow Environmental Group
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.

    Aarow  Environmental   Group,  Inc.  entered  into  an  exclusive  marketing
agreement with AWM  Investments,  LLC. This is an annually  renewing  agreement,
beginning  January  22, 1998 which gives  Aarow  exclusive  worldwide  marketing
rights to sell the Animal Waste Management machine.



                                        2

<PAGE>

Competition

    Soil  &   Groundwater   Remediation   Competition.   Large   engineering   &
environmental  assessment  firms are the primary  rival of Aarow within the soil
and groundwater  remediation  market.  These large firms comprise  approximately
70-80% of Aarow's  competition.  The last 20-30% of the  competitors  comes from
small  engineering & environmental  assessment firms and construction  companies
with the  capabilities to expedite large  excavation  projects,  however massive
site excavation is an outdated remediation process well into it's decline.

    Aarow's   remediation   services  emphasize  in  situ  treatment.   In  situ
technologies   are   predicted  to  continue   gaining   market  share  as  site
characterization and analysis revenues,  revenues on which our competitors rely,
will begin to decline.  Much of the site  characterization  and analysis methods
will be replaced by actual site cleanups, activities at which Aarow specializes.

    Competition  in the  animal  waste  management  market  consists  mainly  of
composting  operations.  Out of these operations the ones realizing the greatest
success  employ  enzymes to accelerate  the  decomposition  process.  Composting
methods  are time  consuming,  eliminate  only 60 to 70% of the  bacteria,  have
little effect on nitrate and phosphate  levels,  and do very little to eliminate
odor. Finally the end product left from this system has a limited use.

    Aarowaste  systems,   the  Animal  Waste  Management   machine,   utilize  a
combination of ultraviolet  light and multiple  chemical  processes to eliminate
all  bacteria,  bind up nutrients  into  release on demand  forms which  prevent
overloading the soil, significantly reduce odors, and reduce the waste stream up
to 95% by  removing  the  water.  This  entire  process,  from  start to finish,
transpires in a matter of minutes.  The end product from the Aarow waste systems
will benefit several  markets (feed  additives,  fertilizer,  etc.) in ways that
have never before been possible.

    Chemical  companies are the largest  competitors  in the fluid  conditioning
industry.  Currently  chemical  injection  is the method of choice for  treating
calcium scale build up in pipes and heat exchanger  systems.  Although  chemical
treatment is very effective, there is considerable ongoing expense involved.

    Over the years there have been  several  products  developed to improve fuel
economy. Of these products, not one has achieved overwhelming success.  However,
the Aarow fuel conditioner presents a solution involving a one time expense. The
unit has no moving  parts,  requires no  maintenance,  and will last for several
years.

Government Regulation

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

Environmental Matters

    Environmental  standards  must be met by the  Company  when  doing  Soil and
Groundwater Remediation. When a cleanup site is finished it must be certified by
the appropriate governmental agency.



                                        3

<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,  marketing and
administrative   positions,   none  of  which  were   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 3.

Item 2.  Description of Property.

    The  Company  leases  executive  offices  at   1317 S.  Turner,  Springdale,
Arkansas 72764.

Item 3. Legal Proceedings

    On October 2, 1997 a judgment was entered in the  Washington  County  Court,
Fayetteville,  AR,  against  the  Company.  This  judgment is in the amount of $
18,370 and accrues interest at the rate of 10 %.

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

    During the fourth  quarter of the fiscal year ended  December 31, 1998,  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.

    The Company's  Common Stock is traded on the over the counter bulletin board
under the symbol of AARO.  On April 21,  1999,  there were  approximately  1,220
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
intent 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 Aarow  Environmental  Group, Inc. 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 the Report.

    Rendezvous Trails of America, Inc. (formerly Holiday Resorts  International,
Inc.); the former parent of Aarow Environmental was incorporation in April 1970.
Beginning in 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 Merger, dated February 23, 1996,
RTA merged with and into Aarow Environmental as the surviving  corporation.  See
"Item 1. Description of  Business-Background-Reincorpration  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

                                        4

<PAGE>

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. See "Item
1. Description of Business-Background-RFM Arkansas Acquisition" and "Item 12.
Certain Relationships and Related Transactions."

Results of Operations

    The following table sets forth selected results of operations for the fiscal
year ended December 31, 1998, and December 31, 1997,  which are derived from the
audited  financial  statements of Aarow  Environmental  Group, Inc. See "Item 1.
Description of Business-Background-RFM Arkansas Acquisition."

<TABLE>

                                            For the Fiscal Year Ended           for the Fiscal Year Ended
                                                  December 31, 1998                 December 31, 1997
                                                  Amount       Percent            Amount       Percent
                                                  ------       -------            ------       -------
<S>                                               <C>          <C>                <C>          <C>

Sales income                                      $  26,242    100.00%            $ 38,279     100.00%
                                                  ---------    -------            --------     -------
Cost of Sales:
    Materials                                     $  14,418     54.9.0%           $ 20,815      54.4%
    Freight                                               0      0.0%                  198       0.5%
                                                  ---------      ----             --------     ------
    Total Cost of Sales                           $  14,418     54.9%             $ 21,013      54.9%
                                                  ---------     -----             --------     ------
Gross Profit                                      $  11,824     45.1%             $ 17,266      45.1%
                                                  ---------     -----             --------     ------
Operating Expenses                                $ 197,119    751.16%            $206,652     539.9%
                                                  ---------    -------            --------     ------
Income or (loss) from operations                  ($185,295)   706.1%             ($189,386)   494.75%
                                                  ----------   ------             ----------   -------
Other Income and (expense);
    Interest Expense                              ($ 22,179)    84.5%             ($ 7,036)     18.4%
    Payroll Tax Penalties and Interest            (   7,722)    29.4%             (  6,517)     17.0%
    Extraordinary Item                                    0      0.0%             (142,934)    373.4%
                                                  ---------      ----             ---------    ------
         Total other income and (expense)         ($ 29,901)   113.9%             ($156,487)   408.8%
                                                  ----------   ------             ----------   ------
Net Income or (Loss)                              ($215,196)   820.0%             ($345,873)   903.56
                                                  ==========   ======             ==========   ======

WEIGHTED AVERAGE number of
common stock and common stock
equivalents outstanding                           19,380,942                      18,024,045
                                                  ==========                      ==========

NET INCOME (LOSS) per common stock
and common stock equivalents                      ($   .011)                      ($   .019)
                                                  ==========                      ==========
</TABLE>

         Comparison of Fiscal 1998 and 1997

    Sales  income  decreased  to $ 26,242  in 1998  from $ 38,279  for  1997,  a
decrease of 31.4  percent.  The decrease in sales was primarily due to decreased
sale  of  Peat  Moose   Absorbent   products   during  1998  and  the  Company's
concentration  on  research  and  development  of the  Animal  Waste  Management
Machine.  The  decreased  sales  during  1998  resulted  in total costs of sales
decreasing  to $ 14,418 in 1998,  compared  to $ 21,013 for 1997,  a decrease of
31.4 percent.  The decrease in total cost of sales  resulted from a 30.7 percent
decrease in the cost of materials  from $ 20,815 in 1997, to $ 14,418,  in 1998,
and a 100.0 percent decrease in the cost of freight from $ 198 in 1997 to $ 0 in
1998.  Gross profit  decreased 31.5 percent from $ 17,266 in 1997 to $ 11,824 in
1998.

    Operating expenses decreased from $ 206,652 in 1997 to $ 197,119 for 1998, a
4.6 percent  decrease.  The  decrease in  operating  expenses  was the result of
extensive research and development on the Animal Waste Management machine.

                                        5

<PAGE>

    The  Company  experienced  a $  185,295  loss  from  operations  in 1998  as
compared to a $ 189,386 loss from operations in 1997.

    Interest expense increased from $ 7,036 in 1997 to $ 22,179 in 1997, a 315.2
percent  increase.  Payroll tax penalties  and interest  increased to $ 7,722 in
1998 from $ 6,517 in 1997, an 18.5 percent increase.  Such items combined with a
$ 185,295 loss from operations resulted in a $ 215,196 loss for 1998 as compared
with a loss of $ 345,873 for 1997.

    Quarterly Results of Operations

    Aarow Environmental Group, Inc.'s operations are affected by seasonal trends
principally based upon weather.  In 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 are relatively fixed
over the short term, Aarow Environmental Group, Inc. 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 Aarow  Environmental  Group,  Inc.
Nevertheless,  Aarow  Environmental  Group,  Inc.'s  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,  Aarow Environmental Group, Inc., for
federal and state income tax purposes,  was taxed as a pass-through  entity, and
income  taxes were not imposed at Aarow  Environmental  Group,  Inc.'s  level of
taxation. After the RFM Arkansas acquisition, Aarow Environmental Group, Inc.
has produced continuing losses.
Therefore, no provisions for income taxes have been made.

Liquidity and Capital Resources

    Historically,  Aarow Environmental  Group, Inc. has financed its growth from
borrowing and shareholder  contributions.  Net cash used by operating activities
totaled  $  182,351  in  1998,  as  compared  with net  cash  used by  operating
activities  totaling $ 126,149 in 1997. As of December 31, 1998, the Company had
a working capital deficit of $ 419,523, compared to a working capital deficit of
$ 243,178,  at December 31, 1997. The working  capital  deficit is the result of
the  extensive  time spent in the research and  development  of the Animal Waste
Management machine.

    During 1997, the Company experienced a period of inadequate management until
the  election  of new  management  for  the  Company  on  May12,  1997.  The new
Management for the Company has begun a plan to  recapitalize  the Company and to
reestablish the relationships with its distributors. Also, as disclosed earlier,
the Company has entered into an exclusive  distribution  agreement to distribute
the Animal  Waste  Machine and during 1998 spent a total of $ 86,770 in research
and development of this machine.  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.





                                        6

<PAGE>

    As of December 31, 1998, Aarow  Environmental  Group, Inc. had one loan from
Springdale Bank & Trust Company (the "Bank"), which was secured by inventory and
accounts receivable,  bears interest at 10.25 percent per annum. At December 31,
1998, the outstanding principal balance of this loan was $ 60,000. This note has
an original  due date of June 21, 1997 and at December  31, 1998 the Company was
in default.  On February  16, 1999 this note was renewed at 10 percent per annum
with monthly  payments of $ 500 interest only. The new note matures February 16,
2000.

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 1997 and 1996.

Part III

Item 9. Directors,  Executive Officers, Promoters and Control Person; 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 Aarow Environmental  Group, Inc. 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>

Name                         Age            Position with Aarow               Position with RFM
----                         ---            -------------------               -----------------
                                              Environmental
                                              -------------  
<S>                          <C>            <C>                               <C>

Lloyd W. Phillips(1)         53             President, Chief Executive         President, Chief Executive
                                            Officer, and Chairman              Officer, and Chairman
                                            of the Board                       of the Board

Jeff Martin(2)               37             Executive Vice President           Executive Vice President
                                            and  Director                      and Director

Stan Sisemore(2)             51             Vice President                     Vice President
                                            and Director                       and Director

Mitch Villines               49             Secretary and Director             Secretary and Director

</TABLE>
----------------------------

(1)  As holder of all of the outstanding  Series I Convertible  Preferred Stock,
     Mr.  Phillips  in  combination  with  Mr.  Sisemore  and  Mr.  Martin  hold
     approximately  55.7  percent  of  the  outstanding  voting  rights  of  the
     shareholders of the Company.  Therefore,  Mr. Phillips,  Mr. Martin and Mr.
     Sisemore  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 "-Stock Option Plan, "below.

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

                                        7

<PAGE>

    The  following  is a brief  description  of the business  background  of the
executive officers and directors of the Aarow Environmental Group, Inc.

    Lloyd  Phillips  was elected as Chairman of the Board,  President  and Chief
Executive  Officer on March 31, 1999.  Mr.  Phillips has served as the Secretary
and a director since 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 also has a broad  background in sales and
marketing.

    Jeff Martin is Executive Vice President and a Director of the Company serves
as a member of the Stock Option  Committee.  Prior to becoming employed with the
Company in September  1994, Mr. Martin was employed by First Brands  Corporation
as  operations  manager of  packaging  plant  operations.  His  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.

    Stan Sisemore was Chariman of the Board, President,  Chief Executive Office,
and a Director of the Company from May 12, 1997 to March 31, 1999. Currently Mr.
Sisemore is serving in the capacity of Vice President and Director. Mr. Sisemore
also  serves as a member of the Stock  Option  Committee.  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.

    Mitch  Villines  is the  Secretary  and a  Director.  He has served  in this
capacity since March 31, 1999. Mr.  Villines has been involved in the management
and development of the poultry and egg industry for the past twenty-five years.

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















                                        8

<PAGE>

<TABLE>

<CAPTION>

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 each of
the executive  officers that received  compensation in excess of $100,000 during
1998.  Because  Rendezvous  Trails of America,  Inc. (the former parent of Aarow
Environmental)  was inactive  during 1993 through 1996,  its President and other
executive officers were not paid any executive  compensation nor was any accrued
during such years
                                                                       Annual Compensation
                                                                       -------------------
                                                                                              All Other
Name and Principal Position                 Year(1)           Salary(2)         Bonus(3)     Compensation
---------------------------                 --------          ---------         --------     -------------
<S>                                             <C>           <C>               <C>           <C>

Stanley L. Sisemore                             1998          $  21,000         $      0      $       0
    Vice President and Director                 1997          $  23,000         $      0      $       0

Lloyd W. Phillips                               1998          $  13,000         $      0      $       0
    President and Director                      1997          $  23,000         $      0      $       0

Jeff Martin                                     1998          $  16,000         $      0      $       0
    Executive Vice President                    1997          $  26,000         $      0      $       0
    and Director

Mitch Villines                                  1998          $   3,000         $      0      $       0
    Secretary and Director                      1997          $       0         $      0      $       0

</TABLE>
---------------------------
(1)  The  executive  officers,  including  the  President,  were  not  paid  any
     executive compensation during 1996 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 nor  currently  compensated  for  attending  meetings  of
directors  and  committees  of  the  Board  of  Directors,  but  are  reimbursed
out-of-pocket expenses.

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 option ("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  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.




                                        9

<PAGE>

    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, 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  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.

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
April 21, 1999, 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 share unless otherwise  indicated,  and there is no family
relationship   between  the   executive   officers   and   directors   of  Aarow
Environmental.






                                       10

<PAGE>

<TABLE>
                                                 Series I Convertible
                                                    Preferred Stock                     Common Stock   
                                            -------------------------------        -------------------------
                                            Shares               Percent of        Shares         Percent of
                                            Beneficially         Share             Beneficially   Share
          Owned                             Outstanding          Owned             Ownership
          -----                             -----------          -----             ------------   ----------
<S>                                         <C>                  <C>              <C>             <C>   

Name and Address of Beneficial Owner
Stanley L. Sisemore(1)                          0                   0.0%            1,440,000     7.4%
Jeff Martin                                     0                   0.0%              250,000     1.3%
Lloyd W. Phillips                           3,000,000             100.0%            9,100,000     47.0%
Executive Officers and Directors as a group
   (three persons)(1)                       3,000,000             100.0%           10,790,000     55.7%
</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 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.

    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, 1997, 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 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,  1997,  these  loans  had  been  discharged  in
connection with the resolution of unauthorized loans from the Company to Mr.
Pilkington.

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., and Arkansas  corporation,
          Dan  Pilkington,  Jeff Martin,  Stan  Sisemore,  Jim Anderson and Bill
          Hooten, dated March 5, 1196*
     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.*




                                       11

<PAGE>

     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.*
     4.5  Registration  Rights Agreement  between Rain Forest - Moose,  Ltd. and
          Dan Pilkington, dated March 5, 1996.*
     4.6  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 and Bill Hooten,  dated
          January 19, 1996, filed as Exhibit 2.2 hereto.*
     21.1 Subsidiary of Registrant.*
     27   Financial Data Schedule

-------------------------------------
o    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 1998.



























                                       12

<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/ Lloyd W. Phillips
                                          --------------------------------  
                                              Lloyd W. Phillips, President

Date:


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

   /s/ Lloyd W. Phillips         Chief Executive Officer, President and
       -----------------         Chairman of the Board
       Lloyd W. Phillips         

   /s/ Jeff Martin               Executive Vice President
       -----------------         and Director
       Jeff Martin               

   /s/ Stan Sisemore             Vice President
       -----------------         and Director
       Stan Sisemore             

   /s/ Mitch Villines            Secretary
       -----------------
       Mitch Villines            and Director
















                                       13

<PAGE>



                          INDEX TO FINANCIAL STATEMENTS

AAROW ENVIRONMENTAL GROUP, INC.

    Independent Auditors Report                                              F-2

    Balance Sheet, December 31,1998 and 1997                                 F-3

    Statements of Income and Retained Earnings for the Twelve Months
    Ended December 31, 1998 and the Twelve Months Ended December 31, 1997    F-5

    Statements of Cash Flows for the Twelve Months Ended December 31, 1998
    and the Twelve Months Ended December 31, 1997                            F-6

    Notes to Financial Statements                                            F-7

    Supplemental Information                                                F-11











<PAGE>


                           INDEPENDENT AUDITORS REPORT



To the Board of Directors
and Stockholders of
Aarow Environmental Group, Inc.
Springdale, AR


I have audited the  accompanying  balance sheets of Aarow  Environmental  Group,
Inc. (a public  corporation)  as of December  31, 1998 and December 31, 1997 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 Aarow Environmental Group, Inc. as
of December 31, 1998 and December 31, 1997 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-11 to the
financial statements,  the Company's significant operating loss, working capital
deficit, and prior 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
April 21, 1999




                                       F-2

<PAGE>

<TABLE>

<CAPTION>


AAROW ENVIRONMENTAL GROUP, INC.
BALANCE SHEET
As of December 31, 1998 and December 31, 1997
                                                                                     Dec. 31,              Dec. 31,
Assets                                                                                 1998                  1997     
                                                                                 ---------------       ---------------
<S>                                                                              <C>                   <C>

Current Assets:
Cash and Cash Equivalents                                                        $             0       $             0
Accounts Receivable                                                                            0                 1,043
Inventory                                                                                 32,400                33,668
                                                                                 ---------------       ---------------
                                                   Total Current Assets          $        32,400       $        34,711

PROPERTY, PLANT AND EQUIPMENT (net of  accumulated
                    depreciation of $ 13,937 and $ 10,001 respectively)                    8,159                12,095

Other Assets
Organization Costs (net of accumulated
         amortization of  $ 2,925 and $ 2,475 respectively)                      $         1,575       $         2,025
Noncompete Covenant (net of accumulated
         amortization of $ 2,550 and $ 750 respectively)                                  15,450                17,250
                                                                                 ---------------       ---------------
                                                     TOTAL OTHER ASSETS          $        17,025       $        19,275
                                                                                 ---------------       ---------------

                                                           TOTAL ASSETS          $        57,584       $        66,081
                                                                                 ===============       ===============

</TABLE>

















SEE ACCOUNTANTS REPORT AND NOTES
                                       F-3

<PAGE>

<TABLE>

<CAPTION>


AAROW ENVIRONMENTAL GROUP, INC.
BALANCE SHEET
As of December 31, 1998 and December 31, 1997
                                                                                 Dec. 31,              Dec. 31,
Liabilities and Stockholders Equity                                                1998                  1997     
                                                                             ---------------       ---------------
<S>                                                                          <C>                   <C>
Current Liabilities:
Bank Overdraft                                                               $             0       $         2,316
Accounts Payable                                                                      41,142                26,538
Payroll Taxes Payable                                                                103,496               107,965
Accrued Interest Payable                                                              24,229                 7,700
Judgment Payable                                                                      18,370                18,370
Short Term Notes                                                                     204,686                55,000
Current Portion of Long Term Notes                                                    60,000                60,000
                                                                             ---------------       ---------------
         TOTAL CURRENT LIABILITIES                                           $       451,923       $       277,889

LONG TERM LIABILITIES                                                                      0                     0
                                                                             ---------------       ---------------

         TOTAL LIABILITIES                                                   $       451,923       $       277,889

Stockholders Equity
Common Stock at Dec. 31, 1997, $ 0.001 par value, 30,000,000 shares          $        10,381       $         9,024
     authorized,  10,380,942 shares issued and outstanding
Convertible Preferred Stock, $0.001 par value, 5,000,000 shares                        3,000                 3,000
     authorized, 3,000,000 shares issued and outstanding,
     one share convertible for three shares common
Paid in Capital                                                                      220,557               189,249
Retained Earnings                                                            (       628,277)      (       413,081)
                                                                             ----------------      ----------------
TOTAL STOCKHOLDERS EQUITY                                                    ($      394,339)      ($      211,808)
                                                                             ----------------      ----------------

         TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                           $        57,584       $        66,081
                                                                             ================      ================

</TABLE>














SEE ACCOUNTANTS REPORT AND NOTES
                                       F-4

<PAGE>

<TABLE>


AAROW ENVIRONMENTAL GROUP, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Twelve Months Ended December 31, 1998 and
the Twelve Months Ended December 31, 1997
                                                                     Dec. 31               Dec. 31,
                                                                      1998                  1997     
                                                                ---------------       ---------------
<S>                                                             <C>                   <C>

Sales Income                                                    $        26,242       $        38,279

Cost of Sales
         Materials                                              $        14,418       $        20,815
         Freight                                                              0                   198
                                                                ---------------       ---------------
Total Cost of Sales                                             $        14,418       $        21,013
                                                                ---------------       ---------------

         GROSS PROFIT                                           $        11,824       $        17,266

Operating Expenses                                                      197,119               206,652
                                                                ---------------       ---------------

         GAIN  OR (LOSS) FROM OPERATIONS                        ($      185,295)      ($      189,386)

Other Income and (Expenses)
         Interest Expense                                       ($       22,179)      ($        7,036)
         Payroll Tax Penalties and Interest                     (         7,722)      (         6,517)
                                                                ----------------      ----------------
Total Other Income and (Expense)                                ($       29,901)      ($       13,553)
                                                                ----------------      ----------------

         INCOME OR (LOSS) BEFORE
         EXTRAORDINARY ITEM                                     ($      215,196)      ($      202,939)

Extraordinary Items
         Note Receivable                                        $             0       ($       20,455)
         Loss on Repossession                                                 0       (         3,298)
         Casualty Loss                                                        0       (       119,181)
                                                                ---------------       ----------------
Total Extraordinary Items                                       $             0       ($      142,934)
                                                                ---------------       ----------------

         NET INCOME OR (LOSS)                                   ($      215,196)      ($      345,873)

Retained Earnings at Beginning of Year                          (       413,081)      (        67,208)
                                                                ----------------      ----------------

         RETAINED EARNINGS AT END OF YEAR                       ($      628,277)      ($      413,081)
                                                                ================      ================

</TABLE>











SEE ACCOUNTANTS REPORT AND NOTES
                                       F-5

<PAGE>

<TABLE>

<CAPTION>

AAROW ENVIRONMENTAL GROUP, INC.
STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 1998 and
the Twelve Months Ended December 31, 1997
                                                                     Dec. 31,              Dec. 31,
                                                                       1998                  1997     
                                                                 ---------------       ---------------
<S>                                                              <C>                   <C>
         CASH FLOWS FROM OPERATING ACTIVITIES
Net Income or (Loss)                                             ($      215,196)      ($      345,873)
     Adjustments to reconcile net loss to net cash provided
     by operating activities
     Depreciation                                                          3,936                 3,383
     Amortization                                                          2,250                 1,650
     Extraordinary Items                                                       0                23,753
(Increase) decrease in:
     Accounts Receivable                                                   1,043       (         1,043)
     Inventory                                                             1,268       (         2,042)
     Insurance Claim                                                           0               119,181
Increase (decrease) in:
     Bank Overdraft                                              (         2,316)                2,316
     Accounts Payable                                                     14,604                 6,229
     Payroll Taxes Payable                                       (         4,469)               40,960
     Accrued Interest Payable                                             16,529                 6,967
     Judgment Payable                                                          0                18,370
                                                                 ---------------       ---------------
         NET CASH PROVIDED (USED)
              BY OPERATING ACTIVITIES                            ($      182,351)      ($      126,149)

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of Equipment                                       $             0       ($        4,887)
     Noncompete Covenant                                                       0       (        18,000)
                                                                 ---------------       ----------------
              NET CASH PROVIDED (USED)
              BY INVESTING ACTIVITIES                            $             0       ($       22,887)

CASH FLOWS FROM FINANCING ACTIVITIES
     New borrowings
     Long-Term                                                   $             0       $             0
     Short-Term                                                          167,458                59,500
Debt Reduction
     Long-Term                                                                         (        15,045)
     Short-Term                                                 (         17,772)
     Sale of Stock                                                        32,665               102,434
                                                                 ---------------       ---------------
              NET CASH PROVIDED (USED)
              BY FINANCING ACTIVITIES                            $       182,351       $       146,889
                                                                 ---------------       ---------------

              NET INCREASE (DECREASE) IN CASH                    $             0       ($        2,147)

CASH AT BEGINNING OF YEAR                                                      0                 2,147
                                                                 ---------------       ---------------
              CASH AT END OF YEAR                                $             0       $             0
                                                                 ===============       ===============

SUPPLEMENTAL DISCLOSURES
Interest Paid                                                    $        22,179       $         7,036

</TABLE>



SEE ACCOUNTANTS REPORT AND NOTES
                                       F-6


<PAGE>


AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
For the Twelve Months Ended December 31, 1998 and
the Twelve Months Ended December 31, 1997

Statement of  Significant Accounting Assumptions

Nature of Business

The Company's  business is centered around a core of products and services which
address specific environmental issues. These issues are:

Soil and Groundwater  Remediation with an emphasis on  bioremediation (a form of
remediation which utilizes microbial  bacteria to digest harmful  contaminants.)
Along with this is the Company's  Aarozorb  products  which are  environmentally
preferred absorbent products.

Animal Waste Management through the development of and exclusive  marketing of a
newly  designed  processing  machine  that  will  tackle  most  of the  problems
associated with animal waste.

Fuel and Fluid  Management by treating various fuels and fluids by exposing them
to a compound  magnetic field. The Company has a unique  configuration  that has
proven to be far more  effective  over  conventional  methods  in the  following
areas:  emissions  reduction,  controlling  calcium  scale  build  up,  and fuel
economy.

The Company  trades it's stock on the over the counter  bulletin board using the
stock symbol of AARO.

Name Change

On May 12, 1997 the Company  formally  changed it's name from Rain Forest Moose,
Ltd. to Aarow Environmental Group, Inc.

Basis of Accounting

The  financial   statements  of  Aarow  Environmental   Group,  Inc.,  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.


SEE ACCOUNTANTS REPORT
                                       F-7

<PAGE>

AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
For the Twelve Months Ended December 31, 1998 and
the Twelve Months Ended December 31, 1997

Income Taxes

For income tax reporting and financial  statement reporting the Company is using
depreciation  methods  that are the same and  therefore  there is no accrual for
deferred  income  taxes at this time.  However,  because  of  various  elections
available  at the time of filing  the income  tax  returns,  there may be future
differences  between  income tax  depreciation  expense and financial  statement
depreciation expense giving rise to accrual of deferred income taxes.

Note-1:  Property, Plant and Equipment

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

                                                    Accum.              Depr.
December 31, 1998                 Cost               Depr.             Expense  
                             -------------      -------------      -------------
Office Equipment             $      16,079      $      10,448      $       3,076
Equipment                            6,017              3,489                860
                             -------------      -------------      -------------
Total                        $      22,096      $      13,937      $       3,936
                             =============      =============      =============

                                                    Accum.              Depr.
December 31, 1997                 Cost               Depr.             Expense  
                             -------------      -------------      -------------
Office Equipment             $      16,079      $       7,372      $       2,523
Equipment                            6,017              2,629                860
                             -------------      -------------      -------------
Total                        $      22,096      $      10,001      $       3,383
                             =============      =============      =============

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

Note-2: Noncompete Covenant

On  July  29,  1997  the  Company  entered  into  an  agreement  with  Evergreen
BioServices,  Inc.  whereby  Evergreen grants Aarow the right to use Evergreen's
name and reputation to exclusively  market  remediation  throughout the U.S. and
Mexican markets.  Additionally,  Evergreen  agrees to work  exclusively  through
Aarow and Evergreen agrees not to compete with Aarow.  Evergreen will supply the
engineering  and technical  support and will be  responsible to accept or reject
all proposals  concerning  remediation  through Aarow.  This agreement begins on
July 29,  1997 and remains in effect for ten years at which time Aarow can renew
one time for an additional ten years

                                            Dec. 31,              Dec. 31,
                                              1998                  1997      
                                        -----------------     -----------------
     Noncompete Covenant                $         18,000      $         18,000
     Accumulated Amortization           (          2,550)     (            750)
                                        -----------------     -----------------
     Net Noncompete Covenant            $         15,450      $         17,250
                                        ================      =================


SEE ACCOUNTANTS REPORT
                                       F-8

<PAGE>

AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
For the Twelve Months Ended December 31, 1998 and
the Twelve Months Ended December 31, 1997

Note-3:  Judgment Payable

On October 2, 1997 a  judgment  was  entered  in the  Washington  County  Court,
Fayetteville,  AR,  against  the  Company.  This  judgment is in the amount of $
18,370 and accrues interest at the rate of 10%.

Note-4:  Short-Term Notes

On September 15, 1997 the Company originally issued a series of short term notes
in the  amount  of $ 5,000  each  for a total of $  55,000.  Each  note  accrues
interest at the rate of 8 % and is a single pay note  originally  due  September
15, 1998.  These notes were  increased  and extended to September  15, 1999.  In
addition  20,000 shares of common stock and 100,000  common stock  warrants were
issued to each note holder.  In case of default the note agreements call for the
issuance of an additional 40,000 shares of common stock to each note holder.

Note-5: The company's Long Term debt consists of the following:

<TABLE>

                                                             Dec. 31,         Dec. 31,
                                                              1998             1997      
                                                           -----------      ------------
<S>                                                        <C>              <C>

Springdale Bank & Trust, 10.25%, Monthly Int. Only         $    60,000      $    60,000
Maturity Date  6-21-97
Secured by Inventory and A/R
Current Portion of Long Term debt                          (    60,000)     (    60,000)
                                                           ------------     ------------

Long Term debt, less current portion                       $         0      $         0
                                                           ===========      ============

</TABLE>


At  December  31,  1998 the  Company  was in default on this note,  however,  on
February  16, 1999 this note was  renewed at 10 percent  per annum with  monthly
payments of $ 500 interest only. The new note matures February 16, 2000.

Note-6:  Stockholders' Equity

Common  Stock:  At December 31, 1998 there were  30,000,000  shares  authorized,
10,380,942  issued and  outstanding at $ 0.001 per share par value.  At December
31, 1997 there were 30,000,000  shares  authorized,  9,024,045 shares issued and
outstanding at $ 0.001 per share par value. The Company trades it's stock on the
over the counter bulletin board using the stock symbol of AARO.

Stock Warrants:  There are 1,100,000 common stock warrants  issued.  Each common
stock warrant permits the holder to purchase at any time from September 15, 1997
until September 15, 2002 one share of the Company's  common stock at the initial
exercise price of $ 0.50 per share.  The common stock warrants are redeemable by
the  Company  upon  thirty days  written  notice to the  holder,  at $ 0.001 per
warrant,  conditioned  upon the price of the common stock of the Company closing
for fourteen consecutive business days above $ 2.00 per share.


SEE ACCOUNTANTS REPORT
                                       F-9

<PAGE>


AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
For the Twelve Months Ended December 31, 1998 and
the Twelve Months Ended December 31, 1997

Convertible  Preferred Stock: At December 31, 1998 and 1997 there were 5,000,000
shares authorized,  3,000,000 shares issued and outstanding.  Each share has a $
0.001 par value and is convertible for three shares of common stock.

Note-7:  Going Concern

As shown in the accompanying  financial  statements,  the Company has incurred a
sizable  loss for the year ended  December 31, 1998 and has a deficit in working
capital.  Management has begun a plan to recapitalize  the Company and to market
new products.  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.

















SEE ACCOUNTANTS REPORT
                                      F-10


<PAGE>












                            SUPPLEMENTAL INFORMATION














<PAGE>


AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
For the Twelve Months Ended December 31, 1998 and
the Twelve Months Ended December 31, 1997
                                               Dec. 31,              Dec. 31,
                                                1998                  1997     
                                         ---------------       ---------------
Operating Expenses
Accounting                                        22,111       $        18,416
Advertising                                        1,839                   400
Amortization                                       2,250                 1,650
Auto & Truck                                       6,214                 5,688
Bank Charges                                       3,029                    81
Depreciation                                       3,936                 3,383
Dues & Subscriptions                                  65                     0
Equipment Rental                                     224                     0
Insurance                                              0                   222
Legal Expense                                      7,507                 8,960
Miscellaneous                                      7,422                     0
Office Expense                                     5,953                13,048
Office Salaries                                   10,610                99,567
Payroll Tax Expense                                5,585                 7,617
Postage                                              832                    22
Rent                                              13,500                 9,091
Research and Development                          86,770                     0
Supplies                                           1,703                 9,882
Taxes & Licenses                                     351                     0
Telephone                                         13,235                16,506
Travel                                             2,237                10,341
Unemployment Taxes                                 1,746                 1,778
                                         ---------------       ---------------
                                         $       197,119       $       206,652

















SEE ACCOUNTANTS REPORT
                                      F-11