SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
    For the fiscal year ended December 31, 1996

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
    For the transition period from ________ to ________

    Commission File No. 33-55254-01

                             ARROW MANAGEMENT, INC.
             (Exact name of Registrant as specified in its charter)

       NEVADA                                     87-0467339
(State or other jurisdiction of                (I.R.S. Employer
incorporation or organization)              Identification Number)

3098 SOUTH HIGHLAND DRIVE, SUITE 460
SALT LAKE CITY, UTAH                                     84106
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (801) 485-7775

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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. [X] Yes [ ] No

Indicate by check mark if  disclosure of delinquent filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best  of registrant's knowledge, in definitive proxy or
information statements incorporated  by reference in Part III  of this Form 10-K
or any amendment to this Form 10-K.    [X]

As of March,  1997,  there is no aggregate market value of the voting stock held
by non-affiliates of the registrant.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

             Class                                 Outstanding as of March, 1997
$.001 PAR VALUE CLASS A COMMON STOCK                     5,580,700 SHARES

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>



                                     PART I

ITEM 1.  Business.

         The  Company was  incorporated  under the laws of Nevada on January 14,
1988. The Company was formed as a Nevada  corporation  to look for  investments,
business  opportunities and assets in any industry. The Company is attempting to
acquire assets and properties in real estate development,  specifically the area
of Idaho Falls, Idaho, which,  according to the Census Bureau, has been reported
as one of the fastest growing states in the nation.

         On  September  30, 1993,  the Company  issued  5,250,700  shares of its
common stock to acquire 99.45% of the outstanding stock of Panorama  Industries,
Inc.,  an affiliated  Nevada  corporation.  Panorama  became a subsidiary of the
Company.  In December,  1996, the Company  canceled 460,000 shares of its common
stock  held for  issuance  to a  shareholder  of  Panorama.  As a result of this
transaction,  the  Company's  ownership  of Panorama  was reduced from 99.45% to
90.73%.

         David  R.  Yeaman,  President  of  the  Company,  and  Krista  Nielson,
Secretary of the Company are officers, directors and controlling shareholders of
Panorama,  International Association of Financial Consultants, Inc., and Capital
General Corporation.  After the completion of the acquisition,  the above listed
shareholders of Panorama became the holders of  approximately  84% of the issued
and outstanding common shares of the Company.  Through the acquisition of 99.45%
of the  issued  and  outstanding  shares  of  Panorama,  Panorama  has  become a
subsidiary of the Company.

         Panorama is a real estate development  company with its principal asset
being  approximately  300 acres of property  located on the  outskirts  of Idaho
Falls,  Idaho,  presently platted for 2.5 acre lot sites,  which was the minimum
allowed by the Bonneville County Planning and Zoning Commission for subdivisions
utilizing  septic tanks.  Approximately 55 lots were sold by the previous owner,
AMR Corporation,  which filed a Chapter 11 bankruptcy and ceased  development of
the property for several years.  AMR  Corporation  then sold the property to the
Company as part of its resolving  its  bankruptcy  condition.  During this time,
economic  conditions  in the Idaho  Falls  area  changed  such that the  Company
believes that a  significantly  different  approach to  developing  the property
would achieve greater success.

         In November,  1993, the Company employed Washington  Development Group,
Inc. of Bellevue,  Washington, a real estate development and consulting firm, to
develop a "Market and Feasibility Study with Development Recommendations". Their
report,  which the  Company  had  intended  to follow,  concluded  that a better
approach to the  development  would be to re-plat the  subdivision  utilizing as
much as possible the existing  improvements on the property to expand the number
of available  homesites by  sub-dividing  the property into 1/3 to 1/2 acre lots
for residential housing. The new subdivision would have been renamed tentatively
"Bridle  Trails"  and would  have  consisted  of  approximately  578 lots  after
dedicating property for an elementary school, an equestrian facility, equestrian
riding trails and new roads.  Preliminary discussions with the Bonneville County
Planning  and Zoning  Commission resulted  in their tentative approval  provided
the  Company  install  new sewer lines to replace the use  of septic  tanks.  In
January,  1995, the Company hired an independent  MAI appraiser  to appraise the
lots to  assist in  developing its  marketing strategy.  The Company  also hired
Benton Engineering of Idaho Falls to assist in the technical aspects of platting
out the lots, developing roads, sewer lines and other utilities.

         Last year,  however,  the Company  changed its  development  plans with
respect to the Panorama  Hills  project and is not presently  pursuing  plans to
develop  the land,  however,  the land is for sale.  One factor that lead to the
change in plans is the slowdown in economic  development and related decrease in
consumer  demand for new  housing in the Idaho  Falls  area.  Another  factor is
Panorama's  rescission of the media due bills, trade dollars,  and other credits
for the retorn of shares of its common stock. Panorama had planned on using such
credits as a portion of the financing required for development of the land.

                                       2
<PAGE>

         During  1996,  Panorama  purchased  a time share in a  vacation  resort
called the San Clemente  Inn in Orange  County,  California.  The time share was
acquired by trading  $5,000 worth of ITEX trade  dollars which were obtained for
consulting services.


ITEM 2.  Properties.

         See "Item 1" above, and also, the Company utilizes space on a rent-free
basis  in the  office  of one of its  principal  shareholders,  Capital  General
Corporation.  This  arrangement  is expected to continue  until such time as the
Company becomes involved in a business venture which necessitates its relocation
or increased use of the available facilities. The Company has no agreements with
respect to the maintenance or future acquisition of office facilities.

ITEM 3.  Legal Proceedings.

         In March,  1993,  the Company  was advised  that a lis pendens had been
filed  against  the  Idaho  Falls  subdivision  by  Uintah  Resources   Company,
plaintiff,  a former partner of AMR  Corporation,  the seller of the property to
the Company.  Uintah claims that it has a 1/2 interest in the property by virtue
of agreements with the previous owner, AMR. The Company was not advised or aware
at the time of purchase of any  agreements  with the former  owner and any other
parties.  The  Company  secured  title  insurance  for  the  purchase  price  of
$2,300,000 and is being defended in this action by the title  insurance  company
which is  obligated  to pay the costs of  defending  this  action and any losses
incurred. The legal proceedings were settled in December,  1995, and the Company
now has clear title to the land.

         On January 7, 1994, the Bureau of Securities of the State of New Jersey
filed a complaint in the matter of Capital General Corporation,  David R. Yeaman
and 74 other  named  defendants,  Nevada  and Utah  corporations  including  the
Company,  which  complaint  proposes  that civil  monetary  penalties  totalling
$30,000.00  be  assessed   against  Capital  General   Corporation  for  alleged
violations of the Uniform  Securities Law (1967),  N.J.S.A.  49:3-47 et. seq. by
(1)  selling  to 24 New  Jersey  residents  between  April  1986  and May  1991,
securities in 25 of the 74 above  referred to respondent  corporations  named in
the  proceeding,  not including the Company,  which were neither  registered nor
exempt from registration,  and (2) making untrue statements of material fact and
omitting to state material  facts in connection  with said New Jersey sales in 6
of the 74 above referred to resident  corporations named in the proceeding,  not
including the Company.  Also on January 7, 1994, the Bureau of Securities of the
State of New Jersey, based on substantially  similar allegations as in the above
referred complaint, issued its Order Denying Exemptions and to Cease and Desist.
This order  summarily  denied the exemptions  contained in N.J.S.A.  49:3-50(b),
(1),  (2),  (3),  (9),  (11)  and  (12) of the  securities  of  Capital  General
Corporation  and the other 74  respondent  corporations,  including the Company,
except that  excluded  from the summary  denial of the  exemption  contained  in
N.J.S.A.   49-3-50(b)(12)   is  the  Offer  of  Rescission  by  Capital  General
Corporation to 24 New Jersey residents pursuant to the offer of rescission which
began about April 28, 1993. This order also ordered Capital General  Corporation
and David Yeaman to Cease and Desist from offering or selling any  securities in
blind pool corporations into, or from the State of New Jersey.

         Capital  General and David  Yeaman filed  answers  denying the material
allegations  of said  complaint  and  resisting  the  imposition  of said  civil
monetary  penalties,  and the said  Order  Denying  Exemptions  and to Cease and
Desist.  Subsequently the issues raised in said complaint and order were settled
by agreement  between the  said Bureau  of Securities and Mr. Yeaman and Capital

                                       3
<PAGE>

General  Corporation in a  consent order dated  July 11, 1994 and approved by an
administrative  law judge of the State of  New Jersey  Office of  Administrative
Law September 2, 1994.  Under the terms of said consent order, all claims in the
complaint  against all named  respondents  were settled by the payment of $3,000
civil penalty,  and the order was modified so that it does not to apply to 27 of
the respondent companies; however said order does still apply to the Company.

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

         No matter was  submitted to the Company's  security  holders for a vote
during the fiscal year ending December 31, 1996.

                                     PART II

ITEM 5.  Market for Registrant's Common Equity and Related Stockholders Matters.

         There  currently is not a trading  market for the  Company's  $.001 par
value common stock nor has there been a trading  market for the Company's  stock
since its inception.

         As of March,  1997,  there  were 425 record  holders  of the  Company's
common stock.  The Company has not previously  declared or paid any dividends on
its  common  stock  and does  not  anticipate  declaring  any  dividends  in the
foreseeable future.

ITEM 6.  Selected Financial Data.
<TABLE>
<CAPTION>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                              SUMMARY OF OPERATIONS
                                  DECEMBER 1996

                                                1996             1995              1994              1993             1992
<S>                                          <C>              <C>             <C>               <C>              <C>      
Total Assets...........................      617,513          630,357         3,987,178         4,012,213        4,023,129
Net Sales...............................       - 0 -            - 0 -           104,000            44,000                0
Operating Expenses..................           8,983        1,975,111            84,945            23,517           60,990
Net Earnings (Loss).................          11,826       (1,960,141)          (41,004)          (16,763)            (891)
Per Share Data Earnings (Loss)...                .00            (.33)             (.01)              (.00)            (.00)
Average Shares Outstanding.......          5,930,700        5,930,700         6,250,700         6,250,700        6,250,700

</TABLE>

ITEM 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operation.

         As discussed  above (see "ITEM 1.  Business"),  the Company has been in
existence since January 14, 1988. The Company's subsidiary, Panorama Industries,
Inc. has been in existence since August 25, 1986. On December 20, 1991, Panorama
acquired 300 acres of residential real estate  overlooking  Idaho Falls,  Idaho.
This property was originally  developed and subdivided in the late 1970's into 2
1/2 acre lots,  which was the minimum allowed by the Bonneville  County Planning
and Zoning Commission for subdivisions utilizing septic tanks.  Approximately 55
lots were sold by the previous owner, AMR Corporation,  which filed a Chapter 11
bankruptcy  and ceased  development  of the  property  for  several  years.  AMR
Corporation  then sold the property to the Company as part of its  resolving its
bankruptcy  condition.  During this time, economic conditions in the Idaho Falls
area  changed  such that the Company  believed  that a  significantly  different
approach to developing the property would achieve greater success.

                                       4
<PAGE>

         In November,  1993, the Company employed Washington  Development Group,
Inc. of Bellevue,  Washington, a real estate development and consulting firm, to
develop a "Market and Feasibility Study with Development Recommendations". Their
report,  which the  Company  had  intended  to follow,  concluded  that a better
approach to the  development  would be to re-plat the  subdivision  utilizing as
much as possible the existing  improvements on the property to expand the number
of available  homesites by  sub-dividing  the property into 1/3 to 1/2 acre lots
for residential housing. The new subdivision would have been renamed tentatively
"Bridle  Trails" and would consist of  approximately  578 lots after  dedicating
property for an elementary  school,  an equestrian  facility,  equestrian riding
trails  and new  roads.  Preliminary  discussions  with  the  Bonneville  County
Planning and Zoning Commission resulted in their tentative approval provided the
Company  install new sewer lines to replace the use of septic tanks. The Company
hired an independent appraiser to appraise the lots to  assist in developing its
marketing  strategy.   The Company has  also hired Benton  Engineering  of Idaho
Falls to assist in the  technical  aspects of platting out  the lots, developing
roads, sewer lines and other utilities.

         The MAI  appraisal  dated  January  25, 1995 showed an "as is" value of
$317,000  and a  developed  value of the  first  phase of  $2,550,000.  When the
Company  purchased the property,  it realized that the property was depressed in
value because of the previous  owner's  inability to complete the development of
the property and then promote and market it. However,  the Company purchased the
property for $2,300,000  through a combination of cash and stock which value was
arrived at by extensive and thorough  investigation,  the value as determined in
the Manwaring appraisal,  obtaining title insurance on the property for the full
purchase price, and  representations  made by AMR, the previous owner,  based on
the actual costs incurred. This original valuation was recently substantiated by
the  Market and  Feasibility  Study by  Washington  Development  which  projects
potential  profit of over  $1,900,000  on phases I and II. The Company  believed
then and still believes the project to be worth $2,300,000. However, the Company
encountered  objections to the property's  valuation as well as other  financial
statement  valuations by the National  Association of Securities  Dealers,  Inc.
(NASD) when the Company  attempted to list its common stock on the NASD Bulletin
Board. In order to resolve the NASD's concerns over the property's valuation for
the Bulletin Board listing desired by the Company, the Company requested the new
MAI appraisal. The Company had a second appraisal performed in  December,  1995,
which valued the land at $330,000.  In December, 1995, the  litigation  over the
lis pendens was settled by the title company and the Company now has clear title
on all of its properties.

        Last year,  however,  the  Company  changed its  development  plans with
respect to the Panorama  Hills  project and is not presently  pursuing  plans to
develop  the land,  however,  the land is for sale.  One factor that lead to the
change in plans is the slowdown in economic  development and related decrease in
consumer  demand for new  housing in the Idaho  Falls  area.  Another  factor is
Panorama's  rescission of the media due bills, trade dollars,  and other credits
for the return of shares of its common stock. Panorama had planned on using such
credits as a portion of the financing required for development of the land.

         In July, 1992,  Panorama entered into an agreement with Haydon,  Ives &
Neal,  Inc. in which the Company  issued  210,000  shares of its common stock in
exchange for  $1,050,000  in radio and tv  advertising  and  production  credits
referred  to as media due bills and  $250,000  in Travel  Paradise  certificates
(which were  substituted  for ITEX trade  dollars).  Also,  in July,  1992,  the
Company  entered into an agreement  with ITEX  Corporation  to exchange  110,000
shares  of the  company's  common  stock  for  $400,000  in media  due bills and
$150,000 in ITEX trade dollars.  These  acquisitions  were made with the view of
utilizing them in connection  with the Company's  business,  in  particular,  to
trade for goods and services  which would assist the Company in  developing  its
Idaho   Falls   property.   Because   of  the   delays   experienced   with  the
above-referenced  lis pendens and the Company's inability to effectively utilize
the trade dollars in developing the property, the Company rescinded the issuance
of the 320,000  shares of common  stock and  transfer of the media due bills and
ITEX trade dollars.

                                       5
<PAGE>

         The  Company  originally  anticipated  selling  some of its  properties
including  some of the new lots in the proposed  Bridal  Trails  subdivision  in
order to finance its  development  expenses  and, as stated  above,  the Company
anticipated  utilizing the ITEX barter credits to assist in development expenses
and marketing costs. However, because of the litigation over the lis pendens the
Company has been unable to complete its plans and market conditions have changed
in the Idaho Falls area.  Further,  the  Company  obtained  an MAI  appraisal in
February,  1995, and a  second   appraisal in December,  1995,  which valued the
Panorama  Hills  property at $317,000  and $330,000  respectively.  All of these
factors pursuaded  management of the Company to modify its development plans and
consider  selling the Panorama Hills property,  and also played an integral part
in  management's  decision to rescind the acquisition of the media due bills and
ITEX barter  credits and cancel the 320,000  shares which  were issued as  their
consideration.

         There were no sales in 1995 or 1996.  The Company had an operating loss
decrease from $1,975,111 in 1995 to $8,983 (general and administrative expenses)
in 1996.   The  1995  operating  loss  was  due  to (1)  a $1,955,000  loss from
impairment of land  value write  down as discussed  above, and  (2)  general and
administrative  expenses of $20,111.  Interest, consulting income and government
subsidy in the amount of $20,809 ($14,970 in 1995) resulted in a 1996 net income
of $11,826 ($1,960,141 loss in 1995).  Interest income for 1995 is the result of
(1) a sale  of land on  contract in 1993  which pays  approximately $450 monthly
with an interest rate of 9%, and (2) a sale of  land on contract  in 1994  which
has an interest rate of 12% on the unpaid principal balance ($19,255 at December
31, 1996).

ITEM 8.  Financial Statements and Supplementary Data.

         See Item 14.

ITEM 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         Not Applicable.

                                    PART III

ITEM 10.  Directors and Executive Officers of the Registrant.

         The following table shows the positions held by the Company's  officers
and  directors.  The directors  were appointed at inception and will serve until
the  next  annual  meeting  of  the  Company's  stockholders,  and  until  their
successors have been elected and have qualified.  The officers were appointed to
their  positions,  and  continue in such  positions,  at the  discretion  of the
directors.

Name                               Age      Position
David R. Yeaman                    50       President, Director

Krista Nielson                     34       Secretary/Treasurer, Director

         DAVID R. YEAMAN, has been Director of the Company since inception, and,
in addition to his management  position with the Company,  has been President of
Capital  General  Corporation  since its  inception in 1971 to the present.  Mr.
Yeaman has been  involved  in  numerous  development  stage  companies  since he
assisted  in  organizing  Capital  General.  During  the  last  five  years,  in
connection  with  Capital  General,  he  has  been  primarily  involved  in  the
organization and promotion of various shell  companies.  Mr. Yeaman serves as an
officer  and/or  director  in  the  following   private   corporations:   Yeaman
Enterprises,  Inc., a family holding company,  Four Star Ranch, Inc., a farmland
development company,  Yeaman Auto Sales, Inc., an automobile dealership company,
Financial  Connections,  Inc. and Peak Experience,  Inc.,  financial  consulting
companies.  Mr.  Yeaman  devotes his time  primarily to his role as President of
Capital  General and to the  financial  consulting  activities  in which Capital
General engages.

                                       6
<PAGE>

         Krista Nielson,  has been Director of the Company since  inception.  In
addition to her management position with the Company, she has been since 1986 an
officer and director of Capital  General  Corporation,  and has been involved in
the organization and promotion of various shell companies.  Ms. Nielson received
a Business  degree from Salt Lake  Community  College in 1987.  She serves as an
officer  and/or  director  in  the  following   private   corporations:   Yeaman
Enterprises,  Inc. and Universal  Associates,  Inc.,  family holding  companies,
Yeaman Auto Sales,  Inc., an  automobile  dealership  company,  Four Star Ranch,
Inc., a farmland development company,  Creative Financial Corporation and Visual
Impact Corporation, financial consulting companies, and National Stock Transfer,
Inc., a stock transfer agency company. Ms. Nielson devotes her time primarily to
her role as Vice  President of Capital  General and to the financial  consulting
activities in which Capital General engages.

         The management of Capital  General is  essentially  the same as that of
the Company and, as the Company's  largest  shareholder,  Capital General exerts
considerable  influence in the election of the Company's officers and directors.
Capital  General is a private  venture  capital and financial  consulting  firm,
incorporated in Utah in 1971. Capital General is a closely held corporation with
eight  shareholders  and is not  an  investment  company  under  The  Investment
Companies  Act of 1940.  A majority of the stock of Capital  General is owned by
Yeaman  Enterprises,  Inc., a private  corporation  which is, in turn,  owned by
certain  members of the  family of David R.  Yeaman;  Krista  Nielson is also an
officer and director of Yeaman Enterprises, Inc.

         Each of the above  directors  of the  Company  is a  director  of Saber
Capital, Inc., Vicuna, Inc., Why Not?, Inc., Grandeur, Inc., Kowtow, Inc., Radar
Resources,  Inc., Alpaca,  Inc., Bonito Industries,  Inc., Cetacean  Industries,
Inc., Star Dolphin,  Inc., Flamingo Capital,  Inc., Gopher, Inc., Hyena Capital,
Inc.,  Jackal   Industries,   Inc.,   Longhorn,   Inc.,  Macaw  Capital,   Inc.,
Environmental Development Corporation,  Ultronics Corporation,  Bioethics, Ltd.,
Quantitative Methods Corporation and Bio-Chem,  Inc. which are companies subject
to the  requirements of Section 15(d) of the Exchange Act. None of the directors
are  directors  or  officers  of any other  company  with a class of  securities
registered  pursuant to Section 12 of the  Exchange Act or the  requirements  of
Section 15(d) of such Act or any company  registered  as an  investment  company
under the Investment Company Act of 1940.

         On February 8, 1996,  David R. Yeaman was charged in the United  States
District Court for the Eastern District of Pennsylvania  with  conspiracy,  wire
fraud and fraud in the offer,  purchase and sale of securities,  in violation of
18 U.S.C.  Sections 2, 371 and 1343; 15 U.S.C. Sections 77q(a), 77x, 78j(b), and
78ff; and Rule 10b-5  promulgated  by the  Securities  and Exchange  Commission,
Title 17, Code of Federal Regulations, Section 240.10b-5 (1986).

         On February 22,  1996,  Mr.  Yeaman  entered his not guilty plea to all
charges. The allegations against Mr. Yeaman are based on the government's claims
that he and five of the other  defendants  named in the proceeding  violated the
aforesaid laws by inflating the apparent worth of certain reinsurance  companies
by leasing them alleged worthless securities.  Specifically,  it is alleged that
Mr. Yeaman, with other defendants,  engaged in practices which falsely increased
the quoted prices of the securities and misrepresented  restricted securities as
free trading  securities.  Based on these  allegations,  the charges against Mr.
Yeaman include one count of conspiracy,  seven counts of wire fraud,  six counts
of securities  fraud,  and aiding and abetting with respect to each count.   The
trial began March 10, 1997, and is expected  to last approximately six to  eight
weeks.

         The U.S.  Securities  and Exchange  Commission,  Securities Act of 1933
Release No. 7008 and Securities Exchange Act of 1934 Release No. 32669 announced
that  on July  23,  1993,  it  ordered  David  R.  Yeaman  and  Capital  General
Corporation to permanently  cease and desist from  committing or causing further
violations of Section 5(a) and (c) and 17(a) of the  Securities  Act of 1933 and
Sections 10(b) and 13(g) of the Securities Exchange Act of 1934 and Rules 10b-5,
12b-20 and 13d-1(c) thereunder.

                                       7
<PAGE>

         Krista  Nielson  was  ordered  to  permanently  cease and  desist  from
committing or causing further  violations of Section 17(a) of the Securities Act
and Section 10(b) of the Exchange Act and Rules 10b-5 and 12b-20 thereunder.  In
addition,  the  Commission  ordered the  revocation of the  registration  of the
common  stock of Altara  International,  Inc.,  Arrow  Management,  Inc.,  Atlas
Equity, Inc., Dynamic Associates,  Inc., Energy Systems,  Inc., Four Star Ranch,
Inc., Panorama Industries,  Inc., Partisan Corporation,  Quiescent  Corporation,
Saber, Inc., Upsilon,  Inc., Vicuna, Inc., Why Not?, Inc., Xebec Galleon,  Inc.,
Zebu, Inc., and Zeus Enterprises, Inc. pursuant to Section 12(j) of the Exchange
Act.  The  Commission  found that each of the issuers  had filed a  registration
statement on Form 10 that contained  materially false and misleading  statements
in violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

         Each of the respondents had submitted an Offer of Settlement consenting
to the entry of the Order without  admitting or denying the  allegations  in the
Order. Prior to the submission of the Offers of Settlement,  Capital General, on
behalf of the above mentioned companies,  except for Panorama Industries,  Inc.,
filed a registration  statement on Form S-1 during  December of 1992 to register
the  common  stock  of  those  companies  under  the  Securities  Act  of  1933.
Concurrently  with the  signing of the Offers of  Settlement,  the  Registration
Statement was declared  effective on June 30, 1993. A Post  Effective  Amendment
was filed and declared effective September 2, 1993. Although the registration of
the common  stock  under  Section  12(g) of the 1934 Act was revoked on July 23,
1993, the companies are now registered and reporting under the Securities Act of
1933 by virtue of the filing of Form S-1 as  indicated  by  Commission  File No.
33-55254.

         During 1986 and 1987,  Capital General gifted very small percentages of
stock  (usually  100  shares to each  giftee)  in the  following  companies,  to
approximately 1,000 persons or entities:  Amenity, Inc., Dogmatic,  Inc., Mystic
Industries,  Inc.,  Highland Mfg., Inc., Kowtow,  Inc., Noble Industries,  Inc.,
Oryan Capital Corporation,  Pegasus Star Enterprise,  Inc., Showstoppers,  Inc.,
Hightide, Inc., Grandeur, Inc., Fantastic Industries, Inc., Jugglar, Inc., Xebec
Galleon,  Inc.,  Golden Home  Health Care  Equipment  Centers,  Inc.,  Nighthawk
Capital, Inc., Instrument Development Corporation, Panther Industries, Inc., Owl
Enterprises,  Inc., Quail, Inc., GBS Technologies  Corporation,  H & B Carriers,
Inc., Florida Growth Industries,  Inc., Macaw, Inc., Longhorn Enterprise,  Inc.,
Koala Corporation,  Yahwe Corporation,  Star Dolphin,  Inc., Jackal, Inc., Hyena
Capital,  Inc., Gopher,  Inc.,  Flamingo Capital,  Inc., Egret,  Inc.,  Cetacean
Industries,  Inc., Bonito, Inc., Alpaca, Inc., Zeus Enterprise,  Inc., Tamarind,
Inc., Saber, Inc., Radar, Inc., Quiescent Corporation,  Vanadium, Inc., Upsilon,
Inc., Why Not?, Inc., Bestmark, Inc., Missouri Illinois Mining Co., Inc.

         Capital General did not register the gifts of shares in these companies
with the  Securities  Division of  the State  of  Utah or  with  the  Securities
Exchange Commission  because it believed  these gifts to be outside the scope of
the Utah  Uniform Securities  Act and the  Securities Act of  1933 in as much as
such  acts require  registration for sales  and do not  require registration  of
gifts.   Nevertheless, in  connection  with  the distribution  of shares  of its
subsidiaries, Capital  General was found  by the Utah Securities Advisory Board,
in two  decisions  affirmed  by  the  Utah State  Courts, to have  violated  the
registration  provisions of the  Utah Uniform Securities Act.  See In re Amenity
Inc., No. SD-86-11 (Utah  Sec. Adv.  Bd. February  18, 1987)  aff'd C87-2625 (3d
Dist. Ct. September 18, 1987) aff'd sub nom  Capital General Corp. v. Utah Dep't
of Business Reg., 777 P.2d 494, 498  (Utah Ct. App.)  cert. denied, 781 P.2d 873
(Utah S. Ct. 1989); In re H&B Carriers  Inc.,  No. 87-09-28-01  (Utah  Sec. Adv.
Bd., Apr. 15, 1988) aff'd No. 88-5900053 (3d Dist. Ct.  Sept 10, 1990) aff'd sub
nom Capital  General Corp. v.  Utah Dep't of Business Reg., Case No 91-196 (Utah
Ct. App. February 10, 1992.   All of the  remaining  companies listed above were
parties to the H&B Carriers order.

         Both of these actions  sought  suspension of  transactional  exemptions
respecting the shares of these companies  pursuant to Section 14 (3) of the Utah
Uniform  Securities Act.  Capital  General  defended both actions on the grounds
that the Utah Uniform Securities Act did not apply to gifts of securities,  that
the gifts were good faith gifts specifically  exempted  by the Act,  and that in

                                       8
<PAGE>

any event  even if it had  "sold" shares in violation  of  the  Act,  suspension
of  transactional  exemptions was not an authorized  remedy  under the  statute.
These  defenses  were  rejected  at the administrative  agency  level,  and upon
judicial review at the District Court level and by the Utah Court of Appeals.


ITEM 11.  Executive Compensation.

         The  Company  has  made no  arrangements  for the  remuneration  of its
officers  and   directors,   except  that  they  will  be  entitled  to  receive
reimbursement for actual, demonstrable out-of-pocket expenses,  including travel
expenses if any, made on the Company's  behalf in the  investigation of business
opportunities.  No  remuneration  has been  paid to the  Company's  officers  or
directors  prior  to the  filing  of  this  form.  There  are no  agreements  or
understandings  with  respect to the amount or  remuneration  that  officers and
directors  are expected to receive in the future.  Management  takes no salaries
from  the  Company  and  does  not  anticipate  receiving  any  salaries  in the
foreseeable future.

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management.

         The following  table sets forth,  as of December 31, 1996,  information
regarding the beneficial ownership of shares by each person known by the Company
to own five percent or more of the outstanding  shares, by each of the directors
and by the officers and directors as a group.
<TABLE>
<CAPTION>

                          Name and address                                Amount of                   Percent
Title of class            of beneficial owner                        beneficial ownership            of class

<S>                       <C>                                             <C>                          <C>   
Common Stock              David R. Yeaman(1,2)                            1,534,000                    27.49%
                          3098 So. Highland Drive, Suite 460
                          Salt Lake City, Utah  84106

Common Stock              Capital General Corporation(1,2)                1,338,300                    23.98%
                          3098 So. Highland Drive, Suite 460
                          Salt Lake City, Utah  84106

Common Stock              Jack Kalaf                                        924,000                    16.56%
                          Level 20, 56 Pitt Street
                          Sydney, NSW, 2000 Australia

Common Stock              John Read                                         924,000                    16.56%
                          Level 20, 56 Pitt Street
                          Sydney, NSW, 2000 Australia

Common Stock              Gordon Crofts                                     528,000                     9.46%
                          242 South 200 East
                          Salt Lake City, Utah  84111

Common Stock              Krista Nielson(1,2)                                80,000                     1.43%
                          3098 So. Highland Drive, Suite 460
                          Salt Lake City, Utah  84106

Common Stock              All Officers and Directors as a Group(1,2)      2,952,300                    52.90%

</TABLE>

                                       9
<PAGE>

  (1)Capital  General  Corporation,  Krista Nielson  and David R. Yeaman  may be
deemed to be the Company's "parents" and "promoters," pursuant  to the Rules and
Regulations promulgated under the 1933 Act.

  (2)Capital General Corporation is a private  corporation.  The majority of its
shares (80%) are owned by another private corporation,  Yeaman Enterprises, Inc.
The  stockholders  of Yeaman  Enterprises  are members of the family of David R.
Yeaman,  who is also an officer and director of the Company and Capital General.
Mr.  Yeaman's  beneficial  ownership of the  securities of the Company  includes
shares directly owned by Capital General and Yeaman Enterprises. Although Yeaman
Enterprises is nominally owned by Mr. Yeaman's children, Mr. Yeaman beneficially
owns shares  nominally  owned by Yeaman  Enterprises in that he has the power to
vote or direct the voting of the shares and the power to dispose of or to direct
the  disposition  of the shares.  Other  owners of the stock of Capital  General
include Krista Nielson,  the Company's  Secretary/Treasurer.  Mr. Yeaman and Ms.
Castleton  control and have beneficial  ownership of the shares owned by Capital
General  and  Profit  Financial  and  exercise  shared  voting  power and shared
investment power over those shares.

ITEM 13.  Certain Relationships and Related Transactions.

         No officer,  director, nominee for election as a director, or associate
of such  officer,  director  or  nominee  is or has been in debt to the  Company
during the last fiscal year.

                                     PART IV


ITEM 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

         Financial Statements and Financial Statement Schedules.

         Financial Statements - December 31, 1996, 1995 and 1994.



         Reports on Form 8-K.

         There were no reports on Form 8-K filed  during the fiscal  year ending
         December 31, 1996.




                                       10
<PAGE>




                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



                             ARROW MANAGEMENT, INC.



Date: March 3, 1997                        By: s\David R. Yeaman
                                    David R. Yeaman, President, CEO and Director


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.




Date: March 3, 1997                        By: s\David R. Yeaman
                                    David R. Yeaman, President, CEO and Director




Date: March 3, 1997                         By: s\Krista Nielson
                                            Krista Nielson, Secretary/Treasurer
                                               and Director


                                       11
<PAGE>

         
                                 SMITH & COMPANY
                          CERTIFIED PUBLIC ACCOUNTANTS

Members of:                                          Crandall Building Suite 700
American Institute of                                          10 West 100 South
     Certified Public Accountants                     Salt Lake City, Utah 84101
Utah Association of                                    Telephone: (801) 575-8297
     Certified Public Accountants                      Facsimile: (801) 575-8306
--------------------------------------------------------------------------------



                          INDEPENDENT AUDITOR'S REPORT


Board of Directors
Arrow Management, Inc. and Subsidiary

We  have  audited  the  accompanying   consolidated   balance  sheets  of  Arrow
Management, Inc. (a development stage company) and Subsidiary as of December 31,
1996  and  1995,  and  the  related   statements  of   operations,   changes  in
stockholders' equity, and cash flows for the years ended December 31, 1996, 1995
and 1994 and for the period of January 14, 1988 (date of  inception) to December
31, 1996.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Arrow Management,
Inc. (a  development  stage  company) and Subsidiary as of December 31, 1996 and
1995 and the results of their  operations,  changes in stockholders'  equity and
their cash flows for the years ended  December 31,  1996,  1995 and 1994 and for
the period of January  14,  1988 (date of  inception)  to  December  31, 1996 in
conformity with generally accepted accounting principles.


                                                s\Smith & Company
                                                CERTIFIED PUBLIC ACCOUNTANTS


Salt Lake City, Utah
March 28, 1997

See Notes to Consolidated Financial Statements.

                                      F - 1

<PAGE>
<TABLE>
<CAPTION>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS


                                                                                               December 31,
                                                                                           1996            1995
<S>                                                                               <C>              <C>          
ASSETS

  CURRENT ASSETS
       Cash in bank                                                               $       21,844   $      18,005
       Current portion of contracts receivable (Note 8)                                   21,945          32,604
                                                                                  --------------   -------------
                                                         TOTAL CURRENT ASSETS             43,789          50,609

   OTHER ASSETS
       Real estate (Note 6)                                                              395,000         390,000
       Investment security (Note 9)                                                      150,003         158,337
       Long-term portion of contracts receivable (Note 8)                                 28,721          31,411
                                                                                  --------------   -------------
                                                                                         573,724         579,748
                                                                                  --------------   -------------
                                                                                  $      617,513   $     630,357
                                                                                  ==============   =============
 
LIABILITIES & EQUITY

    CURRENT LIABILITIES
       Accrued expenses payable                                                   $        1,215   $       9,214
       Note payable and accrued interest - related party (Note 11)                             0           8,337
                                                                                  --------------   -------------
                                                    TOTAL CURRENT LIABILITIES              1,215          17,551

       Minority interest in subsidiary                                                    57,000           3,000

    STOCKHOLDERS' EQUITY
       Common Stock $.001 par value:
         Authorized - 50,000,000 shares
         Issued and outstanding - 5,580,700 shares
           (5,930,700 shares at 12/31/95)                                                  5,581           5,931
       Additional paid-in capital                                                      2,514,667       2,568,317
       Deficit accumulated during development stage                                   (2,010,953)     (2,022,779)
       Unrealized gain on investment security (Note 9)                                    50,003          58,337
                                                                                  --------------   -------------
                                                   TOTAL STOCKHOLDERS' EQUITY            559,298         609,806
                                                                                  --------------   -------------

                                                                                  $      617,513   $     630,357
                                                                                  ==============   =============


See Notes to Consolidated Financial Statements.
</TABLE>

                                      F - 2

<PAGE>
<TABLE>
<CAPTION>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                                    1/14/88
                                                                                                                   (Date of
                                                                         Years ended December 31,               inception) to
                                                                    1996            1995            1994           12/31/96
<S>                                                            <C>            <C>             <C>            <C>           
Net sales                                                      $          0   $          0    $    104,000   $      148,000
Cost of sales                                                             0              0          70,195          118,626
                                                               ------------   ------------    ------------   --------------
                                               GROSS PROFIT               0              0          33,805           29,374

Loss from impairment of land value (Note 6)                               0      1,955,000               0        1,955,000
General and administrative expenses                                   8,983         20,111          84,945          202,526
                                                               ------------   ------------    ------------   --------------
                                           OPERATING (LOSS)          (8,983)    (1,975,111)        (51,140)      (2,128,152)

Other income
            Interest                                                  8,550          8,454           3,620           78,966
            Consulting                                                5,000              0               0            5,000
            Government subsidy                                        7,259          6,516           6,516           33,233
                                                               ------------   ------------    ------------   --------------
                                         TOTAL OTHER INCOME          20,809         14,970          10,136          117,199
                                                               ------------   ------------    ------------   --------------
                      NET INCOME (LOSS) BEFORE INCOME TAXES          11,826     (1,960,141)        (41,004)      (2,010,953)

Provision for income taxes                                                0              0               0                0
                                                               ------------   ------------    ------------   --------------
                                          NET INCOME (LOSS)    $     11,826   $ (1,960,141)   $    (41,004)  $   (2,010,953)
                                                               ============   ============    ============   ==============
Net income (loss) per weighted average
     common shares outstanding                                 $        .00   $       (.33)   $       (.01)
                                                               ============   ============    ============
Weighted average number of common shares
             outstanding used to compute net income (loss)        5,930,700      5,930,700       6,250,700
                                                               ============   ============    ============



See Notes to Consolidated Financial Statements.
</TABLE>

                                      F - 3

<PAGE>
<TABLE>
<CAPTION>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


                                                                                                                     Deficit
                                                                                                                   Accumulated
                                                                    Common Stock                Additional           During
                                                                   Par Value $.001               Paid-In          Development
                                                                Shares          Amount           Capital             Stage
<S>                                                          <C>           <C>             <C>                <C>          
Balances at 1/14/88
            (Date of inception)                                      0     $         0     $           0      $           0
            Issuance of common stock (restricted)
               at $.002 per share, 1/14/88                   1,000,000           1,000             1,000
            Acquisition of subsidiary(1)                     5,250,700           5,251            (3,251)            (1,960)
            Net loss for period                                                                                      (1,960)
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/88                                         6,250,700           6,251            (2,251)            (3,920)
            Net loss for year                                                                                           (20)
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/89                                         6,250,700           6,251            (2,251)            (3,940)
            Net loss for year                                                                                           (20)
                                                             ---------     -----------     -------------      -------------   
Balances at 12/31/90                                         6,250,700           6,251            (2,251)            (3,960)
            Assets acquired by subsidiary                                                      4,420,000
            Minority interest adjustment                                                         (12,000)
            Net loss for year                                                                                           (20)
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/91                                         6,250,700           6,251         4,405,749             (3,980)
            Debentures canceled                                                               (2,000,000)
            Assets acquired by subsidiary                                                      1,600,000
            Minority interest adjustment                                                          (8,000)
            Net loss for year                                                                                          (891)
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/92                                         6,250,700           6,251         3,997,749             (4,871)
            Minority interest adjustment                                                          (2,000)
            Net loss for year                                                                                       (16,763)
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/93                                         6,250,700           6,251         3,995,749            (21,634)
            Net loss for year                                                                                       (41,004)
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/94                                         6,250,700           6,251         3,995,749            (62,638)
            Trade and media credits canceled
               (Note 7)                                       (320,000)           (320)       (1,446,432)
            Minority interest adjustment                                                          19,000
            Net loss for year                                                                                    (1,960,141)
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/95                                         5,930,700           5,931         2,568,317         (2,022,779)
            Reissuance of erroneously canceled
               shares during 1995 (Note 7)                     110,000             110              (110)
            Cancellation of previously issued
               shares related to acquisition of
               subsidiary (Note 4)                            (460,000)           (460)              460
            Minority interest adjustment                                                         (54,000)
            Net income for year                                                                                      11,826
                                                             ---------     -----------     -------------      -------------
Balances at 12/31/96                                         5,580,700     $     5,581     $   2,514,667      $  (2,010,953)
                                                             =========     ===========     =============      =============
(1)  Acquisition  actually  occurred on  September  30,  1993,  but is reflected
earlier under the pooling-of-interests method of accounting.

See Notes to Consolidated Financial Statements.
</TABLE>

                                      F - 4

<PAGE>
<TABLE>
<CAPTION>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                                   1/14/88
                                                                                                                  (Date of
                                                                         Years ended December 31,               inception) to
                                                                   1996             1995            1994          12/31/96
<S>                                                        <C>             <C>              <C>             <C>   
OPERATING ACTIVITIES
           Net income (loss)                               $      11,826   $   (1,960,141)  $     (41,004)  $   (2,010,953)
           Adjustments to reconcile net income (loss) to
              cash provided (required) by operating
              activities:
                Amortization                                           0                0               0              100
                Cost of land sold                                      0                0          60,000          105,000
                Non-cash income                                   (5,000)               0               0           (5,000)
                Itex Trade Dollars used                                0                0               0            8,248
                Loss from impairment of land
                  value (Note 6)                                       0        1,955,000               0        1,955,000
           Changes in assets and liabilities:
                Trade dollars                                          0                0           6,964                0
                Loans receivable                                       0                0          11,205                0
                Contracts receivable                              13,349           16,104         (41,944)         (50,666)
                Accrued expenses                                  (7,999)         (16,602)         16,616            1,215
                                                           -------------   --------------   -------------   --------------
                            NET CASH PROVIDED (REQUIRED)
                                 BY OPERATING ACTIVITIES          12,176           (5,639)         11,837            2,944
INVESTING ACTIVITIES
           Purchase of real estate                                     0                0               0         (105,000)
           Organization costs                                          0                0               0             (100)
                                                           -------------   --------------   -------------   -------------- 
                                      NET CASH (USED) BY
                                    INVESTING ACTIVITIES               0                0               0         (105,100)
FINANCING ACTIVITIES
           Proceeds from sale of common stock (1)                      0                0               0          124,000
           Loans                                                       0            8,337               0           10,417
           Repayments                                             (8,337)               0            (647)         (10,417)
                                                           -------------   --------------   -------------   --------------
                         NET CASH PROVIDED (REQUIRED) BY 
                                    FINANCING ACTIVITIES          (8,337)           8,337            (647)         124,000
                                                           -------------   --------------   -------------   --------------
                             INCREASE (DECREASE) IN CASH
                                    AND CASH EQUIVALENTS           3,839            2,698          11,190           21,844

           Cash and cash equivalents at beginning
              of year                                             18,005           15,307           4,117                0
                                                           -------------   --------------   -------------   --------------
                               CASH AND CASH EQUIVALENTS
                                          AT END OF YEAR   $      21,844   $       18,005   $      15,307   $       21,844
                                                           =============   ==============   =============   ==============
SUPPLEMENTAL INFORMATION
           Cash paid for interest                          $         477   $            0   $          13   $          676
                                                           =============   ==============   =============   ==============
SUPPLEMENTAL INVESTING ACTIVITY DISCLOSURE
In July, 1992,  Panorama issued 320,000 shares of stock for trade credits with a
cost of $1,600,000. These shares were returned to the Company in December, 1995,
in connection with a rescission  agreement.  In December,  1996,  110,000 shares
were reissued. See Note 7 for details of the foregoing transactions.

In December,  1996, the Company  canceled  460,000 shares of its common stock as
set forth in Note 4.

(1) Stock of subsidiary was $122,000.

See Notes to Consolidated Financial Statements.
</TABLE>

                                      F - 5

<PAGE>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1:               SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
                      The  Company's   accounting   policies   reflect   current
                      accounting  practices  and conform to  generally  accepted
                      accounting   principles.   The   following   policies  are
                      considered to be significant.

                      Accounting Method
                      The accompanying  financial  statements have been prepared
                      on the accrual method using generally accepted  accounting
                      principles   applicable   to   a   going   concern   which
                      contemplates the realization of assets and the liquidation
                      of  liabilities  in the  normal  course of  business.  All
                      assets are listed at historical cost as adjusted for asset
                      impairment.

                      Revenue Recognition
                      Revenue is recognized  upon  completion of sales including
                      adequate   payment   arrangements  to  reasonably   assure
                      collection of related receivables, if any.

                      Dividend Policy:
                      The  Company  has not yet  adopted  any  policy  regarding
                      payment of dividends.

                      Income Taxes:
                      The Company  utilizes the  liability  method of accounting
                      for income  taxes as set forth in  Statement  of Financial
                      Accounting  Standards  No.  109,  "Accounting  for  Income
                      Taxes" (SFAS 109).  Under the liability  method,  deferred
                      taxes are determined  based on the difference  between the
                      financial   statement   and  tax  bases  of   assets   and
                      liabilities using enacted tax rates in effect in the years
                      in which the  differences  are  expected  to  reverse.  An
                      allowance  against  deferred assets is recorded when it is
                      more  likely than not that such tax  benefits  will not be
                      realized.

                      Basis of Presentation
                      The consolidated financial statements include the accounts
                      of the Company and Panorama Industries, Inc. ("Panorama"),
                      a subsidiary owned 90.73% by the Company.  All significant
                      intercompany   transactions   and   balances   have   been
                      eliminated.

                      Earnings (Loss) per Share
                      Earnings  (loss) per share are  computed by  dividing  net
                      income  (loss)  by  the  weighted  average  common  shares
                      outstanding during each period.

                                      F - 6

<PAGE>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2:               DEVELOPMENT STAGE COMPANY AND BUSINESS ACTIVITY
                      The Company was  incorporated  under the laws of the State
                      of  Nevada  on  January  14,  1988  and  has  been  in the
                      development   stage  since   incorporation.   The  Company
                      acquired  a   substantial   amount  of  land  through  its
                      acquisition  of Panorama  (See Notes 4 and 6). The Company
                      holds  real  estate for  investment  and  possible  future
                      development  and  sales.  The  Company  also  may  acquire
                      interests in various other business  opportunities  which,
                      in the opinion of management, will provide a profit to the
                      Company.  Additional  external  financing or other capital
                      may be required to proceed  with any  business  plan which
                      may be developed by the Company.

NOTE 3:               CAPITALIZATION
                      On the date of  incorporation,  the Company sold 1,000,000
                      shares of its common stock to Capital General  Corporation
                      for $2,000 cash for an average  consideration of $.002 per
                      share. The Company's  authorized  common stock consists of
                      50,000,000 shares at $.001 par value.

NOTE 4:               ACQUISITION OF SUBSIDIARY
                      On September 30, 1993, the Company issued 5,250,700 shares
                      of its common stock to acquire  99.45% of the  outstanding
                      stock of Panorama, an affiliated company.  Panorama became
                      a subsidiary  of the  Company.  The  transaction  has been
                      accounted  for  under the  pooling-of-interests  method of
                      accounting.  Therefore, the financial statements have been
                      restated as if the Companies had been consolidated for all
                      periods presented. In December, 1996, the Company canceled
                      460,000  shares of its common stock held for issuance to a
                      shareholder of Panorama.  As a result of this transaction,
                      Arrow's  ownership  of Panorama was reduced from 99.45% to
                      90.73%.

NOTE 5:               RELATED PARTY TRANSACTIONS
                      The  Company  neither  owns or leases  any real  property,
                      other than the land held for development.  Office services
                      are  provided,   without   charge,   by  Capital   General
                      Corporation.  Such costs are  immaterial  to the financial
                      statements,  and,  accordingly,  have not  been  reflected
                      therein.  The  officers  and  directors of the Company are
                      involved  in other  business  activities  and may,  in the
                      future,  become involved in other business  opportunities.
                      If a specific business opportunity becomes available, such
                      persons  may face a  conflict  in  selecting  between  the
                      Company and their other  business  interests.  The Company
                      has not  formulated  a policy for the  resolution  of such
                      conflicts.

                      During 1994,  Panorama  paid a $520 fee to a related party
                      for services. During 1996, Panorama repaid a loan that was
                      obtained from a related party during 1995 (see Note 11).

                                      F - 7

<PAGE>


                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


NOTE 6:               REAL ESTATE AND LAND
                      On December 20, 1991, Panorama acquired various parcels of
                      real  estate  for  460,000  shares  of its  common  stock,
                      $120,000 cash, and assumption of approximately  $30,000 in
                      unpaid property taxes. The real properties  located in the
                      State  of  Idaho  consist  of 100  acres  of  Tall  Timber
                      Estates,  Bingham  County;  300 acres of  Panorama  Hills,
                      Bonneville  County; two building lots in Arco; Mt. Juniper
                      building lot in Lava Hot Springs;  Salem River lot,  Lemhi
                      County; and six Hall City Townsite lots in Bannock County.
                      The property acquired in the State of Utah consists of six
                      town  home  lots in St.  George,  Washington  County.  The
                      properties  purchased were believed by Company  management
                      to have a retail market value of approximately $2,600,000.
                      During 1993,  one of the  properties in Bannock County was
                      sold.  During 1994, the St. George  property was sold (see
                      Note 8).

                      Panorama retained a development planning firm in November,
                      1993,  to  conduct  a new  feasibility  study  and to make
                      development   recommendations   for  the  Panorama   Hills
                      project.  The study was completed with the  recommendation
                      by the  consultant  that the  project be  renamed  "Bridal
                      Trails" and be replatted to consist of  approximately  578
                      1/3 to 1/2 acre lots.  This proposed change would increase
                      the number of lots by over 300%. An  engineering  firm was
                      retained  to  plan  for  water,  sewer,  roads  and  other
                      improvements.  The actual  construction  was  expected  to
                      commence within the next six to nine months.

                      A January, 1995, MAI appraisal determined the value of the
                      Panorama Hills land on an "as is" basis to be $317,000. At
                      December 31, 1994, the Company had no intention or need to
                      sell the land. The land was acquired for development  over
                      a period of time.  After  development,  improvements,  and
                      implementation of marketing plans, the Company expected to
                      realize income substantially in excess of its costs in the
                      land.   A  market   feasibility   report  (see   preceding
                      paragraph)  projected  potential profit of over $1,900,000
                      on  phases  I and II  (276  lots - out of a  total  of 578
                      lots).  At December  31,  1994,  management  felt that any
                      decline in value was temporary.

                      During 1994, a Lis Pendens (pending  lawsuit) was recorded
                      against the Panorama  Hills land  relating to title to the
                      land. The cost of defending this legal action and any loss
                      sustained is covered by a title  insurance  company.  This
                      action caused a delay in the timetable for  development of
                      the land.  The Lis Pendens was settled in December,  1995,
                      and the Company now has clear title to the land.
 
                                     F - 8

<PAGE>


                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


NOTE 6:               LAND (continued)
                      During December, 1995, the Company changed its development
                      plans with  respect to the Panorama  Hills  project and is
                      not presently pursuing plans to develop the land, however,
                      the land is  available  for sale.  One factor that lead to
                      the  change  in  plans  is  the   slowdown   in   economic
                      development  and related  decrease in consumer  demand for
                      new  housing in the Idaho Falls  area.  Another  factor is
                      Panorama's  rescission  of  the  media  due  bills,  trade
                      dollars,  and other  credits (as  discussed in Note 7) for
                      the return of shares of its  common  stock.  Panorama  had
                      planned  on  using  such  credits  as  a  portion  of  the
                      financing required for development of the land.

                      During 1996, Panorama purchased a time share in a vacation
                      resort  called  the San  Clemente  Inn in  Orange  County,
                      California.  The time share was acquired by trading $5,000
                      worth  of ITEX  Trade  Dollars  which  were  obtained  for
                      consulting services.

                      Impairment of Land Value
                      In 1995, the Financial Accounting Standards Board ("FASB")
                      adopted  SFAS  No.  121  entitled   "Accounting   for  the
                      Impairment of Long-Lived  Assets and for Long-Lived Assets
                      to Be Disposed Of".  Adoption of this SFAS is required for
                      financial  statements  for fiscal  years  beginning  after
                      December  15,  1995,   however,   earlier  application  is
                      encouraged.  The Company has elected to adopt SFAS No. 121
                      effective for 1995. SFAS No. 121 provides that restatement
                      of   previously   issued   financial   statements  is  not
                      permitted. In conformity with SFAS No. 121 and based on an
                      A.R.A. appraisal in December,  1995, which valued the land
                      at $330,000, Panorama is showing the value of the Panorama
                      Hills land at $330,000 at December 31, 1995. The loss from
                      write-down  of the land value from  $2,285,000 to $330,000
                      is accounted for in the 1995 statement of operations as an
                      operating loss of  $1,955,000.  The new cost basis of such
                      land for financial reporting purposes is now $330,000.

NOTE 7:               MEDIA DUE BILLS, TRADE DOLLARS AND TRAVEL CERTIFICATES
                      In July,  1992,  Panorama  entered into an agreement  with
                      ITEX  Corporation  ("ITEX") to exchange  110,000 shares of
                      its common stock for $550,000 in trade  credits  ($400,000
                      in radio and television advertising and production credits
                      referred to as media due bills and  $150,000 in ITEX Trade
                      Dollars).

                      Also in July,  1992,  Panorama  entered  into an agreement
                      with  Haydon,  Ives & Neal,  Inc.  ("Haydon")  to exchange
                      210,000 shares of its common stock for $1,050,000 in trade
                      credits ($800,000 in radio and television  advertising and
                      production  credits  referred  to as media  due  bills and
                      $250,000  in  Travel  Paradise   certificates).   Panorama
                      intended  to  exchange  the   advertising  and  production
                      credits,  trade dollars and travel  certificates for goods
                      and services for the land  development  projects and other
                      business activities.  During 1993, the travel certificates
                      were  exchanged  for  $250,000  of  additional  ITEX Trade
                      Dollars.

                      In  December,  1995,  Panorama  entered  into a rescission
                      agreement with Haydon whereby  Panorama  received back the
                      320,000  shares of its common  stock in  exchange  for the
                      remaining balance of $1,446,752 of advertising credits and
                      ITEX Trade  Dollars  (the amount on hand at  December  31,
                      1994).  The transaction has been accounted for by reducing
                      common stock at par value by $320 and  additional  paid-in
                      capital by $1,446,432.  No gain or loss on the transaction
                      was  recorded  in   accordance   with  the  terms  of  the
                      agreement.  In December,  1996, 110,000 shares relating to
                      the ITEX Trade  Dollars were  reissued due to an erroneous
                      cancellation. Common stock was therefore increased by $110
                      and additional paid-in capital decreased by $110.

                                    F - 9

<PAGE>

                      ARROW MANAGEMENT, INC. AND SUBSIDIARY
                          (A Development Stage Company)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8:               CONTRACTS RECEIVABLE
                      During  1993,  real  estate  was  sold  on  contract.  The
                      contract  requires monthly payments of $451 at an interest
                      rate of 9%. At December 31, 1996,  the current  portion of
                      the  receivable  was $2,690 and the long-term  portion was
                      $28,721 for a total of $31,411.

                      During 1994,  additional real estate was sold on contract.
                      The balance of $44,000  was due in  September,  1995.  The
                      contract was  renegotiated in November,  1995, after being
                      paid down to  $29,840.  The  interest  rate on the note is
                      12%. At December 31, 1996,  the balance  owing on the note
                      was $19,255 (including accrued interest of $94).

NOTE 9:               INVESTMENT SECURITY
                      The  investment   consists  of  66,668  shares  of  Profit
                      Financial  Corporation (an entity that was affiliated with
                      the Company at December 31, 1994,  but not at December 31,
                      1995 or 1996).  The quoted  market  value at December  31,
                      1996,  was $2.25 per share.  Pursuant to SFAS No. 115, the
                      investment is  considered to be an equity  security and is
                      categorized as available-for-sale  and the increase in the
                      market value of $50,003 at December 31, 1996,  is shown in
                      the equity section of the balance sheet.

NOTE 10:              NET OPERATING LOSS CARRYOVER
                      The  Company  and  Panorama  had  a  net  operating   loss
                      carryover  of $55,953 at December  31,  1996,  that if not
                      used will expire as follows:
<TABLE>
<CAPTION>

                                                                                         Company's            Panorama's
                              Year Ended                   Expiration Date                 Loss                  Loss
                          <S>                             <C>                       <C>                    <C>   
                           December 31, 1988              December 31, 2003         $           1,950       $            0
                           December 31, 1989              December 31, 2004                        10                    0
                           December 31, 1990              December 31, 2005                        10                    0
                           December 31, 1991              December 31, 2006                        10                    0
                           December 31, 1992              December 31, 2007                        20                    0
                           December 31, 1993              December 31, 2008                         0                7,808
                           December 31, 1994              December 31, 2009                         0               41,004
                           December 31, 1995              December 31, 2010                         0                5,141

                                                                                    $           2,000       $       53,953
</TABLE>
                      Due to the Company's  activities  as a  development  stage
                      company,  there is not a  sufficient  basis for  making an
                      estimate of future  income.  At  December  31,  1996,  the
                      Company has not recorded a deferred  tax asset.  There may
                      be a deferred tax asset, but the amount, if any, cannot be
                      determined  at this time,  therefore,  the amount has been
                      reserved 100%.

                      The tax basis of the  Panorama  land (see Note 6 regarding
                      impairment of land value) is $2,285,000  (now $330,000 for
                      financial reporting purposes).  At the time of disposal of
                      such land,  the gain or loss for income tax purposes  will
                      be based on the  original  recorded  cost of the  property
                      ($2,285,000).  For financial reporting  purposes,  gain or
                      loss on  disposal  of such land will be based on the "new"
                      cost basis ($330,000).

NOTE 11:              NOTE PAYABLE - RELATED PARTY
                      In July,  1995,  Panorama  borrowed  $8,000 from a related
                      party.  The  note had an  interest  rate of 9% and was due
                      July,  1996.  The  balance of the note  including  accrued
                      interest was $8,337 at December  31,  1995.  The note plus
                      accrued  interest  was paid in full in  March,  1996 for a
                      total of $8,477.



                                     F - 9