**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, 2007




**o**
            **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,
                27****th****Floor, New York, NY 10019****(Address
                of Principal Executive Offices) (Zip
                Code)**




**212-262-2300**


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




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




**Title
                of Each Class**
            
            **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 o




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




Issuer’s
      revenues for 2007, its most recent fiscal year, were $0 from continuing
      operations.




The
      number of freely tradable shares not held by affiliates is 17,254,089.




As
      of
      April 10, 2008, the aggregate market value of voting stock held by
      non-affiliates of the Issuer was approximately $1,035,245.




The
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of April 10, 2008 are as follows:




**Class**
            
            **Outstanding
                at April 10, 2008**Common
                stock - par value $0.00001
            
            649,743,240




**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
      the planning of all harvesting, land preparation, and the planning of both
      the
      eucalyptus tree plantation and a large-scale agricultural
      operation.




“Arrow
      Pte.” - Arrow Pacific Resources (s) Pte. Ltd. is organized under the laws
      of Singapore and is a wholly owned subsidiary of Arrow Pacific Resources Group
      Limited (“APR”).





**Item 1.**
            **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,
      27 th Floor,
      New York, NY 10019 (212-262-2300) and our web site is
      www.arrowrd.com.




**INTRODUCTION**




We
      used
      to be a telecommunications and recruiting company formally known as CNE Group,
      Inc. We changed our name to Arrow Resources Development, Inc. on or around
      December 1, 2005. The Company elected to shift its business focus from
      telecommunications and recruiting to the worldwide commercial exploitation
      of
      natural resources.





2




Arrow
      Resources Development Inc. (herein “ARD,” “Arrow Inc.” or “the Company”) was
      established, in 2005, to serve as the corporate finance and management
      infrastructure developer for large scale plantation/farming operations and
      ethanol plants in Indonesia. These projects are first and foremost environmental
      restorations and social engineering projects, being done in cooperation with
      the
      central and local governments of Indonesia, in partnership with Gerakan
      Masyarakat Pelestari Lingkungan Hidup (GMPLH), the largest nonprofit
      organization in Indonesia, as well a group of Indonesian joint venture partners
      that includes Arrow Pacific Resources Group Limited; a British Virgin Islands
      registered company, PT Wika Realty Inc. and Indonesian publicly traded
      construction and land development company and PT Mitrasarana Infrakomindo,
      a
      public pension manager and natural resource development company. The government
      of Indonesia has declared that 55,000,000 hectares (approximately 6% of the
      country) to be “critical land”. Critical land is classified as land that has
      been illegally harvested over last 50 years by approximately 25 million local
      “farmers” who earn their living by cutting old-growth trees for their own use or
      for sale, at a fraction of its’ value to local lumber companies. The goal of the
      Arrow development team is to restore 3,000,000 hectares of this critical land
      in
      Indonesia through the creation of eucalyptus/corn plantations, ethanol plants,
      several the large-scale farming (eucalyptus, corn, soy, rice, fish and chickens)
      operations, an oil refinery and possibly several ethanol blending plants. It
      is
      anticipated that these development will require approximately 6 - 8 years and
      when completed, will create approximately 200,000 local jobs, along with many
      small local business opportunities. Arrow has developed and maintains the
      corporate operating structure, financial operations, sales and marketing
      infrastructure and the administrative group to oversee its’ corporate
      citizenship programs. Arrow has outlined the necessary public relations and
      communications programs to sustain these rapidly growing operations. Arrow
      Resources, along with all of its joint venture partners, are collectively
      referred to in this document as "the Companies".





Arrow
      Pacific Resources Group Limited (herein “Arrow Pacific” or “APR”), a British
      Virgin Islands registered company, was founded by Hans Karundeng, an Indonesian
      industrialist and financier, for the purpose of developing natural resource
      assets controlled by his group of local Indonesian Companies that are developing
      plantation/farming operations and ethanol production plants in Indonesia. Mr.
      Karundeng is the principal stockholder of our resources a member of the advisory
      board of GMPLH and a board member of several prominent Indonesian Companies.
      Arrow Pacific, through its local subsidiary Companies, has developed and will
      manage these opportunities in Indonesia.





Arrow
      Inc., along with its partners GMPLH and PT Eucalyptus Alam, an Indonesian
      registered wholly owned subsidiary of Arrow Pacific Resources Group Limited
      have
      developed a synergy of agro-biotechnology and cutting edge forestry/agricultural
      practices in response to the growing demand for timber and farming products.
      When these practices are performed in a conscientious manner, it provides
      humankind with one of the greatest sources for renewable and ecologically
      sustainable resources. Paper, dimensional lumber, fiberboard, particleboard,
      furniture, utensils, recreational areas, animal habitat, and clean air are
      some
      of the many benefits that will be realized through the implementation of these
      programs in Indonesia.





The
      Companies are executing their plantation/farming operating plan through the
      implementation of a sound land management system, promote and/or establish
      infrastructural development programs and provide provisions for financial,
      economic and social growth to the people in the development areas. It is
      essential for these developments to take into consideration local bio-physical
      environment conditions as well as the traditional and cultural beliefs of the
      local villagers. In conjunction with local inhabitants, the Companies have
      developed a plan that will maximize profits to the greatest potential of the
      area, while increasing employment and constantly re-evaluating their
      administrative and management programs. The Companies are working to achieve
      superior safety performance, implement reliable harvesting, replanting and
      farming processes, and become a leader 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.





Arrow
      Pacific has entered into Marketing and Distribution Agreement with Arrow
      Resources Development Ltd. (a Bermuda Limited Company), which is a wholly-owned
      subsidiary of Arrow Resources Development Inc., that provides for Arrow to
      receive 10% of the gross sales generated by all plantation operations from
      any
      and all derivative products (e.g. paper, pulp, chips), 5% of gross sales
      generated from all ethanol plants and a 50% ownership interest in all ethanol
      plants. Under this agreement, Arrow acts as collection and disbursement
      consultant and agent for all operations. In the case of each plantation, Arrow
      collects all gross revenue from all customers, retains 10% and disburses the
      remaining 90% to Arrow Pacific's various business units which becomes their
      gross revenues. In the case of the ethanol plants, Arrow collects all gross
      revenue from all customers, retains 5%, disburses all expensive tool suppliers
      and labor and develops audited accounting to determine operating income for
      distribution on a 50-50 basis.  The
      Companies’ Asian office is in Singapore, Jakarta and Kendari Indonesia and
      satellite offices at each plantation or plant location. The following is a
      brief
      description of these transactions and relationships.





**THE
      COMPANIES**





Arrow
      Pacific, through its Indonesian operating division, PT Tiga Daun Nusantara
      (and
      locally registered Sulawesi company) is the principal operating company for
      the
      initial plantation and ethanol plant location in Tenggara, Sulawesi. Gerakan
      Masyarakat Pelestari Lingkungan Hidup (GMPLH), a large nonprofit organization
      based in Indonesia, for the development of a plantation/farming operation that
      will include 3 million hectares (ha) on the islands of Kalimantan and Sulawesi
      in Indonesia. PT Wika Realty Inc. and Indonesian publicly traded construction
      and land development company and PT Mitrasarana Infrakomindo, a public pension
      manager and natural resource development company.





This
      program of reforestation is built around the development of eucalyptus and
      corn
      plantations, the development of ethanol plants as well as farming operations
      designed to create a sustainable forestry and agricultural program. This program
      will include local subsistence farming operations at each plantation for the
      purpose of increasing and sustaining the income for local farmers. Through
      the
      development these subsistence
      farms, which will be funded by revenue from the programs, thousands of local
      farmers will plant and manage rice and soybean crops for local consumption
      and
      national distribution as well as fish farms and chicken farms for local
      consumption and sale throughout the country.




3




Arrow
      Pacific and all its subsidiary Companies in Indonesia, along with GMPLH, have
      executed Agency Agreements in August 2006 with Arrow Resources Development
      Ltd.
      (the Bermuda registered wholly-owned subsidiary of our Resource Development
      Inc.
      herein referred to as "Arrow Ltd.") providing that the Company will advise
      the
      Companies on matters related to structured corporate finance, financial
      administration, corporate management practice, marketing and distribution and
      infrastructure. The Agency Agreements are for a term of 99 years while granting
      the Company 10% of gross revenue.





PT
      Tiga
      Daun Nusantara, a wholly owned subsidiary of Arrow Pacific Resources Group
      Limited, has opened its research and development office in Ujung Pandang for
      the
      purpose of developing genetically engineered eucalyptus tree saplings. PT Tiga
      Daun Nusantara the first research and development office will provide the
      genetically engineered eucalyptus tree saplings to be an initial
      plantation/farming sites. By synthesizing aspects of American-style forestry
      and
      agricultural practices with these new advances in bio-engineering, the Company's
      methodology produces a significant increase in both quantity and quality of
      tree
      production, corn, rice and soy production. The accelerated growth cycle, for
      the
      eucalyptus trees, produced by these processes yield a continually renewable
      timber resource. Ujung Pandang, also known as Makassar, is the provincial
      capital of South Sulawesi, Indonesia. It is anticipated that this facility
      will
      be fully operational no later than December 31 st ,
      2008.





The
      Companies are poised to capitalize on the increasing demand for the raw material
      for the manufacture of paper, timber products, the company's agricultural
      products and the demand for ethanol in the local market and all the regional
      developing international markets, most notably China, where rising standards
      of
      living have created a demand for larger quantities of printed material,
      packaging, personal care paper products, industrial paper supplies, corn, rice,
      soy and the production of energy such as ethanol. The proximity of the Companies
      operations to these local and principal markets enables them to supply these
      markets in a highly competitive manner due to significantly reduce
      transportation costs.





The
      Companies have two significant timing factors that enhance their competitive
      advantage for the production of eucalyptus. The first of these factors is the
      application of newly developed agro-biotechnology. The growth cycle of the
      eucalyptus trees in the Companies plantation areas is significantly faster
      than
      those of its competitors; 3 to 4 years, as opposed to a typical 10 to 12 years
      on average. The technology also offers several other biological advantages.
      The
      bio-engineered trees are more resistant to adverse weather and infestation,
      more
      successful at growing in poor soil and are able to sustain growth without the
      use of any toxic agro-chemicals. Several other lumbering operations in the
      Pacific have been heavily scrutinized in the past for their heavy use of such
      environmentally-degrading chemicals. The second factor is the proximity of
      the
      operations to the equator. This unique geographical position provides a growing
      season that lasts a full 12 months of each year, in comparison to the 7 to
      8
      month seasons of many of its competitors.





These
      significant advantages are also applicable to the production of the company's
      agricultural products, most notably corn. The climate and rainfall enable the
      growth of 2.5 crops of corn annually. This significant increase in land usage
      lowest cost of the raw material and increases productivity while reducing
      storage requirements and the amortization of fixed expenses associated with
      a
      single crop




The
      Companies understand that any large-scale timber and agricultural operation
      faces environmental and wildlife conservation concerns. In the interest of
      good
      corporate citizenship, a plan has been developed to ensure that all operations
      are sensitive to the environmental and ecological importance of transforming
      the
      critical land into a sustainable and renewable timber resource in a responsible
      manner. The Companies have consulted with their joint-venture partners GMPLH,
      to
      develop socially sensitive and environmentally friendly programs for developing
      these sustainable resources and large-scale farming operations. The Companies
      have also assembled its own local team of highly qualified scientists,
      bio-engineers and environmentalists for the development of its technology
      Center. This team has also examined methods proposed to establish a preserve
      for
      the relocation of wildlife, the preservation of biodiversity, the investigation
      of potential medical benefit and the replanting of several noble species.





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





However,
      the World Bank and World Wildlife Federation have adopted forest management
      guidelines to ensure economic, social and environmental benefits from timber
      and
      non-timber products and the environmental services provided by forests. Most
      countries, including Indonesia as of 2007, have adopted these guidelines as
      law
      in order to promote economical development while combating the ongoing crisis
      of
      worldwide deforestation.




4




It
      has
      always been the policy of Arrow Pte to follow the international guidelines
      for
      the harvesting of timber in virgin forests. In December 2007, Arrow Pte.
      assessed that it would be unable to harvest the timber products in Papua, New
      Guinea due to the fact that the widely accepted international guidelines of
      the
      World Wildlife Federation had not been adopted by Papua, New Guinea. This fact
      is adverse to the economic, social and environmental goals of Arrow Pte. because
      with the amount of land that the project was allotted combined with the agreed
      upon previous guidelines of the marketing and distribution agreement, yields
      would be significantly reduced. Given the significant change in the economics
      of
      the harvesting of the timber in Papua, New Guinea, Arrow Pte. has decided not
      to
      pursue any further operations in Papua, New Guinea given that the above
      restrictions cause a significant reduction in the volume of harvesting, which
      results in a disproportionate cost to yield ration at the Papua, New Guinea
      site
      which makes the project not economically feasible in the foreseeable
      future.





Based
      on
      the fact that Arrow Pte. is unable to fulfill their part of the agreement,
      the
      Company has reached the conclusion that the marketing and distribution agreement
      has no value. Therefore, the Company has fully impaired the value of the
      agreement and recorded a loss on write-off of the marketing and distribution
      agreement of $125,000,000 at December 31, 2007.





In
      April
      of 2006, Arrow Ltd. entered into an agency agreement with APR to provide
      marketing and distribution services for 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.





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.




5




**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 led 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 the planning of all harvesting, land
      preparation, and the 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.





**INDUSTRY**





The
      planet’s consumption of forestry products has more than doubled over the last 30
      years as global population continues to grow. The increased demand for forestry
      products has also led to the need for increased protection of forests and
      wildlife, and a more public participation in forestry management. The demand
      for
      imported raw material for China’s low-cost timber manufacturing industries is
      increasing sharply and establishing a more expansive market for international
      suppliers. The forestry community in the Asia-Pacific region, where the
      Companies’ plantation will be located, possesses an advantage in the industry of
      greater periods of harvesting and re-growth in comparison to other countries
      that experience periods of dormancy. This is primarily caused by adverse weather
      and seasonal conditions. This enables growers in the region to cope with the
      ever shifting goals and expectations associated with the rapid evolution of
      social, economic and environmental issues that impact policies, legislation,
      and
      institutions. The increase in demand was rapidly exploited in many areas by
      timbering operations that stripped forests bare with no regard for their
      environmental damage, or replenishing the timber resources being consumed.
      This
      mercenary behavior was responded to with strict and immediate regulation and
      monitoring of the industry by government environmental agencies and consumer
      advocacy groups on lumbering operations worldwide. Despite the increase in
      demand, the shortage of suppliers who are able to meet environmental standards
      has caused the forestry industry to shrink by an estimated 9.4 million ha per
      annum.




6




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





The
      Asian
      demand for timber and pulp supply has increased due to the rapid expansion
      of
      its economy and one of the largest population densities. These increases have
      led also to the increase in usage of computers requiring more printing paper,
      higher living standards, and the usage of more books, magazines and packing
      boxes. These same factors also drive the increased demand for Eucalyptus Oil,
      which China uses over 70% of the world’s production, and is projected to
      increase as well as the demand for the wood chips, which is one of the principal
      ingredients for manufacturing chipboard. Many experts believe China’s demand for
      such material will continue for the next 30 years.





The
      international market’s demand for timber derivative products continues to rise
      as economic factors drive the consumption of such goods forward. Household
      production levels directly impact the consumption levels of chipboards. A
      nationwide study in China determined 80% of the finished products available
      to
      the market are developed in household processing level mills which cannot meet
      the market demand. The insufficient rate in correlation with the high demand
      for
      timber raw material is so great that outside sources need to be employed. Aside
      from the growing demand for corn products in the Asian market, Indonesia is
      currently importing 1.5 million metric tons of corn annually to sustain its
      ever-growing production of ethanol and demand for animal feed
      products.





**OPERATING
      MODEL**





The
      Companies have developed a synergy of agro-biotechnology and cutting edge
      forestry/agricultural practices in response to the growing demand for timber
      and
      farming products. When these practices are performed in a conscientious manner,
      it provides humankind with one of the greatest sources for renewable and
      ecologically sustainable energy. Paper, dimensional lumber, fiberboard,
      particleboard, furniture, utensils, hydrocarbon fuel, recreational areas, animal
      habitat, and clean air are some of the many benefits of the world’s forests.





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





7




The
      Companies believe the affectivity of any forest management system hinges on
      the
      accuracy of obtaining pre-development information. They have commissioned
      qualified and highly experienced foresters, surveyors and enumerators to conduct
      surveys that will map out the harvestable area before the commencement of
      development activities. The data obtained from these surveys will provide a
      framework for the development of the infrastructure of the plantations. Local
      inhabitants will be employed to operate the plantation/farming operations as
      laborers and managers. There will also be teams of trainee plantation employees,
      field doctors, security personnel, cooks and other basic labor to support the
      large scale of operations being undertaken.





Possessing
      a strong commitment to responsible environmental management practices, the
      Companies will continuously monitor and improve the environmental outcomes
      of
      its operations. In the interest of good corporate citizenship, a plan has been
      developed to ensure that all operations are sensitive to the environmental
      and
      ecological importance of transforming the virgin forests territories into a
      sustainable and renewable timber resource in a responsible manner. The Companies
      have consulted with the scientific and environmental communities regarding
      the
      establishment of a preserve for the relocation of wildlife, the preservation
      of
      biodiversity, the investigation of potential medical benefit and the replanting
      of several noble species.





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, APR 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 and the Companies
      have commissioned physical surveys on the target sites. The majority of the
      noble species and selected hardwoods have been removed by illegal logging during
      the past half-century. The general composition of the remaining species included
      on the development sites are primarily whole new growth bushes, heavy brush
      and
      some small little grove saplings which all are somewhat suitable for the
      manufacture of paper and paper products.





Due
      to
      the fact that all of the plantation and plant sites are considered "critical
      land," the Companies have commissioned physical surveys on the target sites.
      The
      majority of the noble species and selected hardwoods have been removed by
      illegal logging during the past half-century. The general composition of the
      remaining species included on the development sites are primarily whole new
      growth bushes, heavy brush and some small little grove saplings which all are
      somewhat suitable for the manufacture of paper and paper products.





The
      current raw materials that are being used for the manufacture of paper include
      peelable logs, woodchips and pulp. Raw lumber stock (peel-able 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 $405 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.





8




**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. On November 28, 2007, the Company settled the lawsuit with the
      plaintiff. In full and final settlement of the claims asserted in the action,
      the Company has paid the plaintiff $10,000 in cash and issued the plaintiff
      200,000 shares of the Company’s common stock on December 21, 2007.




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. In August 2006,
      the
      plaintiffs alleging the default obtained a judgment in the 17th Judicial Circuit
      Court Broward County, Florida for approximately $1,000,000. On November 13,
      2007, legal counsel engaged by Management brought a countersuit against the
      plaintiffs alleging that the judgment obtained in that court was fraudulent
      based on the plaintiffs’ perjury. The Company and its counsel strongly feel that
      the plaintiffs’ claims against the Company have no merit, the likelihood of an
      unfavorable outcome is very low, and is prepared to vigorously defend the
      matter.





**HUMAN
      RESOURCES**




As
      of
      December 31, 2007, 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.





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.




9




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.





10




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.




As
      mentioned above, 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. However, the World Bank and World Wildlife Federation have adopted
      forest management guidelines to ensure economic, social and environmental
      benefits from timber and non-timber products and the environmental services
      provided by forests. Most countries, including Indonesia as of 2007, have
      adopted these guidelines as law in order to promote economical development
      while
      combating the ongoing crisis of worldwide deforestation.





It
      has
      always been the policy of Arrow Pte to follow the international guidelines
      for
      the harvesting of timber in virgin forests. In December 2007, Arrow Pte.
      assessed that it would be unable to harvest the timber products in Papua, New
      Guinea due to the fact that the widely accepted international guidelines of
      the
      World Wildlife Federation had not been adopted by Papua, New Guinea. This fact
      is adverse to the economic, social and environmental goals of Arrow Pte. because
      with the amount of land that the project was allotted combined with the agreed
      upon previous guidelines of the marketing and distribution agreement, yields
      would be significantly reduced. Given the significant change in the economics
      of
      the harvesting of the timber in Papua, New Guinea, Arrow Pte. has decided not
      to
      pursue any further operations in Papua, New Guinea given that the above
      restrictions cause a significant reduction in the volume of harvesting, which
      results in a disproportionate cost to yield ration at the Papua, New Guinea
      site
      which makes the project not economically feasible in the foreseeable
      future.





Based
      on
      the fact that Arrow Pte. is unable to fulfill their part of the agreement,
      the
      Company has reached the conclusion that the marketing and distribution agreement
      has no value. Therefore, the Company has fully impaired the value of the
      agreement and recorded a loss on write-off of the marketing and distribution
      agreement of $125,000,000 at December 31, 2007.





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 in close proximity
      to the Asian Pacific market enabling timber to be delivered with lower shipping
      costs, and at higher profit. The distance for competitors to ship their products
      includes a much greater cost and longer shipping period. These near-equatorial
      locations ensures a good supply of rainwater for the tree crops, which aids
      in
      developing a consistent growth cycle of only 3-4 years. The specific location
      of
      the government granted timberland concessions, in Indonesia, enables the trees
      to grow with minimal interference from open-ocean earthquakes and large storms.
      Thus, the location of this timberland makes easier to transport and sell, and
      easier to maintain.





11




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





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





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





Chile
      has
      around 5.5 million hectares of productive native forest, mainly Nothofagus
      hardwood species. Timber production from native hardwood amounts to 0.35 million
      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.




12




**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.itclimited.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
      FIBRECOMPANY** (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
      climate of Indonesia is reported to be monsoonal in nature, characterized by
      high temperatures and humidity throughout the year. However, the specific
      location of the timber concessions within these countries enables the trees
      to
      grow with minimal interference from open-ocean earthquakes and large storms.
      Operations in Indonesia are located inland, not on annual flood plains, not
      on
      islands with historically high earthquake activity and where there are active
      volcanoes present.





13





**EMPLOYEES**




As
      of
      December 31, 2007, 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 & DILUTION**




The
      Company’s capital requirements are and will continue to be significant. The
      Company anticipates, based on management’s internal forecasts and assumptions
      relating to its operations (including the costs associated with marketing),
      that
      unless at least $1,500,000 is raised for working capital purposes, the Company’s
      cash resources will not be sufficient to satisfy the Company’s contemplated cash
      requirements and that additional financing may be needed to support the Company.
      There can be no assurance that the Company will be able to obtain additional
      financing on terms acceptable to the Company. To the extent that any financing
      involves the sale of the Company’s equity securities, the interests of the
      Company’s then existing shareholders could be substantially diluted. Dilution
      will also occur when and if options to be granted to employees, consultants
      and
      other third parties are exercised.




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




Our
      revenues are currently entirely derived from sales of APR and its operating
      subsidiaries products sales. APR will not be in a position to generate timber
      sales until it has completed certain infrastructure improvements in Indonesia.
      The infrastructure requirements will take APR a maximum of one year to complete.
      Therefore, APR will probably not generate meaningful sales of its timber
      products until the third quarter of 2008.




14





**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
      53.76% of the Company’s stock. Hans Karundeng is the Chairman of APR. His son,
      Rudolph, is a Director of the Company and is an 8% owner of the Company’s
      stock.




**DEPENDENCE
      ON MANAGEMENT**




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





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




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





**GENERAL
      ECONOMIC AND OTHER CONDITIONS**




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





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




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




As
      shown
      in the accompanying consolidated financial statements, the Company incurred
      a
      net loss of $129,023,304 for the year ended December 31, 2007 and a net loss
      during the development stage from inception in November 15, 2005 through
      December 31, 2007 of $133,810,007. 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.




15





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.




16




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 $185,000 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.




17




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.





18




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 18% 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.




19




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





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




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




The
      Company was a party to a lawsuit where the plaintiff alleged that he was
      entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
      to compensate him for services related to identifying financing for CNE,
      based upon an agreement that was entered into between CNE and the plaintiff
      in
      April 2005. On November 28, 2007, the Company settled the lawsuit with the
      plaintiff. In full and final settlement of the claims asserted in the action,
      the Company has paid the plaintiff $10,000 in cash and issued the plaintiff
      200,000 shares of the Company’s common stock having a fair value of $12,000,
      based on the public traded share price on December 21, 2007. The settlement
      resulted in a loss on debt conversion of $2,000 during the year ended December
      31, 2007 because an estimated liability had been recognized prior to 2007.




In
      May
      2006, the Company was advised that 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. In August 2006,
      the
      plaintiffs alleging the default obtained a judgment in the 17th Judicial Circuit
      Court Broward County, Florida for approximately $1,000,000. On November 13,
      2007, legal counsel engaged by Management brought a countersuit against the
      plaintiffs alleging that the judgment obtained in that court was fraudulent
      based on the plaintiffs’ perjury. The Company and its counsel strongly feel that
      the plaintiffs’ claims against the Company have no merit, the likelihood of an
      unfavorable outcome is very low, and is prepared to vigorously defend the
      matter.




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




On
      November 20, 2007, the Board of Directors approved a private placement offering
      (the "Offering") approximating $2,000,000 to accredited investors at $1.00
      per
      share of Series A Convertible Preferred Stock. The Offering will consist of
      the
      Company's Series A Convertible Preferred Stock that will be convertible into
      our
      common stock. These securities are not required to be and will not be registered
      under the Securities Act of 1933. Shares issued under this placement will not
      be
      sold in the United States, absent registration or an applicable exemption from
      registration. As of December 31, 2007, the Company has received $280,000 from
      investors towards 280,000 Series A Convertible Preferred Stock shares issuable
      under subscription agreements covering the placement offering. Each Series
      A
      Convertible Preferred Stock is convertible into 20 shares of the Company’s
      Common Stock. The holders of the preferred stock have no voting rights except
      as
      may be required by Delaware law, no redemption rights, and no liquidation
      preferences over the Common Stock holders.





On
      December 3, 2007, the Board of Directors approved a plan to compensate all
      members of the Board of Directors at a rate of $50,000 per year and 250,000
      shares of Company common stock effective January 1, 2007. This compensation
      plan
      applies to any board member that belonged to the Board as of and subsequent
      to
      January 1, 2007. Those board members that were only on the Board for part of
      the
      year will received pro-rata compensation based on length of service. As of
      December 31, 2007, none of the shares under this plan have been issued and
      the
      Company has accrued $200,137 of cash and recorded additional paid-in capital
      of
      $60,041 for stock compensation based on the fair value of 1,000,685 shares
      to be
      issued to the members of the Board.




**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 18, 2008 was
      approximately 311.




20





Equity
      Sale Prices:


**Common
                  Stock****High Sales**
              
              **Low Sales****Price**
              
              **Price**20071st
                  Quarter
              
              
              0.21
              
              
              0.142nd
                  Quarter
              
              
              0.14
              
              
              0.073rd
                  Quarter
              
              
              0.10
              
              
              0.064th
                  Quarter
              
              
              0.07
              
              
              0.0420061st
                  Quarter
              
              
              0.51
              
              
              0.282nd
                  Quarter
              
              
              0.49
              
              
              0.183rd
                  Quarter
              
              
              0.26
              
              
              0.064th
                  Quarter
              
              
              0.33
              
              
              0.07




The
      number of freely tradable shares not held by affiliates is 17,254,089.





As
      of
      April 10, 2008, the aggregate market value of voting stock held by
      non-affiliates of the Issuer was approximately $1,035,245.





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.





On
      August 1, 2005, Arrow Ltd. entered into the Marketing Agreement with Arrow
      Pte. and its subsidiaries in consideration for Arrow issuing a non-interest
      bearing note (the “Note”) in the principal amount of $125,000,000 to Empire
      Advisory, LLC, (“Empire”), acting as agent, due on or before December 31,
      2005. Empire is Arrow Pte.’s merchant banker. The Note permitted the Company, as
      Arrow’s sole stockholder, to cause Arrow to repay the Note in cash or with
      10,000,000 shares of the Company’s non-voting Series AAA Preferred Stock.
      However, in December 2007, Arrow Pte. assessed that it would be unable to
      harvest the timber products in Papua, New Guinea due to the fact that the widely
      accepted international guidelines of the World Wildlife Federation had not
      been
      adopted by Papua, New Guinea.




21




This
      fact
      is adverse to the economic, social and environmental goals of Arrow Pte. because
      with the amount of land that the project was allotted combined with the agreed
      upon previous guidelines of the marketing and distribution agreement, yields
      would be significantly reduced. Given the significant change in the economics
      of
      the harvesting of the timber in Papua, New Guinea, Arrow Pte. has decided not
      to
      pursue any further operations in Papua, New Guinea given that the above
      restrictions cause a significant reduction in the volume of harvesting, which
      results in a disproportionate cost to yield ration at the Papua, New Guinea
      site
      which makes the project not economically feasible in the foreseeable
      future.





Based
      on
      the fact that Arrow Pte. is unable to fulfill their part of the agreement,
      the
      Company has reached the conclusion that the marketing and distribution agreement
      has no value. Therefore, the Company has fully impaired the value of the
      agreement and recorded a loss on write-off of the marketing and distribution
      agreement of $125,000,000 at December 31, 2007. (See Note 6.)





On
      April
      4, 2006 Arrow Resource Development Ltd. (the Company’s Bermuda subsidiary)
      entered into an agency agreement with APR in which the Company will provide
      financial consultancy services to APR for an annual fee, payable as collected,
      equal to 10% of APR’s gross revenue payable commencing upon execution. 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, 2007, 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**




The
      Company’s only intangible asset was comprised of a marketing and distribution
      agreement with Arrow Pte. In accordance with SFAS 142, “Goodwill and Other
      Intangible Assets” this intangible agreement is no longer amortized; instead the
      intangible is tested for impairment on an annual basis. The Company assesses
      the
      impairment of identifiable intangibles and goodwill whenever events or changes
      in circumstances indicate that the carrying value may not be recoverable.
      Factors the Company considers to be important which could trigger an impairment
      review include the following:




· Significant
        inability to achieve expected projected future operating results;




· Significant
        changes in the manner in which the work is able to be performed what increases
        costs;


· Significant
        negative impact on the environment.
  We
        perform goodwill impairment tests on an annual basis and on an interim basis
        if
        an event or circumstance indicates that it is more likely than not that
        impairment has occurred. We assess the impairment of other amortizable
        intangible assets and long-lived assets whenever events or changes in
        circumstances indicate that the carrying value may not be recoverable. Factors
        we consider important that could trigger an impairment review include
        significant underperformance to historical or projected operating results,
        substantial changes in our business strategy and significant negative industry
        or economic trends. If such indicators are present, we evaluate the fair
        value
        of the goodwill. For other intangible assets and long-lived assets we determine
        whether the sum of the estimated undiscounted cash flows attributable to
        the
        assets in question is less than their caring value. If less, we recognize
        an
        impairment loss based on the excess of the carrying amount of the assets
        over
        their respective fair values.




22




Fair
      value of goodwill is determined by using a valuation model based on market
      capitalization. Fair value of other intangible assets and long-lived assets
      is
      determined by future cash flows, appraisals or other methods. If the long-lived
      asset determined to be impaired is to be held and used, we recognize an
      impairment charge to the extent the anticipated net cash flows attributable
      to
      the asset are less than the asset’s carrying value. The fair value of the
      long-lived asset then becomes the asset’s new carrying value, which we
      depreciate over the remaining estimated useful life of the asset.





**RECENT
      ACCOUNTING PRONOUNCEMENTS**





In
      December 2007, the FASB issued SFAS No.160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of ARB No. 51”.  SFAS
      No.160 requires that the ownership interests in subsidiaries held by parties
      other than the parent be clearly identified, labeled, and presented in the
      consolidated statement of financial position within equity, in the amount of
      consolidated net income attributable to the parent and to the noncontrolling
      interest on the face of the consolidated statement of income, and that Entities
      provide sufficient disclosures that clearly identify and distinguish between
      the
      interests of the parent and the interests of the noncontrolling owners. 
SFAS No.160 is effective for fiscal years, beginning on or after December 15,
      2008 and cannot be applied earlier.





In
      December 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      141(revised 2007), “Business Combinations,” (“FASB 141R”). This standard
      requires that entities recognize the assets acquired, liabilities assumed,
      contractual contingencies and contingent consideration measured at their fair
      value at the acquisition date for any business combination consummated after
      the
      effective date. It further requires that acquisition-related costs are to be
      recognized separately from the acquisition and expensed as incurred. FASB 141R
      is effective for fiscal years beginning after December 15, 2008.





The
      Company does not anticipate that the adoption of SFAS No. 141R and No. 160
      will
      have an impact on the Company's overall results of operations or financial
      position, unless the Company makes a business acquisition in which there is
      a
      noncontrolling interest.




In
      December 2007, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 110, “Use of a Simplified Method in Developing Expected Term of
      Share Options” (“SAB 110”). SAB 110 expresses the current view of the staff that
      it will accept a company’s election to use the simplified method discussed in
      Staff Accounting Bulletin 107, *Share
      Based Payment* ,
      (“SAB
      107”), for estimating the expected term of “plain vanilla” share options
      regardless of whether the company has sufficient information to make more
      refined estimates. SAB 110 became effective for the Company on January 1, 2008.
      The adoption of SAB 110 is not expected to have a material impact on the
      Company’s 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. Unless a new election date occurs, the fair value option is
      irrevocable. 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 expect
      that the adoption of SFAS No. 159 will have a material effect on the Company's
      consolidated financial statements.




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      statement standardizes the definition of fair value, establishes a framework
      for
      measuring in generally accepted accounting principles and sets forth the
      disclosures about fair value measurements. SFAS No. 157 is effective for
      the beginning of an entity's fiscal year that begins after November 15, 2007.
      The Company does not expect SFAS No. 157 will have a material effect on its
      financial statements.




23




**RESULTS
      OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007**




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, 2007 we incurred consulting fees of $3,541,850
      of which, $3,358,386 was related to services provided by the Management
      Agreement with Empire under which Empire provides the services of Chief
      Executive Officer and administrative services to the Company and consulting
      services provided by Hans Karundeng and Rudolph Karundeng under Engagement
      and
      Consulting Agreements. For the year ended December 31, 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 years ended December 31, 2007 and 2006 as the Company is
      in its development stage.





**COST
      OF GOODS SOLD**




There
      was
      no cost of good sold for the year ended December 31, 2007 and 2006 as the
      Company is in its development stage.





**OTHER
      EXPENSES**




Compensation,
      consulting and related costs increased to $3,541,850 for the year December
      31,2007 as compared to $4,413,216 for period from inception (November 15, 2005)
      to December 31, 2006 and $7,955,066 for the period from inception (November
      15,
      2005) to December 31, 2007. The increase was mostly due to consulting fees
      for
      services provided by the Management Agreement with Empire under which Empire
      provides the services of Chief Executive Officer and administrative services
      to
      the Company and consulting services provided by Hans Karundeng and Rudolph
      Karundeng under Engagement and Consulting Agreements.





General
      and administrative expenses decreased to $161,624 for the year ended December
      31, 2007 as compared to $392,553 for the period from inception (November 15,
      2005) to December 31, 2006 and $554,177 for the period from inception (November
      15, 2005) to December 31, 2007. This was primarily due to a decrease in legal
      and a reduction in operating expenses.





Directors’
      compensation increased to $260,178 for the year ended December 31, 2007 as
      compared to none for the period from inception (November 15, 2005) to December
      31, 2006. The increase was due to a December 3, 2007 resolution to compensate
      all members of the Board of Directors on an annualized basis of $50,000 and
      250,000 shares in the Company’s common stock, effective January 1,
      2007.




24




Delaware
      franchise taxes amount to $57,652 for the year ended December 31, 2007 compared
      to $127,349 for the period from inception (November 15, 2005) to December 31,
      2006 and $185,001 for the period from inception (November 15, 2005) to December
      31, 2007. 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,
      2007, the Company has estimated unpaid Delaware franchise taxes for the years
      ended December 31, 2007, December 31, 2006 and 2005 in the amount of $57,652,
      $57,650 and $69,699, respectively. The Company did not file their tax returns
      on
      time due to an administrative oversight. The Company will file the delinquent
      tax returns in the second
      quarter of 2008 and
      pay
      the amount owed in full during the fourth quarter of 2008.





Total
      operating expenses during the development stage decreased to $4,021,304 for
      the
      year ended December 31, 2007 as compared to $4,933,118 for the period from
      inception (November 15, 2005) to December 31, 2006 and $8,954,422 for the period
      from inception (November 15, 2005) to December 31, 2007.




In
      December 2007, Arrow Pte. assessed that it would be unable to harvest the timber
      products in Papua, New Guinea due to the fact that the widely accepted
      international guidelines of the World Wildlife Federation had not been adopted
      by Papua, New Guinea. This fact is adverse to the economic, social and
      environmental goals of Arrow Pte. because with the amount of land that the
      project was allotted combined with the agreed upon previous guidelines of the
      marketing and distribution agreement, yields would be significantly reduced.
      Given the significant change in the economics of the harvesting of the timber
      in
      Papua, New Guinea, Arrow Pte. has decided not to pursue any further operations
      in Papua, New Guinea given that the above restrictions cause a significant
      reduction in the volume of harvesting, which results in a disproportionate
      cost
      to yield ration at the Papua, New Guinea site which makes the project not
      economically feasible in the foreseeable future. Based on the fact that Arrow
      Pte. is unable to fulfill their part of the agreement, the Company has reached
      the conclusion that the marketing and distribution agreement has no value.
      Therefore, the Company has fully impaired the value of the agreement and
      recorded a loss on write-off of the marketing and distribution agreement of
      $125,000,000 at December 31, 2007. (See Note 6.)





The
      Company was a party to a lawsuit where the plaintiff alleged that he was
      entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
      to compensate him for services related to identifying financing for CNE,
      based upon an agreement that was entered into between CNE and the plaintiff
      in
      April 2005. On November 28, 2007, the Company settled the lawsuit with the
      plaintiff. In full and final settlement of the claims asserted in the action,
      the Company has paid the plaintiff $10,000 in cash and issued the plaintiff
      200,000 shares of the Company’s common stock having a fair value of $12,000,
      based on the public traded share price on December 21, 2007. The settlement
      resulted in a loss on debt conversion of $2,000 during the year ended December
      31, 2007 because an estimated liability had been recognized prior to 2007.
      (See
      Item 3. Legal Proceedings and Note 11 - Commitments and Other Matters.)





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, 2007 and December 31, 2006 the Company had
      $1,040 and $0 of cash, respectively. We had losses of approximately $129,023,304
      for the year ended December 31, 2007 and do not currently generate any revenue.
      We had losses of approximately $3,514,000 for the year ended December 31, 2006
      and did not generate any revenue for that year. In order for us to survive
      the
      next twelve months we will need to secure approximately $1,500,000 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, 2007, we had no off-balance sheet arrangements.




25





*Year
      ended December 31, 2007 compared to the Year ended December 31,
      2006.*





**Operating
      Activities**




We
      used
      $2,597,391 of cash in our operating activities during the year ended December
      31, 2007. We had a net loss of $129,023,304 which was offset by the write down
      of the marketing and distribution agreement for $125,000,000. We had an increase
      in stock-based directors’ compensation to be issued of $60,041, accounts payable
      and accrued expenses payable of $1,365,872 mostly related to compensation and
      management fees. In addition, we had a working capital deficiency of $8,733,265
      during the period ended December 31, 2007. We did not have any material
      commitments for capital expenditures as of December 31, 2007.





**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. During the third and fourth quarters of 2006, the Company
      received a 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. During
      the year ended December 31, 2007, the Company received an additional $500,000
      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.





On
      November 20, 2007, the Board of Directors approved a private placement offering
      (the "Offering") approximating $2,000,000 to accredited investors at $1.00
      per
      share of Series A Convertible Preferred Stock. The Offering will consist of
      the
      Company's Series A Convertible Preferred Stock that will be convertible into
      our
      common stock. These securities are not required to be and will not be registered
      under the Securities Act of 1933. Shares issued under this placement will not
      be
      sold in the United States, absent registration or an applicable exemption from
      registration. As of December 31, 2007, the Company has received $280,000 from
      investors towards 280,000 Series A Convertible Preferred Stock shares issuable
      under subscription agreements covering the placement offering. Each Series
      A
      Convertible Preferred Stock is convertible into 20 shares of the Company’s
      Common Stock. The holders of the preferred stock have no voting rights except
      as
      may be required by Delaware law, no redemption rights, and no liquidation
      preferences over the Common Stock holders.





On
      December 3, 2007, the Board of Directors approved a plan to compensate all
      members of the Board of Directors at a rate of $50,000 per year and 250,000
      shares of Company common stock effective January 1, 2007. This compensation
      plan
      applies to any board member that belonged to the Board as of and subsequent
      to
      January 1, 2007. Those board members that were only on the Board for part of
      the
      year will received pro-rata compensation based on length of service. As of
      December 31, 2007, none of the shares under this plan have been issued and
      the
      Company has accrued $200,137 of cash and recorded additional paid-in capital
      of
      $60,041 for stock compensation based on the fair value of 1,000,685 shares
      to be
      issued to the members of the Board.





**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.





26




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




In
      addition to the traditional investment banking skills related to sourcing,
      valuation and negotiation, Mr. Frugone, 58, 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., 78, is Chairman and Chief Executive Officer of JEMC
      Corporation, a personal holding company he founded in 1985. He was Chairman
      and
      CEO of Peabody International Corp. from 1969 and in addition Chairman and CEO
      of
      GEO International Corp. when it was spun off in 1981. He retired from the former
      in February 1986 and the latter in October 1992.





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





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





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





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




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





**Director
      (2005-February 28, 2007) - John W. Allen**




John
      W.
      Allen, 69, 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.




27




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
      (February 26, 2007 - October 15, 2007) - Robert A Levinson**





Robert
      A.
      Levinson, 83, served as Chairman of the Board of Andrex Industries Corporation,
      a company engaged in textile manufacturing and processing, from April 1979
      to
      May 1995. He has served as Chairman of the Board of Levcor International, a
      public company engaged in several industry segments, since June of 1989. From
      November of 1979 to July of 1986, he was President of Dillon Yarn Corporation,
      a
      texturizer of polyester filament yarn. From 1977 to December of 1987, Mr.
      Levinson was Chairman of the Board of Directors of Sheldon Petroleum.





Levinson
      was a member of the Board of Directors of the Brooklyn Museum from 1968 to
      1994,
      where he served as Chairman from 1972 to 1984. Mr. Levinson is a former Chairman
      and member of the Advisory Board of The National Dance Institute, Chairman
      Emeritus and member of the Board of The Harlem School of the Art, Vice Chairman
      of the Board of Directors of the National Committee on United States-China
      Relations, and is on the Advisory Committee of the Center for U.S.-China Arts
      Exchange at Columbia University.





Mr.
      Levinson is also on the Board of Overseers of the Hood Museum and Hopkins
      Performing Arts Center at Dartmouth, and a member of the New York-Beijing Sister
      City Advisory Committee and also serves as Chairman, President and CEO of
      Carlyle Industries, Inc., a publicly-owned manufacturer of threads, buttons,
      crafts, and gifts. He is also a member of the Advisory Board at the World Policy
      Insitute at the New School and the Board of the National Academy of Design
      Museum and School.





Mr.
      Levinson graduated from Dartmouth with an A.B. degree in February of 1946 and
      received an MBA from the Amos Tuck School at Dartmouth in September of the
      same
      year. He attended the London School of Economics and Political Science, where
      he
      did additional graduate work.





**Director
      - Rudolph Karundeng**




Mr. Karundeng,
      28, 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.




28




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





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





**Director
      - James L. Rothenberg**





Mr.
      Rothenberg is an attorney who is licensed to practice in the State of New
      York.  He is also licensed to practice before the federal courts in the
      Southern and Eastern Districts of New York.  Since 1990, Mr. Rothenberg has
      served as a case consultant and expert witness in securities litigation and
      arbitration, criminal defense and employment matters.  He is also a
      consultant and a lecturer in securities market structure, exchange specialists
      and NASD market makers.  From 1996 through 2003, Mr. Rothenberg served as
      counsel to Bear Wagner Specialists LLC, members of the New York Stock
      Exchange.  He is currently a member of the Federal Regulation of Securities
      Committee, Litigation Committee and Broker-Dealer Subcommittee. From 1970
      through 1973, Mr. Rothenberg was employed by the Securities and Exchange
      Commission as an enforcement attorney in Washington DC and from 1973 through
      1975 he was Chief Counsel and Manager of the Market Surveillance Division of
      the
      New York Stock Exchange.  From 1975 through 1985, Mr. Rothenberg was a
      principal of Rothenberg Stuart Co., specialists on the New York Stock Exchange.





**Senior
      Advisor - Hans Karundeng**




Mr. Hans
      Karundeng, 57, 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.





29





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




Evaluation
      of Disclosure Controls and Procedures




The
      Company’s Chief Executive Officer and acting Chief Financial Officer has
      evaluated the effectiveness of the Company’s disclosure controls and procedures
      (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of
      the
      fiscal period ending December 31, 2007 covered by this Annual Report
      on Form 10-KSB. Based upon such evaluation, the Chief Executive Officer and
      acting Chief Financial Officer has concluded that, as of the end of such period,
      the Company’s disclosure controls and procedures were not effective as required
      under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion
      by
      the Company’s Chief Executive Officer and acting Chief Financial
      Officer does not relate to reporting periods after December 31,
      2007.




Management’s
      Report on Internal Control Over Financial Reporting




Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
      Act) of the Company. Internal control over financial reporting is a process
      designed to provide reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for external purposes
      in
      accordance with accounting principles generally accepted in the United States
      of
      America.




The
      Company’s internal control over financial reporting includes those policies and
      procedures that (i) pertain to the maintenance of records that, in
      reasonable detail, accurately and fairly reflect the transactions and
      dispositions of the assets of the company; (ii) provide reasonable
      assurance that transactions are recorded as necessary to permit preparation
      of
      financial statements in accordance with accounting principles generally accepted
      in the United States of America, and that receipts and expenditures of the
      Company are being made only in accordance with authorizations of management
      and
      directors of the Company; and (iii) provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use or disposition
      of the Company’s assets that could have a material effect on the financial
      statements.




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.




Management,
      under the supervision of the Company’s Chief Executive Officer and acting Chief
      Financial Officer, conducted an evaluation of the effectiveness of internal
      control over financial reporting based on the framework in  Internal
      Control—Integrated Framework  issued by the Committee of Sponsoring
      Organizations of the Treadway Commission. Based on this evaluation, management
      concluded that the Company’s internal control over financial reporting was not
      effective as of December 31, 2007 under the criteria set forth in the
      in Internal Control—Integrated Framework.




A
      material weakness is a deficiency, or combination of deficiencies, in internal
      control over financial reporting such that there is a reasonable possibility
      that a material misstatement of the Company's annual or interim financial
      statements will not be prevented or detected on a timely
      basis.   Management has determined that material weaknesses exist
      due to a lack of segregation of duties, resulting from the Company's limited
      resources.




This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the SEC that permit us to provide
      only management’s report in this Annual Report on Form 10-KSB.




Changes
      in Internal Control Over Financial Reporting




No
      change
      in the Company’s internal control over financial reporting occurred during the
      quarter ended December 31, 2007, that materially affected, or 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.





30





The
      directors and executive officers of the Registrant as of March 31, 2008 were
      as
      follows:





**Name
                and Address**
            
            **Position**
            
            **Tenure**Peter
                J. Frugone
            
            Chairman,
                Chief Executive Officer
            
            2005
                to Present124
                West 79th Street, Apt 14B
            
            and
                DirectorNew
                York, NYRudolph
                Karundeng
            
            Director
            
            2005
                to Present19
                Taman SerasiBotanic
                Garden View #01-25John
                E. McConnaughy Jr.
            
            Director
            
            2005
                to Present637
                Valley RoadNew
                Canaan Ct.James
                Rothenberg
            
            Director
            
            10/15/2007152
                W. 57th Street, 27th Floor,
            
            
            
            toNew
                York, NY 10019
            
            
            
            Present




**BUSINESS
      EXPERIENCE**




PETER
      J.
      FRUGONE. In addition to the traditional investment banking skills related to
      sourcing, valuation and negotiation, Mr. Frugone, has significant
      experience in hands-on operating roles at the senior levels, as well as
      strategic and advisory roles as director of and consultant to small-cap and
      mid-cap companies. He has overseen the processes of strategic planning and
      oversight, recruitment of management executives, assisting with follow-on
      capital requirements, arranging follow-on acquisitions, and assisting with
      realization of value through IPO, public sale or sale or merger of the company.
      Mr. Frugone is experienced in all phases of financial analysis, corporate
      re-engineering and restructuring, information technology and Internet marketing,
      real estate financing and development, and commercial/residential general
      construction/management. In 1991, Mr. Frugone founded, and has since acted
      as
      the Managing Director of, Empire Advisory LLC (formerly Electra Capital
      Corporation), a boutique consulting and investment bank specializing in small
      and medium sized transactions ($1 million to $10 million). Empire has provided
      financial consulting and investing banking services to over 300 clients which
      has resulted in the completion of more than 100 debt and equity placements
      with
      a total value of $250 million. From 1972 until 1989 Mr. Frugone was the CEO
      of
      Citadel Construction and Financial Corporations. He started Citadel as a small
      home improvement company and expanded to all phases of general construction,
      project management, and real estate development with 1988 annual sales of $25
      million. During that period Citadel completed development projects of $105
      million and construction projects of over $400 million. Mr. Frugone started
      his
      career as an executive trainee with Marine Midland Bank in 1967, rising to
      the
      position of Corporate Trust Officer in charge of bond and coupon auditing.
      From
      1969 to 1971 Mr. Frugone was a "baby bond" trader for Merrill Lynch Pierce
      Fenner and Smith, then with Loeb Rhodes and Company and with Pershing and
      Company.





RUDOLPH
      KARUNDENG. Mr. Karundeng has assisted Hans Karundeng, helping start,
      maintain and oversee the operations at a senior level of numerous projects
      throughout the world since 2000. His primary role in most of these projects
      was
      the acquisition of capital through banking means as well as financial analysis
      of projects and transforming their structure in order to be viable for funding
      by banks Since receiving his degree in Economics from UCLA, Rudolph Karundeng
      has been Director in numerous corporations throughout the world including Golden
      Summit Inc. a small-cap company lender and loan facilitator, Du Motier
      International Corporation, a note structure developer as well as a bank loan
      facilitation consultant. During his tenure as a Director for these companies
      he
      has been involved in facilitating the loans for 25 Clients, which had a loan
      range from $100 Million to $1.8 Billion for various projects including mining,
      manufacturing, and marketing. Mr. Karundeng is intimately involved with all
      the processes, equipment, and day to day operations of each project in order
      to
      better help in cost and budget analysis for each project. Through his family’s
      earlier background of mining and forestry he has developed a strong base of
      knowledge for the day-to-day operations as well as development, marketing and
      all forms of operations for coal mining, oil refining, gas mining, and forestry.
      Another product of his tenure as Director of these companies is
      Mr. Karundeng’s has developed his knowledge in Note Structures as well as
      the laws that pertain to them in many areas of the world including but not
      limited to United States, Europe, China, Singapore, and Indonesia. He has
      facilitated the sale, usage, and the acquisition of Notes throughout the world
      utilizing his many banking relationships throughout the world to assist
      companies in moving a project forward.




31


JOHN
      E.
      MCCONNAUGHY, JR. Mr. McConnaughy is Chairman and Chief Executive Officer of
      JEMC Corporation. He was Chairman and CEO of Peabody International Corp. from
      1969 and in addition Chairman and CEO of GEO International Corp. when it was
      spun off in 1981. He retired from the former in February 1986 and the latter
      in
      October 1992. Prior to joining Peabody in 1969, Mr. McConnaughy served as
      Vice President of European Consumer Products with the Singer Company. He was
      responsible for operations in 16 countries and sales of $400 million. He had
      previously been President of the Singer Company of Canada, Limited. Earlier,
      he
      held management positions at Westinghouse Electric Corp. in its consumer group
      and portable appliance divisions. Mr. McConnaughy currently serves on the boards
      of five other public companies Allis-Chalmers Energy Inc.,(ASY,) Wave Systems
      Corp. (WAVX), Arrow Resources Development, Inc, (OTC:BB ARWD) Levcor
      International, Inc. (LEVC.OB) and Kinetitec Corporation. Mr. McConnaughy has
      been a Director of Oxigene, Inc., Varsity Brands, Inc., Texstar Corporation,
      MAI
      Corporation, Pets Choice Ltd., Akzona Corp., First Bank Corp. (New Haven),
      Beringer Co., Inc., the Pullman Co., Moore McCormack Resources, Peabody
      International Corp., DeVlieg Bullard, Inc., Mego Financial Corp., Trasact
      International, Inc. and RateXchange, who changed their name to MCF Corporation.
      and Fortune Natural Resources Corporation from 2000 through January 30,
      2004.





JAMES
      L.
      ROTHENBERG. Mr. Rothenberg is an attorney who is licensed to practice in the
      State of New York.  He is also licensed to practice before the federal
      courts in the Southern and Eastern Districts of New York.  Since 1990, Mr.
      Rothenberg has served as a case consultant and expert witness in securities
      litigation and arbitration, criminal defense and employment matters.  He is
      also a consultant and a lecturer in securities market structure, exchange
      specialists and NASD market makers.  From 1996 through 2003, Mr. Rothenberg
      served as counsel to Bear Wagner Specialists LLC, members of the New York Stock
      Exchange.  He is currently a member of the Federal Regulation of Securities
      Committee, Litigation Committee and Broker-Dealer Subcommittee. From 1970
      through 1973, Mr. Rothenberg was employed by the Securities and Exchange
      Commission as an enforcement attorney in Washington DC and from 1973 through
      1975 he was Chief Counsel and Manager of the Market Surveillance Division of
      the
      New York Stock Exchange.  From 1975 through 1985, Mr. Rothenberg was a
      principal of Rothenberg Stuart Co., specialists on the New York Stock Exchange.




**Director
      (2005-February 28, 2007) - 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.





32




**Director
      (February 26, 2007 - October 15, 2007) - Robert A Levinson**





Robert
      A.
      Levinson, 83, served as Chairman of the Board of Andrex Industries Corporation,
      a company engaged in textile manufacturing and processing, from April 1979
      to
      May 1995. He has served as Chairman of the Board of Levcor International, a
      public company engaged in several industry segments, since June of 1989. From
      November of 1979 to July of 1986, he was President of Dillon Yarn Corporation,
      a
      texturizer of polyester filament yarn. From 1977 to December of 1987, Mr.
      Levinson was Chairman of the Board of Directors of Sheldon Petroleum.





Levinson
      was a member of the Board of Directors of the Brooklyn Museum from 1968 to
      1994,
      where he served as Chairman from 1972 to 1984. Mr. Levinson is a former Chairman
      and member of the Advisory Board of The National Dance Institute, Chairman
      Emeritus and member of the Board of The Harlem School of the Art, Vice Chairman
      of the Board of Directors of the National Committee on United States-China
      Relations, and is on the Advisory Committee of the Center for U.S.-China Arts
      Exchange at Columbia University.





Mr.
      Levinson is also on the Board of Overseers of the Hood Museum and Hopkins
      Performing Arts Center at Dartmouth, and a member of the New York-Beijing Sister
      City Advisory Committee and also serves as Chairman, President and CEO of
      Carlyle Industries, Inc., a publicly-owned manufacturer of threads, buttons,
      crafts, and gifts. He is also a member of the Advisory Board at the World Policy
      Insitute at the New School and the Board of the National Academy of Design
      Museum and School.





Mr.
      Levinson graduated from Dartmouth with an A.B. degree in February of 1946 and
      received an MBA from the Amos Tuck School at Dartmouth in September of the
      same
      year. He attended the London School of Economics and Political Science, where
      he
      did additional graduate work.





**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, 2007, 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.





33




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




The
      following table sets forth the salaries of the Company’s executive officers for
      the fiscal year ending December 31, 2007.


**Annual
                  Compensation**
              
              **Long-Term
                  Compensation****Name
                  and Principal**
                  **Position**
              
              **Year**
              
              **Salary
                  ($)**
              
              **Bonus
                  ($)**
              
              **Other
                  Annual Compensation ($)**
              
              **Restricted
                  Stock Award(s)****($)**
              
              **Number
                  of Restricted Stock Award(s)**
              
              **Securities
                  Underlying Options/**
                **SARs
                  (#)**
              
              **LTIP
                  Payouts ($)**
              
              **All
                  other Compensation ($)**Peter
                  J. Frugone
              
              
              2007
              (1)
              $
              -
              
              $
              -
              
              $
              50,000
              
              $
              -
              
              
              
              
              
              -
              
              $
              -
              
              $
              15,000
              (1)Chairman,
                  CEO
                and
                  Director
              
              
              Prior
                  to 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              52,000,000
              
              
              -
              
              
              -
              
              
              -Rudolph
                  Karundeng
              
              
              2007
              (2)
              
              -
              
              
              -
              
              
              50,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              15,000
              (2)Director
              
              
              Prior
                  to 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              52,000,000
              
              
              -
              
              
              -
              
              
              -John
                  E.
                McConnaughy,Jr.
              
              
              2007
              (3)
              
              -
              
              
              -
              
              
              50,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              15,000
              (3)Director
              
              
              Prior
                  to 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              9,875,000
              
              
              -
              
              
              -
              
              
              -James
                  Rothenberg
              
              
              2007
              (4)
              
              -
              
              
              -
              
              
              10,548
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              3,164
              (4)Director
              
              
              Prior
                  to 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -John
                  Allen
              
              
              2/28/2007
              (5)
              
              -
              
              
              -
              
              
              7,945
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              2,384
              (5)Director
              
              
              1/1/2007
              
              
              -
              
              
              -
              
              
              -
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -Robert
                  Levinson
              
              
              10/15/2007
              (6)
              
              -
              
              
              -
              
              
              31,644
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              9,493
              (6)Director
              
              
              2/26/2007
              
              
              -
              
              
              -
              
              
              -
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -




(1)
              As
                  part of Chairman's compensation that was proved by the Board of
                  Director
                  on December 3, 2007, Mr. Frugone was entitled to 250,000 shares
                  of the
                  Company's Common Stock which has fair market value of $15,000.
                  At December
                  31, 2007, none of these shares we(2)
              As
                  part of director's compensation that was proved by the Board of
                  Director
                  on December 3, 2007, Mr. Karundeng was entitled to 250,000 shares
                  of the
                  Company's Common Stock which has fair market value of $15,000.
                  At December
                  31, 2007, none of these shares(3)
              As
                  part of director's compensation that was proved by the Board of
                  Director
                  on December 3, 2007, Mr. McConnaughy was entitled to 250,000 shares
                  of the
                  Company's Common Stock which has fair market value of $15,000.
                  At December
                  31, 2007, none of these share(4)
              As
                  part of director's compensation that was proved by the Board of
                  Director
                  on December 3, 2007, Mr. Rothenberg was entitled to 52,740 shares
                  of the
                  Company's Common Stock which has fair market value of $3,164. At
                  December
                  31, 2007, none of these shares w(5)
              As
                  part of director's compensation that was proved by the Board of
                  Director
                  on December 3, 2007, Mr. Allen was entitled to 39,726 shares of
                  the
                  Company's Common Stock which has fair market value of $2,384. At
                  December
                  31, 2007, none of these shares were i(6)
              As
                  part of director's compensation that was proved by the Board of
                  Director
                  on December 3, 2007, Mr. Levinson was entitled to 158,219 shares
                  of the
                  Company's Common Stock which has fair market value of $9,493. At
                  December
                  31, 2007, none of these shares
                  we




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




As
      of
      March 31, 2008, there were 649,743,260 shares of the Company’s $0.00001 par
      value per share common stock outstanding. The following table sets forth the
      name, address, number of shares beneficially owned, and the percentage of the
      Company's total outstanding common stock shares owned by: (i) each of the
      Company's Officers and Directors; (ii) the Company's Officers and Directors
      as a
      group; and (iii) other shareholders of 5% or more of the Registrant's total
      outstanding common stock shares.




34




**Name
                  and Address of Beneficial Owner****(1)**
              
              **Company
                  Position**
              
              **Number
                  of Shares Owned**
              
              **Percent
                  of Class**Peter
                  J. Frugone(2)
              
              
              Chairman,
                  Chief Executive Officer and Director
              
              
              52,250,000
              
              
              8.0
              %Rudolph
                  Karundeng(3)
              
              
              Director
              
              
              52,250,000
              
              
              8.0
              %John
                  E. McConnaughy Jr.(4)
              
              
              Director
              
              
              10,125,000
              
              
              1.6
              %James
                  Rothenberg(3)
              
              
              Director
              
              
              52,740
              
              
              0.0
              %John
                  Allen(6)
              
              
              Former
                  Director (1/1/07 - 2/28/07)
              
              
              39,726
              
              
              0.0
              %Robert
                  Levinson(7)
              
              
              Former
                  Director (2/26/07 - 10/15/07)
              
              
              158,219
              
              
              0.0
              %Arrow
                  Pacific Resources Group Limited(8)
              
              
              
              
              
              349,370,000
              
              
              53.8
              %AIS
                  International Holdings Ltd.(9)
              
              
              
              
              
              55,000,000
              
              
              8.5
              %World
                  Ocean Development Corp.(10)
              
              
              
              
              
              35,000,000
              
              
              5.4
              %Officers
                  and Directors as a Group (4 persons)
              
              
              
              
              
              114,677,740
              
              
              17.6
              %
 (1)
                As
                    used in this table, a beneficial owner of a security includes
                    any person
                    who, directly or indirectly, through contract, arrangement, understanding,
                    relationship or otherwise has or shares (a) the power to vote,
                    or direct
                    the voting of, such secrity or(2)
                Mr.
                    Frugone's address is 124 West 79th Street, Apt 1, New York, NY.
                    Mr.
                    Frugone is entitled to 250,000 common shares related to directors'
                    compensation, none of which were issued as of December 31, 2007.
                    Mr.
                    Frugone also holds 52,000,000 shares of the Co(3)
                Mr.
                    Karundeng's address is 19 Taman Serasi, Botanic Garden View #01-25.
                    Mr.
                    Karundeng is entitled to 250,000 common shares related to directors'
                    compensation, none of which were issued as of December 31, 2007.
                    Mr.
                    Karungdeng also holds 52,000,000 shares(4)
                Mr.
                    McConnaughy's address is 637 Valley Road, New Canaan Ct. Mr.
                    McConnaughy
                    is entitled to 250,000 common shares related to directors' compensation,
                    none of which were issued as of December 31, 2007. Mr. McConnaughy
                    also
                    holds 9,875,000 shares of the Co(5)
                Mr.
                    Rothenberg is entitled to 52,740 common shares related to directors'
                    compensation, none of which were issued as of December 31, 2007.(6)
                Mr.
                    Allen is entitled to 39,726 common shares related to directors'
                    compensation, none of which were issued as of December 31, 2007.(7)
                Mr.
                    Levinson is entitled to 158,219 common shares related to directors'
                    compensation, none of which were issued as of December 31, 2007.(8)
                Arrow
                    Pacific Resources Group Limited's address is 19 Taman Serasi,
                    Botanic
                    Garden View #01-25. Arrow Pacific Resources Group Limited currently
                    holds
                    349,370,000 shares of the Company's restricted shares, all of
                    which are
                    not exercisable as of December 31(9)
                AIS
                    International Holdings Ltd. currently holds 55,000,000 shares
                    of the
                    Company's restricted shares, all of which are not exercisable
                    as of
                    December 31, 2007.(10)
                World
                    Ocean Development Corp. currently holds 35,000,000 shares of
                    the Company's
                    restricted shares, all of which are not exercisable as of December
                    31,
                    2007.


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




Other
      than as listed below, we have not been a party to any transaction, proposed
      transaction, or series of transactions in which the amount involved exceeds
      $60,000, and in which, to our knowledge, any of our directors, officers, five
      percent beneficial security holder, or any member of the immediate family of
      the
      foregoing persons has had or will have a direct or indirect material
      interest.




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




35





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.**




Audit
      Fees




Audit
      fees for 2007 and 2006 incurred to KBL, LLP were $55,514 and $75,000. All
      services provided by independent accountants were approved by the audit
      committee.  Audit Fees consist of fees billed for professional services
      rendered for the audit of the Company’s annual statements, for review of interim
      consolidated financial statements included in quarterly reports and services
      that are normally provided by KBL LLP in connection with statutory and
      regulatory filings or engagements.




Audit
      Related Fees




The
      Company did not incur audit related fees from KBL LLP in 2007 and 2006. 
Audit-Related Fees consist of fees billed for assurance and related services
      that are reasonably related to the performance of the audit or review of the
      Company’s consolidated financial statements and are not reported under “Audit
      Fees.”




Tax
      Fees




The
      Company did not incur tax fees from KBL LLP in 2007 and 2006.  Tax Fees
      consist of fees billed for professional services rendered for tax
      compliance.  These services include assistance regarding federal, state and
      local tax compliance.




All
      Other Fees




There
      were no other fees for professional services rendered to the Company during
      the
      fiscal years 2007 and 2006, other than the services reported above.




36




**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 15, 2008
            By:
            /S/ PETERJ.
                FRUGONE
              Peter
                J. FrugonePresident
                and Chief Executive Officer




Dated:
                April 15, 2008
            By:
            /S/ PETERJ.
                FRUGONE
              Peter
                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
                15, 2008/S/    PETERJ.
                FRUGONE
              **Peter
                J. Frugone**
            
            Principal
                Accounting Officer (principal financial and accounting
                officer)
            
            April
                15, 2008/S/    JOHNE.
                McCONNAUGHY,
                JR.
              **John
                E. McConnaughy, Jr.**
            
            Director
            
            April
                15, 2008/S/    JAMES
                ROTHENBERG
              **James
                Rothenberg**
            
            Director
            
            April
                2, 2008




37




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


**(A
      DEVELOPMENT STAGE COMPANY)**


**INDEX
      TO CONSOLIDATED AUDITED FINANCIAL STATEMENTS**


**FOR
      THE YEAR ENDED DECEMBER 31, 2007**





Report
                of Independent Registered Public Accounting Firm
            
            F-1Consolidated
                financial statements:Consolidated
                Balance Sheets (At December 31, 2007 and 2006)
            
            F-2Consolidated
                Statement of Operations (For the year ended December 31, 2007 and
                for the
                period from inception November 15, 2005 to December 31,
                2007)
            
            F-3Consolidated
                Statement of Changes in Stockholders' (Deficit) Equity (For the yearended
                December 31, 2007)
            
            F-4Consolidated
                Statement of Cash Flows (For the year ended December 31, 2007 and
                for the
                period from inception November 15, 2005 to December 31,
                2007)
            
            F-5Notes
                to the consolidated financial statements
            
            F-6 - F-17





38





**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, 2007 and 2006, and the related consolidated statements of
      operations, cash flows, and changes in stockholders’ (deficit) equity during the
      development stage, for the year ended December 31, 2007, and for the period
      from
      inception (November 15, 2005) to December 31, 2007. These consolidated financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these consolidated financial
      statements based on our audit.




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




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Arrow Resources Development,
      Inc. and Subsidiaries as of December 31, 2007 and 2006, and the results of
      its
      operations and its cash flows during the development stage for the year ended
      December 31, 2007, and for the period from inception (November 15, 2005) to
      December 31, 2007 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 Notes 6 and 10
      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
      15,
      2008




F-1




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


Consolidated
      Balance Sheets (during the development stage)


**December
                      31, 2007**
                  
                  **December
                      31, 2006****ASSETS**Current:Cash
                  
                  $
                  1,040
                  
                  $
                  —Prepaid
                      expenses
                  
                  
                  —
                  
                  
                  —Total
                      current assets
                  
                  
                  1,040
                  
                  
                  —Amortizable
                      intangible assetMarketing
                      and distribution agreement
                  
                  
                  —
                  
                  
                  125,000,000Total
                      assets
                  
                  $
                  1,040
                  
                  $
                  125,000,000**LIABILITIES
                      AND STOCKHOLDERS’ (DEFICIT) EQUITY**Current:Accounts
                      and accrued expenses payable (including $3,592,491 and $2,510,491
                      due to
                      shareholders, respectively)
                  
                  $
                  4,085,122
                  
                  $
                  2,719,251Due
                      to related parties
                  
                  
                  4,404,183
                  
                  
                  2,597,751Notes
                      payable, including accrued interest of $20,000 in both
                      years
                  
                  
                  245,000
                  
                  
                  245,000Total
                      liabilities
                  
                  
                  8,734,305
                  
                  
                  5,562,002Commitments
                      and contingencies
                  
                  
                  —
                  
                  
                  —STOCKHOLDERS’
                      (DEFICIT) EQUITYPreferred
                      stock, $0.10 par value, 10 million shares authorized, 280,000
                      shares to be
                      issued
                  
                  
                  280,000
                  
                  
                  —Common
                      stock, $0.00001 par value, 1 billion shares authorized, 649,743,240
                      and
                      649,543,240 issued and outstanding, respectively; 1,485,000
                      and 985,000
                      shares to be issued at December 31, 2007 and 2006,
                      respectively
                  
                  
                  6,497
                  
                  
                  6,495Additional
                      paid-in capital
                  
                  
                  124,790,245
                  
                  
                  124,218,206Accumulated
                      deficit
                  
                  
                  (133,810,007
                  )
                  
                  (4,786,703
                  )Total
                      stockholders’ (Deficit) equity
                  
                  
                  (8,733,265
                  )
                  
                  119,437,998Total
                      liabilities and stockholders’ (deficit) equity
                  
                  $
                  1,040
                  
                  $
                  125,000,000
 *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 EndedDecember
                      31, 2007
                  
                  For
                      the Period FromInception
                      (November15,
                      2005) to December31,
                      2006
                  
                  Accumulated
                      during thedevelopment
                      stage for the PeriodFrom
                      Inception (November 15,2005)
                      to December 31, 2007Revenue
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -Operating
                      expenses:Consulting
                      fees and services, including $3,358,386, $4,197,084 and $7,555,470
                      incurred to related parties, respectively3,541,850
                  
                  
                  4,413,216
                  
                  
                  7,955,066General
                      and administrative
                  
                  
                  161,624
                  
                  
                  392,553
                  
                  
                  554,177Directors'
                      compensation
                  
                  
                  260,178
                  
                  
                  -
                  
                  
                  260,178Delaware
                      franchise taxes
                  
                  
                  57,652
                  
                  
                  127,349
                  
                  
                  185,001Total
                      operating expenses
                  
                  
                  4,021,304
                  
                  
                  4,933,118
                  
                  
                  8,954,422Loss
                      from operations during the development stage
                  
                  
                  (4,021,304
                  )
                  
                  (4,933,118
                  )
                  
                  (8,954,422
                  )Other
                      income (expense):Gain
                      on write off of liabilities associated with predecessor entity
                      not to be
                      paid
                  
                  
                  -
                  
                  
                  395,667
                  
                  
                  395,667Loss
                      on write off of marketing agreement
                  
                  
                  (125,000,000
                  )
                  
                  -
                  
                  
                  (125,000,000
                  )Loss
                      on settlement of predecesoorentity
                      stockholder litigation
                  
                  
                  (2,000
                  )
                  
                  -
                  
                  
                  (2,000
                  )Expenses
                      incurred as part of recapitalization transaction
                  
                  
                  -
                  
                  
                  (249,252
                  )
                  
                  (249,252
                  )(125,002,000
                  )
                  
                  146,415
                  
                  
                  (124,855,585
                  )Net
                      loss
                  
                  
                  (129,023,304
                  )
                  $
                  (4,786,703
                  )
                  $
                  (133,810,007
                  )Basic
                      and diluted net loss per weighted- average shares common stock
                      outstanding
                  
                  
                  (0.203
                  )
                  $
                  (0.008
                  )
                  $
                  (0.212
                  )Weighted-average
                      number of shares of common stock outstanding
                  
                  
                  636,073,137
                  
                  
                  623,733,021
                  
                  
                  631,654,538




*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' (Deficit) Equity (during the development
      stage)


**Series
                    A Convertible Preferred Stock**
                
                **Common
                    Stock**
                
                **Additional****Shares
                    to be issued**
                
                **Amount**
                
                **Shares
                    issued**
                
                **Amount**
                
                **Paid-in
                    Capital**
                
                **Accumulated**
                    **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
                    shares)*
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                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
                )
                $
                119,437,998Common
                    stock to be issued for cash received by Company (500,000
                    shares)*
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                500,000
                
                
                —
                
                
                500,000Series
                    A Convertible Preferred Stock to be issued for cash received
                    by
                    Company
                
                
                280,000
                
                
                280,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                280,000Common
                    stock issued in settlement of predecesoor entity stockholder
                    litigation
                
                
                —
                
                
                —
                
                
                200,000
                
                
                2
                
                
                11,998
                
                
                —
                
                
                12,000Common
                    stock to be issued for directors' compensation
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                60,041
                
                
                
                
                
                60,041Net
                  loss for the year
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                (129,023,304
                )
                
                (129,023,304
                )Balance
                    at December 31, 2007
                
                
                280,000
                
                $
                280,000
                
                
                649,743,240
                
                $
                6,497
                
                $
                124,790,245
                
                $
                (133,810,007
                )
                $
                (8,733,265
                )


*
      At
      December 31, 2007 and December 31, 2006, there are 1,501,488 and 500,000 shares
      of Company Common Stock to be issued, respectively.





*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, 2007, for the period from inception (November 15, 2005)
      to December 31, 2006, and for the period from inception (November 15, 2005)
      to
      December 31, 2007




For
                  the Year Ended December 31, 2007
              
              For
                  the Period From Inception (November 15, 2005) to December 31,
                  2006
              
              Accumulated
                  during the development stage for the Period From Inception (November
                  15,
                  2005) to December 31, 2007Net
                  loss
              
              $
              (129,023,304
              )
              $
              (4,786,703)
              
              $
              (133,810,007
              )Adjustments
                  to reconcile net loss to net cash (used in) operating
                  activities:Net
                  non-cash change in stockholders’ equity due to recapitalization
                  transaction
              
              
              -
              
              
              1,264,217
              
              
              1,264,217Loss
                  on write-off of marketing and distribution agreement
              
              
              125,000,000
              
              
              -
              
              
              125,000,000Stock-based
                  directors' compensation to be issued
              
              
              60,041
              
              
              -
              
              
              60,041Changes
                  in operating asset and liabilities:Increase
                  in accounts and accrued expenses payable
              
              
              1,365,872
              
              
              1,482,690
              
              
              2,848,562Net
                  cash (used in) operating activities
              
              
              (2,597,391
              )
              
              (2,039,796
              )
              
              (4,637,187
              )Cash
                  flows from investing activities:Cash
                  acquired as part of merger transaction
              
              
              -
              
              
              39,576
              
              
              39,576Advances
                  to related party
              
              
              (369,575
              )
              
              -
              
              
              (369,575
              )Net
                  cash provided by investing activities
              
              
              (369,575
              )
              
              39,576
              
              
              (329,999
              )Cash
                  flows from financing activities:Proceeds
                  of issuance of note payable
              
              
              -
              
              
              25,000
              
              
              25,000Proceeds
                  of loans received from related parties
              
              
              1,175,000
              
              
              -
              
              
              1,175,000Repayment
                  towards loan from related party
              
              
              (86,425
              )
              
              -
              
              
              (86,425
              )Net
                  increase in due to related parties attributed to operating expenses
                  paid
                  on the Company’s behalf by the related party
              
              
              1,087,433
              
              
              940,220
              
              
              2,027,653Net
                  increase in investments/capital contributed
              
              
              791,998
              
              
              985,000
              
              
              1,776,998Advances
                  from senior advisor
              
              
              -
              
              
              50,000
              
              
              50,000Net
                  cash provided by financing activities
              
              
              2,968,006
              
              
              2,000,220
              
              
              4,968,226Net
                  change in cash
              
              
              1,040
              
              
              -
              
              
              1,040Cash
                  balance at beginning of period
              
              
              -
              
              
              -
              
              
              -Cash
                  balance at end of period
              
              $
              1,040
              
              $
              -
              
              $
              1,040Supplemental
                  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.




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.





Effective
      January 1, 2007, the Company adopted Financial Accounting Standard Board
      Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”). FIN
      48 clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise’s financial statements in accordance with SFAS Statement No. 109
      Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and
      measurement attributes for the financial statement recognition and measurement
      of a tax position taken or expected to be taken in tax return. FIN 48 also
      provides guidance on derecognition, classification, interest and penalties,
      accounting interim period, disclosure and transition. There were no adjustments
      required upon adoption of FIN 48.




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, 2006 and for the year ended December 31,
      2007.
      As of December 31, 2007, there are no dilutive equity instruments outstanding.
      However, the Company has 280,000 shares of Series A Convertible Preferred Stock
      that are issuable as of December 31, 2007.





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 inception (November 15, 2005) to December 31, 2007, 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
      December 2007, the FASB issued SFAS No.160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of ARB No. 51”.  SFAS
      No.160 requires that the ownership interests in subsidiaries held by parties
      other than the parent be clearly identified, labeled, and presented in the
      consolidated statement of financial position within equity, in the amount of
      consolidated net income attributable to the parent and to the noncontrolling
      interest on the face of the consolidated statement of income, and that Entities
      provide sufficient disclosures that clearly identify and distinguish between
      the
      interests of the parent and the interests of the noncontrolling owners. 
SFAS No.160 is effective for fiscal years, beginning on or after December 15,
      2008 and cannot be applied earlier.





In
      December 2007, the FASB issued Statement of Financial Accounting Standards
      No.
      141(revised 2007), “Business Combinations,” (“FASB 141R”). This standard
      requires that entities recognize the assets acquired, liabilities assumed,
      contractual contingencies and contingent consideration measured at their fair
      value at the acquisition date for any business combination consummated after
      the
      effective date. It further requires that acquisition-related costs are to be
      recognized separately from the acquisition and expensed as incurred. FASB 141R
      is effective for fiscal years beginning after December 15, 2008.





The
      Company does not anticipate that the adoption of SFAS No. 141R and No. 160
      will
      have an impact on the Company's overall results of operations or financial
      position, unless the Company makes a business acquisition in which there is
      a
      noncontrolling interest.




In
      December 2007, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 110, “Use of a Simplified Method in Developing Expected Term of
      Share Options” (“SAB 110”). SAB 110 expresses the current view of the staff that
      it will accept a company’s election to use the simplified method discussed in
      Staff Accounting Bulletin 107, *Share
      Based Payment* ,
      (“SAB
      107”), for estimating the expected term of “plain vanilla” share options
      regardless of whether the company has sufficient information to make more
      refined estimates. SAB 110 became effective for the Company on January 1, 2008.
      The adoption of SAB 110 is not expected to have a material impact on the
      Company’s 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
      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. Unless a new election date occurs, the fair value option is
      irrevocable. 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 expect
      that the adoption of SFAS No. 159 will have a material effect on the Company's
      consolidated financial statements.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      statement standardizes the definition of fair value, establishes a framework
      for
      measuring in generally accepted accounting principles and sets forth the
      disclosures about fair value measurements. SFAS No. 157 is effective for
      the beginning of an entity's fiscal year that begins after November 15, 2007.
      The Company does not expect SFAS No. 157 will have a material effect on its
      financial statements.





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)




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
              
              $
              62,900Differences
                  resulting from use of cash basis for tax purposes
              
              
              -Total
                  deferred tax assets
              
              
              62,900Less
                  valuation allowance
              
              
              (62,900
              )Net
                  deferred tax assets
              
              $
              —




**The
                  net operating losses expire as follows:**December
                  31, 2026
              
              $
              127,349December
                  31, 2027
              
              
              57,652Net
                  Operating Loss Carryover
              
              $
              185,001


**Reconciliation
                  of net loss for income tax purposes to net loss per financial statement
                  purposes:**Costs
                      capitalized under IRC Section 195 which will be amortizable
                      over 15 years
                      for tax purposes once the Company commences
                      operations
              
              $
              133,625,006Delaware
                  franchise taxes deductible on Company's tax return
              
              
              185,001Net
                  loss for the period from inception (November 15, 2005) to September
                  30,
                  2007
              
              $
              133,810,007
  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, 2007 and 2006, the Company had notes payable outstanding as
      follows:


**September
                  30,**
              
              **December
                  31,****Holder**
              
              **Terms**
              
              **2007**
              
              **2006**Barry
                  Blank (1)
              
              
              Due
                  on demand, 10% interest
              
              $
              200,000
              
              $
              200,000H.
                  Lawrence Logan
              
              
              Due
                  on demand, non-interest bearing
              
              
              25,000
              
              
              25,000Accrued
                  interest (1)
              
              
              
              
              
              20,000
              
              
              20,000**Total**
              
              
              
              
              $
              245,000
              
              $
              245,000


(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, 2007, 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 -
      IMPAIRMENT OF 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 would have been amortized over the
      remainder of 99 years (the life of the agreement) once the Company commenced
      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 ever been taken during the period from
      inception (November 15, 2005) to December 31, 2007, as the relevant operations
      had not commenced.





The
      Company’s only intangible asset was comprised of this marketing and distribution
      agreement with Arrow Pte. In accordance with SFAS 142, “Goodwill and Other
      Intangible Assets” this intangible agreement is no longer amortized; instead the
      intangible is tested for impairment on an annual basis. The Company assesses
      the
      impairment of identifiable intangibles and goodwill whenever events or changes
      in circumstances indicate that the carrying value may not be recoverable.
      Factors the Company considers to be important which could trigger an impairment
      review include the following:




·
            Significant
                inability to achieve expected projected future operating results;


·
            Significant
                changes in the manner in which the work is able to be performed what
                increases costs;


·
            Significant
                negative impact on the environment.





We
      perform goodwill impairment tests on an annual basis and on an interim basis
      if
      an event or circumstance indicates that it is more likely than not that
      impairment has occurred. We assess the impairment of other amortizable
      intangible assets and long-lived assets whenever events or changes in
      circumstances indicate that the carrying value may not be recoverable. Factors
      we consider important that could trigger an impairment review include
      significant underperformance to historical or projected operating results,
      substantial changes in our business strategy and significant negative industry
      or economic trends.





The
      World
      Bank and World Wildlife Federation have adopted forest management guidelines
      to
      ensure economic, social and environmental benefits from timber and non-timber
      products and the environmental services provided by forests. Most countries,
      including Indonesia as of 2007, have adopted these guidelines as law in order
      to
      promote economical development while combating the ongoing crisis of worldwide
      deforestation.




It
      has
      always been the policy of Arrow Pte to follow the international guidelines
      for
      the harvesting of timber in virgin forests. In December 2007, Arrow Pte.
      assessed that it would be unable to harvest the timber products in Papua, New
      Guinea due to the fact that the widely accepted international guidelines of
      the
      World Wildlife Federation had not been adopted by Papua, New Guinea. This fact
      is adverse to the economic, social and environmental goals of Arrow Pte. because
      with the amount of land that the project was allotted combined with the agreed
      upon previous guidelines of the marketing and distribution agreement, yields
      would be significantly reduced. Given the significant change in the economics
      of
      the harvesting of the timber in Papua, New Guinea, Arrow Pte. has decided not
      to
      pursue any further operations in Papua, New Guinea given that the above
      restrictions cause a significant reduction in the volume of harvesting, which
      results in a disproportionate cost to yield ration at the Papua, New Guinea
      site
      which makes the project not economically feasible in the foreseeable
      future.





Based
      on
      the fact that Arrow Pte. is unable to fulfill their part of the agreement,
      the
      Company has reached the conclusion that the marketing and distribution agreement
      has no value. Therefore, the Company has fully impaired the value of the
      agreement and recorded a loss on write-off of the marketing and distribution
      agreement of $125,000,000 at December 31, 2007.




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, 2007 and December 31, 2006, the Company had short-term borrowings
      of $3,029,183 and $2,311,326, respectively, due to Empire, consisting of cash
      advances to the Company and working capital raised by Empire, as agent, on
      behalf of the Company.  As of
      December 31, 2007 and December 31, 2006, the Company had short-term advances
      of
      $369,575 and had short-term borrowings of $86,425, respectively, due to Hans
      Karundeng. The Company repaid $456,000 of loans during the year ended December
      31, 2007, which includes short term advances made to him of $369,575 during
      the
      year then ended. 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 year ended
      December 31, 2007 incurred to Empire totaled $1,858,386. C onsulting
      fees and services charged to the Statement of Operations for the year ended
      December 31, 2006 and for the period from November 15, 2005 to December 31,
      2005
      incurred to Empire totaled $1,591,016 and $698,834, respectively.




During
      the year ended December 31, 2007, the Company also incurred Director’s
      compensation expense of $65,000 to Mr. Frugone, consisting of cash compensation
      of $50,000 and stock based compensation of $15,000 based upon the Company’s
      share trading price on the date of the grant of December 3, 2007. At December
      31, 2007 the Company is obligated to issue 250,000 Common Stock shares to him,
      and “Accounts payable and accrued liabilities” includes $50,000 due to him for
      the cash based portion of his 2007 director’s compensation (See Note 7[4]).





During
      the years ended December 31, 2007 and 2006, the Company made cash payment of
      $1,028,889 and $562,454, respectively, to Empire under the
      agreement.




**[2]** Engagement and Consulting Agreements entered into with individuals affiliated
      with Arrow
      PNG:




Consulting
      fees and services charged in the Statement of Operations for the year ended
      December 31, 2007 and December 31, 2006 incurred to Hans Karundeng and Rudolph
      Karundeng under Engagement and Consulting Agreements totaled $1,500,000 and
      $1,666,666, respectively. In addition, as of December 31, 2007 and 2006 the
      Company owed them a total of $3,592,491 and $2,510,491, respectively. These
      agreements are discussed in detail in Note 11.





During
      the year ended December 31, 2007, the Company also incurred Director’s
      compensation expense $65,000 to Rudolph Karundeng, consisting of cash
      compensation of $50,000 and stock based compensation of $15,000 based upon
      the
      Company’s share trading price on the date of the grant of December 3, 2007. At
      December 31, 2007 the Company is obligated to issue 250,000 Common Stock shares
      to him, and “Accounts payable and accrued liabilities” includes $50,000 due to
      him for the cash based portion of his 2007 director’s compensation (See Note
      7[4]).





**[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. In February and March
      2007, the Company received an additional $200,000 non-interest bearing advance
      from John E. McConnaughy, Jr., which is due on demand. In May and June 2007,
      the
      Company received an additional $250,000 non-interest bearing advance from John
      E. McConnaughy, Jr., which is due on demand. In July 2007, the Company received
      $250,000 of additional non-interest bearing advances from John E. McConnaughy,
      Jr., which is due on demand. In August 2007, the Company received a $50,000
      non-interest bearing advance from John E.McConnaughy, Jr., which is due on
      demand. In October 2007 the Company received a $200,000 non-interest bearing
      advance from John E. McConnaughy, Jr., which is due on demand. In December
      2007
      the Company received a $250,000 non-interest bearing advance from John E.
      McConnaughy, Jr., which is due on demand. As of December 31, 2007 and December
      31, 2006, the Company had $1,375,000 and $200,000, respectively, left to be
      repaid to Mr. McConnaughy, which is included in “Due to Related
      Parties.”





During
      the year ended December 31, 2007, the Company also incurred Director’s
      compensation expense $65,000 to Mr. McConnaughy, consisting of cash compensation
      of $50,000 and stock based compensation of $15,000 based upon the Company’s
      share trading price on the date of the grant of December 3, 2007. At December
      31, 2007 the Company is obligated to issue 250,000 Common Stock shares to him,
      and “Accounts payable and accrued liabilities” includes $50,000 due to him for
      the cash based portion of his 2007 director’s compensation (See Note 7[4]).





**[4]** Directors’ Compensation:





On
      December 3, 2007, the Board of Directors approved a plan to compensate all
      members of the Board of Directors at a rate of $50,000 per year and 250,000
      shares of Company common stock effective January 1, 2007. This compensation
      plan
      applies to any board member that belonged to the Board as of and subsequent
      to
      January 1, 2007. Those board members that were only on the Board for part of
      the
      year will received pro-rata compensation based on length of service. As of
      December 31, 2007, none of the shares under this plan have been issued and
      the
      Company has accrued $200,137 of cash and recorded additional paid-in capital
      of
      $60,041 for stock compensation based on the fair value of 1,000,685 shares
      to be
      issued to the members of the Board.




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.




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. During the third and fourth quarters of 2006, the Company
      received a 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. During
      the year ended December 31, 2007, the Company received an additional $500,000
      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.)




On
      November 20, 2007, the Board of Directors approved a private placement offering
      (the "Offering") approximating $2,000,000 to accredited investors at $1.00
      per
      share of Series A Convertible Preferred Stock. The Offering will consist of
      the
      Company's Series A Convertible Preferred Stock that will be convertible into
      our
      common stock. These securities are not required to be and will not be registered
      under the Securities Act of 1933. Shares issued under this placement will not
      be
      sold in the United States, absent registration or an applicable exemption from
      registration. As of December 31, 2007, the Company has received $280,000 from
      investors towards 280,000 Series A Convertible Preferred Stock shares issuable
      under subscription agreements covering the placement offering. Each Series
      A
      Convertible Preferred Stock is convertible into 20 shares of the Company’s
      Common Stock. The holders of the preferred stock have no voting rights except
      as
      may be required by Delaware law, no redemption rights, and no liquidation
      preferences over the Common Stock holders.





On
      December 3, 2007, the Board of Directors approved a plan to compensate all
      members of the Board of Directors at a rate of $50,000 per year and 250,000
      shares of Company common stock effective January 1, 2007. This compensation
      plan
      applies to any board member that belonged to the Board as of and subsequent
      to
      January 1, 2007. Those board members that were only on the Board for part of
      the
      year will received pro-rata compensation based on length of service. As of
      December 31, 2007, none of the shares under this plan have been issued and
      the
      Company has accrued $200,137 of cash and recorded additional paid-in capital
      of
      $60,041 for stock compensation based on the fair value of 1,000,685 shares
      to be
      issued to the members of the Board.





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 $129,023,304 for the year ended December 31, 2007 and a net loss
      during the development stage from inception in November 15, 2005 through
      December 31, 2007 of $133,810,007. 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. Finally, the Company’s principal asset, a marketing and
      distribution intangible asset has been written off as impaired as discussed
      in
      Note 6 due to the fact that environment laws affecting timber harvesting have
      become more restrictive in Papua New Guinea.




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, 2007, the Company received additional advances
      of
      $100,000 from Hans Karundeng under his agreement and made cash payments to
      him
      of $556,000. During the year ended December 31, 2007, the Company made cash
      payments of $7,000 to Rudolph Karundeng under his agreement. 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, 2007, the
      Company made cash payments to Hans Karundeng and Rudolph Karundeng of $563,000
      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, 2007, the Company made cash payments of $1,140,529
      to Empire under the agreement. During the year ended December 31, 2006, the
      Company made cash payments 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- predecessor entity stock holders





The
      Company was a party to a lawsuit where the plaintiff alleged that he was
      entitled to $60,000 and 1,300,000 of common stock based upon CNE’s failure
      to compensate him for services related to identifying financing for CNE,
      based upon an agreement that was entered into between CNE and the plaintiff
      in
      April 2005. On November 28, 2007, the Company settled the lawsuit with the
      plaintiff. In full and final settlement of the claims asserted in the action,
      the Company has paid the plaintiff $10,000 in cash and issued the plaintiff
      200,000 shares of the Company’s common stock having a fair value of $12,000,
      based on the public traded share price on December 21, 2007. The settlement
      resulted in a loss on debt conversion of $2,000 during the year ended December
      31, 2007 because an estimated liability had been recognized prior to
      2007.




In
      May
      2006, the Company was advised that 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. In August 2006,
      the
      plaintiffs alleging the default obtained a judgment in the 17th Judicial Circuit
      Court Broward County, Florida for approximately $1,000,000. On November 13,
      2007, legal counsel engaged by Management brought a countersuit against the
      plaintiffs alleging that the judgment obtained in that court was fraudulent
      based on the plaintiffs’ perjury. The Company and its counsel strongly feel that
      the plaintiffs’ claims against the Company have no merit, the likelihood of an
      unfavorable outcome is very low, and is prepared to vigorously defend the
      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, 2007, 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, 2007,
      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, 2007, the Company has not recovered any revenue from
      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)





**[5]** (a)
      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,
      owning 349,370,000 shares or 53.76%. As of December 31, 2007, the Company has
      received $1,485,000 from APR towards the fulfillment of this
      agreement.




(b)
      Private Placement Offering- Series A Convertible Preferred Stock





On
      November 20, 2007, the Board of Directors approved a private placement offering
      (the "Offering") approximating $2,000,000 to accredited investors at $1.00
      per
      share of Series A Convertible Preferred Stock. The Offering was to consist
      of
      the Company's Series A Convertible Preferred Stock that will be convertible
      into
      our common stock. These securities are not required to be and will not be
      registered under the Securities Act of 1933 and will not be sold in the United
      States. As of December 31, 2007, the Company has received $280,000 from
      investors towards 280,000 Series A Convertible Preferred Stock shares issuable
      under subscription agreements covering the placement offering. Each Series
      A
      Convertible Preferred Stock is convertible into 20 shares of the Company’s
      Common Stock. The holders of the preferred stock have no voting rights except
      as
      may be required by Delaware law, no redemption rights, and no liquidation
      preferences over the Common Stock holders absent registration or an applicable
      exemption from registration. On January 31, 2008, the Board of Directors
      approved an extension of the private placement offering until February 15,
      2008,
      after which the offer was closed. As of February 15, 2008, the Company has
      received and additional $75,000 from investors towards 75,000 Series A
      Convertible Preferred Stock shares issuable under subscription agreements
      covering the placement offering. Under the whole private placement offering,
      the
      Company has raised $355,000 in total.





**[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, 2007 the Company has accrued $57,650 for estimated unpaid Delaware
      franchise taxes incurred to date reportable during the year ending December
      31,
      2007. 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. Accordingly, as of December 31, 2007 accounts and
      accrued expenses payable includes aggregate estimated unpaid Delaware Franchise
      taxes of $185,001. The
      Company will file the delinquent tax returns in the second quarter of 2008
      and
      pay the amount owed in full during the fourth quarter of
      2008.




**[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**2008
            
            $
            3,833,7602009
            
            
            4,256,5752010
            
            
            2,449,382$
            10,539,717




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.




**[8]** 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.





On
      October 15, 2007, Robert A. Levinson resigned as a member of the Board of
      Directors. On the same date, the board elected James L. Rothenberg to replace
      Mr. Levinson as director.





F-16





ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS





NOTE
      12 -
      SUBSEQUENT EVENTS




*Private
      Placement Offering- Series A Convertible Preferred Stock*





On
      January 31, 2008, the Board of Directors approved an extension of the private
      placement offering until February 15, 2008, after which the offer was closed.
      As
      of February 15, 2008, the Company has received and additional $75,000 from
      investors towards 75,000 Series A Convertible Preferred Stock shares issuable
      under subscription agreements covering the placement offering. Each Series
      A
      Convertible Preferred Stock is convertible into 20 shares of the Company’s
      Common Stock. The holders of the preferred stock have no voting rights except
      as
      may be required by Delaware law, no redemption rights, and no liquidation
      preferences over the Common Stock holders absent registration or an applicable
      exemption from registration. Under the whole private placement offering, the
      Company has raised $355,000 in total.




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




In
      March
      2008, the Company received an additional $110,000 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
      2008.




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