**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM
      10-KSB**




(Mark
      One)




**x**
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




For
      the
      fiscal year ended December 31, 2006




** ̈**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 (No fee required)**




For
      the
      transition period from  to




Commission
      file number l-9224




**Arrow
      Resources Development, Inc.**


**(Name
      of Small Business Issuer in Its Charter)**





**DELAWARE**
            
            **56-2346563****(State
                or Other Jurisdiction of Incorporation or
                Organization)**
            
            **(I.R.S.
                Employer Identification
                No.)**





**Carnegie
                Hall Tower, 152 W. 57****th****Street, New York, NY 10019****(Address
                of Principal Executive Offices) (Zip
                Code)**




**212-262-2300**


**(Issuer’s
      Telephone Number, including Area Code)**




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




**Title
                of Each Class**
            
            **Name
                of Each Exchange on Which Registered**Common
                stock - par value $0.00001
            
            OTC:
                Bulletin Board




Securities
      registered under Section 12(g) of the Exchange Act: None







**(Title
      of Class)**







**(Title
      of Class)**




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




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB  ̈




Issuer’s
      revenues for 2006, its most recent fiscal year, were $0 from continuing
      operations.




The
      number of freely tradable shares not held by affiliates is 25,003,244.




As
      of
      March 19, 2007, the aggregate market value of voting stock held by
      non-affiliates of the Issuer was approximately $3,750,487.




The
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of March 19, 2007.




**Class**
            
            **Outstanding
                at March 19, 2007**Common
                stock - par value $0.00001
            
            649,543,240




**DOCUMENTS
      INCORPORATED BY REFERENCE**




None.












**PART
      I**




Forward
      Looking Statements




Certain
      statements in this Annual Report on Form 10-KSB constitutes “forward-looking
      statements” relating to the Company within the meaning of the Private Securities
      Litigation Reform Act of 1995. All statements regarding future events, our
      financial performance and operating results, our business strategy and our
      financing plans are forward-looking statements. In some cases, you can identify
      forward-looking statements by terminology, such as




●
            
            “may,”




●
            
            “will,”




●
            
            “would,”




●
            
            “should,”




●
            
            “could,”




●
            
            “expect,”




●
            
            “intend,”




●
            
            “plan,”




●
            
            “anticipate,”




●
            
            “believe,”




●
            
            “estimate,”




●
            
            “predict,”




●
            
            “potential”
                or




●
            
            “continue,”




1




the
      negative of such terms or other comparable terminology. These statements are
      only predictions. Known and unknown risks, uncertainties and other factors
      could
      cause actual results to differ materially from those contemplated by the
      statements. In evaluating these statements, you should specifically consider
      various factors, including the risks outlined under the Risk Factors set forth
      herein. These factors may cause our actual results to differ materially from
      any
      forward-looking statements.




Although
      we believe that the expectations reflected in the forward-looking statements
      are
      reasonable, we cannot guarantee future results, levels of activity, performance
      or achievements. We are under no duty to update any of the forward-looking
      statements after the date of this report to conform those statements to actual
      results or to changes in our expectations.




**Glossary**




“Arrow”
-
      Arrow Resources Development, Inc. (also referred to as the “Company”), formerly
      known as CNE Group, Inc. prior to the name change that occurred on or around
      December 1, 2005.




“Arrow
      Ltd.” - Arrow Resources Development, Ltd., a company organized under the laws of
      Bermuda and a 100% owned subsidiary of Arrow. Arrow Ltd. was acquired by Arrow
      on or around August 1, 2005.




“APR”
-
      Arrow Pacific Resources Group Limited, a British Virgin Islands company, is
      currently the principal shareholder of the Company, owning 349,370,000 shares
      or
      53.78%.




“GMPLH”
- Gerakan
      Masyarakat Pelestari Lingkungan Hidup, is a
      non-profit organization in Indonesia founded by A. H. Moerdani and Hans
      Karundeng. GMPLH is an educational organization that acts as project developer,
      fundraiser, and project expeditor for agricultural and environmental projects
      throughout Indonesia.




“P.T.
      Eucalyptus” - P.T. Eucalyptus Alam Lestari is an Indonesian registered company
      owned by Hans Karundeng and is a wholly
      owned subsidiary of Arrow Pacific Resources Group Limited (“APR”). This
      company is the Indonesian operating company that is the interface between GMPLH
      and all of the operating units and joint venture partners. P.T. Eucalyptus
      is
      responsible for the supervision of planning of all harvesting, land preparation,
      and planning of both the eucalyptus tree plantation and a large-scale
      agricultural operation.




“Arrow
      Pte.” - Arrow Pacific Resources (s) Pte. Ltd. is organized under the laws
      of Singapore and is a wholly owned subsidiary of Arrow Pacific Resources Group
      Limited (“APR”). Arrow Pte. is the operating company for the Papua New Guinea
      project and responsible
      for the supervision of planning of all harvesting, land preparation, and
      planning of both the eucalyptus tree plantation and a large-scale agricultural
      operation.




**Item 1.**
            **Description
                of Business.**




Arrow
      Resources Development, Inc. (“Arrow”) was incorporated under the laws of the
      State of Delaware in 1968. Unless the context requires otherwise, the term
      “Company,” “our,” or “we” refers to Arrow Resources Development, Inc.




**GENERAL**




The
      principal business of Arrow is to provide marketing, sales, distribution,
      corporate operations and corporate finance services for the commercial
      exploitation of natural resources around the world.




Our
      temporary corporate executive offices are located at Carnegie Hall Tower, 152
      W.
      57 th Street,
      New York, NY 10019 (212-262-2300) and our web site is www.arrowrd.com.




**INTRODUCTION**




We
      used
      to be a telecommunications and recruiting company formally known as CNE Group,
      Inc. We changed our name to Arrow Resources Development, Inc. on or around
      December 1, 2005.





2




The
      Company elected to shift its business focus from telecommunications and
      recruiting to the worldwide commercial exploitation of natural resources.





Arrow
      serves as the corporate finance and management infrastructure developer for
      large scale plantation/farming operations in Indonesia and Papua New Guinea.
      These projects, which are first and foremost environmental restorations and
      social engineering projects, are to be done in cooperation with the governments
      of Indonesia and Papua
      New
      Guinea and
      in
      partnership with Gerakan Masyarakat Pelestari Lingkungan Hidup (“GMPLH”), the
      largest nonprofit organization in Indonesia, and Arrow Pacific Resources Group
      Limited (“APR”). The goal of the development team is to restore 3,000,000
      hectares of “critical land” (land that has been illegally harvested by local
      farmers) in Indonesia and 334,000 hectares in Papua New Guinea through the
      creation of eucalyptus plantations and the large-scale farming operations.
      Arrow
      has developing and will maintain the corporate operating structure, financial
      operations, sales and marketing activities and the administration of the
      corporate citizenship programs. Arrow will also develop all of the necessary
      public relations and communications programs to sustain these rapidly growing
      operations. APR, along with all of its operating units and Arrow are
      collectively referred to in this document as "the companies".





APR,
      a
      British Virgin Islands registered company, was founded by Hans Karundeng, an
      Indonesian industrialist and financier for the purpose of developing natural
      resource assets controlled by his interest in a group of companies that are
      developing plantation and farming operations in Indonesia and Papua New Guinea.





Arrow,
      along with its project partners GMPLH and P.T.
      Eucalyptus Alam Lestari (“P.T. Eucalyptus”) ,
      an
      Indonesian registered wholly owned subsidiary of APR, have developed a synergy
      of agro-biotechnology and cutting edge forestry and agricultural practices
      in
      response to the growing demand for timber and farming products.





The
      companies will execute their plantation and farming operating plan through
      the
      implementation of a sound land management system, promotion and/or establishment
      of infrastructural development programs and provisions for financial, economic
      and social growth to the people in the development areas. It is essential for
      the development to take into consideration local bio-physical environment
      conditions as well as the traditional and cultural beliefs of the local
      villagers. In conjunction with local inhabitants, the companies have developed
      a
      plan that will maximize profits to the greatest potential of the area, while
      increasing employment and constantly re-evaluating their administrative and
      management programs. The companies will work to achieve superior safety
      performance, implement reliable harvesting, replanting and farming processes,
      and become a leader of the industries of sustainable forestry and farming as
      well as leaders in the development of socially conscious and environmentally
      sensitive land development throughout the world.





On
      or
      around August 1, 2005, Arrow Pacific Resources (s) Pte. Ltd. (“Arrow
      Pte.”) entered into a Marketing and Distribution Agreement with Arrow Resources
      Development Ltd. (“Arrow Ltd.”) (a Bermuda Limited Company), which is a
      wholly-owned subsidiary of Arrow, that provides for both Companies to receive
      10% of the gross sales generated by all plantation and mining operations and
      any
      and all derivative products (e.g. paper, pulp, chips). Under this agreement,
      Arrow acts as collection and disbursement consultant and agent for all
      operations. Arrow collects all gross revenue from all customers, retains 10%
      and
      disburses the remaining 90% to APR’s various business units which becomes their
      gross revenues.




In
      April
      of 2006, Arrow Ltd. entered into an agency agreement with APR to provide
      marketing and distribution services for timber resource products. Arrow Ltd.
      currently has an exclusive marketing and sales agreement with APR to market
      lumber and related products from land leased by GMPLH located in Indonesia
      which
      is operated by APR and its subsidiaries. Under the agreement Arrow Ltd. will
      receive a commission of 10% of gross sales derived from lumber and related
      products.




3


The
      companies’ Asian offices are in Singapore, Jakarta and Kendari Indonesia and
      their plantation/farming activities are in Indonesia and Papua New Guinea.
      Hans
      Karundeng is a director of the nonprofit organization GMPLH and is the principal
      stockholder of Arrow, the principal stockholder on APR and principal stockholder
      of all the Indonesian registered companies.





Through
      APR’s eucalyptus plantations in Indonesia and Papua New Guinea, we are poised to
      capitalize on the increasing demand for paper and timber products in developing
      international markets, most notably Asia, where rising standards of living
      have
      created a demand for larger quantities of printed material, packaging, personal
      care paper products, and industrial paper supplies. The proximity of APR’s
      operations to this principal Asian market enables APR to supply that market
      in a
      competitive manner.




**THE
      ARROW COMPANIES - GENERAL**





Arrow,
      as
      part of the Management Agreement, has built and maintains all of the companies’
corporate finance activities, corporate operations structure, financial
      management activities, international banking activities, supervision of all
      accounting and auditing activities, corporate research and development
      activities, maintenance of the companies’ global MIS, direction of all marketing
      and sales activities and all the general administrative functions. Arrow has
      also developed and maintained the companies’ scientific advisory team and
      corporate citizenship programs. Additionally, the Company supervises all legal
      and accounting activities necessary to retain its public listing.





APR,
      with
      its joint-venture partners, conducts all of the on-the-ground, day-to-day
      plantation operations, all infrastructural development operations and all
      shipping operations as they relate to the overall plan. APR is lead by a team
      of
      highly qualified professionals with experience in the fields of plantation
      management, agro-law, material science and analysis, agriculture, and forestry.
      The team has contracted with necessary labor, heavy equipment suppliers,
      transportation coordinators and shipping equipment. Several members of the
      team
      hold close affiliations with organizations such as the Timber Association of
      Sabah, the National Sub-committee on Fiscal Incentives of Forest Plantations
      in
      Malaysia and the Scientific and Technical Committee of The Association Technique
      Internationale des Bois Tepicaux.





GMPLH
      is
      one of the largest non-profit organizations in Indonesia. Founded by an
      Indonesian group which included. H. Moerdani, the organization’s current
      managing director, and Hans Karundeng, GMPLH is an educational organization
      that
      acts as project developer, fundraiser, and project expeditor for agricultural
      and environmental projects throughout Indonesia and the Asian-Pacific basin.
      Since its inception in 1993, GMPLH has sponsored and completed more than 25
      large-scale agricultural and educational projects resulting in the planting
      of
      more than 600 million trees throughout Indonesia. GMPLH has been initially
      granted land licenses by the Indonesian government for more than 1.8 million
      hectares (ha) (3.75 million acres) for a program that will ultimately include
      3
      million ha as part of large-scale reforestation and farming efforts.





P.T.
      Eucalyptus is an
      Indonesian registered company owned by Hans Karundeng. This company is the
      Indonesian operating company that is the interface between GMPLH and all of
      the
      operating units and joint venture partners. P.T. Eucalyptus is responsible
      for
      the supervision of planning of all harvesting, land preparation, and planning
      of
      both the eucalyptus tree plantation and a large-scale agricultural operation.
      The Ministry Of Forests in Indonesia requires that local companies receiving
      operating licenses for operations on each island. The local companies that
      will
      hold the licenses that P.T.
      Eucalyptus has
      formed are PT Nusa Alam Sejahtera, PT Sumbur Utama Alam, PT Tiga Daun Nusantara
      and PT Tunas Hamparan Hijau.





Arrow
      Pte. owns and operates natural resource companies throughout the Asian Pacific
      market. Arrow Pte. is led by a team of professionals with experience in
      agriculture and forestry. The team handles all of the on-the-ground and
      day-to-day plantation operations, all infrastructural development operations
      and
      all shipping operations as they relate to the overall plan for the development.
      The team has contracted with necessary labor, heavy equipment suppliers,
      transportation coordinators and shipping equipment.





4


Arrow’s
      100% owned subsidiary, Arrow Ltd., has entered into a Marketing and Distribution
      Agreement with Arrow Pte. for the exclusive sales and distribution of the
      commercial global marketing of natural resource projects including, but not
      limited to, timber resources, derivatives from it and other natural resources
      for a predetermined fee of 10% of Arrow Pte.’s gross sales. As part of the
      Marketing and Distribution Agreement, Arrow is building and maintaining Arrow
      Pte.’s corporate operating structure, financial operations, sales and marketing
      activities, corporate governance, and the administration of Arrow Pte.’s
      corporate programs. What follows is a detailed description of the initial timber
      resource business that the Company will be handling for Arrow
      Pte.




**INDUSTRY**




The
      planet’s consumption of forestry products has more than doubled over the last 30
      years as global population continues to grow. The increased demand for forestry
      products has also led to the need for increased protection of forests and
      wildlife, and a more public participation in forestry management. The demand
      for
      imported raw material for Asia-Pacific region’s low-cost timber manufacturing
      industries is increasing sharply and establishing a more expansive market for
      international suppliers. The Asia-Pacific region forestry community possesses
      the advantage of greater periods of harvesting and re-growth in comparison
      to
      other countries that experience periods of dormancy caused by adverse weather
      and seasonal conditions. With this benefit over competition, the Asia-Pacific
      market is being challenged to cope with constantly shifting goals and
      expectations as it begins to experience rapid evolution of social, economic
      and
      environmental issues that impact policies, legislation, and institutions. The
      increased demand generated the immediate regulation and monitoring of the
      industry. And yet, the forestry industry is estimated to be shrinking by
      9.4 million hectares (ha) per annum. This is partly due to conservation
      pressure from government, environmental and consumer advocacy groups on
      lumbering operations worldwide.





The
      forestry industry involves harvesting, silviculture (the growing and cultivation
      of trees), milling, value-added processing and manufacturing. Globally, the
      industry is being pressured from many directions. Governments have attempted
      to
      improve the forestry industry with privatizing measures, which transfer the
      property rights through the sale of natural forests or planned forests. Only
      a
      limited number of countries were involved in this practice in the 1970s and
      1980s, among them were Chile and China. In New Zealand, privatization began
      in
      the late 1980s with the sale of 550,000 ha and in 2000 was shown to have 94%
      of
      planted forests owned privately. Between 2000 and 2002 South Africa saw the
      benefits of this system and an estimated 90,000 ha became privatized.
      Privatization typically consists of the management of natural forest in
      concession or leases, volume permits or standing timber sales, outsourcing
      and
      community-based approaches. Global paper consumption trends continue to edge
      higher, confirming its utility as a low cost, high performance and flexible
      material. Paper has been labeled by many as “essential” for development and
      modern living. Global consumption of paper has increased at least 25% during
      the
      20th century and by a factor of three in the last three decades alone.





The
      Asia-Pacific region’s demand for pulp supply has increased due to the rapid
      expansion of its economy and one of the largest population densities. These
      increases have led also to the increase in usage of computers requiring more
      printing paper, higher living standards, and the usage of more books, magazines
      and packing materials and boxes. These same factors also drive the increase
      in
      demand for eucalyptus oil, which China uses over 70% of the world’s production
      and is projected to increase as well the demand for the wood chips, which is
      one
      of the principal ingredients for manufacturing chipboard. Many experts believe
      China’s demand for such material will continue for years to come.





The
      international market’s demand for timber derivative products continues to rise
      as economic factors drive the consumption of such goods forward. Household
      production levels directly impact the consumption levels of chipboards. A
      nationwide study in China determined 80% of the finished products available
      to
      the market are developed in household processing level mills, which cannot
      meet
      the market demand. The insufficient rate in correlation with the high demand
      for
      timber raw material is so great that outside sources need to be employed.




5




**OPERATING
      MODEL**




APR
      has
      developed a practice of timber exportation in response to the growing demand
      for
      timber and timber related goods. When logging and forest management are
      performed in a conscientious manner, it provides humankind with one of the
      greatest sources for renewable and ecologically sustainable resources. Paper,
      dimensional lumber, fiberboard, particleboard, furniture, utensils, hydrocarbon
      fuel, recreational areas, animal habitat, and clean air are some of the many
      benefits of the world’s forests.





APR
      will
      develop the timber area through implementation of a sound forest management
      system, promote and/or establish infrastructural development programs and
      provide provisions for financial, economic and social growth to the people
      in
      the timber area. It is essential for the development to take into consideration
      local bio-physical and bio-diverse environmental conditions as well as the
      traditional and cultural beliefs of the local villagers. In conjunction with
      local governments, the local inhabitants and forestry/agricultural, APR has
      developed a plans that will maximize profits to the greatest potential of the
      area, while minimizing costs that other larger companies typically endure
      through the examination, administration, and management of concessions. APR
      will
      work to achieve superior safety performance, implement reliable harvesting,
      replanting and manufacturing processes, and will work to become a leader of
      the
      industry in the development of socially conscious and environmentally sensitive
      land development throughout the world.





APR
      plans
      to construct a large number of roads to connect the project area with the
      proposed factory area, harbor, camp site, local inhabitant living area, and
      other major sites that require transportation to and from on a frequent basis.
      Throughout this phase, inventory and tree marking will take place. The data
      obtained from these surveys will provide a framework for the development of
      the
      infrastructure of the plantations. Local inhabitants will be employed to
      participate in the operations of the plantation and, in some cases as
      specialized loggers. There will also be teams of back-up plantation employees,
      field doctors, security personnel, cooks and other basic labor to support the
      large scale of operations being undertaken. In conjunction with the local
      inhabitants, equipment specialists, as well as labor force specialist from
      Indonesia and Singapore, Arrow Pte. has developed a fully operational
      on-the-ground team ready to begin the first phase.





The
      near-equatorial position of Indonesia and Papua New Guinea ensures a good supply
      of rainwater for the tree crops year-round with little or no seasonal change,
      aiding in maintaining the consistent growth cycle of only 3-4 years. The
      specific location of the government granted timberland concessions, in
      Indonesia, enables the trees to grow with minimal interference from open-ocean
      earthquakes and large storms. In Papua New Guinea the concessions are protected
      from such conditions by the large islands of New Britain and New Ireland, which
      act as barriers at sea. Thus, the timberlands are all located in the areas
      most
      conducive to growth, maintenance, transportation, and sale. The areas of
      Southeast Asia allow eucalyptus tree and farming production to thrive due to
      the
      steady weather patterns and no real winter season.





**PRODUCTS**





The
      forestland that will be the site of APR’s plantation in Indonesia are lands that
      have been classified by the government as "critical land" meaning land that has
      been partially harvested illegally during the past 50 years. In Papua New Guinea
      the forestland sites are is presently comprised of virgin tree growth, which
      has
      never been previously harvested. The initial range of trees harvested will
      include noble species, selected hardwoods, peelable logs, and trees suitable
      for
      sawn timber and wood chips.





The
      general composition profile of the species included on the sites in Indonesia
      and Papua New Guinea (as determined by a PriceWaterhouse physical survey of
      50,000 acres) in Papua New Guinea includes the following species in these
      approximate percentages:




●
            
            2%,
                411,856 m3 noble species




●
            
            8%,
                1,647,424 m3 selected hardwood




6




●
            
            25%,
                5,148,200 m3 peelable logs




●
            
            15%,
                3,088,920 m3 sawn timber




●
            
            50%,
                10,296,400 m3 woodchip





The
      current market values for the various forms of raw materials that are being
      used
      for the manufacture of paper include peelable logs, woodchips and pulp. Raw
      lumber stock (peelable logs **)** for the
      production of woodchips (the first step in the production of paper) is currently
      selling at $80 per cubic meter, which shows an increase of 7% in the last year.
      Pulp prices (the second step in the production of paper) are rapidly rising
      and
      have increased by more then $15 per ton in the last year alone. As of May 2006,
      the average market price for pulp was $495 per ton. Paper prices have also
      been
      rising at approximately the same rate, and raw paper is currently being sold
      ranging from $3,000 to $6,000 per ton, depending on its grade.





**LEGAL**




The
      Company is a party to a lawsuit where the plaintiff is alleging that he is
      entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
      to compensate him for services related to identifying financing for CNE,
      based upon an agreement that was entered into between CNE and the plaintiff
      in
      April 2005. The Company and its counsel strongly feel that the plaintiff’s
      claims against the Company have no merit, the likelihood of an unfavorable
      outcome is very low, and is prepared to vigorously defend the
      matter.




In
      May
      2006, the Company was advised that they were in default of a settlement
      agreement entered into in January of 2005 by CNE related to the release of
      unrestricted, freely-tradable, non-legend shares of stock. Management has agreed
      to release shares of the Company’s stock in consideration of the above
      matter.





**HUMAN
      RESOURCES**




As
      of
      December 31, 2006, our workforce consists of consultants. The majority of
      our consultants are professional, technical or administrative personnel who
      possess training and experience in finance, information management, and business
      management. We have no union contracts. We believe that our relations with
      our
      consultants are satisfactory. In addition we rely on the personnel of APR,
      described below.





APR
      has
      already assembled the necessary senior management and field operations personnel
      required to initiate the project. The initial senior staff of APR and its
      supporting clerical personnel are sufficient for operations in the first five
      years. The initial senior management and field operations personnel of APR
      is
      sufficient for operations for at least a three years. During the initial
      three-year period, APR will conduct an executive search for additional field
      operations personnel and eventually the requisite personnel for the operation
      of
      the paper mill. APR will be responsible for staffing field and production
      operations.





Since
      the
      projects in Indonesia are first and foremost an environmental restorations
      and
      social engineering projects the emphasis is on maximizing the use of local
      labor
      and job creation. APR is developing its technical/agricultural production center
      on Sulawesi Island which is staffed by highly qualified Indonesian based
      professionals. All manual operations will employ local resident farmers and
      their families and all hiring will be coordinated by GMPLH. This approach is
      designed to reengineer large-scale farming communities and redeveloped long-term
      farming infrastructure.





In
      Papua
      New Guinea the forest harvesting is machine-intensive; labor quality remains
      the
      most critical element if harvesting is to be conducted efficiently and in an
      environmentally sound way. This is due to very limited availability of local
      labor and government desire to perpetuate the local culture. Only workers,
      who
      are healthy, qualified, and motivated, can be expected to contribute effectively
      to achieve the goals of environmentally sound forest harvesting.





The
      companies have assembled, through their joint venture partners the necessary
      senior management and field operations personnel required to initiate the
      project. The initial senior staff, and its supporting clerical personnel, is
      sufficient for operations in the first five years. The initial senior management
      and field operations personnel are sufficient for operations for approximately
      two years. During the initial two-year period, a human resource acquisition
      and
      benefits program will be completed and structured to grow as the projects grow.




7


Since
      the
      health of the workers is not only based on physical conditions, special
      attention must be paid to safety, adequate standards of comfort, sanitation,
      nutrition and general welfare. Adequate training, which is appropriate for
      job
      requirements and satisfactory working conditions, is viewed by the companies
      as
      a primary and effective motivator since these considerations not only contribute
      to improved safety, but they also contribute to improved efficiency.
      Plantation/farming projects normally place a high priority on landowners'
      participation in resource development and give employment preference to
      landowners whose dedication reflects the investment they have in the success
      of
      their local economies.




Training
      personnel will be required to maintain the highest level of safety for the
      workers and the environment. The workers will receive training to identify
      various tree species, measurement of trees, quality criteria for harvestable
      trees and field organization for the pre-harvesting inventory. Training programs
      for harvesting crews will consist of harvesting safety, proper cutting and
      directional felling techniques, maintenance of chainsaw and chain sharpening,
      field organization of harvesting activity, use of tree location maps and
      criteria for deciding whether or not to fell a marked tree. Practical training
      for extraction crews will consist of field considerations for reducing the
      damage to the remaining forest stand, field organization of the extraction
      activities, and use of tree location/extraction maps. Training programs for
      farm
      workers will include proper soil tilling methods, proper seeding techniques,
      fertilizer techniques and management, irrigation techniques, testing and
      allocations, harvesting techniques and proper use of crop rotation.





**THE
      MARKET**




We
      operate in the global market for companies providing marketing, distribution,
      and financial advisory services. As this market is broad and often served by
      non-public companies for whom little competitive information is available,
      we
      have provided additional information on the market in which APR
      operates.





Paper
      performs a range of core functions in the modern world. For many, it would
      be
      hard to imagine daily life without using paper, whether for communication,
      packaging or for hygienic and household use. The steady growth in paper
      consumption has confirmed its utility as a low cost, high performance and
      flexible material. Global consumption has increased twenty-fold during the
      last
      century, and by a factor of three in the last three decades alone. During the
      same period, growth rates in paper use among developing countries have doubled
      that of the industrialized world. This can be correlated to the overall economic
      growth in developing countries 5.5% to 6.4% of GDP. As a result, the developing
      countries’ share of world paper consumption has climbed from 15% in 1980 to 25%
      in 1993, with projections of 31% in 2010. Average per capita consumption in
      the
      USA alone is 333 kilograms, seven times the figure for the world as a whole
      and
      double the average for the developed world.





A
      new
      global distribution of paper consumption is emerging, in which Asia is becoming
      increasingly dominant, driven by growth in Japan and China. In 1980, the region
      accounted for less than one fifth of the world’s consumption of paper, today it
      accounts for over 30%. Asia’s paper consumption is now over 80 million
      tones, one-fifth higher than Western Europe and soon to surpass the United
      States. China’s per capita consumption levels have risen by a factor of five
      over the past two decades from approximately 20 kilograms per capita in 1975
      to
      225 kilograms per head in 1994. A further quintupling of Chinese paper use
      over
      the next 20 years would take consumption level over 100 million tones per
      annum, about a fifth larger than current US levels.





The
      Food
      and Agricultural organization of the United Nations expects long-term demand
      for
      wood products to grow at 1.2% to 1.5% per annum. Japan is currently the
      largest importer of hardwood woodchips, buying 18-20mt (million tons) per annum.
      Korea is emerging as a significant market as its demand outstrips its own
      domestic supply. Global paper consumption is set to rise from 54kg/capita in
      2000 to 63kg/capita in 2015, largely as a result of strong growth in Asia,
      led
      by China, and Western Europe. China’s consumption of paper products has jumped
      from 6 kg/ capita in 1980 to 30kg kg/capita and is expected to rise by about
      50%
      to 43 kg/capita in 2010. Projections anticipate China will have the capacity
      to
      consume 20mt of woodchip per annum by 2010. China’s small export of woodchip to
      Japan is likely to cease as domestic demand increases, turning it into a major
      importer of woodchip as the decade unfolds. Both consumers and paper makers
      show
      a strong preference for plantation fiber which should result in increased demand
      in Asia, especially China and India. Although paper is traditionally identified
      with reading and writing; communications have now been replaced by packaging
      as
      the single largest category of paper use. Only a small proportion is used for
      personal care products. Paper usage varies from country to country but overall
      is continuously increasing, demonstrating the importance of determining more
      efficient methods to supply the demand.





8


The
      overall return depends on the rate of timber growth, which in turn depends
      on
      soil types, rainfall, pest and weed control, fertilization and genetics. Timber
      quality is judged based on species of tree, age of the wood and climatic
      conditions in which the tree is grown. Price achieved will depend on the quality
      of the product and the relationship between the grower and the customer. For
      instance, a grower backed by a well capitalized company with a demonstrable
      ability to fulfill a long term supply agreement would be favored over smaller,
      less stable grower. Factors affecting costs include distance to export terminal
      and processing logistics, topography of plantations and expertise of shipping
      and/or transportation operator. Because of its proximity to the Asian market,
      the locations allow shipments of timber to Asia to be made within 10 to 14
      days.
      Thus, APR can bring timber to the Asian market faster and at a higher profit
      than its competitors.




Arrow
      Pte. has entered into a Marketing and Distribution Agreement with the Company
      for the exclusive sales and distribution of the commercial global marketing
      of natural
      resource projects, including but not limited to timber resources, derivatives
      from it and other natural resources for a predetermined fee of 10% of Arrow
      Pte.’s gross sales activity in Papua New Guinea. APR has
      entered into an agency agreement with Arrow Resource Development Ltd. to act
      as
      its marketing and sales agent for commercial global marketing of all timber
      resources and derivatives (logs, finished lumber products, chip etc.) for a
      predetermined fee of 10% of APR’s gross sales activity in Indonesia.




Arrow
      Ltd. entered into an agency agreement with APR to provides marketing and
      distribution services for timber resource products and currently has an
      exclusive marketing and sales agreement with APR to market lumber and related
      products from land leased by GMPLH, which is operated by APR and it's
      subsidiaries, located in Indonesia. Under the agreement Arrow Ltd. will receive
      a commission of 10% of gross sales derived from lumber and related products.





**COMPETITION**





APR
      principal plantation operations will be located in Indonesia and Papua, New
      Guinea in close proximity to the Asian Pacific market enabling timber to be
      delivered with lower shipping costs, and at higher profit. The distance for
      competitors to ship their products includes a much greater cost and longer
      shipping period. These near-equatorial locations ensures a good supply of
      rainwater for the tree crops, which aids in developing a consistent growth
      cycle
      of only 3-4 years. . The specific location of the government granted timberland
      concessions, in Indonesia, enables the trees to grow with minimal interference
      from open-ocean earthquakes and large storms. The location of the timber
      concessions within Papua, New Guinea enables the trees to grow with minimal
      interference from open-ocean earthquakes and large storms; the timber
      concessions are protected from such conditions by the large islands of New
      Britain and New Ireland, which act as barriers at sea. Thus, the location of
      this timberland makes easier to transport and sell, and easier to maintain.





The
      companies’ plantation/farming operations are located in Indonesia and Papua New
      Guinea in close proximity to the Asian market, most notably China, enabling
      the
      companies to market their timber for delivery with lower shipping costs and
      at a
      higher profit. The distance for competitors to ship their products includes
      a
      much greater cost and longer shipping period. The near-equatorial situation
      of
      Papua New Guinea ensures a good supply of rainwater for the tree crops, which
      aids in developing a consistent growth cycle of only 3-4 years. Operations
      in
      Indonesia are located inland and not on islands where there are volcanoes
      present. Finally, the specific location of the timber concessions within Papua
      New Guinea enables the trees to grow with minimal interference from open-ocean
      earthquakes and large storms; the timber concessions are protected from such
      conditions by the large islands of New Britain and New Ireland, which act as
      barriers at sea. Thus, the location of this timberland makes it easier to
      transport and sell, and easier to maintain.





9


The
      existing forest industry is dominated by large foreign logging companies, or
      landowning companies.





Australia
      currently exports approximately 6.5 million tons of woodchips annually from
      ports in Tasmania, Victoria and Western Australia. Australia’s stock in
      plantations has risen rapidly over the past decade. Estimates show 455,000
      hectares of new eucalyptus plantations have been established over the past
      7
      years. The Australian market competitors have relatively high entrance costs
      and
      higher service fess with lower potential return. Their harvesting cycles
      typically take 6 years or longer and environmental risks weigh heavily on the
      yield.





Brazil
      has 400 million hectares of tropical forests, and 7 million hectares of exotic
      plantations comprised mainly of fast growing eucalyptus. The timber from these
      plantations provides raw material for charcoal, and pulp and paper production.
      Brazil accounts for 60% of total charcoal production although native woods
      are
      mostly used for timber production; with an annual consumption rate around 250
      million m 3 .





Chile
      has
      around 5.5 million hectares of productive native forest, mainly Nothofagus
      hardwood species. Timber production from native hardwood amounts to 0.35 million
      m 3 /year,
      and nearly 75% is used to produce chips for exports to Asian countries. Pine
      and
      eucalyptus plantations cover 1.8 million hectares, with an annual expansion
      rate
      of 7-10%. Pinewood accounts for 78% of total plantations; eucalyptus is growing
      faster and a big surplus is expected within the next decade.





All
      evidence points to a demand for woodchips that growing more rapidly than supply.
      Quality and environmental issues result in a market preference for plantation
      timbers. Given these conditions, woodchip prices are likely to rise in real
      terms over a ten year period. After analyzing the major competitors in the
      market it can be anticipated that the companies will capture a minimum of 4
      to
      5% of the market in the next ten years, making them one of the largest
      distributor of woodchips worldwide.





The
      raw
      timber, pulp, and paper markets which APR hopes to enter are controlled by
      several large and medium-sized well-established firms. These are the most
      dominant international timber and paper companies:




**INTERNATIONAL
      PAPER** (www.ipaper.com): International Paper has $25 billion of annual sales, and
      operates in almost 40 countries. They manage their own forests worldwide, and
      produce raw timber stock, wood pulp, and finished paper products for sale.




**KLABIN** (www.klabin.com):
      Klabin operates primarily in Brazil, and is their leading supplier of paper,
      pulp and wood products. They specialize in paper packaging materials, including
      corrugated cardboard boxes and multi-wall stacks. They also sell lumber for
      construction. Klabin controls 183,000 hectares of land for timber usage, as
      well
      as 119,000 hectares in southern Brazil used for medical and wildlife research.




**DAISHOWA-MARUBENI
      INTERNATIONAL** (www.dmi.ca):
      DMI is one of the largest timber distributors in the Asian market, catering
      primarily to Japan. It controls 2.9 million hectares of land in western
      Canada, as well as a pulp processing plant. 50% of its sales go to Japan, 25%
      to
      North America, and the remainder is split between the rest of Asia and Europe.




**GEORGIA-PACIFIC** (www.gp.com): GP is one of the largest US based paper corporations. Though
      they
      have sold their pulp factory, they still receive pulp and timber materials
      from
      over 80 different suppliers for their paper business.




**ASIA
      PULP AND PAPER GROUP** (www.asiapulppaper.com):
      Outside of Japan, they are the largest pulp and paper provider in Asia. Most
      of
      their production takes place in Indonesia, where they have the capacity to
      produce over 6.9 million tons of pulp.




**WEYERHAEUSER** (www.weyerhaeuser.com): Weyerhaeuser is another large forest product company,
      producing everything from pulp, paper and packaging to construction-grade lumber
      for real estate and homes. They have operations in 19 countries, with their
      timber stock comprised of 15 million hectares of land in 5 countries. They
      have been a Fortune 200 company since the inception of Fortune’s rankings in
      1955.




10


**NEENAH
      PAPER INC** .
      (www.neenah.com): Neenah paper primarily deals in technical paper, fine paper,
      and pulp, catering to the high end of the paper market. They distribute their
      products worldwide, and deal in more than 700,000 metric tons of bleached kraft
      pulp every year.




**INTEGRATED
      TREE CROPPING** (www.treecrop.com.au): As the largest timber firm in Australia, ITC controls
      almost 120,000 hectares of hardwood plantations.




**POPE &
      TALBOT** (www.poptal.com):
      Pope & Talbot principally manufactures wood and pulp products. Wood
      Products business manufactures and sells standardized and specialty lumber,
      residual wood chips, and other by-products. Together they operate three pulp
      mills located in Halsey, Oregon and Nanaimo and Mackenzie in British Columbia.
      The pulp products are marketed globally through sales offices in Portland,
      Oregon, Brussels, Belgium and through agency sales offices around the world.




**LONGVIEW
      FIBRE COMPANY** (www.longviewfibre.com):
      Longview’s principal activity is to own, manage and operate timberlands, pulp
      and paper mill and converting plants. It operates in three business segments:
      timber, paper and paperboard and converted products. The timber segment owns
      and
      manages approximately 585,000 acres of timberlands in nine tree farms in Oregon
      and Washington. The paper and paperboard segment includes the operation of
      a
      pulp and paper mill that produces corrugating medium and linerboard. The
      Converted Products segment includes the operations of 15 converting plants
      located in 12 states that produce value-added corrugated containers, specialty
      packaging and creative point-of-purchase displays. The company exports its
      products to Japan, China, Canada and Southeast Asia.




**POTLATCH
      CORPORATION** (www.potlatchcorp.com):
      Potlatch Corp.’s principal activities are to grow and harvest timber, convert
      wood fiber into commodity and specialized wood products and bleached pulp
      products. The Group operates through four segments: Resource, Wood Products,
      Pulp and Paperboard and Consumer Products. The Group has foreign sales in Japan,
      Australia, Canada, China, Italy, Korea and other countries.




**RAYONIER,
      INC** .
      (www.rayonier.com): Rayonier’s principal activities are to manufacture and sell
      value-added performance cellulose fibers and activities associated with
      timberland management, including the sale of timber and timberlands and land
      management. They own and operate two fiber mills the United States. Rayonier
      operates in three reportable business segments: performance fibers, timber
      and
      land, and wood products. Performance fibers include cellulose specialties and
      absorbent materials. The timber and land segment manages timberlands, sells
      standing timber to third parties and sells land for both future harvesting
      and
      real estate development. The wood products segment manufactures and sells lumber
      and medium-density-fiberboard.




**MERCER
      INTL. INC** . (www.mercerint.com):
      Mercer’s principal activity is to produce and market pulp and paper products.
      They are based in Zurich, Switzerland and have operations primarily in Germany.
      Mercer manufactures and markets softwood kraft pulp and two primary classes
      of
      paper products. Their products are produced from both virgin fibre and recycled
      fibre. Their manufacturing plants are located in Germany and Switzerland.





**DEMOGRAPHICS**




The
      climates of Indonesia and Papua New Guinea are reported to be monsoonal in
      nature, characterized by high temperatures and humidity throughout the year.
      However, the specific location of the timber concessions within these countries
      enables the trees to grow with minimal interference from open-ocean earthquakes
      and large storms. Operations in Indonesia are located inland, not on annual
      flood plains, not on islands with historically high earthquake activity and
      where there are active volcanoes present. The operations in Papua New Guinea
      inland are not on annual flood plains, not in an area with historically high
      earthquake activity, where there are active volcanoes present and are protected
      from tsunami conditions by the large islands of New Britain and New Ireland,
      which act as barriers at sea.





11





**EMPLOYEES**




As
      of
      December 31, 2006, our workforce consists of consultants. The majority of our
      consultants are professional, technical or administrative personnel who possess
      training and experience in finance, information management, and business
      management. We have no union contracts. We believe that our relations with
      our
      consultants are satisfactory.




Our
      future success depends in large part on our ability to retain key technical,
      marketing, and management personnel, and to attract and retain qualified
      employees and consultants. Competition for such personnel is intense, and the
      loss of key consultants, as well as the failure to recruit and train additional
      technical personnel in a timely manner, could have a material and adverse effect
      on our operating results.





Our
      success also depends, to a significant extent, upon the contribution of our
      executive officers and other key consultants. We have agreements with our chief
      executive officer, and maintain an informal stock plan whereby key personnel
      can
      participate in our success. All of our personnel are eligible to participate
      in
      this plan.





**RISK
      FACTORS THAT MAY AFFECT FUTURE RESULTS**




The
      following discussion highlights certain of the risks we currently
      face.




The
      following factors, in addition to those discussed elsewhere in this document,
      should be carefully considered. Securities of the Company involve a high degree
      of risk and should be regarded as speculative. In addition to matters set forth
      elsewhere in this Annual Report, potential investors should carefully consider
      the risk factors described below relating to the business of the Company.




**LIMITED
      OPERATING HISTORY**




The
      success of the Company cannot be guaranteed or accurately predicted. There
      is no
      assurance that the Company will be able to operate profitably. Such prospects
      must be considered in light of the risks, expenses and difficulties frequently
      encountered in the establishment of a product and service.





Arrow
      began operations in approximately September, 2005, and to date has generated
      no
      material revenues. The Company has no significant operating history. There
      is no
      assurance that the Company will be able to operate and manage on a profitable
      basis or that cash flow from operations will be sufficient to pay the operating
      costs of the Company. The Company may need to raise additional capital to
      finance its continued operations. The Company may seek additional financing
      through debt or equity financings. There is no assurance that additional
      financing will be available to the Company, or if available, that the financing
      will be on terms acceptable to the Company. There is no assurance that the
      Company’s estimate of its reasonably anticipated liquidity needs is accurate or
      that new business developments or other unforeseen events will not occur that
      will result in the need to raise additional funds. In the event that the Company
      cannot raise needed capital, it will have a material adverse affect on the
      Company. There is no assurance that the Company will achieve or sustain
      profitability or positive cash flow from operating activities in the future
      or
      that it will generate sufficient cash flow to service any debt requirements.





**SIGNIFICANT
      CAPITAL REQUIREMENTS; NEED FOR ADDITIONAL FINANCING; DILUTION**




The
      Company’s capital requirements are and will continue to be significant. The
      Company anticipates, based on management’s internal forecasts and assumptions
      relating to its operations (including the costs associated with marketing),
      that
      unless at least $350,000 is raised for working capital purposes, the Company’s
      cash resources will not be sufficient to satisfy the Company’s contemplated cash
      requirements and that additional financing may be needed to support the Company.
      There can be no assurance that the Company will be able to obtain additional
      financing on terms acceptable to the Company. To the extent that any financing
      involves the sale of the Company’s equity securities, the interests of the
      Company’s then existing shareholders could be substantially diluted. Dilution
      will also occur when and if options to be granted to employees, consultants
      and
      other third parties are exercised.





12


**DEPENDENCE
      ON ARROW PACIFIC RESOURCES GROUP LIMITED AND ITS OPERATING SUBSIDIARIES**




Our
      revenues are currently entirely derived from gross sales of APR and its
      operating subsidiaries products sales. APR will not be in a position to generate
      timber sales until it has completed certain infrastructure improvements in
      Indonesia and Papua, New Guinea. These infrastructure requirements will take
      APR
      a maximum of one year to complete. Therefore, APR will probably not generate
      meaningful sales of its timber products until the second or third quarter of
      2007.





**COMPETITION**




The
      Company anticipates competition on numerous fronts. Increased competition could
      require the Company to respond to competitive pressures by establishing pricing,
      marketing and other programs, or seeking out additional strategic alliances
      or
      acquisitions, any of which could have a material adverse effect on the business,
      prospects, financial condition and results of operations of the Company. The
      Company could potentially have competitors with longer operating histories,
      larger customer bases, greater brand recognition, and significantly greater
      financial, marketing and other resources than the Company. Increased competition
      may result in reduced operating margins, loss of market share, and a diminished
      brand franchise, any of which would have a material adverse effect on the
      Company. There is no assurance that the Company will be able to compete
      successfully.





**ABSENCE
      OF DIVIDENDS; DIVIDEND POLICY**


The
      Company has never paid dividends on its Common Stock, but does anticipate paying
      dividends on its Common Stock in the foreseeable future. The declaration and
      payment of dividends by the Company are subject to the discretion of the
      Company’s Board of Directors. Any determination as to the payment of dividends
      in the future will depend upon results of operations, capital requirements,
      restrictions in loan agreements, if any, and such other factors as the Board
      of
      Directors may deem relevant.





**OWNERSHIP
      OF THE COMPANY**




APR
      owns
      53.78% of the Company’s stock. Hans Karundeng is the Chairman of APR. His son,
      Rudolph, is a Director of the Company and is an 8% owner of the Company’s
      stock.




**DEPENDENCE
      ON MANAGEMENT**




The
      success of the Company will largely be dependent upon the active participation
      of its management. The Company does not currently have “Key Man” life insurance
      on any of its current officers or employees, although the Company intends to
      provide such insurance, based on availability of funds in the future. The
      Company would pay all premiums for such “Key Man” life insurance. The time that
      the officers and directors devote to the business affairs of the Company, and
      the skill with which they discharge their responsibilities, will substantially
      impact the Company’s success. Loss of the services of certain executive officers
      of the Company could be expected to have a material adverse effect upon the
      Company.





**POSSIBLE
      LOSS OF OR INABILITY TO ATTRACT KEY PERSONNEL**




The
      Company’s success depends largely on its ability to attract and retain highly
      qualified managerial and industry personnel. There can be no assurance that
      the
      Company will be successful in attracting or retaining these key personnel.
      The
      loss of the services of key personnel could have a material adverse effect
      on
      the Company.





**GENERAL
      ECONOMIC AND OTHER CONDITIONS**




The
      Company’s business may be adversely affected from time to time by such matters
      as changes in economic, industrial and international conditions, changes in
      taxes, changes in government regulations, prices and costs and other factors
      of
      a general nature and in particular those changes which have an adverse material
      effect on the natural resources industry or other industries in which the
      Company becomes engaged to provide marketing, sales, distribution, corporate
      operations and corporate finance services for the commercial exploitation of
      natural resources around the world.





**WE
      MAY BE UNABLE TO CONTINUE AS A GOING CONCERN**




Our
      independent auditors’ reports on our consolidated financial statements for the
      years ended December 31, 2006 and 2005 includes language reflecting that
      substantial doubt exists as to our ability to continue as a going concern.
      Our
      management’s notes to these financial statements included a discussion of our
      ability to continue as a going concern. They describe the reasons why there
      is
      substantial doubt about our ability to continue as a going concern. Our
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty. As noted above, we cannot assure you that we will
      not continue to incur net losses and negative cash flow for the foreseeable
      future.





13


**RISKS
      RELATED TO OUR FINANCIAL CONDITION**




We
      have
      operated on a negative cash flow basis and our business and financial condition
      will be materially and adversely affected if we are unable to generate a
      positive cash flow on a continuing basis.





We
      cannot
      assure you when or if we will ever be able to operate on a positive cash flow
      basis. If we are unable to achieve the level of revenues needed to attain a
      positive cash flow, we may be required to take actions, including but not
      limited to reducing our operations, seeking an acquisition and/or merging with
      another entity, that could materially change and/or adversely affect our
      business.





We
      have a
      history of losses and we cannot assure you that we will be able to operate
      profitably in the foreseeable future, if at all.





Our
      inability to achieve or maintain profitability or positive cash flow could:




●
            
            result
                in disappointing financial results,




●
            
            impede
                implementation of our growth strategy,




●
            
            cause
                the market price of our common stock to decrease,




●
            
            impede
                our ability to procure financing on acceptable terms or at all, and




●
            
            otherwise
                adversely affect our business and financial condition.


Under
      certain circumstances we could incur an impairment loss that could adversely
      affect our stockholders’ equity.





We
      will
      require financing if our revenues do not meet our projections or our expenses
      are greater than we anticipate, or to finance the further development of our
      business. Our inability to obtain financing, if required, would have an adverse
      effect on our business.





We
      may
      need to obtain financing if our actual costs are higher than projected or our
      contemplated future revenues fall below our current expectations, in order
      to




●
            
            finance
                more rapid expansion,




●
            
            increase
                marketing and sales,




●
            
            develop
                new or enhanced technology,




●
            
            respond
                to competitive pressures,




●
            
            establish
                strategic relationships, and/or




●
            
            provide
                for working capital.





If
      we
      raise such financing by issuing equity or convertible debt securities, the
      percentage ownership of our stockholders will be diluted. Any new debt or equity
      securities could have rights, preferences and privileges senior to rights of
      our
      common stock holders. We currently have no commitments for any such financing
      and, accordingly, cannot assure you that such financing will be available when
      and to the extent required or that, if available, it will be on terms acceptable
      to us. If adequate financing is not available on acceptable terms, we may be
      unable to finance the activities referred to above. In such event, our business
      may be adversely affected.





Recently
      enacted and proposed changes in securities laws and regulations will increase
      our costs. The Sarbanes-Oxley Act of 2002 that became law in July 2002 has
      required and will continue to require changes in some of our corporate
      governance practices. We expect that the Sarbanes-Oxley Act will increase our
      legal and financial compliance costs, and make some activities more difficult,
      time consuming and/or more costly. We also expect that the Sarbanes-Oxley Act
      will make it more costly to obtain director and officer liability insurance
      coverage, and we may be required to accept reduced coverage or incur
      substantially higher costs to obtain it. We currently do not have this coverage.
      These new rules and regulations could also make it more difficult for us to
      attract and retain qualified members of our board of directors, particularly
      to
      serve on our audit committee, and qualified executive officers. In accordance
      with the Sarbanes-Oxley Act, we have instituted a number of changes relating
      to
      corporate governance practices including the certification of our consolidated
      financial statements pursuant to Sections 302 and 906 of the Sarbanes-Oxley
      Act
      and adoption of certain internal controls. The Sarbanes-Oxley Act has provisions
      that have implementation deadlines, including those related to Section 404
      concerning internal control procedures. Implementation of those procedures
      will
      require resources and a portion of our management’s time and efforts.





14


Our
      reported financial results may be adversely affected by changes in accounting
      principles generally accepted in the United States.




We
      prepare our financial statements in conformity with accounting principles
      generally accepted in the United States. These accounting principles are subject
      to interpretation by the Financial Accounting Standards Board, the American
      Institute of Certified Public Accountants, the SEC and various bodies formed
      to
      interpret and create appropriate accounting policies. A change in these policies
      or interpretations could have a significant effect on our reported financial
      results, and could affect the reporting of transactions completed before the
      announcement of a change. For example, while current accounting rules allow
      us
      to exclude the expense of employee stock options from our financial statements,
      influential business policy groups, including the Financial Accounting Standards
      Board, have suggested that the rules be changed to require these options to
      be
      expensed.





Due
      to
      the change in business activities of the Company in conjunction with the change
      in control, we are no longer able to realize any benefit from net operating
      losses carried forward of CNE Group, Inc. of approximately $30,000,000. The
      Company currently has net operating losses of approximately $3,514,000 related
      to development stage activity, which may be carried forward to future periods.





Companies
      generally, and our Company, specifically, rely heavily on stock options as
      a
      major component of our employee compensation packages. If we are required to
      expense options granted to our officers and employees, although our cash
      position would not be affected, our income from continuing operations and our
      stockholders’ equity would decrease and our stock price could be adversely
      affected. In such event, we may have to decrease or eliminate option grants
      to
      our officers and employees, which could negatively impact our ability to attract
      and retain qualified employees and executive personnel. While the Company does
      not currently have a stock option plan, such a plan may be established in the
      future.





In
      general, for purposes of the Code, an ownership change occurs when 5% or more
      owners increase their ownership percentage by more than 50% over the lowest
      percentage owned by those owners at any time during a testing period, which
      is
      generally the three years prior to the increase in ownership by 5% or more
      owners. The IRS has authority to treat warrants, options, contracts to acquire
      stock, convertible debt interests and other similar interests as if they are
      stock and stock as if it is not stock. In any event, it is possible that past
      and/or future transactions affecting our equity could create an ownership change
      and trigger this limitation on the use of our net operating loss.





**RISKS
      RELATED TO OUR BUSINESS**




Our
      business faces intense competition. If we fail to adequately meet this
      competition, our business could be adversely affected.




Most
      of
      our competitors have substantially greater financial, technical and marketing
      resources; longer operating histories and greater name recognition to apply
      to
      each of these factors, and in some cases have built significant reputations
      with
      the customer base in the markets in which we compete. If we are unable to
      successfully compete, our business, financial condition, and operating results
      could be materially and adversely affected.





15


Because
      we have fixed costs, any decline in our revenues could disproportionately and
      adversely affect our financial condition and operating results.




Significant
      portions of our costs are fixed, due in part to our fixed sales, engineering
      and
      product support, and manufacturing facilities. As a result, relatively small
      declines in revenue could disproportionately affect our operating results.
      Changes in product demand, among other things, could adversely affect our
      manufacturing capacity, which would adversely affect our business.





Our
      business may suffer if we lose the services of our executive officers, or if
      we
      cannot recruit and retain additional skilled personnel.





We
      depend
      on the continued services and performance of Peter Frugone, our Chairman and
      Chief Executive Officer, Rudolph Karundeng, one of our Directors, as well as
      Senior Advisor Hans Karundeng and his subsidiary operations for our future
      success. If either Mr. Frugone or Mr. Rudolph Karundeng becomes unable
      or unwilling to continue in his current position, our business and financial
      conditions could be damaged. We are not the beneficiaries of any key person
      life
      insurance covering them or any other executive.





**RISKS
      RELATED TO THE OWNERSHIP OF OUR COMMON STOCK**


Your
      ability to sell any common stock may be restricted, because there is a limited
      trading market for these securities.





Although
      our common stock is currently traded on the NASD OTC Bulletin Board, a liquid
      market in our stock has been sporadic. Accordingly, you may not be able to
      sell
      shares of our common stock when you want or at the price you want, if at all.





In
      addition, depending on several factors including, among others, the future
      market price of our common stock, these securities are subject to the so-called
      “penny stock” rules that impose additional sales practice and market making
      requirements on broker-dealers who sell and/or make a market in such securities.
      These factors could affect the ability or willingness of broker-dealers to
      sell
      and/or make a market in our common stock and the ability of purchasers of our
      common stock to sell their shares in the secondary market. A delisting could
      also negatively affect our ability to raise capital in the future.




The
      market price of our common stock may be volatile, which could adversely affect
      the value of any common stock that you may own.





The
      market price of our common stock may fluctuate significantly in response to
      the
      following factors:




●
            
            variations
                in our quarterly operating results;




●
            
            our
                announcements of significant contracts, milestones or acquisitions;




●
            
            our
                relationships with other companies;




●
            
            our
                ability to obtain capital commitments;




●
            
            additions
                or departures of our key personnel;




●
            
            sales
                of our common stock by others or termination of stock transfer
                restrictions;




●
            
            changes
                in estimates of our financial condition by securities analysts; and




●
            
            fluctuations
                in stock market price and volume.




The
      last
      three factors are beyond our control.




In
      the
      past, following periods of volatility in the market price of a company’s
      securities, securities class action litigation often has been instituted against
      that company. Such litigation is expensive and diverts management’s attention
      and resources. Any one of the factors noted above could have an adverse affect
      on the value of our common stock.





16


Anti-takeover
      provisions of the Delaware General Corporation Law and in our Certificate of
      Incorporation could discourage a merger or other type of corporate
      reorganization or a change in control, even if it could be favorable to the
      interests of our stockholders.





The
      Delaware General Corporation Law and our Certificate of Incorporation contain
      provisions that may enable our management to retain control and resist a
      takeover of our Company. These provisions generally prevent us from engaging
      in
      a broad range of business combinations with an owner of 15%, 20% in the case
      of
      our Certificate of Incorporation, or more of our outstanding voting stock for
      a
      period of three years from the date that this person acquires his stock. Our
      Certificate of Incorporation and our By Laws also require the affirmative vote
      of at least 60% or our voting stockholders to effect certain actions, including,
      under certain circumstances, the removal of directors, and provide for the
      election of different classes of directors with the term of each class ending
      at
      different times. Accordingly, these provisions could discourage or make more
      difficult a change in control or a merger or other type of corporate
      reorganization even if it could be favorable to the interests of our
      stockholders.




Our
      officers and directors exercise significant control over our affairs, which
      could result in their taking actions that other stockholders do not approve
      of.





Our
      executive officers and directors, and persons or entities affiliated with them,
      currently control approximately 70% of our outstanding common stock. These
      stockholders, if they act together, may be able to exercise substantial
      influence over all matters requiring approval by our stockholders, including
      the
      election of directors and approval of significant corporate transactions. This
      concentration of ownership may also delay or prevent a change in control of
      our
      Company and might affect the market price of our common stock.





We
      have
      never paid any cash dividends on our common stock and currently intend to retain
      all future earnings, if any, to invest in our business.





If
      our
      Board issues common stock, which it can do without stockholder approval, a
      purchaser of our common stock could experience substantial dilution.





Our
      Board
      of Directors has the authority to issue up to 1 billion shares of common stock
      and 10,000,000 shares of preferred stock and to issue options and warrants
      to
      purchase shares of our common stock without stockholder approval. In the future,
      we could issue additional shares of our common stock at values substantially
      below the current market price for our common stock, which could substantially
      dilute the equity ownership of holders of our common stock. In addition, our
      Board could issue large blocks of our common stock to prevent unwanted tender
      offers or hostile takeovers without any stockholder approval.


Our
      ability to issue preferred stock may adversely affect the rights of common
      stockholders and be used as an anti-takeover device.





Our
      Certificate of Incorporation authorizes our Board of Directors to issue up
      to
      10 million shares of preferred stock without approval from our
      stockholders. Accordingly, all of our common stock will be junior to any
      preferred stock issued by us, and our Board has the right, without the approval
      of common stockholders, to fix the relative rights and preferences of such
      preferred stock. This could affect the rights of common stockholders regarding,
      among other things, voting, dividends and liquidation. We could also use an
      issuance of preferred stock to deter or delay a change in control that may
      be
      opposed by our management, even if the transaction might be favorable to the
      common stockholders.





The
      Company might issue options and warrants in the future. The exercise of all
      of
      the outstanding options and warrants would dilute the then-existing
      stockholders’ percentage ownership of our common stock. Any sales resulting from
      the exercise of options and warrants in the public market, such as sales by
      the
      selling stockholders pursuant to this prospectus, could adversely affect
      prevailing market prices for our common stock. Moreover, our ability to obtain
      additional equity capital could be adversely affected since the holders of
      outstanding options and warrants may exercise them at a time when we would
      also
      wish to enter the market to obtain capital on terms more favorable than those
      provided by such options and warrants. We lack control over the timing of any
      exercise or the number of shares issued or sold if exercises occur.




17





**Item 2.**
            **Description
                of NYC Office.**





Our
      executive offices are located at Carnegie Hall Tower, 152 W. 57th Street, New
      York, NY 10019 where we use office space, on a temporary basis, under a
      management agreement with Empire Advisory, LLC.





**Item 3.**
            **Legal
                Proceedings**




The
      Company is a party to a lawsuit where the plaintiff is alleging that he is
      entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
      to compensate him for services related to identifying financing for CNE,
      based upon an agreement that was entered into between CNE and the plaintiff
      in
      April 2005. The Company and its counsel strongly feel that the plaintiff’s
      claims against the Company have no merit, the likelihood of an unfavorable
      outcome is very low, and is prepared to vigorously defend the
      matter.




In
      May
      2006, the Company was advised that they were in default of a settlement
      agreement entered into in January of 2005 by CNE related to the release of
      unrestricted, freely-tradable, non-legend shares of stock. Management has agreed
      to release shares of the Company’s stock in consideration of the above
      matter.





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




On
      January 11, 2005, Mr. Michael J. Gutowski and
      Mr. Larry M. Reid resigned from our board as part of the settlement of
      litigation with Mr. Gutowski and Larry M. Reid. On June 28, 2005,
      Anthony S. Conigliaro, our former Vice President and Chief Financial Officer,
      was appointed to our board. On October 21, 2005, Mr. Joseph G.
      Anastasi resigned as a director. On November 14, 2005, Mr. Conigliaro
      resigned as our Vice President and Chief Financial Officer and as a director,
      Mr. Benoit resigned as a director and Chief Executive Officer and President
      and Mr. David W. Dube and Mr. Charles W. Currie resigned as
      directors.





On
      November 14, 2005, we appointed KBL Eisner, LLP to conduct the audit for
      the fiscal year ended December 31, 2005, and retained Wheeler, Herman,
      Hopkins & Lagor, P.A. as the auditor for our discontinued operations.
      After the December 31, 2005 report on Form 10-KSB was filed, we no longer
      utilized the services of Wheeler, Herman, Hopkins & Lagor, P.A. There
      was no dispute with Wheeler, Herman, Hopkins & Lagor, P.A. over any
      accounting, financial or legal issues.





On
      November 14, 2005, immediately prior to submitting their resignations, our
      Board, consisting of Mr. Benoit, Mr. Currie and Mr. Dube at that
      time, appointed Peter J. Frugone, Rudolph Karundeng, John Allen and John E.
      McConnaughy, Jr. to the Board. However, on May 1, 2006, the Company accepted
      the
      resignation of Rudolph Karundeng as Chairman of the Board, but he continues
      to
      be a director of the Company. Peter Frugone has been elected as Chairman of
      the
      Board until his successor is duly qualified and elected.





**PART
      II**




**Item 1.**
            **Market
                For Common Equity and Related Stockholder Matters.**




Exchange
      Listing:




Our
      common stock is listed on the NASD OTC: Bulletin Board (trading symbol ARWD.OB).
      The number of record holders of our common stock as of March 19, 2007 was
      approximately 313.





18


Equity
      Sale Prices:


**Common
                  Stock****High Sales**
                **Price**
              
              **Low Sales**
                **Price**20061st
                  Quarter
              
              
              0.51
              
              
              0.282nd
                  Quarter
              
              
              0.49
              
              
              0.183rd
                  Quarter
              
              
              0.26
              
              
              0.064th
                  Quarter
              
              
              0.33
              
              
              0.0720051st
                  Quarter
              
              
              0.43
              
              
              0.242nd
                  Quarter
              
              
              0.37
              
              
              0.093rd
                  Quarter
              
              
              0.45
              
              
              0.084th
                  Quarter
              
              
              0.62
              
              
              0.29




The
      number of freely tradable shares not held by affiliates is 25,003,244.





As
      of
      March 19, 2007, the aggregate market value of voting stock held by
      non-affiliates of the Issuer was approximately $3,750,487.





Dividends:




We
      have
      not previously paid cash dividends on our common stock. The payments of future
      dividends and the amount thereof will depend upon our earnings, financial
      condition, capital requirements and such other factors as our Board of Directors
      may consider relevant.





**Item 2.**
            **Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations**




**GENERAL**




We
      are a
      holding company whose only operating subsidiary as of December 31, 2006 is
      Arrow
      Ltd. The principal business of Arrow is to provide marketing, sales,
      distribution, corporate operations and corporate finance services for the
      commercial exploitation of natural resources around the world. Prior to November
      2005, we used to be a telecommunications and recruiting company formally known
      as CNE Group, Inc. The company elected to shift its business focus to the
      worldwide commercial exploitation of natural resources.





**ARROW
      RESOURCES DEVELOPMENT, LTD.**




In
      August
      2005, Arrow entered into an Agreement and Plan of Merger (“the Agreement”) with
      its wholly-owned subsidiary, Arrow Ltd., in which Arrow (formerly CNE) was
      required to issue 10 million shares of Series AAA convertible preferred
      stock (“the Preferred Stock”) to Arrow Ltd.’s designees, representing 96% of all
      outstanding equity of CNE on a fully diluted basis in exchange for the Marketing
      and Distribution Agreement provided to the Company by Arrow. Under the
      Agreement, the Company discontinued all former operations (CareerEngine, Inc.,
      SRC and US Commlink.) and changed its name to Arrow Resources Development,
      Inc.





19


On
      August 1, 2005, Arrow Ltd. entered into the Marketing Agreement with Arrow
      Pte. and its subsidiaries in consideration for Arrow issuing a non-interest
      bearing note (the “Note”) in the principal amount of $125,000,000 to Empire
      Advisory, LLC, (“Empire”), acting as agent, due on or before December 31,
      2005. Empire is Arrow Pte.’s merchant banker. The Note permitted the Company, as
      Arrow’s sole stockholder, to cause Arrow to repay the Note in cash or with
      10,000,000 shares of the Company’s non-voting Series AAA Preferred Stock.





On
      April
      4, 2006 Arrow Resource Development Ltd. ( the Company’s Bermuda subsidiary)
      entered into an agency agreement with APR in which the Company will provide
      financial consultancy services to APR for an annual fee, payable as collected,
      equal to 10% of APR’s gross revenue payable commencing upon execution. This
      agreement provides for the company to collect all revenues from all operations,
      retain its 10% fee and disperse the remaining 90% to APR and its subsidiaries.
      The term of the agreement is effective upon execution, shall remain in effect
      for ninety-nine (99) years and shall not be terminated until the expiration
      of
      at least ten (10) years. As of December 31, 2006, the Company has not recovered
      any revenue from this agreement.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**




The
      preparation of financial statements in accordance with U.S. generally accepted
      accounting principles requires us to make estimates and assumptions that affect
      the reported amounts of assets and liabilities at the date of the financial
      statements and the reported amounts of net revenue and expenses during the
      reporting period. On an ongoing basis, we evaluate our estimates, including
      those related to our allowance for doubtful accounts, inventory reserves, and
      goodwill and purchased intangible asset valuations, and asset impairments.
      We
      base our estimates on historical experience and on various other assumptions
      that we believe to be reasonable under the circumstances, the results of which
      form the basis for making judgments about the carrying values of assets and
      liabilities. Actual results may differ from these estimates under different
      assumptions or conditions. We believe the following critical accounting
      policies, among others, affect the significant judgments and estimates we use
      in
      the preparation of our consolidated financial statements.





**ALLOWANCE
      FOR DOUBTFUL ACCOUNTS, REVENUE RECOGNITION**




We
      evaluate the collectibility of our accounts receivable based on a combination
      of
      factors. In circumstances where we are aware of a specific customer’s inability
      to meet its financial obligations to us, we record a specific allowance to
      reduce the net receivable to the amount we reasonably believe will be collected.
      For all other customers, we record allowances for doubtful accounts based on
      the
      length of time the receivables are past due, the prevailing business environment
      and our historical experience. If the financial condition of our customers
      were
      to deteriorate or if economic conditions were to worsen, additional allowances
      may be required in the future.





We
      recognize product revenue when persuasive evidence of an arrangement exists,
      the
      sales price is fixed, the service is performed or products are shipped to
      customers, which is when title and risk of loss transfers to the customers,
      and
      collectibility is reasonably assured.





**VALUATION
      OF GOODWILL, PURCHASED INTANGIBLE ASSETS AND LONG-LIVED ASSETS**




We
      perform goodwill impairment tests on an annual basis and on an interim basis
      if
      an event or circumstance indicates that it is more likely than not that
      impairment has occurred. We assess the impairment of other amortizable
      intangible assets and long-lived assets whenever events or changes in
      circumstances indicate that the carrying value may not be recoverable. Factors
      we consider important that could trigger an impairment review include
      significant underperformance to historical or projected operating results,
      substantial changes in our business strategy and significant negative industry
      or economic trends. If such indicators are present, we evaluate the fair value
      of the goodwill. For other intangible assets and long-lived assets we determine
      whether the sum of the estimated undiscounted cash flows attributable to the
      assets in question is less than their caring value. If less, we recognize an
      impairment loss based on the excess of the carrying amount of the assets over
      their respective fair values. Fair value of goodwill is determined by using
      a
      valuation model based on market capitalization. Fair value of other intangible
      assets and long-lived assets is determined by future cash flows, appraisals
      or
      other methods. If the long-lived asset determined to be impaired is to be held
      and used, we recognize an impairment charge to the extent the anticipated net
      cash flows attributable to the asset are less than the asset’s carrying value.
      The fair value of the long-lived asset then becomes the asset’s new carrying
      value, which we depreciate over the remaining estimated useful life of the
      asset.





20


**RECENT
      ACCOUNTING PRONOUNCEMENTS**




In
      May
      2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections,” that
      applies to all voluntary changes in accounting principle. This Statement
      requires retrospective application to prior periods’ financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. When it
      is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, this Statement requires
      that
      the new accounting principle be applied to the balances of assets and
      liabilities as of the beginning of the earliest period for which retrospective
      application is practicable and that a corresponding adjustment be made to the
      opening balance of retained earnings (or other appropriate components of equity
      or net assets in the statement of financial position) for that period rather
      than being reported in an income statement. When it is impracticable to
      determine the cumulative effect of applying a change in accounting principle
      to
      all prior periods, this Statement requires that the new accounting principle
      be
      applied as if it were adopted prospectively from the earliest date practicable.
      SFAS 154 will be effective for the Company for fiscal year ended
      December 31, 2007. The Company does not anticipate that the adoption of
      SFAS No. 154 will have an impact on the Company’s overall results of
      operations or financial position.





In
      February 2006, the FASB issued SFAS 155, “Accounting for Certain Hybrid
      Financial Instruments—an amendment of FASB Statements No. 133 and 140,” that
      allows a preparer to elect fair value measurement at acquisition, at issuance,
      or when a previously recognized financial instrument is subject to a
      remeasurement (new basis) event, on an instrument-by-instrument basis, in cases
      in which a derivative would otherwise have to be bifurcated. It also eliminates
      the exemption from applying Statement 133 to interests in securitized financial
      assets so that similar instruments are accounted for similarly regardless of
      the
      form of the instruments. This Statement is effective for all financial
      instruments acquired or issued after the beginning of an entity’s first fiscal
      year that begins after September 15, 2006. The Company does not anticipate
      that
      the adoption of SFAS No. 155 will have an impact on the Company’s overall
      results of operations or financial position.




In
      March
      2006, the FASB issued SFAS 156, “Accounting for Servicing of Financial Assets—an
      amendment of FASB Statement No. 140,” that applies to the accounting for
      separately recognized servicing assets and servicing liabilities. This Statement
      requires that all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value, if practicable. An entity
      should adopt this Statement as of the beginning of its first fiscal year that
      begins after September 15, 2006. The Company does not anticipate that the
      adoption of SFAS No. 156 will have an impact on the Company’s overall results of
      operations or financial position.





On
      July
      13, 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
      in Income Taxes. The Interpretation clarifies the way companies are to account
      for uncertainty in income tax reporting and filing and prescribes a consistent
      recognition threshold and measurement attribute for recognizing, derecognizing,
      and measuring the tax benefits of a tax position taken, or expected to be taken,
      on a tax return. The Interpretation is effective for fiscal years beginning
      after December 15, 2006, although early adoption is possible. The Company does
      not plan to adopt early and the Company is currently in the process of
      evaluating the impact, if any, the adoption of the Interpretation will have
      on
      the 2007 financial statements.




In
      September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” which
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. The adoption of SFAS No. 157 will not have an
      impact on the Company's overall results of operations or financial
      position.





21


In
      September 2006, the Financial Accounting Standards Board (“FASB”) the issued
      SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an Amendment of FASB Statements No. 87, 88, 106, and
      132(R)” (“SFAS No. 158”). SFAS No. 158 requires companies to report the funded
      status of their defined benefit pension and other postretirement benefit plans
      on their balance sheets as a net liability or asset as of December 31, 2006.
      The
      new standard does not address the accounting treatment for pension and
      postretirement benefits in the income statement. This will have no impact on
      the
      Company’s results of operations or financial position.





In
      February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No.159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an amendment of FASB Statement No.115”. SFAS No.159 permits entities
      to choose to measure eligible financial instruments and other items at fair
      value at specified election dates. A business entity shall report unrealized
      gains and losses on items for which the fair value option has been elected
      in
      earnings at each subsequent reporting date. The fair value option may be applied
      instrument by instrument but only upon the entire instrument - not portions
      of
      the instrument. SFAS No.159 is effective as of the beginning of an entity’s
      first fiscal year that begins after November 15, 2007. The Company does not
      anticipate that the adoption of SFAS No. 159 will have an impact on the
      Company's overall results of operations or financial position.





**RESULTS
      OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006**




In
      November 2005, we discontinued and disposed of our subsidiaries except for
      Arrow
      Ltd. in conjunction with the recapitalization of the Company. The Company had
      no
      revenue during this period as Arrow Ltd. is still in the development stage.
      For
      the year ended December 31, 2006 we incurred consulting fees of $3,391,129
      of which, $3,257,683 was related to services provided by the Management
      Agreement with Empire under which Empire provides the services of Chief
      Executive Officer and administrative services to the Company and consulting
      services provided by Hans Karundeng and Rudolph Karundeng under Engagement
      and
      Consulting Agreements.





**REVENUES**




There
      was
      no revenue for the year ended December 31, 2006 as the Company is in its
      development stage. There was also no revenue for the year ended December 31,
      2005 as the Company discontinued all of its operating businesses.





**COST
      OF GOODS SOLD**




There
      was
      no cost of good sold for the year ended December 31, 2006 as the Company is
      in its development stage. There was also no cost of goods sold for the year
      ended December 31, 2005 as the company discontinued all of its operating
      businesses.





**OTHER
      EXPENSES**




Compensation,
      consulting and related costs increased to $3,391,129 for the year December
      31,2006 as compared to $1,022,087 for period from inception (November 15, 2005)
      to December 31, 2005 and $4,413,216 for the period from inception (November
      15,
      2005) to December 31, 2006. The increase was mostly due to consulting fees
      for
      services provided by the Management Agreement with Empire under which Empire
      provides the services of Chief Executive Officer and administrative services
      to
      the Company and consulting services provided by Hans Karundeng and Rudolph
      Karundeng under Engagement and Consulting Agreements.





General
      and administrative expenses increased to $391,634 for the year ended December
      31, 2006 as compared to $919 for the period from inception (November 15, 2005)
      to December 31, 2005 and $392,553 for the period from inception (November 15,
      2005) to December 31, 2006. This was primarily due to an increase in legal
      and
      audit related services.





22




Delaware
      franchise taxes amount to $127,349 for the year ended December 31, 2007 compared
      to none for the period from inception (November 15, 2005) to December 31, 2005
      and $127,349 for the period from inception (November 15, 2005) to December
      31,
      2006. The Company is delinquent in its filing and payment of the Delaware
      Franchise Tax report and, accordingly, is not in good standing. At December
      31,
      2006, the Company has estimated unpaid Delaware franchise taxes for the years
      ended December 31, 2006 and 2005 in the amount of $57,650 and $69,699,
      respectively. The Company expects to file the delinquent forms and pay the
      taxes
      in full during the second quarter of 2007.





Total
      operating expenses during the development stage increased to $3,910,112 for
      the
      year ended December 31, 2006 as compared to $1,023,006 for the period from
      inception (November 15, 2005) to December 31, 2005 and $4,933,118 for the period
      from inception (November 15, 2005) to December 31, 2006.




At
      December 31, 2006, the Company wrote off liabilities associated with CNE, the
      predecessor entity, which will not be paid. The total amounted to $395,667
      and
      was recorded as a reduction to accrued expenses. This resulted in the
      recognition of a gain for the same amount.




**LIQUIDITY
      AND CAPITAL RESOURCES**




In
      November 2005 we discontinued and disposed of our subsidiaries except for Arrow
      Ltd. in conjunction with the recapitalization of the Company. The Company was
      recapitalized by the conversion of $125,000,000 preferred convertible note
      related to the purchase of the Marketing Agreement. As part of the
      recapitalization plan the Company settled all outstanding debt except for
      $220,000. As of December 31, 2006 and December 31, 2005 the Company had $0
      and $3,084 of cash, respectively. We had losses of approximately $3,514,000
      for
      the year ended December 31, 2006 and do not currently generate any revenue.
      In
      order for us to survive the next twelve months we will need to secure
      approximately $350,000 of debt or equity financing. We expect to secure the
      additional financing in the future but there can be no guarantee that we will
      be
      successful.





**Off-Balance
      Sheet Arrangements**




At
      December 31, 2006, we had no off-balance sheet arrangements.





*Year
      ended December 31, 2006 compared to the Year ended December 31, 2005.*





**Operating
      Activities**




We
      used
      $2,278,071 of cash in our operating activities during the year ended December
      31, 2006. We had a net loss of $3,514,445 of which $3,391,129 was related to
      consulting fees and services. We had an increase in accounts payable and accrued
      expenses payable of $1,236,374 mostly related to compensation and management
      fees, which is net of a $395,667 gain on write off of liabilities associated
      with CNE that will not be paid. In addition, we had a working capital deficiency
      of $5,562,002 during the period ended December 31, 2006.





We
      did
      not have any material commitments for capital expenditures as of
      December 31, 2006.





**INFLATION**




We
      believe that inflation does not significantly impact our current operations.





**RECENT
      TRANSACTIONS**




On
      August
      2, 2006, the Company entered into a stock purchase agreement with APR wherein
      APR agreed to purchase up to an aggregate amount of 15,000,000 shares of common
      stock in the Company for $1.00 per share, making this a capital contribution
      of
      $15,000,000 in total. The stock will be delivered at the time the Company files
      for registration. APR is currently the principal shareholder of the Company,
      owning 349,370,000 shares or 53.78%. As of December 31, 2006, the Company has
      received $985,000 from APR towards the fulfillment of this agreement.





23


**MANAGEMENT**




The
      Company has brought together a team of management and professionals with a
      balance of experience in the fields plantation management, corporate finance,
      corporate management and governance, marketing and sales, law, accounting and
      international marketing. The team includes directors and advisors (Hans
      Karundeng and Rudolph Karundeng) who are both members of the Company team and
      senior management of APR.





**CEO-President,
      Chairman and Director - Peter J. Frugone**




In
      addition to the traditional investment banking skills related to sourcing,
      valuation and negotiation, Mr. Frugone, 57, has significant experience in
      hands-on operating roles at the senior levels, as well as strategic and advisory
      roles as director of and consultant to small-cap and mid-cap companies. He
      has
      overseen the processes of strategic planning and oversight, recruitment of
      management executives, assisting with follow-on capital requirements, arranging
      follow-on acquisitions, and assisting with realization of value through IPO,
      public sale or sale or merger of the company. Mr. Frugone is experienced in
      all phases of financial analysis, corporate re-engineering and restructuring,
      information technology and Internet marketing, real estate financing and
      development, and commercial/residential general construction/management.





In
      1991,
      Mr. Frugone founded, and has since acted as the Managing Director of,
      Empire Advisory LLC (formerly Electra Capital Corporation), and a boutique
      consulting and investment bank specializing in small and medium sized
      transactions ($1 million to $10 million). Empire has provided financial
      consulting and investing banking services to over 300 clients, which has
      resulted in the completion of more than 100 debt and equity placements with
      a
      total value of $250 million.





From
      1972
      until 1989 Mr. Frugone was the CEO of Citadel Construction and Financial
      Corporations. He started Citadel as a small home improvement company and
      expanded to all phases of general construction, project management, and real
      estate development with 1988 annual sales of $25 million. During that period
      Citadel completed development projects of $105 million and construction projects
      of over $400 million. Mr. Frugone started his career as an executive
      trainee with Marine Midland Bank in 1967, rising to the position of Corporate
      Trust Officer in charge of bond and coupon auditing. From 1969 to 1971
      Mr. Frugone was a “baby bond” trader for Merrill Lynch Pierce Fenner and
      Smith, then with Loeb Rhodes and Company and with Pershing and Company.





**Director
      - John E. McConnaughy, Jr.**




John
      E.
      McConnaughy, Jr., 77, is Chairman and Chief Executive Officer of JEMC
      Corporation, a personal holding company he founded in 1985. He was Chairman
      and
      CEO of Peabody International Corp. from 1969 and in addition Chairman and CEO
      of
      GEO International Corp. when it was spun off in 1981. He retired from the former
      in February 1986 and the latter in October 1992.





At
      the
      start of his tenure with Peabody International Corp., the Company had sales
      of
      $23 million. During the next 11 years, he built sales to $85 million and ranked
      8th of the Fortune 500 Companies in growth of earnings per share. He was named
      outstanding Chief Executive Officer for the Environmental Control industry
      for
      the years 1975, 1976 and 1978 by Financial World magazine.





Prior
      to
      joining Peabody in 1969, Mr. McConnaughy served as Vice President of
      European Consumer Products with the Singer Company. He was responsible for
      operations in 16 countries and sales of $400 million. He had previously been
      President of the Singer Company of Canada, Limited. Earlier, he held management
      positions at Westinghouse Electric Corp. in its consumer group and portable
      appliance divisions.





Mr. McConnaughy
      served on the board of Fortune Natural Resources Corporation from 2000 through
      January 30, 2004. On June 1, 2004, Fortune filed from protection under
      Chapter 11 of the Federal Bankruptcy law in the United States Bankruptcy Court
      for the Eastern District of Louisiana, Case No. 04-14112. The case is still
      pending.





24
 
  A
          graduate of Denison University with a B.A. in Economics, Mr. McConnaughy
          earned his M.B.A. in Marketing and Finance at Harvard’s Graduate School of
          Business Administration.
 Mr. McConnaughy
          has been a Director of Oxigene, Inc., Varsity Brands, Inc., Texstar Corporation,
          MAI Corporation, Pets Choice Ltd., Akzona Corp., First Bank Corp. (New
          Haven),
          Beringer Co., Inc., the Pullman Co., Moore McCormack Resources, Peabody
          International Corp., DeVlieg Bullard, Inc., Mego Financial Corp., Trasact
          International, Inc. and RateXchange, who changed their name to MCF Corporation.
          Mr. McConnaughy currently serves on the boards of five other public
          companies (Wave Systems, Inc., Allis-Chalmers Energy Inc., Overhill Farms
          inc.,
          Consumer Portfolio Services, Inc. and Levcor International, Inc.)


He
      is
      Chairman of the Board of Trustees and Executive Committee of the Strang Cancer
      Prevention Center and is Chairman Emeritus of the Harlem School of the Arts.





**Director
      - John W. Allen**




John
      W.
      Allen, 68, is Chairman and CEO of Spring Investment Corporation an international
      investment firm based in New York City. He is also Chairman and CEO of Greater
      China Corporation, a U.S. public company with operations in Hong Kong and China.
      He was a co-founder of Turtlesnap Ventures, Inc. a company which identifies
      promising technology opportunities through its “Global Trends in Technology”
Symposia.





Mr. Allen
      serves as a Director, Advisor or Trustee of the following non-profit
      organizations: AIESEC Yale (formerly Chairman of the Board of AIESEC, U.S.),
      the
      Maryland Information Technology Center (MITC), George Soros’ International
      Science Foundation (previously, Trustee of the Soros Open Society Institute)
      and
      the Chinese Cultural Foundation.





Mr. Allen
      has well-established relationships at senior levels in corporate, financial,
      technical and government organizations worldwide. Over the past 30 years he
      has
      been instrumental in starting, building and financing more than 50 companies
      in
      global markets. He has participated in numerous conferences as chairman or
      speaker on international capital markets, private equity, venture capital,
      education and philanthropy.





After
      receiving his BA from Yale University, he attended law school and received
      his
      MBA from Harvard Business School. He assisted Professor George Cabot Lodge
      in
      developing case materials for Harvard Business School in Central America.
      Mr. Allen began his financial career with the Bank of Boston where he
      eventually ran the international investment subsidiary of the Bank, Boston
      Overseas Financial Corporation. This entity held direct investments in more
      than
      30 countries. He was instrumental in starting eight new financial service
      companies in Asia, Europe and Latin America. Several grew into multi-billion
      dollar enterprises, including one, in Japan, with more than $20 billion in
      assets.





He
      left
      Boston to join Schroder Bank and Trust Company as Assistant to James D.
      Wolfensohn (recently President of the World Bank Group). At Schroder he was
      responsible for various international money market, and investment banking
      activities.




He
      initiated a new leasing company in Brazil, managed the successful acquisition
      of
      a NYSE listed company, and helped start a money market advisory firm which
      today
      manages more than $30 billion.





Mr. Allen
      left Schroder to become President of the International Securities Exchange
      Corporation, an organization designed to link investment companies around the
      world to provide research and trading capabilities for global investors. Upon
      the death of ISEC’s Chairman, Mr. Allen liquidated his shares and formed
      Spring Investment Corporation, a family-owned company through which he conducts
      his on-going investment activities.





**Director
      - Rudolph Karundeng**




Mr. Karundeng,
      27, has assisted Hans Karundeng, helping start, maintain and oversee the
      operations at a senior level of numerous projects throughout the world since
      2000. His primary role in most of these projects was the acquisition of capital
      through banking means as well as financial analysis of projects and transforming
      their structure in order to be viable for funding by banks.





25


Since
      receiving his degree in Economics from UCLA, Rudolph Karundeng has been Director
      in numerous corporations throughout the world including Golden Summit Inc.
      a
      small-cap company lender and loan facilitator, Du Motier International
      Corporation, a note structure developer as well as a bank loan facilitation
      consultant. During his tenure as a Director for these companies he has been
      involved in facilitating the loans for 25 Clients, which had a loan range from
      $100 Million to $1.8 Billion for various projects including mining,
      manufacturing, and marketing.





Mr. Karundeng
      is intimately involved with all the processes, equipment, and day to day
      operations of each project in order to better help in cost and budget analysis
      for each project. Through his family’s earlier background of mining and forestry
      he has developed a strong base of knowledge for the day-to-day operations as
      well as development, marketing and all forms of operations for coal mining,
      oil
      refining, gas mining, and forestry. Another product of his tenure as Director
      of
      these companies is Mr. Karundeng’s has developed his knowledge in Note
      Structures as well as the laws that pertain to them in many areas of the world
      including but not limited to United States, Europe, China, Singapore, and
      Indonesia. He has facilitated the sale, usage, and the acquisition of Notes
      throughout the world utilizing his many banking relationships throughout the
      world to assist companies in moving a project forward.





**Senior
      Advisor - Hans Karundeng**




Mr. Hans
      Karundeng, 56, has been involved in a wide variety of business ventures
      throughout his life. His first business activity was operating a bakery which
      supplied bread to the city as well as neighboring cities and to this day is
      still well known throughout Java, Indonesia. After selling his shares in the
      business, he became involved in Timber and timber related products with the
      company that has now become one of the largest paper and paper related products
      manufacturer and supplier in the world, Asian Pulp and Paper. Mr. Karundeng
      during this time, opened a company named P.T. Akal Rasa, which helped develop
      low-income housing for an underdeveloped area in Indonesia.





Mr. Karundeng
      then moved on and started a mid cap firm that built, maintained and sold real
      estate. A by-product of this company was starting a Corporation Consultant
      company with a large Engineering consultant arm which later became the 4th
      largest in Indonesia. During the time of this company, Mr. Hans Karundeng
      acquired the licensing right to repair and maintain the turbines for select
      Oil
      companies in Indonesia, PLN (Electric company of Indonesia) and Telkom
      (Tele-Communication company of Indonesia). Diversifying his portfolio he went
      into Small saving and Loans, owning shares in a number of these facilities.





Mr. Karundeng
      has diversified his operations to include Sulfur Mining, Orange Plantation,
      Shrimp Farming and Sand mining, as well as owning and operating an Air Cargo
      company specializing in exporting Seafood to Japan and Hong Kong. During this
      period he also had shares in a company that maintained 300,000 ha of Kasava
      for
      animal feed for exportation.





During
      the time of the expansion of his holdings, Mr. Karundeng also went into
      larger dealings on the international level. Helped obtain large quantities
      of
      Rice Donations to the Indonesian government from Thailand and Vietnam, and
      paved
      the way for larger loan from the World Bank for Indonesia to help the
      underdeveloped areas of Indonesia.





After
      leaving Indonesia he became involved in the opening of the Indonesian Exim
      Bank
      in NY, where he first started his international consultancy firm, which helped
      his numerous clients achieve the level of competence in order to receive bank
      loans either through corporate restructuring, cost analysis, or note
      structuring.




**Item 7.**
            **Financial
                Statements.**




Our
      financial statements to be filed hereunder follow, beginning with page F-1.





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




There
      have been no disagreements concerning any matter of accounting principle or
      financial statement disclosure between the Company and its independent auditor,
      KBL LLP.




26




**Item 8A.**
            **Controls
                and Procedures**




Management,
      including the Company’s Chief Executive Officer and Principle Accounting
      Officer, has evaluated the effectiveness of the Company’s disclosure controls
      and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
      as of the end of the period covered by this report. Based upon that evaluation,
      the Chief Executive Officer and Principal Accounting Officer concluded that
      the
      disclosure controls and procedures were effective to ensure that information
      required to be disclosed in the reports the Company files and submits under
      the
      Exchange Act is (i) recorded, processed, summarized and reported as and
      when required and (ii) accumulated and communicated to the Company’s
      management, including its principal executive officer and principal financial
      officer, as appropriate to allow timely decisions regarding disclosure.





There
      have been no changes in the Company’s internal control over financial reporting
      identified in connection with the evaluation that occurred during the Company’s
      last fiscal quarter that has materially affected, or that is reasonably likely
      to materially affect, the Company’s internal control over financial reporting.




**Part
      III**




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




The
      directors and executive officers of the Company are set forth below. All
      directors hold office until the next annual meeting of stockholders, or until
      their death, resignation, retirement, removal, disqualification, and until
      their
      successors have been elected and qualified. Vacancies in the existing board
      are
      filled by a majority vote of the remaining directors.


**Name**
              
              **Age**
              
              **Position**
              
              **Director Since**Peter
                  J. Frugone
              
              57
              
              Chairman,
                  Chief Executive Officer and Principal Accounting Officer
              
              2005Rudolph
                  Karundeng
              
              27
              
              Director
              
              2005John
                  E. McConnaughy, Jr.
              
              77
              
              Director
              
              2005John
                  W. Allen
              
              68
              
              Director
              
              2005




**BUSINESS
      EXPERIENCE**




PETER
      J.
      FRUGONE. In addition to the traditional investment banking skills related to
      sourcing, valuation and negotiation, Mr. Frugone, has significant
      experience in hands-on operating roles at the senior levels, as well as
      strategic and advisory roles as director of and consultant to small-cap and
      mid-cap companies. He has overseen the processes of strategic planning and
      oversight, recruitment of management executives, assisting with follow-on
      capital requirements, arranging follow-on acquisitions, and assisting with
      realization of value through IPO, public sale or sale or merger of the company.
      Mr. Frugone is experienced in all phases of financial analysis, corporate
      re-engineering and restructuring, information technology and Internet marketing,
      real estate financing and development, and commercial/residential general
      construction/management.





RUDOLPH
      KARUNDENG. Mr. Karundeng has assisted Hans Karundeng, helping start,
      maintain and oversee the operations at a senior level of numerous projects
      throughout the world since 2000. His primary role in most of these projects
      was
      the acquisition of capital through banking means as well as financial analysis
      of projects and transforming their structure in order to be viable for funding
      by banks.





JOHN
      E.
      MCCONNAUGHY. Mr. McConnaughy is Chairman and Chief Executive Officer of
      JEMC Corporation. He was Chairman and CEO of Peabody International Corp. from
      1969 and in addition Chairman and CEO of GEO International Corp. when it was
      spun off in 1981. He retired from the former in February 1986 and the latter
      in
      October 1992. Prior to joining Peabody in 1969, Mr. McConnaughy served as
      Vice President of European Consumer Products with the Singer Company. He was
      responsible for operations in 16 countries and sales of $400 million. He had
      previously been President of the Singer Company of Canada, Limited. Earlier,
      he
      held management positions at Westinghouse Electric Corp. in its consumer group
      and portable appliance divisions.





27


JOHN
      W.
      ALLEN. Mr. Allen is Chairman and CEO of Spring Investment Corporation an
      international investment firm based in New York City. He is also Chairman and
      CEO of Greater China Corporation, a U.S. public company with operations in
      Hong
      Kong and China. He was a co-founder of Turtlesnap Ventures, Inc. a company
      which
      identifies promising technology opportunities through its “Global Trends in
      Technology” Symposia.





**Audit
      Committee Financial Expert**





The
      Board
      of Directors has determined that Mr. McConnaughy is an “audit committee
      financial expert” (as defined in Item 401(e)(2) of Regulation S-B).
      Mr. McConnaughy is independent as that term is used in
      Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.





**Compliance
      with Section 16 (a) of the Exchange Act.**





Section 16(a)
      of the Securities Exchange Act of 1934, as amended, requires the Company’s
      directors, executive officers and holders of more than 10% of the Common Stock
      to file with the Securities and Exchange Commission initial reports of ownership
      and reports of changes in ownership of the Common Stock. Based solely upon
      a
      review of Forms 3, 4 and 5 furnished to the Company with respect to the year
      ended December 31, 2006, to the best of the Company’s knowledge, the
      Company’s directors, executive officers and holders of more than 10% of its
      Common Stock timely filed the reports required by Section 16(a).





**Code
      of Ethics**




The
      Company has adopted a written Code of Ethics that applies to the Company’s
      principal executive officer, principal financial officer, principal accounting
      officer or controller and any persons performing similar functions. The Company
      will provide a copy of its Code of Ethics to any person without charge upon
      written request addressed to Arrow Resources Development, Inc. 152 W. 57th
      Street, 27th Floor, New York, NY 10019, Attention: Shareholder Relations.




**Item 10.**
            **Executive
                Compensation.**




The
      Information required under this item is incorporated by reference to the
      applicable information set forth in our Proxy Statement for our 2007 Annual
      Meeting of Shareholders to be held in the second quarter of 2007.




**Item 11.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters.**




The
      Information required under this item is incorporated by reference to the
      applicable information set forth in our Proxy Statement for our 2007 Annual
      Meeting of Shareholders to be held in the second quarter of 2007.




**Item 12.**
            **Certain
                Relationships and Related Transactions.**




The
      Information required under this item is incorporated by reference to the
      applicable information set forth in our Proxy Statement for our 2007 Annual
      Meeting of Shareholders to be held in the second quarter of 2007.




**Item 13.**
            **Exhibits.**




28


The
      Company hereby furnishes the exhibits listed on the attached exhibit index.
      Exhibits, which are incorporated herein by reference, may be inspected and
      copied at the public reference facilities maintained by the SEC at Room 1024,
      Washington, D.C. 20549. Copies of such material may be obtained by mail from
      the
      Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
      Washington, D.C. 20549, at prescribed rates. The SEC also maintains a website
      that contains reports, proxy and information statements and other information
      regarding registrants that file electronically with the SEC at the address
      http://www.sec.gov.




**Item 14.**
            **Principal
                Accountant fees and Services.**




The
      Information required under this item is incorporated by reference to the
      applicable information set forth in our Proxy Statement for our 2007 Annual
      Meeting of Shareholders.




29


**SIGNATURES**




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


ARROW
                RESOURCES DEVELOPMENT, INC.Dated:April
                2, 2007
            By:
            /S/ PETERJ.
                FRUGONEPeter
                J. FrugonePresident
                and Chief Executive Officer




Dated:April
                2, 2007
            By:
            /S/ PETERJ.
                FRUGONEPeter
                J. FrugonePrincipal
                Accounting Officer




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


**Signatures**
              
              **Title**
              
              **Date**/S/    PETERJ.
                  FRUGONE
                **Peter
                  J. Frugone**
              
              President
                  and Chief Executive Officer and Director (principal executive
                  officer)
              
              April
                  2, 2007/S/    PETERJ.
                  FRUGONE
                **Peter
                  J. Frugone**
              
              Principal
                  Accounting Officer (principal financial and accounting
                  officer)
              
              April
                  2, 2007/S/    JOHNE.
                  MCCONNAUGHY,
                  JR.
                **John
                  E. McConnaughy, Jr.**
              
              Director
              
              April
                  2, 2007/S/    JOHNW.
                  ALLEN
                **John
                  W. Allen**
              
              Director
              
              April
                  2, 2007





30




**ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES**


**(A
      DEVELOPMENT STAGE COMPANY)**


**INDEX
      TO CONSOLIDATED AUDITED FINANCIAL STATEMENTS**


**FOR
      THE YEAR ENDED DECEMBER 31, 2006**





Reportof
                Independent Registered Public Accounting Firm
            
            F-1Consolidated
                financial statements:Consolidated
                Balance Sheets (At December 31, 2006 and 2005)
            
            F-2Consolidated
                Statement of Operations (For the twelve months ended December 31,
                2006 and
                for the period from inception November 15, 2005 to December 31,
                2006)
            
            F-3Consolidated
                Statement of Changes in Stockholders' Equity (For the twelve months
                ended
                December 31, 2006)
            
            F-4Consolidated
                Statement of Cash Flows (For the twelve months ended December 31,
                2006 and
                for the period from inception November 15, 2005 to December 31,
                2006)
            
            F-5Notes
                to the consolidated financial statements
            
            F-6 - F-17





31





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders


Arrow
      Resources Development, Inc.


New
      York,
      New York




We
      have
      audited the accompanying consolidated balance sheet of Arrow Resources
      Development, Inc. and Subsidiaries, development stage entity, (“the Company”) as
      of December 31, 2006, and the related consolidated statements of operations,
      cash flows, and changes in stockholders’ equity during the development stage,
      for the period from inception (November 15, 2005) to December 31, 2006. These
      consolidated financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these consolidated
      financial statements based on our audit.




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




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Arrow Resources Development,
      Inc. and Subsidiaries as of December 31, 2006, and the results of its operations
      and its cash flows during the development stage for the period from inception
      (November 15, 2005) to December 31, 2006 in conformity with accounting
      principles generally accepted in the United States.




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 9 to the
      consolidated financial statements, the Company has suffered recurring losses
      from operations, and is dependent upon shareholders to provide sufficient
      working capital to maintain continuity. These circumstances create substantial
      doubt about the Company’s ability to continue as a going concern. The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




KBL,
      LLP


Certified
      Public Accountants


April
      2,
      2007




F-1


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


Consolidated
      Balance Sheets (during the development stage)


December
      31, 2006 and 2005




**December
                  31, 2006**
              
              **December
                  31, 2005****ASSETS**Current:Cash
              
              $
              —
              
              $
              3,084Prepaid
                  expenses
              
              
              —
              
              
              —Total
                  current assets
              
              
              —
              
              
              3,084Amortizable
                  intangible assetMarketing
                  and distribution agreement
              
              
              125,000,000
              
              
              125,000,000Total
                  assets
              
              $
              125,000,000
              
              $
              125,003,084**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current:Accounts
                  and accrued expenses payable (including $2,510,491 and $844,212
                  due to
                  shareholders, respectively)
              
              $
              2,719,251
              
              $
              1,482,877Due
                  to related parties
              
              
              2,597,751
              
              
              1,332,764Notes
                  payable, including accrued interest of $20,000 (2005)
              
              
              245,000
              
              
              220,000Total
                  liabilities
              
              
              5,562,002
              
              
              3,035,641Commitments
                  and contingencies
              
              
              —
              
              
              —STOCKHOLDERS’
                  EQUITYCommon
                  stock, $0.00001 par value, 1 billion shares authorized, 649,543,240
                  issued
                  and outstanding
              
              
              6,495
              
              
              6,495Preferred
                  stock, $0.10 par value, 10 million shares authorized, none issued
                  and
                  outstanding
              
              
              —
              
              
              —Additional
                  paid-in capital
              
              
              124,218,206
              
              
              123,233,206Accumulated
                  deficit
              
              
              (4,786,703
              )
              
              (1,272,258
              )Total
                  stockholders’ equity
              
              
              119,437,998
              
              
              121,967,443Total
                  liabilities and stockholders’ equity
              
              $
              125,000,000
              
              $
              125,003,084




*See
      accompanying notes to the consolidated financial statements.*




F-2




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


Consolidated
      Statement of Operations (during the development stage)


For
                  the Year Ended December 31, 2006
              
              For
                  the Period From Inception (November 15, 2005) to December 31,
                  2005
              
              Accumulated
                  during the development stage for the Period From Inception (November
                  15,
                  2005) to December 31, 2006Revenue
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  expenses:Consulting
                  fees and services, including $3,257,683, $939,401 and $4,197,084
                  incurred
                  to related parties, respectively
              
              
              3,391,129
              
              
              1,022,087
              
              
              4,413,216General
                  and administrative
              
              
              391,634
              
              
              919
              
              
              392,553Delaware
                  franchise taxes
              
              
              127,349
              
              
              -
              
              
              127,349Total
                  operating expenses
              
              
              3,910,112
              
              
              1,023,006
              
              
              4,933,118Loss
                  from operations during thedevelopment
                  stage
              
              
              (3,910,112
              )
              
              (1,023,006
              )
              
              (4,933,118
              )Other
                  income (expense):Gain
                  on write off of liabilities associated with predecessor entity
                  not to be
                  paid
              
              
              395,667
              
              
              -
              
              
              395,667Expenses
                  incurred as part of recapitalization transaction
              
              
              -
              
              
              (249,252
              )
              
              (249,252
              )395,667
              
              
              (249,252
              )
              
              146,415Net
                  loss
              
              $
              (3,514,445
              )
              $
              (1,272,258
              )
              $
              (4,786,703
              )Basic
                  and diluted net loss per weighted-average shares common stock
                  outstanding
              
              $
              (0.005
              )
              $
              (0.003
              )
              $
              (0.008
              )Weighted-average
                  number of shares of common stock outstanding
              
              
              649,543,240
              
              
              423,841,112
              
              
              623,733,021




*See
      accompanying notes to the consolidated financial statements.*




F-3


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


Consolidated
      Statement of Changes in Stockholders' Equity (during the development
      stage)


For
      the
      period from inception (November 15, 2005) to December 31, 2005 and for the
      year
      ended December 31, 2006


**Common
                  Stock**
              
              **Additional
                    Paid-**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **in Capital**
              
              **Deficit**
              
              **Total**Balance,
                  November 14, 2005 pursuant to recapitalization transaction
              
              
              25,543,240
              
              $
              255
              
              $
              (2,674,761
              )
              $
              —
              
              $
              (2,674,506
              )Common
                  stock conversion and settlement of senior note pursuant to
                  recapitalization transaction
              
              
              624,000,000
              
              
              6,240
              
              
              125,907,967
              
              
              —
              
              
              125,914,207Net
                  loss for the period from November 15, 2005 to December 31,
                  2005
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,272,258
              )
              
              (1,272,258
              )Balance,
                  December 31, 2005
              
              
              649,543,240
              
              $
              6,495
              
              $
              123,233,206
              
              $
              (1,272,258
              )
              $
              121,967,443Common
                  stock to be issued for cash received by Company
              
              
              —
              
              
              —
              
              
              985,000
              
              
              —
              
              
              985,000Net
                  loss for the year
              
              
              —
              
              
              —
              
              
              —
              
              
              (3,514,445
              )
              
              (3,514,445
              )Balance
                  at December 31, 2006
              
              
              649,543,240
              
              $
              6,495
              
              $
              124,218,206
              
              $
              (4,786,703
              )
              $
              119,437,998


*See
      accompanying notes to the consolidated financial statements.*




F-4


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


Consolidated
      Statement of Cash Flows ( during
      the development stage)




For
                  the Year Ended December 31, 2006
            
            For
                  the Period From Inception (November 15, 2005) to December 31,
                  2005
            
            Accumulated
                  during the development stage for the Period From Inception (November
                  15,
                  2005) to December 31, 2006Net
                loss
            
            $
            (3,514,445
            )
            $
            (1,272,258
            )
            $
            (4,786,703
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Net
                non-cash change in stockholders’ equity due to recapitalization
                transaction
            
            
            -
            
            
            1,264,217
            
            
            1,264,217Changes
                in operating asset and liabilities:Increase
                in accounts and accrued expenses payable
            
            
            1,236,374
            
            
            246,316
            
            
            1,878,357Net
                cash provided by (used in) operating activities
            
            
            (2,278,071
            )
            
            238,275
            
            
            (2,039,796
            )Cash
                flows from investing activities:Cash
                acquired as part of merger transaction
            
            
            -
            
            
            39,576
            
            
            39,576Net
                cash provided by investing activities
            
            
            -
            
            
            39,576
            
            
            39,576Cash
                flows from financing activities:Proceeds
                of issuance of note payable
            
            
            25,000
            
            
            -
            
            
            25,000Net
                increase (decrease) in due to related parties attributed to operating
                expenses paid on the Company’s behalf by the related party
            
            
            1,264,987
            
            
            (324,767
            )
            
            940,220Net
                increase in investments/capital contributed
            
            
            985,000
            
            
            -
            
            
            985,000Advances
                from senior advisor
            
            
            -
            
            
            50,000
            
            
            50,000Net
                cash provided by (used in) financing activities
            
            
            2,274,987
            
            
            (274,767
            )
            
            2,000,220Net
                change in cash
            
            
            (3,084
            )
            
            3,084
            
            
            -Cash
                balance at beginning of period
            
            
            3,084
            
            
            -
            
            
            -Cash
                balance at end of period
            
            $
            -
            
            $
            3,084
            
            $
            -Supplemental
                disclosures of cash flow information:Cash
                paid during the period for:Income
                taxes
            
            $
            -
            
            $
            -
            
            $
            -Interest
                expense
            
            $
            -
            
            $
            -
            
            $
            -Non-cash
                investing and financing activities:Non-cash
                purchase of marketing and distribution agreement
            
            $
            -
            
            $
            125,000,000
            
            $
            125,000,000Settlement
                of senior note payable through issuance of convertible preferred
                stock
            
            $
            -
            
            $
            125,000,000
            
            $
            125,000,000Non-cash
                acquisition of accrued expenses in recapitalization
            
            $
            -
            
            $
            421,041
            
            $
            421,041Non-cash
                acquisition of notes payable in recapitalization
            
            $
            -
            
            $
            220,000
            
            $
            220,000




*See
      accompanying notes to the consolidated financial statements.*




F-5


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      1 -
      NATURE OF BUSINESS / ORGANIZATION




Business
      Description




Arrow
      Resources Development, Inc. and Subsidiaries (“the Company”), was subject to a
      change of control transaction that was accounted for as a recapitalization
      of
      CNE Group, Inc. (“CNE”) in November 2005. Arrow Resources Development, Ltd.,
      (“Arrow Ltd.”) the Company’s wholly-owned subsidiary, was incorporated in
      Bermuda in May 2005. Arrow Ltd. provides marketing and distribution services
      for
      natural resource products and currently has an exclusive marketing and
      distribution agreement with Arrow Pacific Resources (s) Pte. Ltd. (“Arrow Pte.”)
      to market lumber and related products from land leased by Arrow Pte.’s timber
      subsidiaries in Papua, New Guinea. Under the agreement Arrow Ltd. will receive
      a
      commission of 10% of gross sales derived from lumber and related products.




In
      April
      of 2006, Arrow Ltd. entered into an agency agreement with APR to provides
      marketing and distribution services for timber resource products and currently
      has an exclusive marketing and sales agreement with APR to market lumber and
      related products from land leased by GMPLH which is operated by APR and it's
      subsidiaries, located in Indonesia. Under the agreement Arrow Ltd. will receive
      a commission of 10% of gross sales derived from lumber and related products.
      The
      consideration to be paid to APR will be in the form of a to-be-determined amount
      of the Company's common stock, subject to the approval of the Board of
      Directors.




As
      of
      December 31, 2005, the Company also had a wholly-owned subsidiary, Career
      Engine, Inc. (“Career Engine”) for which operations were discontinued prior to
      the recapitalization transaction. The net assets of Career Engine had no value
      as of December 31, 2005.




NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles
      of consolidation:




The
      accompanying consolidated financial statements include the accounts of the
      Company and its wholly-owned subsidiary, Arrow. All significant inter-company
      balances and transactions have been eliminated.




Income
      taxes:




The
      Company follows SFAS No. 109, “Accounting for Income Taxes.” Under the asset and
      liability method of SFAS No. 109, deferred tax assets and liabilities are
      recognized for the future tax consequences attributable to differences between
      the financial statement carrying amounts of existing assets and liabilities
      and
      their respective tax bases. A valuation allowance has been provided for the
      Company's net deferred tax asset, due to uncertainty of
      realization.




Fair
      value of financial instruments:




For
      financial statement purposes, financial instruments include cash, accounts
      and
      accrued expenses payable, and amounts due to Empire Advisory, LLC (“Empire”) (as
      discussed in Notes 6 and 7) for which the carrying amounts approximated fair
      value because of their short maturity.




Use
      of
      estimates:




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




F-6


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Loss
      per
      share:





The
      Company complies with the requirements of the Financial Accounting Standards
      Board issued Statement of Financial Accounting Standards No. 128, “Earning per
      share” (“SFAS No. 128”). SFAS No. 128 specifies the compilation, presentation
      and disclosure requirements for earning per share for entities with publicly
      held common stock or potentially common stock. Net loss per common share, basic
      and diluted, is determined by dividing the net loss by the weighted average
      number of common shares outstanding.





Net
      loss
      per diluted common share does not include potential common shares derived from
      stock options and warrants because they are anti-dilutive for the period from
      November 15, 2005 to December 31, 2005 and for the period ended December 31,
      2006. As of December 31, 2006, there are no dilutive equity instruments
      outstanding.





Acquired
      intangibles:





Intangible
      assets are comprised of an exclusive sales and marketing agreement. In
      accordance with SFAS 142, “Goodwill and Other Intangible Assets” the Company
      assesses the impairment of identifiable intangibles whenever events or changes
      in circumstances indicate that the carrying value may not be recoverable.
      Factors the Company considers to be important which could trigger an impairment
      review include the following:




1.
            Significant
                underperformance relative to expected historical or projected future
                operating results;




2.
            Significant
                changes in the manner of use of the acquired assets or the strategy
                for
                the overall business; and




3.
            Significant
                negative industry or economic trends.





When
      the
      Company determines that the carrying value of intangibles may not be recoverable
      based upon the existence of one or more of the above indicators of impairment
      and the carrying value of the asset cannot be recovered from projected
      undiscounted cash flows, the Company records an impairment charge. The Company
      measures any impairment based on a projected discounted cash flow method using
      a
      discount rate determined by management to be commensurate with the risk inherent
      in the current business model. Significant management judgment is required
      in
      determining whether an indicator of impairment exists and in projecting cash
      flows.





The
      sales
      and marketing agreement will be amortized over 99 years, utilizing the
      straight-line method. Amortization expense has not been recorded since the
      acquisition occurred as the company has not yet made any sales.




F-7


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Consideration
      of Other Comprehensive Income Items:





SFAS
      130
      - Reporting Comprehensive Income, requires companies to present comprehensive
      income (consisting primarily of net income plus other direct equity changes
      and
      credits) and its components as part of the basic financial statements. For
      the
      period from January 1, 2006 to December 31, 2006, the Company’s consolidated
      financial statements do not contain any changes in equity that are required
      to
      be reported separately in comprehensive income.




Recent
      Accounting Pronouncements:





In
      May
      2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections,” that
      applies to all voluntary changes in accounting principle. This Statement
      requires retrospective application to prior periods' financial statements of
      changes in accounting principle, unless it is impracticable to determine either
      the period-specific effects or the cumulative effect of the change. When it
      is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, this Statement requires
      that
      the new accounting principle be applied to the balances of assets and
      liabilities as of the beginning of the earliest period for which retrospective
      application is practicable and that a corresponding adjustment be made to the
      opening balance of retained earnings (or other appropriate components of equity
      or net assets in the statement of financial position) for that period rather
      than being reported in an income statement. When it is impracticable to
      determine the cumulative effect of applying a change in accounting principle
      to
      all prior periods, this Statement requires that the new accounting principle
      be
      applied as if it were adopted prospectively from the earliest date practicable.
      SFAS 154 will be effective for the Company for fiscal year ended December 31,
      2007. The Company does not anticipate that the adoption of SFAS No. 154 will
      have an impact on the Company's overall results of operations or financial
      position.





In
      February 2006, the FASB issued SFAS 155, “Accounting for Certain Hybrid
      Financial Instruments--an amendment of FASB Statements No. 133 and 140,” that
      allows a preparer to elect fair value measurement at acquisition, at issuance,
      or when a previously recognized financial instrument is subject to a
      remeasurement (new basis) event, on an instrument-by-instrument basis, in cases
      in which a derivative would otherwise have to be bifurcated. It also eliminates
      the exemption from applying Statement 133 to interests in securitized financial
      assets so that similar instruments are accounted for similarly regardless of
      the
      form of the instruments. This Statement is effective for all financial
      instruments acquired or issued after the beginning of an entity's first fiscal
      year that begins after September 15, 2006. The Company does not anticipate
      that
      the adoption of SFAS No. 155 will have an impact on the Company's overall
      results of operations or financial position.




In
      March
      2006, the FASB issued SFAS 156, “Accounting for Servicing of Financial
      Assets--an amendment of FASB Statement No. 140,” that applies to the accounting
      for separately recognized servicing assets and servicing liabilities. This
      Statement requires that all separately recognized servicing assets and servicing
      liabilities be initially measured at fair value, if practicable. An entity
      should adopt this Statement as of the beginning of its first fiscal year that
      begins after September 15, 2006. The Company does not anticipate that the
      adoption of SFAS No. 156 will have an impact on the Company's overall results
      of
      operations or financial position.




F-8


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      2 -
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)




Recent
      Accounting Pronouncements (continued):





In
      July
      2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
      in
      Income Taxes. The Interpretation clarifies the way companies are to account
      for
      uncertainty in income tax reporting and filing and prescribes a consistent
      recognition threshold and measurement attribute for recognizing, derecognizing,
      and measuring the tax benefits of a tax position taken, or expected to be taken,
      on a tax return. The Interpretation is effective for fiscal years beginning
      after December 15, 2006, although early adoption is possible. The Company does
      not plan to adopt early and the Company is currently in the process of
      evaluating the impact, if any, the adoption of the Interpretation will have
      on
      the 2007 financial statements.




In
      September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” which
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. The adoption of SFAS No. 157 will not have an
      impact on the Company's overall results of operations or financial
      position.





In
      September 2006, the Financial Accounting Standards Board (“FASB”) the issued
      SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an Amendment of FASB Statements No. 87, 88, 106, and
      132(R)” (“SFAS No. 158”). SFAS No. 158 requires companies to report the funded
      status of their defined benefit pension and other postretirement benefit plans
      on their balance sheets as a net liability or asset as of December 31, 2006.
      The
      new standard does not address the accounting treatment for pension and
      postretirement benefits in the income statement. This will have no impact on
      the
      Company’s results of operations or financial position.





In
      February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No.159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an amendment of FASB Statement No.115”. SFAS No.159 permits entities
      to choose to measure eligible financial instruments and other items at fair
      value at specified election dates. A business entity shall report unrealized
      gains and losses on items for which the fair value option has been elected
      in
      earnings at each subsequent reporting date. The fair value option may be applied
      instrument by instrument but only upon the entire instrument - not portions
      of
      the instrument. SFAS No.159 is effective as of the beginning of an entity’s
      first fiscal year that begins after November 15, 2007. The Company does not
      anticipate that the adoption of SFAS No. 159 will have an impact on the
      Company's overall results of operations or financial position.




NOTE
      3 -
      AGREEMENT AND PLAN OF MERGER BETWEEN ARROW RESOURCES DEVELOPMENT, LTD. AND
      CNE
      GROUP, INC.




In
      August
      2005, the Company entered into an Agreement and Plan of Merger (“the Agreement”)
      with CNE Group, Inc. (“CNE”) under which, CNE was required to issue 10 million
      shares of Series AAA convertible preferred stock (“the Preferred Stock”) to the
      Company, representing 96% of all outstanding equity of CNE on a fully diluted
      basis for the Marketing and Distribution Agreement provided to the Company,
      Empire, as agent. Under the Agreement, the Company changed its name to Arrow
      Resources Development, Inc. and divested all operations not related to Arrow
      Ltd. The Preferred Stock contained certain liquidation preferences and each
      share of the Preferred Stock was convertible to 62.4 shares of common
      stock.




The
      transaction was consummated upon the issuance of the Preferred Stock on November
      14, 2005, which was used to settle the senior secured note payable for
      $125,000,000 and $1,161,000 of cash advances from Empire. The Preferred Stock
      was subsequently converted to common stock on December 2, 2005, for a total
      of
      approximately 649 million shares of common stock outstanding. This was recorded
      as a change of control transaction that was accounted for as a recapitalization
      of CNE.




F-9




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      3 -
      AGREEMENT AND PLAN OF MERGER BETWEEN ARROW RESOURCES DEVELOPMENT, LTD. AND
      CNE
      GROUP, INC. (CONTINUED)


Empire.
        The Preferred Stock was subsequently converted to common stock on December
        2,
        2005, for a total of approximately 649 million shares of common stock
        outstanding. This was recorded as a change of control transaction that was
        accounted for as a recapitalization of CNE.




The
      operations of the Company’s wholly-owned subsidiary, Career Engine, Inc. were
      discontinued prior to the recapitalization transaction. The net assets of Career
      Engine had no value as of December 31, 2005.




During
      the period from November 15, 2005 to December 31, 2005, the Company incurred
      $249,252 of expenses incurred as part of recapitalization transaction.




NOTE
      4 -
      INCOME TAXES




In
      August
      2005, the Company entered into an Agreement and Plan of Merger (“the Agreement”)
      with CNE Group, Inc. (“CNE”). Under the Agreement, the Company changed its name
      to Arrow Resources Development, Inc. and divested all operations not related
      to
      Arrow Ltd. The
      transaction was consummated upon the issuance of the Preferred Stock on November
      14, 2005. (See Note 3 for a detailed description of the
      transaction.)





Consequently,
      as of November 14, 2005 the predecessor CNE entity had a net operating loss
      carryforward available to reduce future taxable income for federal and state
      income tax purposes of the successor entity of approximately zero, because
      those
      losses arose from the predecessor CNE exiting previous business lines that
      had
      generated operating losses.





For
      tax
      purposes, all expenses incurred by the re-named entity now known as Arrow
      Resources Development, Inc. after November 14, 2005 have been capitalized as
      start up costs in accordance with Internal Revenue Code Section (“IRC”) No. 195.
      Pursuant to IRC 195, the Company will be able to deduct these costs by
      amortizing them over a period of 15 years for tax purposes once the Company
      commences operations. Accordingly for tax purposes none of the Company’s post
      November 14, 2005 losses are as yet reportable in Company income tax returns
      to
      be filed for either the year ended December 31, 2005 or 2006.




The
      significant components of the Company’s deferred tax assets are as follows:




Net
                operating loss carryforward (A)
            
            $
            1,627,479Differences
                resulting from use of cash basis for tax purposes
            
            
            -Total
                deferred tax assets
            
            
            1,627,479Less
                valuation allowance
            
            
            (1,627,479
            )Net
                deferred tax assets
            
            $
            —





(A)
      The
      amount represents the tax benefits to be derived from the costs capitalized
      under IRC Section 195 which will be amortizable over 15 years for tax purposes
      once the Company commences operations.





F-10




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      5 -
      NOTES PAYABLE




As
      of
      December 31, 2006 and 2005, the Company had notes payable outstanding as
      follows:




**December
                31,**
            
            **December
                31,****Holder**
            
            **Terms**
            
            **2006**
            
            **2005**Barry
                Blank (1)
            
            
            Due
                on demand, 10% interest
            
            $
            200,000
            
            $
            200,000H.
                Lawrence Logan
            
            
            Due
                on demand, non-interest bearing
            
            
            25,000
            
            
            —Accrued
                interest (1)
            
            
            
            
            
            20,000
            
            
            20,000**Total**
            
            
            
            
            $
            245,000
            
            $
            220,000




(1)
      The
      Company has a note payable outstanding for $200,000, plus $20,000 in accrued
      interest. Although the predecessor company (CNE) reserved 456,740 shares of
      its
      common stock to retire this debt pursuant to a settlement agreement, the stock
      cannot be issued until the party to whom the note was assigned by its original
      holder emerges from bankruptcy or reorganization. During the year ended December
      31, 2006, no interest expense was recorded  on
      the
      note as the number of shares to be issued was determined in the settlement
      agreement, executed prior to the recapitalization.




NOTE
      6 -
      MARKETING AND DISTRIBUTION AGREEMENT AND RELATED SENIOR NOTE PAYABLE DUE TO
      EMPIRE ADVISORY, LLC




As
      discussed in Note 1, in August 2005, the Company executed a marketing and
      distribution agreement with Arrow Pte. This agreement was valued at fair value
      as determined based on an independent appraisal, which approximates the market
      value of 96% of the CNE public stock issued in settlement of the note.




The
      marketing and distribution agreement will be amortized over the remainder of
      99
      years (the life of the agreement) once the Company commences sales. As of
      December 31, 2005, the Company had recorded a $125,000,000 amortizable
      intangible asset for this agreement and corresponding credits to common stock
      and additional paid-in capital in conjunction with the stock settlement of
      the
      senior secured note payable to Empire Advisory, LLC and related cash advances
      in
      the same aggregate amount. The senior secured note payable was non-interest
      bearing and was repaid in the form of the preferred stock, which was
      subsequently converted to common stock (See Note 3). Any preferred stock issued
      under the senior secured note payable is considered restricted as to the sale
      thereof under SEC Rule 144 as unregistered securities. No amortization of the
      agreement has been taken during the period from inception (November 15, 2005)
      to
      December 31, 2006, as the relevant operations have not yet commenced. Operations
      are expected to commence during the 2007 fiscal year.




F-11


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      7 -
      RELATED PARTY TRANSACTIONS




**[1]** Management
      Agreement with Empire Advisory, LLC




Effective
      August 1, 2005, the Company entered into a Management Agreement with Empire
      Advisory, LLC (“Empire”) under which Empire provides chief executive officer and
      administrative services to the Company in exchange for a) an annual fee of
      $300,000 for overhead expenses, b) $25,000 per month for rent, c) $1,000,000
      per
      annum (subject to increases in subsequent years) for executive services, and
      d)
      a one-time fee of $150,000 for execution of the proposed transaction. In
      addition, the Board authorized a one-time payment of $500,000 to Empire upon
      closing the transaction.





As
      of
      December 31, 2006 and December 31, 2005, the Company had short-term borrowings
      of $2,311,326 and $1,282,764, respectively, due to Empire, consisting of cash
      advances to the Company and working capital raised by Empire, as agent, on
      behalf of the Company. In addition the Company received advances of $36,425
      and
      $50,000, respectively, from Hans Karundeng. The Company will repay the loan
      amount in cash and conversion of the balance to shares of restricted stock
      of
      Arrow, if and when issued. These amounts are non-interest bearing and due on
      demand.




Peter
      Frugone is a member of the Board of Directors of the Company and is the owner
      of
      Empire. Empire, as agent, was the holder of the $125 million senior secured
      note
      payable settled in December 2005.




Consulting
      fees and services charged in the Statement of Operations for the twelve months
      ended December 31, 2006 incurred to Empire totaled $1,591,016. In addition,
      consulting fees and services charged to the Statement of Operations for the
      period from November 15, 2005 to December 31, 2005 incurred to Empire totaled
      $698,834.




During
      the year ended December 31, 2006, the Company made cash payment of $562,454
      to
      Empire under the agreement.




**[2]** Engagement and Consulting Agreements entered into with individuals affiliated
      with APR.




Agency
      agreements entered into with individuals affiliated with Arrow Ltd. and APR.




Consulting
      fees and services charged in the Statement of Operations for the twelve months
      ended December 31, 2006 incurred to Hans Karundeng and Rudolph Karundeng under
      Engagement and Consulting Agreements totaled $1,666,666. In addition, consulting
      fees and services charged to the Statement of Operations for the period November
      15, 2005 to December 31, 2005 incurred to Hans Karundeng and Rudolph Karundeng
      under these agreements totaled $240,567. Finally, as of December 31, 2006 and
      2005 the Company owed them a total of $2,510,491 and $844,212, respectively.
      These agreements are discussed in detail in Note 11.





**[3]** Non-Interest Bearing Advance Received from Company Director:




In
      July
      2006, the Company received a $150,000 non-interest bearing advance from John
      E.
      McConnaughy, Jr., a Director of the Company, which is due on demand. In October
      2006, the Company received an additional $200,000 non-interest bearing advance
      from Mr. McConnaughy, Jr. which is also due on demand. As of December 31, 2006,
      the Company has $200,000 left to be repaid to Mr. McConnaughy, which is included
      in “Due to Related Parties.” As of March 26, 2007, the Company received an
      additional $200,000 (See Note 11).




NOTE
      8 -
      STOCKHOLDER’S EQUITY




Arrow
      Ltd. was incorporated in May 2005 as a Bermuda corporation. Upon incorporation,
      1,200,000 shares of $.01 par value common stock were authorized and issued
      to
      CNE.




F-12




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      8 -
      STOCKHOLDER’S EQUITY (CONTINUED)




On
      November 14, 2005, the Company increased its authorized shares to 1 billion
      and
      reduced the par value of its common stock to $0.00001 per share, resulting
      in a
      common stock conversion rate of 1 to 62.4.




On
      November 14, 2005, the Company completed a reverse merger with CNE Group, Inc.
      by acquiring 96% of the outstanding shares of CNE’s common stock in the form of
      convertible preferred stock issued in settlement of the senior note payable.




During
      2005, CNE divested or discontinued all of its subsidiaries in preparation for
      the reverse merger transaction. Accordingly, the results of operations for
      the
      divested or discontinued subsidiaries are not included in the consolidated
      results presented herein. In conjunction with the divestitures, CNE repurchased
      and retired all preferred stock and made certain payments to related parties.




In
      conjunction with the reverse merger transaction, the Company retired 1,238,656
      shares of Treasury Stock.




During
      the third and fourth quarters of 2006, the Company received an additional total
      of $985,000 in capital contribution towards the stock purchase agreement with
      APR to purchase up to an aggregate amount of 15,000,000 shares of common stock
      in the Company for $1.00 per share. (See Note 11 [5] - Stock Purchase
      Agreement).




NOTE
      9 -
      GAIN ON WRITE OFF OF PREDECESSOR ENTITY LIABILITIES




During
      the fourth quarter of 2006, the Company wrote off accounts payable and accrued
      expenses in the amount of $395,667 associated with CNE, the predecessor entity
      in the reverse merger transaction, which will not be paid. This resulted in
      the
      recognition of a gain reflected in the Statement of Operations for the year
      ended December 31, 2006 in the same amount.




F-13


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      10 -
      GOING CONCERN




These
      consolidated financial statements are presented on the basis that the Company
      is
      a going concern. Going concern contemplates the realization of assets and the
      satisfaction of liabilities in the normal course of business over a reasonable
      period of time.




As
      shown
      in the accompanying consolidated financial statements, the Company incurred
      a
      net loss of $3,514,445 for the year ended December 31, 2006 and a net loss
      during the development stage from inception in November 15, 2005 through
      December 31, 2006 of $4,786,703. The Company’s operations are in the development
      stage, and the Company has not generated any revenue since inception. The
      Company’s existence in the current period has been dependent upon advances from
      related parties and other individuals, and the sale of senior notes payable.




The
      consolidated financial statements do not include any adjustments that might
      be
      necessary if the Company is unable to continue as a going concern.




NOTE
      11 -
      COMMITMENTS AND OTHER MATTERS




**[1]** Engagement and Consulting Agreements entered into with individuals affiliated
      with APR




Effective
      May 20, 2005, the Company entered into an Engagement Agreement with Hans
      Karundeng for business and financial consulting services for fees of $1,000,000
      per annum. The term of the agreement is five years. Payments under the agreement
      are subject to the Company’s cash flow.





Effective
      August 1, 2005, the Company entered into a Consulting Agreement with Rudolph
      Karundeng for his services as Chairman of the Board of the Company for fees
      of
      $1,000,000 per annum. The term of the agreement was five years. Rudolph
      Karundeng is a son of Hans Karundeng. However, on May 1, 2006, the Company
      accepted the resignation of Rudolph Karundeng as Chairman of the Board, but
      he
      continues to be a director of the Company. Peter Frugone has been elected as
      Chairman of the Board until his successor is duly qualified and elected.
      Subsequent to his resignation, it was agreed that Rudolph Karundeng’s annual
      salary is to be $500,000 as a director.





During
      the year ended December 31, 2006, the Company received additional advances
      of
      $61,787 from Hans Karundeng under his agreement. During the year ended December
      31, 2006, the Company made cash payments of $62,174 to Rudolph Karundeng under
      his agreement. During the period from November 15, 2005 to December 31, 2006,
      the Company made no cash payments to Hans Karundeng and Rudolph Karundeng under
      the agreements




**[2]** Management
      Agreement with Empire Advisory, LLC




Effective
      August 1, 2005, the Company entered into a Management Agreement with Empire
      Advisory, LLC (“Empire”) under which Empire provides chief executive officer and
      administrative services to the Company in exchange for a) an annual fee of
      $300,000 for overhead expenses, b) $25,000 per month for reimbursable expenses,
      c) $1,000,000 per annum (subject to increases in subsequent years) for executive
      services, and d) a one-time fee of $150,000 for execution of the proposed
      transaction.




During
      the year ended December 31, 2006, the Company made cash payment of $562,454
      to
      Empire under the agreement. During the period from November 15, 2005 to December
      31, 2005, the Company made cash payments of approximately $364,000 to Empire
      under this agreement.





F-14




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      11 -
      COMMITMENTS AND OTHER MATTERS (continued)




**[3]** Litigation





The
      Company is a party to a lawsuit where the plaintiff is alleging that he is
      entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
      to compensate him for services related to identifying financing for CNE,
      based upon an agreement that was entered into between CNE and the plaintiff
      in
      April 2005. The Company and its counsel strongly feel that the plaintiff’s
      claims against the Company have no merit, the likelihood of an unfavorable
      outcome is very low, and is prepared to vigorously defend the
      matter.




In
      May
      2006, the Company was advised that they were in default of a settlement
      agreement entered into in January of 2005 by CNE related to the release of
      unrestricted, freely-tradable, non-legend shares of stock. Management has agreed
      to release shares of the Company’s stock in consideration of the above
      matter.





**[4]** Consulting/Marketing
      and Agency Agreements




On
      April
      4, 2006, the Company entered into a consulting agreement with Dekornas GMPLH
      (“Dekornas”) (a non profit organization in Indonesia responsible for replanting
      of trees in areas that were destroyed by other logging companies) in which
      the
      Company will provide financial consultancy services to Dekornas for an annual
      fee of $1.00 for the duration of the agreement. The term of the agreement is
      effective upon execution, shall remain in effect for ten (10) years and shall
      not be terminated until the expiration of at least one (1) year. As of December
      31, 2006, the Company has not recovered any revenue from this
      agreement.




In
      April
      of 2006, Arrow Resources Development, Ltd. entered into an agency agreement
      with
      APR to provides marketing and distribution services for timber resource products
      and currently has an exclusive marketing and sales agreement with APR to market
      lumber and related products from land leased by GMPLH which is operated by
      APR
      and it's subsidiaries, located in Indonesia. Under the agreement Arrow Ltd.
      will
      receive a commission of 10% of gross sales derived from lumber and related
      products.





On
      April
      9, 2006, the Company entered into a marketing and distribution agreement with
      Shanghai Heyang Bio-Technology Development Co., Ltd. (“Shanghai”), a China
      limited company, in which Shanghai will supply and sell all of its timber
      resource products through the Company. The Company will market, promote,
      distribute and sell those timber resource products worldwide. The Company will
      be entitled to ten percent (10%) of the gross revenue earned by the Company
      from
      the sale of the products. The term of the agreement is effective upon execution
      and shall remain in effect for ninety-nine (99) years. As of December 31, 2006,
      the Company has not recovered any revenue from this agreement. This agreement
      has been cancelled.





On
      April
      14, 2006, the Company entered into a consulting agreement with P.T.
      Eucalyptus in which
      the Company will provide financial consultancy services to P.T.
      Eucalyptus for an
      annual fee, payable quarterly, equal to 10% of P.T.
      Eucalyptus’ gross
      revenue payable commencing upon execution. The term of the agreement is
      effective upon execution, shall remain in effect for ninety-nine (99) years
      and
      shall not be terminated until the expiration of at least ten (10) years. As
      of
      December 31, 2006, the Company has not recovered any revenue from this
      agreement.




**[5]** Stock
      Purchase Agreement




On
      August
      2, 2006, the Company entered into a stock purchase agreement with APR wherein
      APR agreed to purchase up to an aggregate amount of 15,000,000 shares of common
      stock in the Company for $1.00 per
      share, making this a capital contribution of $15,000,000 in total. The stock
      will be delivered at the time the Company files for registration. APR is
      currently the principal shareholder of the Company, owning349,370,000
      shares or 53.78%. As of December 31, 2006, the Company has received $985,000
      from APR towards the fulfillment of this agreement.




F-15




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      11 -
      COMMITMENTS AND OTHER MATTERS (CONTINUED)





**[6]** Delaware
      Corporate Status





The
      Company is delinquent in its filing and payment of the Delaware Franchise Tax
      Report and, accordingly, is not in good standing.




At
      December 31, 2006, the Company has estimated unpaid Delaware franchise taxes
      for
      the years ended December 31, 2006 and 2005 in the amount of $57,650 and $69,699,
      respectively. The Company expects to file the delinquent forms and pay the
      taxes
      in full during the second quarter of 2007.




**[7]** 5 Year
      Table of obligations under [1] and [2] above:




The
      minimum future obligations for consulting fees and services under agreements
      outlined in [1] and [2] are as follows:




**Years
                Ending December 31,**
            
            **Amounts**2007
            
            $
            3,480,2082008
            
            
            3,825,2602009
            
            
            4,256,5752010
            
            
            2,649,3822011
            
            
            -$
            14,211,425




The
      Company also engages certain consultants to provide services including
      management of the corporate citizenship program and investor relation services.
      These agreements contain cancellation clauses with notice periods ranging from
      zero to sixty days.




F-16





ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      12 -
      SUBSEQUENT EVENTS




*Appointment
      to Board of Directors*




On
      February 26, 2007, the Company announced the appointment of Robert A. Levinson
      to its Board of Directors.




On
      February 28, 2007, the company announced that it had accepted the resignation
      of
      John W. Allen as a member of its Board of Directors.




*Non-
      Interest Bearing Advance Received from Company Director:*




In
      February and March 2007, the Company received an additional $200,000
      non-interest bearing advance from John E. McConnaughy, Jr., a Director of the
      Company, which is due on demand. This will be included in the amount “Due to
      Related Parties” in the Company’s financial statements filed in Form 10QSB for
      the first quarter of 2007.




F-17




**Exhibit
      Index**




Exhibit
      No.




31.1
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive Officer




31.2
            Rule
                13a-14(a)/15d-14(a) Certification of the Principal Accounting Officer




32.1
            Certification
                Pursuant to 18 U.S.C. §1350 of Chief Executive Officer




32.2
            Certification
                Pursuant to 18 U.S.C. §1350 of the Principal Accounting
                Officer




F-18