**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**




(Mark
      One)




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




For
      the
      quarterly period ended March 31, 2008




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




For
      the
      transition period from  to




Commission
      file number l-9224




**Arrow
      Resources Development, Inc.**


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





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




**Carnegie
      Hall Tower, 152 W. 57** **th** **Street, New York, NY 10019**


**(Address
      of Principal Executive Offices) (Zip Code)**




**212-262-2300**


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




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




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




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


(Title
                  of Class)
  (Title
                  of Class)




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




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.


Yes  ̈ No x




The
      number of shares outstanding of each of the issuer's classes of common equity,
      as of May 16, 2008.




**Class**
            
            **Outstanding
                at May 16, 2008**Common
                stock - par value $0.00001
            
            650,993,240









ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


FORM
      10-Q


THREE
      MONTHS ENDED MARCH 31, 2008




TABLE
      OF
      CONTENTS





**Page****PART
                I - FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements:Unaudited
                Consolidated Balance Sheets at March 31, 2008 and December 31,
                2007
            
            1Unaudited
                Consolidated Statement of Operations for the three months ended March
                31,
                2008 and 2007, and for the periods from inception (November 15, 2005)
                to
                December 31, 2007 and from inception (November 15, 2005) to March
                31,
                2008
            
            2Unaudited
                Consolidated Statement of Changes in Stockholders' (Deficit) Equity
                for
                the three months ended March 31, 2008 and for the period from inception
                (November 14, 2005) to March 31, 2008
            
            3Unaudited
                Consolidated Statement of Cash Flows for the three months ended March
                31,
                2008  and for the periods from inception (November 15, 2005) to
                December 31, 2007 and from inception (November 15, 2005) to March
                31,
                2008
            
            4Notes
                to the Consolidated Financial Statements (Unaudited)
            
            5Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            16-20Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            21Item
                4.
            Controls
                and Procedures
            
            21**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            
            21Item
                1A.
            Risk
                Factors
            
            22Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            22Item
                3.
            Defaults
                Upon Senior Securities
            
            22Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            22Item
                5.
            Other
                Information
            
            22Item
                6.
            Exhibits
            
            23Signatures
            
            
            24











**PART
      I - FINANCIAL INFORMATION**





**Item 1.**
            **Financial
                Statements**





ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)





Unaudited
      Consolidated Balance Sheets




**December 31, 2007****March 31, 2008**
            
            **(As Restated - Note 2)****ASSETS**Current:Cash
            
            $
            1,040
            
            $
            1,040Total
                current assets
            
            
            1,040
            
            
            1,040Total
                assets
            
            $
            1,040
            
            $
            1,040**LIABILITIES
                AND STOCKHOLDERS’ (DEFICIT) EQUITY**Current:Accounts
                and accrued expenses payable, including $4,089,628 and $4,112,203
                due to
                Company shareholders and directors, respectively
            
            $
            4,464,019
            
            $
            4,085,122Estimated
                liability for legal judgement obtained by predecessor entity
                shareholder
            
            
            1,053,385
            
            
            1,053,385Due
                to related parties
            
            
            4,808,057
            
            
            4,404,183Notes
                payable, including accrued interest of $20,000 and 20,000 at March
                31,
                2008 and December 31, 2007, respectively
            
            
            395,000
            
            
            245,000Total
                liabilities
            
            
            10,720,461
            
            
            9,787,690Commitments
                and contingencies
            
            
            -
            
            
            -STOCKHOLDERS’
                (DEFICIT) EQUITYPreferred
                stock, $0.10 par value, 10 million shares authorized, 355,000 and
                280,000
                shares to be issued at March 31, 2008 and December 31,
                2007
            
            
            355,000
            
            
            280,000Common
                stock, $0.00001 par value, 1 billion shares authorized, 649,743,240
                and
                649,743,240 issued and outstanding, respectively
            
            
            6,497
            
            
            6,497Common
                stock to be issued, $0.00001 par value, 4,776,458 and 2,485,685 shares
                to
                be issued at March 31, 2008 and December 31, 2007,
                respectively
            
            
            48
            
            
            25Additional
                paid-in capital
            
            
            124,926,093
            
            
            124,790,220Accumulated
                deficit
            
            
            (136,007,059
            )
            
            (134,863,392
            )Total
                stockholders’ (deficit) equity
            
            
            (10,719,421
            )
            
            (9,786,650
            )Total
                liabilities and stockholders’ (deficit) equity
            
            $
            1,040
            
            $
            1,040




*See
      accompanying notes to the consolidated financial statements.*




1




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)





Unaudited
      Consolidated Statement of Operations (During the Development Stage)


For the Three
                Months Ended
                March 31, 2008
              
              For the Three
                Months Ended
                March 31, 2007
              
              For the Period From
                Inception (November
                15, 2005) to December
                31, 2007 (As Restated -
                Note 2)
              
              Accumulated During
                the Development
                Stage for the Period
                From Inception
                (November 15, 2005)
                to March 31, 2008Revenue
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  expenses:Consulting
                  fees and services, including $888,613, $810,379, $7,555,470 and
                  $8,444,083
                  incurred to related parties, respectively
              
              
              1,001,059
              
              
              860,442
              
              
              7,955,066
              
              
              8,956,125General
                  and administrative
              
              
              42,503
              
              
              31,772
              
              
              554,177
              
              
              596,680Directors'
                  compensation
              
              
              60,000
              
              
              -
              
              
              260,178
              
              
              320,178Delaware
                  franchise taxes
              
              
              105
              
              
              14,413
              
              
              185,001
              
              
              185,106Total
                  operating expenses
              
              
              1,103,667
              
              
              906,627
              
              
              8,954,422
              
              
              10,058,089Loss
                      from operations during the development stage
              
              
              (1,103,667
              )
              
              (906,627
              )
              
              (8,954,422
              )
              
              (10,058,089
              )Other
                  income (expense):Gain
                  on write off of liabilities associated with predecessor entity
                  not to be
                  paid
              
              
              -
              
              
              -
              
              
              395,667
              
              
              395,667Loss
                  on legal judgement obtained by predecessor entity
                  shareholder
              
              
              -
              
              
              -
              
              
              (1,053,385
              )
              
              (1,053,385
              )Loss
                  on write off of marketing agreement
              
              
              -
              
              
              -
              
              
              (125,000,000
              )
              
              (125,000,000
              )Loss
                  on settlement of predecesoor entity stockholder litigation
              
              
              -
              
              
              -
              
              
              (2,000
              )
              
              (2,000
              )Expenses
                  incurred as part of recapitalization transaction
              
              
              -
              
              
              -
              
              
              (249,252
              )
              
              (249,252
              )Debt
                  issue costs to be satisfied in Company Common Stock
              
              
              (40,000
              )
              
              -
              
              
              -
              
              
              (40,000
              )(40,000
              )
              
              -
              
              
              (125,908,970
              )
              
              (125,948,970
              )Net
                  loss
              
              $
              (1,143,667
              )
              $
              (906,627
              )
              $
              (134,863,392
              )
              $
              (136,007,059
              )Basic
                  and diluted net loss per weighted-average shares common stock
                  outstanding
              
              $
              (0.002
              )
              $
              (0.001
              )
              $
              (0.214
              )
              $
              (0.216
              )Weighted-average
                  number of shares of common stock outstanding
              
              
              649,743,240
              
              
              649,543,240
              
              
              631,654,538
              
              
              629,662,310




*See
      accompanying notes to the consolidated financial statements.*




2




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)





Unaudited Consolidated
      Statement of Changes in Stockholders' (Deficit) Equity (During the Development
      Stage)





**Series A Convertible Preferred Stock**
            
            **Common Stock**
            
            **Common Stock**
            
            **Additional**
            
            **Accumulated****Shares to be issued**
            
            **Amount**
            
            **Shares to be issued**
            
            **Amount**
            
            **Shares issued**
            
            **Amount**
            
            **Paid-in Capital**
            
            **Deficit**
            
            **Total**Balance, November
                14, 2005 pursuant to recapitalization transaction
            
            
            —
            
            $
            —
            
            
            —
            
            $
            —
            
            
            25,543,240
            
            $
            255
            
            $
            (2,674,761
            )
            $
            —
            
            $
            (2,674,506
            )Common
                stock conversion and settlement of senior note pursuant to
                recapitalization transaction
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            624,000,000
            
            
            6,240
            
            
            125,907,967
            
            
            —
            
            
            125,914,207Net
                loss for the period from November 15, 2005 to December 31,
                2005
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,272,258
            )
            
            (1,272,258
            )Balance,
                December 31, 2005
            
            
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            
            649,543,240
            
            $
            6,495
            
            $
            123,233,206
            
            $
            (1,272,258
            )
            $
            121,967,443Common
                stock to be issued for cash received by Company
            
            
            —
            
            
            —
            
            
            985,000
            
            
            10
            
            
            —
            
            
            —
            
            
            984,990
            
            
            —
            
            
            985,000Net
                loss for the year
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (3,514,445
            )
            
            (3,514,445
            )Balance,
                December 31, 2006
            
            
            -
            
            $
            -
            
            
            985,000
            
            $
            10
            
            
            649,543,240
            
            $
            6,495
            
            $
            124,218,196
            
            $
            (4,786,703
            )
            $
            119,437,998Common
                stock to be issued for cash received by Company
            
            
            —
            
            
            —
            
            
            500,000
            
            
            5
            
            
            —
            
            
            —
            
            
            499,995
            
            
            —
            
            
            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 predecesor entity stockholder
                litigation
            
            
            —
            
            
            —
            
            
            -
            
            
            -
            
            
            200,000
            
            
            2
            
            
            11,998
            
            
            —
            
            
            12,000Common
                stock to be issued for directors' compensation
            
            
            —
            
            
            —
            
            
            1,000,685
            
            
            10
            
            
            —
            
            
            —
            
            
            60,031
            
            
            —
            
            
            60,041Net
                loss for the year (As Restated - See Note 2)
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (130,076,689
            )
            
            (130,076,689
            )Balance,
                December 31, 2007 (As Restated - See Note 2)
            
            
            280,000
            
            $
            280,000
            
            
            2,485,685
            
            $
            25
            
            
            649,743,240
            
            $
            6,497
            
            $
            124,790,220
            
            $
            (134,863,392
            )
            $
            (9,786,650
            )Series
                A Convertible Preferred Stock to be issued for cash received by
                Company
            
            
            75,000
            
            
            75,000
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            75,000Common
                stock to be issued for directors' compensation
            
            
            —
            
            
            —
            
            
            250,000
            
            
            3
            
            
            —
            
            
            —
            
            
            9,997
            
            
            —
            
            
            10,000Debt
                issue costs to be satisfied in Company Common Stock
            
            
            —
            
            
            —
            
            
            1,000,000
            
            
            10
            
            
            —
            
            
            —
            
            
            39,990
            
            
            —
            
            
            40,000Common
                stock to be issued for consulting and marketing services
            
            
            —
            
            
            —
            
            
            1,040,773
            
            
            10
            
            
            —
            
            
            —
            
            
            85,886
            
            
            —
            
            
            85,896Net
                loss for the three months ended March 31, 2008
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,143,667
            )
            
            (1,143,667
            )Balance,
                March 31, 2008
            
            
            355,000
            
            $
            355,000
            
            
            4,776,458
            
            $
            48
            
            
            649,743,240
            
            $
            6,497
            
            $
            124,926,093
            
            $
            (136,007,059
            )
            $
            (10,719,421
            )




*See
      accompanying notes to the consolidated financial statements.*




3




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)




Unaudited
      Consolidated Statement of Cash Flows (During the Development Stage)




For the Three
              Months Ended
              March 31, 2008
            
            For the Three
              Months Ended
              March 31,
              2007
            
            For the Period From
              Inception (November
              15, 2005) to December
              31, 2007 (As Restated -
              See Note 2)
            
            Accumulated During the
              Development Stage for
              the Period From
              Inception (November
              15, 2005) to March 31,
              2008Net
                loss
            
            $
            (1,143,667
            )
            $
            (906,627
            )
            $
            (134,863,392
            )
            $
            (136,007,059
            )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
            
            
            125,000,000Debt
                issue costs to be satisfied in Company Common Stock
            
            
            40,000
            
            
            -
            
            
            -
            
            
            40,000Common
                stock to be issued for consulting and marketing services
            
            
            85,896
            
            
            -
            
            
            
            
            
            85,896Increase
                in prepaid expenses
            
            
            -
            
            
            (5,868
            )
            
            -
            
            
            -Stock-based
                directors' compensation to be issued
            
            
            10,000
            
            
            
            
            
            60,041
            
            
            70,041Changes
                in operating asset and liabilities:Increase
                in accounts and accrued expenses payable
            
            
            378,898
            
            
            412,972
            
            
            2,848,562
            
            
            3,227,460Estimated
                liability for legal judgement obtained by predecessor entity
                shareholder
            
            
            -
            
            
            -
            
            
            1,053,385
            
            
            1,053,385Net
                cash (used in) operating activities
            
            
            (628,873
            )
            
            (499,523
            )
            
            (4,637,187
            )
            
            (5,266,060
            )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 (used in) investing activities
            
            
            -
            
            
            -
            
            
            (329,999
            )
            
            (329,999
            )Cash
                flows from financing activities:Proceeds
                of issuance of note payable
            
            
            150,000
            
            
            -
            
            
            25,000
            
            
            175,000Proceeds
                of loans received from related parties
            
            
            110,000
            
            
            -
            
            
            1,175,000
            
            
            1,285,000Repayment
                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
            
            
            293,873
            
            
            399,523
            
            
            2,027,653
            
            
            2,321,526Net
                increase in investments/capital contributed
            
            
            75,000
            
            
            100,000
            
            
            1,776,998
            
            
            1,851,998Advances
                from senior advisor
            
            
            -
            
            
            -
            
            
            50,000
            
            
            50,000Net
                cash provided by financing activities
            
            
            628,873
            
            
            499,523
            
            
            4,968,226
            
            
            5,597,099Net
                change in cash
            
            
            -
            
            
            -
            
            
            1,040
            
            
            1,040Cash
                balance at beginning of period
            
            
            1,040
            
            
            -
            
            
            -
            
            
            -Cash
                balance at end of period
            
            $
            1,040
            
            $
            -
            
            
            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.*




4


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.
  In
        April
        of 2006, Arrow Ltd. entered into an agency agreement with Arrow Pacific
        Resources Group Limited (“APR”) that 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
  **BASIS
        OF PRESENTATION**
 
 **Interim
        Financial Statements**
 
 In
        the
        opinion of management, the accompanying consolidated financial statements
        reflect all adjustments (consisting of normal recurring accruals) necessary
        to
        present fairly the Company's financial position as of March 31, 2008 and
        the
        results of its operations, changes in stockholders' (deficit) equity, and
        cash
        flows for the three months periods ended March 31, 2008 and 2007, respectively.
        Although management believes that the disclosures in these consolidated
        financial statements are adequate to make the information presented not
        misleading, certain information and footnote disclosures normally included
        in
        financial statements that have been prepared in accordance with accounting
        principles generally accepted in the United States of America have been
        condensed or omitted pursuant to the rules and regulations of the Securities
        Exchange Commission.
  The
        results of operations for the three months ended March 31, 2008 are not
        necessarily indicative of the results that may be expected for the full year
        ending December 31, 2008. The accompanying consolidated financial statements
        should be read in conjunction with the more detailed “restated” consolidated
        financial statements, and the related footnotes thereto, filed with the
        Company’s amended Annual Report on Form 10KSB/A for the year ended December 31,
        2007 filed on May 20, 2008.
 
 **Going-Concern
        Status**
 
 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 $1,143,667 for the three months ended March 31, 2008, and a net
        loss
        during the development stage from inception in November 15, 2005 through
        March
        31, 2008 of $136,007,059. 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,
        as
        of December 31, 2007, the Company’s principal asset, a marketing and
        distribution intangible asset in the amount of $125,000,000 was 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.
 
 Principles
        of consolidation:
  The
        accompanying consolidated financial statements include the accounts of the
        Company and its wholly-owned subsidiary, Arrow Ltd. 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.


5




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, 2007 and for the period ended March 31, 2008.
      As of March 31, 2008, there are no dilutive equity instruments outstanding.
      However, the Company has 355,000 and 0 shares of Series A Convertible Preferred
      Stock that are issuable as of March 31, 2008 and 2007,
      respectively.




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 was to be amortized over 99 years, utilizing the
      straight-line method. Amortization expense had not been recorded since the
      acquisition occurred as the company had not yet made any sales.




The
      value
      of the agreement was assessed to be fully impaired by the Company and it
      recorded a loss on the write off of the Marketing and Distribution agreement
      of
      $125,000,000 at December 31, 2007 (See Note 6).




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)





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 March 31, 2008, the Company’s
      consolidated financial statements do not contain any changes in equity that
      are
      required to be reported separately in comprehensive income.





Recent
      Accounting Pronouncements:





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles.” The
      current GAAP hierarchy, as set forth in the American Institute of Certified
      Public Accountants (AICPA) Statement on Auditing Standards No. 69, The Meaning
      of Present Fairly in Conformity With Generally Accepted Accounting Principles,
      has been criticized because (1) it is directed to the auditor rather than the
      entity, (2) it is complex, and (3) it ranks FASB Statements of Financial
      Accounting Concepts. The FASB believes that the GAAP hierarchy should be
      directed to entities because it is the entity (not its auditor) that is
      responsible for selecting accounting principles for financial statements that
      are presented in conformity with GAAP. Accordingly, the FASB concluded that
      the
      GAAP hierarchy should reside in the accounting literature established by the
      FASB and is issuing this Statement to achieve that result. This Statement is
      effective 60 days following the SEC’s approval of the Public Company Accounting
      Oversight Board amendments to AU Section 411, The Meaning of Present Fairly
      in
      Conformity With Generally Accepted Accounting Principles. The
      adoption of FASB 162 is not expected to have a material impact on the Company’s
      financial position.





In
      March
      2008, the FASB issued SFAS No. 161, “ Disclosures
      about Derivative Instruments and Hedging Activities—an amendment of FASB
      Statement No. 133.” Constituents have expressed concerns that the existing
      disclosure requirements in FASB Statement No. 133, Accounting for Derivative
      Instruments and Hedging Activities, do not provide adequate information about
      how derivative and hedging activities affect an entity’s financial position,
      financial performance, and cash flows. SFAS No. 161 requires enhanced
      disclosures about an entity’s derivative and hedging activities and thereby
      improves the transparency of financial reporting. This Statement is effective
      for financial statements issued for fiscal years and interim periods beginning
      after November 15, 2008, with early application encouraged. This Statement
      encourages, but does not require, comparative disclosures for earlier periods
      at
      initial adoption. The adoption of FASB 161 is not expected to have a material
      impact on the Company’s financial position.




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
      non-controlling 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.




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)




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.




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, except for Delaware
      franchise taxes, none of the Company's post November 14, 2005 losses are as
      yet
      reportable in Company income tax returns to be filed for the years ended
      December 31, 2005, 2006 or 2007.




8


ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      4 -
      INCOME TAXES (Continued)




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




Net
                  operating loss carryforward
              
              $
              62,936Differences
                  resulting from use of cash basis for tax purposes
              
              
              -Total
                  deferred tax assets
              
              
              62,936Less
                  valuation allowance
              
              
              (62,936
              )Net
                  deferred tax assets
              
              $
              —




The
      net
      operating losses expire as follows:


December
                  31, 2026
              
              $
              127,349December
                  31, 2027
              
              
              57,757Net
                  Operating Loss Carryover
              
              $
              185,106





Reconciliation
      of net loss for income tax purposes to net loss per financial statement
      purposes:




**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
              
              $
              135,821,953Delaware
                  franchise taxes deductible on Company's tax return
              
              
              185,106Net
                  loss for the period from inception (November 15, 2005) to March
                  31,
                  2008
              
              $
              136,007,059




NOTE
      5 - NOTES PAYABLE




As
      of
      March 31, 2008 and December 31, 2007, the Company had notes payable outstanding
      as follows:


**Holder**
              
              **Terms**
              
              **March 31,**
              
              **December 31,****2008**
              
              **2007**Barry
                  Blank (1)
              
              
              Due
                  on demand, 10% interest
              
              $
              200,000
              
              $
              200,000Accrued
                  interest (1)
              
              
              
              
              
              20,000
              
              
              20,000H.
                  Lawrence Logan
              
              
              Due
                  on demand, non-interest bearing
              
              
              25,000
              
              
              25,000John
                  Marozzi (2)
              
              
              Due
                  on demand, non-interest bearing
              
              
              150,000
              
              
              -**Total**
              
              
              
              
              $
              395,000
              
              $
              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 three months ended March 31, 2008, 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.


(2)
            On
                March 31, 2008, the Company received a $150,000 non-interest bearing
                advance from John Marozzi, which is due on demand. In repayment,
                the
                Company will repay the full amount of the note plus 1,000,000 shares
                of
                unregistered restricted common stock. The Company recorded $40,000
                in debt
                issue costs related to the 1,000,000 shares of common stock that
                are now
                issuable to John Marozzi as of March 31, 2008.




9




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS





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 had ever been taken during the period from
      inception (November 15, 2005) to March 31, 208, 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 reached the conclusion that the marketing and distribution agreement
      had
      no value. Therefore, the Company 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.




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.




10




As
      of
      March 31, 2008 and December 31, 2007, the Company had short-term borrowings
      of
      $3,323,057 and $3,029,183, respectively, due to Empire, consisting of cash
      advances to the Company and working capital raised by Empire, as agent, on
      behalf of the Company. 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 three months
      ended March 31, 2008 and 2007 incurred to Empire totaled $513,613 and $435,379,
      respectively. Consulting fees and services charged in the Statement of
      Operations for the year ended December 31, 2007 incurred to Empire totaled
      $1,858,386. Consulting 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 three months ended March 31, 2008, the Company incurred Director’s
      compensation expense of $15,000 to Mr. Frugone, consisting of cash compensation
      of $12,500 and stock based compensation of $2,500 based upon the Company’s share
      trading price on March 31, 2008. 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 March 31, 2008, the Company is obligated to issue 312,500
      Common Stock shares to him, and “Accounts payable and accrued liabilities”
includes $62,500 due to him for the cash based portion of his 2007 and 2008
      director’s compensation (See Note 7[4]).





During
      the three months ended March 31, 2008, the Company made cash payments of $94,500
      to Empire under the agreement. During the three months ended March 31, 2007
      the
      Company received additional advances of $395,439, from 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 three months
      ended March 31, 2008 and 2007 incurred to Hans Karundeng and Rudolph Karundeng
      under Engagement and Consulting Agreements totaled $375,000 and $375,000,
      respectively. In addition, as of March 31, 2008 and December 31, 2007, the
      Company owed them $3,901,991 and $3,592,491, respectively, under these
      agreements. These agreements are discussed in detail in Note 11.





During
      the three months ended March 31, 2008, the Company incurred Director’s
      compensation expense of $15,000 to Rudolph Karundeng, consisting of cash
      compensation of $12,500 and stock based compensation of $2,500 based upon the
      Company’s share trading price on March 31, 2008. During the year ended December
      31, 2007, the Company also incurred Director’s compensation expense of $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 March 31, 2008, the Company is obligated
      to
      issue 312,500 Common Stock shares to him, and “Accounts payable and accrued
      liabilities” includes $62,500 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. In March 2008, the Company received
      an
      additional $110,000 non-interest bearing advance from John E. McConnaughy,
      Jr.
      As of March 31, 2008 and December 31, 2007, the Company had $1,485,000 and
      $1,375,000, respectively, left to be repaid to Mr. McConnaughy, which is
      included in “Due to Related Parties.”





During
      the three months ended March 31, 2008, the Company incurred Director’s
      compensation expense of $15,000 to Mr. McConnaughy, consisting of cash
      compensation of $12,500 and stock based compensation of $2,500 based upon the
      Company’s share trading price on March 31, 2008. 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 March 31, 2008, the Company is obligated to
      issue 312,500 Common Stock shares to him, and “Accounts payable and accrued
      liabilities” includes $62,500 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
      March
      31, 2008 and December 31, 2007, none of the shares under this plan have been
      issued and the Company has an accrued liability of $250,137 and $200,137,
      respectively, of cash-based compensation and recorded additional paid-in capital
      through those dates of $70,041 and $60,041, respectively, for stock-based
      compensation based on the fair value of 1,250,685 shares and 1,000,685 to be
      issued to the members of the Board, respectively.





11




ARROW
      RESOURCES DEVELOPMENT, INC. AND SUBSIDIARIES


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      8 -
      STOCKHOLDERS' 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.





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.
      As of May 15, 2008, the Company has not received any additional capital
      contribution towards the stock purchase agreement. (See Note 10 [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 March 31, 2008, the Company has received $355,000 from
      investors towards the fulfillment of the financing agreement. The offering
      had
      an extended expiration date of February 15, 2008.





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
      March
      31, 2008 and December 31, 2007, none of the shares under this plan have been
      issued and the Company has accrued $250,137 and $200,137 of cash-based
      compensation and recorded additional paid-in capital of $70,041 and $60,041
      for
      stock-based compensation based on the fair value of 1,250,685 shares and
      1,000,685 to be issued to the members of the Board.





On
      February 1, 2008, the Company entered into Independent Contractor Agreement
      with
      Charles A. Moskowitz of MoneyInfo. Inc. to provide consulting services to the
      Company in the lumber market development, ethanol market development, and
      compilation of market prices associated with lumber and ethanol and development
      of a database for the ongoing analysis of these markets. The term of this
      agreement is February 1, 2008 through July 31, 2008. As payment for the
      Consultant’s services, the Company will issue 2,600,000 shares of common stock
      to Charles A. Moskowitz. The Company recorded consulting fees and services
      of
      $69,324 related to 866,666 of the 2,600,000 shares of common stock that are
      now
      issuable to Charles A. Moskowitz as of March 31, 2008.





On
      March
      13, 2008, the Company and Micro-Cap Review, Inc. (“Micro-Cap”) executed an
      Advertising Agreement wherein the Company will pay Micro-Cap Review, Inc.
      1,000,000 of restricted common shares to display advertisements and advertorial
      in the Micro-cap Review magazine and on http://www.microcapreview.com website
      on a rotating basis. The services began on March 13, 2008 and expire on June
      30,
      2008. The Company recorded a marketing expense of $10,000 in General and
      Administration Expenses related to 142,857 of the 1,000,000 shares of common
      stock that are now issuable to Micro-Cap as of March 31, 2008.





On
      March
      15, 2008, the Company and Seapotter Corporation (“Seapotter”) executed a
      Consulting Agreement wherein Seapotter would provide information technology
      support from March 15, 2008 to July 15, 2008 in exchange for $9,000 per month
      and 250,000 shares of common stock. The Company recorded consulting fees and
      services of $6,563 related to 31,250 of the 250,000 shares of common stock
      that
      are now issuable to Seapotter as of March 31, 2008.





On
      March
      31, 2008, the Company received a $150,000 non-interest bearing advance from
      John
      Marozzi, which is due on demand. As payment for his services, the Company will
      repay the full amount of the note plus 1,000,000 shares of unregistered
      restricted common stock. The Company recorded $40,000 of debt issue costs
      related to the 1,000,000 shares of common stock that are now issuable John
      Marozzi as of March 31, 2008 (See Note 5).





12





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.




NOTE
      10 -
      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 three months ended March 31, 2008, the Company made cash payments to Hans
      Karundeng of $75,000 under his agreement. During the three months ended March
      31, 2008, the Company made cash payments of $3,000 to Rudolph Karundeng under
      his agreement. 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 three months ended March 31, 2008, the Company made cash payment of $94,500
      to Empire under the agreement. 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.





**[3]** Litigation




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





In
      May
      2006, the Company was advised that it was alleged to be in default of a
      settlement agreement entered into in January of 2005 by CNE, its predecessor
      company, related to the release of unrestricted, freely-tradable, non-legend
      shares of stock. In August 2006, the plaintiffs, alleging the default, obtained
      a judgment in the 17th Judicial Circuit Court Broward County, Florida for
      approximately $1,000,000. On November 13, 2007, legal counsel engaged by
      Management commenced an action on the Company’s behalf in the above Circuit
      Court seeking to vacate and set aside the 2006 judgment asserting claims under
      Rule 1.540(b) of the Florida Rules of Civil Procedure. Our counsel’s evaluation
      is that the Company has only a limited chance of having the 2006 judgment opened
      by the Court because Florida law provides very narrow grounds for opening a
      judgment once a year has passed from its entry. The Courts are generally
      reluctant to disturb final judgments and the Company’s grounds for opening the
      judgment depend on the Court’s adopting a somewhat novel argument regarding such
      matters. If, however, the Court does open the default judgment, the Company
      will
      then have the opportunity to defend the 2006 action and, in such event, our
      counsel believes that the Company has a reasonable chance of succeeding in
      defending that claim, at least in part, based on the documents he has reviewed.
      As of December 31, 2007, the Company has accrued $1,053,385 related to this
      matter.




13




**[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
      reforestation in areas that were destroyed by illegal logging) 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 March
      31,
      2008, 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
      14, 2006, the Company entered into a consulting agreement with P.T. Eucalyptus
      Alam Lestari (“Lestari”) 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 March 31, 2008, the Company has not recovered any
      revenue from this agreement.





On
      February 1, 2008, the Company entered into Independent Contractor Agreement
      with
      Charles A. Moskowitz of MoneyInfo. Inc. to provide consulting services to the
      Company in the lumber market development, ethanol market development, and
      compilation of market prices associated with lumber and ethanol and development
      of a database for the ongoing analysis of these markets. The term of this
      agreement is February 1, 2008 through July 31, 2008. As payment for the
      Consultant’s services, the Company will issue 2,600,000 shares of common stock
      to Charles A. Moskowitz. The Company recorded consulting fees and services
      of
      $69,324 related to 866,666 of the 2,600,000 shares of common stock that are
      now
      issuable to Charles A. Moskowitz as of March 31, 2008.





On
      March
      13, 2008, the Company and Micro-Cap Review, Inc. (“Micro-Cap”) executed an
      Advertising Agreement wherein the Company will pay Micro-Cap Review, Inc.
      1,000,000 of restricted common shares to display advertisements and advertorial
      in the Micro-cap Review magazine and on http://www.microcapreview.com website
      on a rotating basis. The services began on March 13, 2008 and expire on June
      30,
      2008. The Company recorded a marketing expense of $10,000 in General and
      Administration Expenses related to 142,857 of the 1,000,000 shares of common
      stock that are now issuable to Micro-Cap as of March 31, 2008.





On
      March
      15, 2008, the Company and Seapotter Corporation (“Seapotter”) executed a
      Consulting Agreement wherein Seapotter would provide information technology
      support from March 15, 2008 to July 15, 2008 in exchange for $9,000 per month
      and 250,000 shares of common stock. The Company recorded consulting fees and
      services of $6,563 related to 31,250 of the 250,000 shares of common stock
      that
      are now issuable to Seapotter as of March 31, 2008.





**[5]** Stock
      Purchase Agreement




On
      August
      2, 2006, the Company entered into a stock purchase agreement with APR wherein
      APR agreed to purchase up to an aggregate amount of 15,000,000 shares of common
      stock in the Company for $1.00 per share, making this a capital contribution
      of
      $15,000,000 in total. The stock will be delivered at the time the Company files
      for registration. APR is currently the principal shareholder of the Company,
      owning 349,370,000 shares or 53.76%. As of March 31, 2008, the Company has
      received $1,485,000 from APR towards the fulfillment of this agreement. As
      of
      May 15, 2008, the Company has not received any additional funds.





(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. 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 March 31, 2008, the Company
      has raised $355,000 from investors under this financing agreement.




**[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.




14


At
      March
      31, 2008, the Company has accrued an additional $105 for estimated unpaid
      Delaware franchise taxes incurred to date reportable during the year ending
      December 31, 2008. The Company had estimated unpaid Delaware franchise taxes
      for
      the years ended December 31, 2007, 2006 and 2005 in the amount of $57,650,
      $57,650 and $69,699, respectively. Accordingly, as of March 31, 2008, accounts
      and accrued expenses payable includes aggregate estimated unpaid Delaware
      Franchise taxes of $185,104. The Company hopes to file the delinquent tax
      returns in the second quarter of 2008 and pay the amount owned in full during
      the fourth quarter of 2008.




**[7]** Table of
      annual 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 March 31,**
              
              **Amounts**2009
              
              $
              3,954,4172010
              
              
              4,378,6462011
              
              
              1,164,677$
              9,497,740


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.





NOTE
      11 -
      SUBSEQUENT EVENTS





*Consulting/Marketing
      and Agency Agreements*





On
      April
      29, 2008, the Company issued 1,000,000 shares of unregistered restricted common
      stock to Micro-Cap Review, Inc. pursuant to the agreement described in Note
      10[4] to pay the Advertising Agreement entered into by the Company on March
      13,
      2008.





On
      April
      29, 2008, the Company issued 250,000 shares of unregistered restricted common
      stock to Charles Potter of Seapotter Corporation, pursuant to the agreement
      described in Note 8 to pay the Consulting Agreement entered into by the Company
      on March 15, 2008.





*Non-Interest
      Bearing Advance Received from Company Director*





On
      April
      25, 2008, the Company received a $12,000 non-interest bearing advance from
      John
      E. McConnaughy, III, which is due on demand. In repayment, the Company will
      repay the full amount of the note plus 96,000 shares of unregistered restricted
      common stock.





*Non-Interest
      Bearing Advance Received from Others*





On
      April
      8, 2008, the Company received a $50,000 non-interest bearing advance from Barry
      Weintraub, which is due on demand. In repayment, the Company will repay the
      full
      amount of the note plus 2,000,000 shares of the Company’s unregistered
      restricted common stock of the Company.





On
      April
      24, 2008, the Company received a $38,000 non-interest bearing advance from
      Christopher T. Joffe, which is due on demand. In repayment, the Company will
      repay the full amount of the note plus 304,000 shares of the Company’s
      unregistered restricted common stock of the Company.





On
      April
      24, 2008, the Company received another $38,000 non-interest bearing advance
      from
      James R. McConnaughy, which is due on demand. In repayment, the Company will
      repay the full amount of the note plus 304,000 shares of the Company’s
      unregistered restricted common stock.




15





**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 March 31, 2008 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.





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 March 31, 2008, 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.


16






**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.





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
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles.” The
      current GAAP hierarchy, as set forth in the American Institute of Certified
      Public Accountants (AICPA) Statement on Auditing Standards No. 69, The Meaning
      of Present Fairly in Conformity With Generally Accepted Accounting Principles,
      has been criticized because (1) it is directed to the auditor rather than the
      entity, (2) it is complex, and (3) it ranks FASB Statements of Financial
      Accounting Concepts. The FASB believes that the GAAP hierarchy should be
      directed to entities because it is the entity (not its auditor) that is
      responsible for selecting accounting principles for financial statements that
      are presented in conformity with GAAP. Accordingly, the FASB concluded that
      the
      GAAP hierarchy should reside in the accounting literature established by the
      FASB and is issuing this Statement to achieve that result. This Statement is
      effective 60 days following the SEC’s approval of the Public Company Accounting
      Oversight Board amendments to AU Section 411, The Meaning of Present Fairly
      in
      Conformity With Generally Accepted Accounting Principles. The
      adoption of FASB 162 is not expected to have a material impact on the Company’s
      financial position.





In
      March
      2008, the FASB issued SFAS No. 161, “ Disclosures
      about Derivative Instruments and Hedging Activities—an amendment of FASB
      Statement No. 133.” Constituents have expressed concerns that the existing
      disclosure requirements in FASB Statement No. 133, Accounting for Derivative
      Instruments and Hedging Activities, do not provide adequate information about
      how derivative and hedging activities affect an entity’s financial position,
      financial performance, and cash flows. SFAS No. 161 requires enhanced
      disclosures about an entity’s derivative and hedging activities and thereby
      improves the transparency of financial reporting. This Statement is effective
      for financial statements issued for fiscal years and interim periods beginning
      after November 15, 2008, with early application encouraged. This Statement
      encourages, but does not require, comparative disclosures for earlier periods
      at
      initial adoption. The adoption of FASB 161 is not expected to have a material
      impact on the Company’s financial position.


17




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.





**RESULTS
      OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,
      2008**





In
      November 2005, we discontinued and disposed of our subsidiaries except for
      Arrow
      Ltd. in conjunction with the recapitalization of the Company. The Company had
      no
      revenue during this period as Arrow Ltd. is still in the development stage.
      For
      the three months ended March 31, 2008, we incurred consulting fees of
      $1,001,059 of which, $888,613 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 three months ended March 31, 2007, we
      incurred consulting fees of $860,442 of which, $810,379 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 three months ended March 31, 2008 and March 31, 2007 as
      the Company is in its development stage.





**COST
      OF GOODS SOLD**




There
      was
      no cost of good sold for the three months ended March 31, 2008 and March
      31, 2007 as the Company is in its development stage.





**OTHER
      EXPENSES**





Compensation,
      consulting and related costs increased to $1,001,059 for the three months ended
      March 31, 2008 as compared to $860,442 for the three months ended
      March 31, 2007, $7,955,066 for the period from inception (November 15,
      2005) to December 31, 2007, and $8,956,125 for the accumulated during the
      development stage for the period from inception (November 15, 2005) to March
      31,
      2008. 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.


18





General
      and administrative expenses increased to $42,503 for the three months ended
      March 31, 2008 as compared to $31,772 for the three months ended
      March 31, 2007, $554,177 for the period from inception (November 15, 2005)
      to December 31, 2007, and $596,680 for the accumulated during the development
      stage for the period from inception (November 15, 2005) to March 31, 2008.
      This
      was primarily due to an increase in advertising and accounting expense.





Directors’
      compensation increased to $60,000 for the three months ended March 31, 2008,
      none for the three months ended March 31, 2007, $260,178 for the year ended
      December 31, 2007 as compared to $320,178 accumulated during the development
      stage for the period from inception (November 15, 2005) to March 1, 2008. 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 in cash and 250,000
      shares in the Company’s restricted common stock, effective January 1,
      2007.




Delaware
      franchise taxes amount decreased to $105 for the three months ended
      March 31, 2008 compared to $14,413 for the three months ended
      March 31, 2007, $185,001 for the period from inception (November 15, 2005)
      to December 31, 2007 and $185,106 for the period from inception (November 15,
      2005) to March 31, 2008. The Company is delinquent in its filing and payment
      of
      the Delaware Franchise Tax report and, accordingly, is not in good standing.
      At
      March 31, 2008, the Company has estimated unpaid Delaware franchise taxes for
      the years ended December 31, 2007, 2006 and 2005 in the amount of $57,650,
      $57,650 and $69,699, respectively. The Company did not file their tax returns
      on
      time due to an administrative oversight. The Company hopes to file the
      delinquent tax returns in the second quarter of 2008 and pay the amount owned
      in
      full during the fourth quarter of 2008.





Total
      operating expenses during the development stage increased to $1,103,667 for
      the
      three months ended March 31, 2008 as compared to $906,627 for the three
      months ended March 31, 2007, $8,954,422 for the period from inception
      (November 15, 2005) to December 31, 2007, and $10,058,089 accumulated during
      the
      development stage for the period from inception (November 15, 2005) to March
      31,
      2008.





On
      March
      31, 2008, the Company received a $150,000 non-interest bearing advance from
      John
      Marozzi, which is due on demand. In repayment, the Company will repay the full
      amount of the note plus 1,000,000 shares of unregistered restricted common
      stock. The Company recorded $40,000 debt issue costs related to the 1,000,000
      shares of common stock that are now issuable to John Marozzi as of March 31,
      2008.





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.





In
      May
      2006, the Company was advised that it was alleged to be in default of a
      settlement agreement entered into in January of 2005 by CNE, its predecessor
      company, related to the release of unrestricted, freely-tradable, non-legend
      shares of stock. In August 2006, the plaintiffs, alleging the default, obtained
      a judgment in the 17th Judicial Circuit Court Broward County, Florida for
      approximately $1,000,000. On November 13, 2007, legal counsel engaged by
      Management commenced
      an action on the Company’s behalf in the above Circuit Court seeking to vacate
      and set aside the 2006 judgment asserting claims under Rule 1.540(b) of the
      Florida Rules of Civil Procedure. Our counsel’s evaluation is that the Company
      has only a limited chance of having the 2006 judgment opened by the Court
      because Florida law provides very narrow grounds for opening a judgment once
      a
      year has passed from its entry. The Courts are generally reluctant to disturb
      final judgments and the Company’s grounds for opening the judgment depend on the
      Court’s adopting a somewhat novel argument regarding such matters. If, however,
      the Court does open the default judgment, the Company will then have the
      opportunity to defend the 2006 action and, in such event, our counsel believes
      that the Company has a reasonable chance of succeeding in defending that claim,
      at least in part, based on the documents he has reviewed. As of December 31,
      2007, the Company has accrued $1,053,385 related to this matter.




19




**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 March 31, 2008 and December 31, 2007 the Company had $1,040
      and $1,040 of cash, respectively. We had losses of $1,143,667 for the three
      months ended March 31, 2008, and do not currently generate any revenue. We
      had
      losses of $906,627 for the three months ended March 31, 2007. In order for
      us to
      survive during the next twelve months we will need to secure approximately
      $350,000 of debt or equity financing. We expect to raise the additional
      financing in the future but there can be no guarantee that we will be
      successful.




**OFF-BALANCE
      SHEET ARRANGEMENTS**




At
      March
      31, 2008, we had no off-balance sheet arrangements.





**OPERATING
      ACTIVITIES**





We
      used
      $628,873 of cash in our operating activities during the three months ended
      March
      31, 2008. We had a net loss of $1,143,667. We had an increase in stock-based
      directors’ compensation to be issued of $10,000, accounts payable and accrued
      expenses payable of $378,898 mostly related to compensation and management
      fees,
      debt issue costs related to a note payable of $40,000, and common stock to
      be
      issued for consulting and marketing services of $85,896. In addition, we had
      a
      working capital deficiency of $10,719,421 at March 31, 2008. We did not have
      any
      material commitments for capital expenditures as of March 31, 2008.





**INFLATION**




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





**RECENT
      TRANSACTIONS**




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 March 31, 2008, the Company has received $355,000 from
      investors towards 355,000 Series A Convertible Preferred Stock shares issuable
      under subscription agreements covering the placement offering. Each Series
      A
      Convertible Preferred Stock 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
      March
      31, 2008, none of the shares under this plan have been issued and the Company
      has accrued $250,137 of cash and recorded additional paid-in capital of $70,041
      for stock compensation based on the fair value of 1,250,685 shares to be issued
      to the members of the Board.





On
      April
      29, 2008, the Company issued 1,000,000 shares of unregistered restricted common
      stock to Micro-Cap Review, Inc. pursuant to the agreement described in Note
      10[4] to pay the Advertising Agreement entered into by the Company on March
      13,
      2008.





On
      April
      25, 2008, the Company received a $12,000 non-interest bearing advance from
      John
      E. McConnaughy, III, which is due on demand. In repayment, the Company will
      repay the full amount of the note plus 96,000 shares of unregistered restricted
      common stock.





On
      April
      8, 2008, the Company received a $50,000 non-interest bearing advance from Barry
      Weintraub, which is due on demand. In repayment, the Company will repay the
      full
      amount of the note plus 2,000,000 shares of the Company’s unregistered
      restricted common stock of the Company.





On
      April
      24, 2008, the Company received a $38,000 non-interest bearing advance from
      Christopher T. Joffe, which is due on demand. In repayment, the Company will
      repay the full amount of the note plus 304,000 shares of the Company’s
      unregistered restricted common stock of the Company.





On
      April
      24, 2008, the Company received another $38,000 non-interest bearing advance
      from
      James R. McConnaughy, which is due on demand. In repayment, the Company will
      repay the full amount of the note plus 304,000 shares of the Company’s
      unregistered restricted common stock.


20


**Item 3.**  **Quantitative
      and Qualitative Disclosures About Market Risk**





We
      conduct no hedging activity. We have no derivative contracts.





**Item 4.**  **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 March 31, 2008 covered by this Quarterly Report
      on Form 10-Q. 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. As
      a
      result of the ineffectiveness of our controls, a description of a litigation
      in
      which the Company is a party was not accurately described in the Company's
      Form
      10K filed on April 15, 2008. In addition, the Company's financial statements
      did
      not reflect a reserve relating to a judgment against the Company in this
      litigation. The Company is currently in the process of evaluating its options
      to
      fix the deficiency in internal controls.  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 March 31, 2008 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
      quarterly 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 Quarterly Report on Form
      10-Q.




Changes
      in Internal Control Over Financial Reporting




No
      change
      in the Company’s internal control over financial reporting occurred during the
      quarter ended March 31, 2008, that materially affected, or is reasonably
      likely to materially affect, the Company’s internal control over financial
      reporting.





**PART
      II - OTHER INFORMATION**





**Item 1.**  **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.


21





In
      May
      2006, the Company was advised that it was alleged to be in default of a
      settlement agreement entered into in January of 2005 by CNE, its predecessor
      company, related to the release of unrestricted, freely-tradable, non-legend
      shares of stock. In August 2006, the plaintiffs, alleging the default, obtained
      a judgment in the 17th Judicial Circuit Court Broward County, Florida for
      approximately $1,000,000. On November 13, 2007, legal counsel engaged by
      Management commenced
      an action on the Company’s behalf in the above Circuit Court seeking to vacate
      and set aside the 2006 judgment asserting claims under Rule 1.540(b) of the
      Florida Rules of Civil Procedure. Our counsel’s evaluation is that the Company
      has only a limited chance of having the 2006 judgment opened by the Court
      because Florida law provides very narrow grounds for opening a judgment once
      a
      year has passed from its entry. The Courts are generally reluctant to disturb
      final judgments and the Company’s grounds for opening the judgment depend on the
      Court’s adopting a somewhat novel argument regarding such matters. If, however,
      the Court does open the default judgment, the Company will then have the
      opportunity to defend the 2006 action and, in such event, our counsel believes
      that the Company has a reasonable chance of succeeding in defending that claim,
      at least in part, based on the documents he has reviewed. As
      of
      December 31, 2007, the Company has accrued $1,053,385 related to this
      matter.





**Item 1A.**  **Risk
      Factors**





Item 1A.
      “Risk Factors” of our Annual Report on Form 10-KSB for the year ended
      December 31, 2007 includes a detailed discussion of our risk factors. There
      have been no significant changes to our risk factors as set forth in our 2007
      Form 10-KSB.





**Item 2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





None.





**Item 3.**  **Defaults
      Upon Senior Securities**





None.





**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 March 31, 2008, the Company has received $355,000 from
      investors towards the fulfillment of this financing agreement. 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
      March
      31, 2008, none of the shares under this plan have been issued and the Company
      has accrued $250,137 of cash and recorded additional paid-in capital of $70,041
      for stock compensation based on the fair value of 1,250,685 shares to be issued
      to the members of the Board.




**Item 5.**  **Other
      Information**




None




22





**Item 6.**  **Exhibits**





**Exhibit
      Index**


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




23





**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:
                May 20, 2008
            By:
            /S/  PETER
                J. FRUGONEPeter
                J. Frugone
              President
                and Chief Executive Officer




Dated:
                May 20, 2008
            By:
            /S/  PETER
                J. FRUGONEPeter
                J. Frugone
              Principal
                Accounting Officer





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