SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]      Quarterly  Report  Under  Section 13  or  15(d) of the
         Securities Exchange Act of 1934

         For the quarterly period ended June 30, 1998;

                                       or

[ ]      Transition Report  Under  Section 13 or  15(d) of  the
         Securities  Exchange Act of 1934

         For transition period from ________________ to _________________

                         Commission file number 0-18865
                                ----------------

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
             (Exact name of registrant as specified in its charter)
                                ----------------
             UTAH                                          87-0401400
(State or other jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                        Identification No.)
                                 ---------------

            3855 South 500 West
                Suite R
            Salt Lake City, Utah                         84115
(Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code (801) 363-8961

     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[ ]

     As of August 18, 1998, the Registrant had outstanding  3,215,596  shares of
Common Stock.

           Transitional Small Business Disclosure Format (check one):

                                 Yes [ ] No [X]


<PAGE>

Part I     Financial Information

Item 1:    Financial Statements (Unaudited)

           Condensed Consolidated Balance Sheets - June 30, 1998
           and March 31, 1998.................................................3

           Condensed Consolidated Statements of Operations - Three Months
           Ended June 30, 1998 and 1997.......................................5

           Statements of Stockholders' Equity.................................6

           Condensed Consolidated Statements of Cash Flows - Three
           Months Ended June 30, 1998 and 1997................................7

           Notes to Condensed Consolidated Financial Statements -
           June 30, 1998......................................................8

Item 2:    Management's Discussion and Analysis or Plan of Operations........26


Part II    Other Information

Item 1.    Legal Proceedings.................................................28

Item 2.    Changes in Securities.............................................28

Item 3.    Defaults upon Senior Securities...................................28

Item 4.    Submission of Matters to a Vote of Security Holders...............28

Item 5.    Other Information ................................................28
Item 6.    Exhibits and Reports on Form 8-K..................................28

                                       2
<PAGE>
<TABLE>
<CAPTION>


                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                           Consolidated Balance Sheet


                                                       ASSETS
                                                                      June 30,                       March 31,
                                                                       1998                             1998
                                                                -----------------                  ------------- 
CURRENT ASSETS
<S>                                                             <C>                                <C>          
  Cash                                                          $          16,649                  $      14,663
  Accounts receivable                                                     299,044                        221,875
  Inventory (Note 1)                                                      362,987                        437,003
  Marketable securities                                                   643,087                        622,182
  Notes receivable, Quade, Inc. (Note 12)                                  40,000                         -
  Prepaid and other current assets                                         36,628                         44,882
                                                                -----------------                  ------------- 
      Total Current Assets                                              1,398,395                      1,340,605
                                                                -----------------                  ------------- 

PROPERTY AND EQUIPMENT (NOTE 1)

  Furniture, fixtures and equipment                                       421,492                        383,638
  Capital leases                                                        1,003,507                        859,185
                                                                -----------------                  ------------- 

     Total depreciable assets                                           1,424,999                      1,242,823
     Less: accumulated depreciation                                      (195,060)                      (118,889)
                                                                -----------------                  ------------- 

      Net Property and Equipment                                        1,229,939                      1,123,934
                                                                -----------------                  ------------- 

OTHER ASSETS

  Investments (Note 1)                                                  1,400,750                      1,077,500
  Goodwill (Note 1)                                                     1,796,050                      1,826,492
  Deposits                                                                 68,105                         68,104
                                                                -----------------                  ------------- 

     Total Other Assets                                                 3,264,905                      2,972,096
                                                                -----------------                  ------------- 

     TOTAL ASSETS                                               $       5,893,239                  $   5,436,635
                                                                =================                  =============
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                        3
<PAGE>
<TABLE>
<CAPTION>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                     Consolidated Balance Sheet (Continued)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                     June 30,                        March 31,
                                                                       1998                             1998
                                                                -----------------                  ------------- 
CURRENT LIABILITIES
<S>                                                             <C>                               <C>           
  Accounts payable                                              $         708,510                 $      688,021
  Accrued expenses and other current liabilities                          418,691                        393,494
  Current portion of notes payable (Note 3)                               620,543                        419,781
  Current portion of notes payable, related parties (Note 4)              229,974                        184,974
  Current portion of capital lease obligations (Note 5)                   239,088                        303,475
                                                                -----------------                  ------------- 

     Total Current Liabilities                                          2,216,806                      1,989,745
                                                                -----------------                  ------------- 

LONG-TERM DEBT

  Reserve for discontinued operations                                     450,782                        450,782
  Notes payable (Note 3)                                                   14,155                         14,155
  Capital lease obligations (Note 5)                                      645,184                        579,963
  Notes payable, related parties (Note 4)                               1,150,739                      1,091,536
                                                                -----------------                  ------------- 

     Total Long-Term Debt                                               2,260,860                      2,136,436
                                                                -----------------                  ------------- 

     Total Liabilities                                                  4,477,666                      4,126,181
                                                                -----------------                  ------------- 

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY

  Unrealized gain on marketable securities and investments                471,655                              -
  Preferred stock, par value $0.001 per share: 10,000,000
   shares authorized; issued and outstanding: 94,953
   Series B shares, 150,000 Series C shares                                   245                            245
  Common stock, par value $0.001 per share: 125,000,000
   shares authorized; issued and outstanding: 2,965,263 and
   2,929,263 shares issued and outstanding.  (Note 8)                       2,965                          2,929
  Additional paid-in capital                                            7,071,224                      7,026,260
  Accumulated deficit                                                  (6,130,516)                    (5,718,980)
                                                                -----------------                  ------------- 

      Total Stockholders' Equity                                        1,415,573                      1,310,454
                                                                -----------------                  ------------- 

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $       5,893,239                  $   5,436,635
                                                                =================                  =============
</TABLE>
                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                        4
<PAGE>
<TABLE>
<CAPTION>


                                         AMERICAN RESOURCES AND DEVELOPMENT
                                        Consolidated Statements of Operations


                                                                               For the Three Months Ended
                                                                                           June 30,
                                                                                   1998                1997
                                                                           ------------------    ---------------
INCOME

<S>                                                                        <C>                   <C>            
  Sales - merchandise                                                      $          809,034    $       161,161
  Cost of sales - merchandise                                                         499,870             78,140
                                                                           ------------------    ---------------

    Gross Profit                                                                      309,164             83,021
                                                                           ------------------    ---------------

GENERAL AND ADMINISTRATIVE EXPENSES

  Depreciation and amortization                                                       104,945              7,274
  General expenses                                                                    552,230            246,338
                                                                           ------------------    ---------------

    Total General and Administrative Expenses                                         657,175            253,612
                                                                           ------------------    ---------------

    Net Loss                                                                         (348,011)          (170,591)
                                                                           ------------------    ---------------

OTHER INCOME AND (EXPENSES)

  Interest income                                                                                              5
  Other income                                                                         24,112             40,818
  Gain on sale of assets                                                               19,405                  -
  Interest expense                                                                   (107,042)            (4,305)
                                                                           ------------------    ---------------

    Total Other Income and (Expenses)                                                 (63,525)            36,518
                                                                           ------------------    ---------------

  LOSS BEFORE INCOME TAXES AND
    DISCONTINUED OPERATIONS                                                          (411,536)          (134,073)
                                                                           ------------------    ----------------

  DISCONTINUED OPERATIONS

  Loss from operations of GVI, FCC                                                          -           (253,206)
                                                                           ------------------    ---------------

  Net loss before income tax                                                         (411,536)          (387,279)
  Less: provisions for (income tax)                                                         -                  -
                                                                           ------------------    ---------------

NET LOSS                                                                   $         (411,536)   $      (387,279)
                                                                           ==================    ===============

LOSS PER SHARE                                                             $            (0.14)   $         (0.21)
                                                                           ==================    ===============

NET LOSS PER SHARE OF COMMON
  STOCK-CONTINUING OPERATIONS                                              $            (0.14)   $         (0.07)
                                                                           ==================    ===============

NET INCOME (LOSS) PER SHARE OF COMMON STOCK -
DISCONTINUED OPERATIONS                                                    $              0.0    $         (0.14)
                                                                           ==================    ===============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                       2,949,834          1,864,113
                                                                           ==================    ===============
</TABLE>
                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>


                                       AMERICAN RESOURCE AND DEVELOPMENT COMPANY
                                    Consolidated Statement of Stockholders' Equity
                                                March 31, 1998 and 1997


                                                                                                  Additional
                                              Common Stock               Preferred Stock            Paid-in            Accumulated
                                        Shares          Amount         Shares         Amount        Capital              Deficit
                                        ------          ------         ------         ------        -------              -------
<S>                                    <C>             <C>             <C>            <C>        <C>                <C>           
Balance, March 31, 1996                1,835,486       $1,835          252,220        $ 252      $ 11,910,212       $  (8,941,298)

Capital contributions by stock
 issuances of a subsidiary                     -            -                -            -         1,111,509                   -

Net loss                                       -            -                -            -                 -          (1,024,802)
                                       ---------       ------          -------        -----      ------------       -------------

Balance, March 31, 1997                1,835,486        1,835          252,220          252        13,021,721          (9,966,100)

Stock issuance of a subsidiary
 for payment of interest                       -            -                -            -           143,166                   -

Preferred B stock conversion
 into common stock                        11,995           12           (7,267)          (7)                -                   -

Common stock issued for
 services                                399,000          399                -            -           388,261                   -

Expense recognized for
 vested stock options                          -            -                -            -            52,498                   -

Eliminate GVI equity for
 merger with U.S. Golf
 Communities (Note 2)                          -            -                -            -        (8,406,498)          4,687,868

Stock issued for cash                     24,000           24                -            -            29,976                   -

Stock issued for PPW
 acquisition (Note 2)                    258,782          259                -            -         1,293,651                   -

Stock issued to FTI
 shareholders (Note 2)                   400,000          400                -            -           499,600                   -

Stock options issued to FTI
 shareholders                                  -            -                -            -             3,885                   -

Net loss                                       -            -                -            -                 -            (440,748)

Balance, March 31, 1998                2,929,263       $2,929          244,953       $  245      $  7,026,260     $    (5,718,980)

Stock issued for cash                     36,000           36                -            -            44,964                   -

Net loss                                       -            -                -            -                 -            (411,536)

Balance, June 30, 1998                 2,965,263       $2,965                -            -      $  7,071,224     $    (6,130,516)
                                       =========       ========       ========       ========    ============     ===============
</TABLE>
                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                        6
<PAGE>
<TABLE>
<CAPTION>



                                     AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                        Consolidated Statements of Cash Flows


                                                                                        June 30,
                                                                               1998                    1997
                                                                         -----------------     -----------------
OPERATING ACTIVITIES

<S>                                                                      <C>                   <C>                 
   Net loss                                                              $       (411,536)     $        (395,012)
   Adjustments to reconcile net income to net cash
    provided by operating activities:
     Depreciation and amortization                                                 104,945                 8,295
     Common sock issued for services                                                     -                30,000
   Changes in operating assets and liabilities:
     (Increase) decrease in inventory                                               74,016              (143,773)
     (Increase) decrease in notes and accounts receivable                         (117,169)              (10,074)
     Increase (decrease) in other current assets                                     8,254                 5,950
     Increase (decrease) in accounts payable and
      other current liabilities                                                   (53,149)               264,023
                                                                         -----------------     -----------------

         Net Cash Provided (Used) by Operating Activities                        (394,639)              (240,591)
                                                                         -----------------     -----------------

INVESTING ACTIVITIES

   Purchases of property and equipment                                            (37,854)              (27,015)
   Investment in land held for development                                              -              (300,862)
   Sale of marketable securities, net of gain                                      121,705                    -
                                                                         -----------------     -----------------

         Net Cash Provided (Used) by Investing Activities                           83,851             (327,877)
                                                                         -----------------     -----------------

FINANCING ACTIVITIES

   Payments on notes payable and capital lease obligations                         (57,759)             (97,503)
   Proceeds from notes payable                                                     325,533              648,000
   Common stock issued for cash                                                     45,000                    -
                                                                         -----------------     -----------------

         Net Cash Provided (Used) by Financing Activities                          312,774              550,497
                                                                         -----------------     -----------------

INCREASE (DECREASE) IN CASH                                                          1,986              (17,971)

CASH, BEGINNING OF PERIOD                                                           14,663                47,850
                                                                         -----------------     -----------------

CASH, END OF PERIOD                                                      $          16,649     $          29,879
                                                                         =================     =================
CASH PAID FOR

   Interest                                                              $          99,824     $          16,343
   Income taxes                                                          $               -     $               -

NON-CASH FINANCING ACTIVITIES

         Common stock issued for services                                $          30,000     $          30,000
         Equipment purchase through capital
             lease obligation                                                      144,312                     -

</TABLE>
                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                       7
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 1 -       SIGNIFICANT ACCOUNTING POLICIES

               a.   Quarterly Financial Statements

               The  preparation  of  financial  statements  in  conformity  with
               generally accepted  accounting  principles requires management to
               make estimates and assumptions  that affect the amounts  reported
               in  the  financial  statements  and  accompanying  notes.  Actual
               results  could  differ  from those  estimates.  The  accompanying
               consolidated  unaudited condensed financial  statements have been
               prepared in accordance  with the  instructions to Form 10-QSB but
               do not include all of the information  and footnotes  required by
               generally accepted accounting principles and should therefore, be
               read in  conjunction  with the  Company's  fiscal 1998  financial
               statements in Form 10-KSB. These statements do include all normal
               recurring  adjustments which the Company believes necessary for a
               fair  presentation  of  the  statements.  The  interim  operating
               results are not necessarily  indicative of the results for a full
               year.

               b. Organization

               American  Resources  and  Development  Company (the  Company) was
               formed as a Utah company on March 31, 1983 under the name Leasing
               Technologies  Incorporated for the purpose of leasing  equipment.
               The Company has significantly  increased its investing activities
               which include startup companies, real estate development,  and/or
               other projects.  Operations include related and non related party
               transactions.  In March  1997,  the  shareholders  of the Company
               approved a name  change to  American  Resources  and  Development
               Corporation.  In  addition,  the  shareholders  also  approved  a
               reverse  split  of its  common  stock  on a 1 share  for 20 share
               basis. The accompanying  consolidated  financial  statements have
               been restated to reflect this reverse split retroactively.

               Effective March 17, 1997, the Company  acquired 80% of the issued
               and  outstanding  common stock of Fan-Tastic,  Inc. (FTI), a Utah
               corporation,  in  exchange  for 100,000  shares of the  Company's
               class "D" preferred stock.  Effective March 31, 1998, the Company
               acquired the remaining 20% of the issued and  outstanding  common
               stock of FTI. This  acquisition  has been accounted for using the
               purchase  method  in  the  accompanying   consolidated  financial
               statements.  See Note 2 for  further  discussion  regarding  this
               transaction.

               Effective  March 31, 1998,  the Company  acquired over 80% of the
               issued  and  outstanding  common  stock of Pacific  Printing  and
               Embroidery.  As a result,  its operations are not included in the
               consolidated  statement of  operations  for the year ending March
               31, 1998.

               c. Principles of Consolidation

               The  accompanying   consolidated   financial  statements  include
               American Resources and Development  Company and its subsidiaries,
               Fan-Tastic,  Inc. (FTI),  Pacific Printing and Embroidery  L.L.C.
               (PPW).  The operations of Golf Ventures,  Inc. (GVI), and Finally
               Communities,   Inc.  (FCC)  are  included  in  the  statement  of
               operations and cash flows at March 31, 1997. (Note 2)

                                       8
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997

NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

               d. Estimates

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

               e. Cash and Cash Equivalents

               The  Company  considers  all  highly  liquid  investments  with a
               maturity  of  three  months  or less  when  purchased  to be cash
               equivalents.

               f. Concentrations of Risk

               The Company  maintains its cash in bank deposit  accounts at high
               credit quality financial  institutions.  The balances,  at times,
               may exceed federally insured limits.

               In the normal course of business,  the Company  extends credit to
               its customers.

               g. Inventories

               Inventories  are stated at the lower of cost or market  using the
               first-in, first-out method.

               h. Property and Equipment

               Property,  equipment and capital  leases are recorded at cost and
               are  depreciated or amortized  over the estimated  useful life of
               the related assets,  generally three to seven years.  When assets
               are  retired  or  otherwise  disposed  of,  the cost and  related
               accumulated  depreciation are removed from the accounts,  and any
               resulting gain or loss is reflected in income for the period.

               The costs of  maintenance  and  repairs  are charged to income as
               incurred.   Renewals  and   betterments   are   capitalized   and
               depreciated over their estimated useful lives.

                                       9
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              i.  Financial Instruments

              Statement of Financial Accounting Standards No. 107, " Disclosures
              about Fair Value of Financial  Instruments" requires disclosure of
              the fair value of financial  instruments held by the Company, SFAS
              107 defines the fair value of a financial instrument as the amount
              at  which  the   instrument   could  be  exchanged  in  a  current
              transaction  between willing  parties.  The following  methods and
              assumptions were used to estimate fair value:

              The carrying amount of cash equivalents,  accounts  receivable and
              accounts  payable  approximate  fair value due to their short-term
              nature.

              Marketable  securities represent 395,746 and 497,746 shares of GVI
              unrestricted  stock at June 30 and March 31,  1998,  respectively,
              which are classified as marketable  securities  available for sale
              and are carried at market  value.  Any change in market value from
              period to period  will be  reported  as a  separate  component  of
              stockholders' equity until realized.

              Investments  represent  862,000 shares of GVI restricted  stock at
              March 31, 1998, which are classified as investments  available for
              sale.  Any change in market  value from  period to period  will be
              reported as a separate  component  of  stockholders'  equity until
              realized.

              There was an unrealized gain of $471,665 in marketable  securities
              and investment securities at June 30, 1998 due to a $.375 increase
              in GVI per share value at June 30, 1998  compared to the Company's
              recorded cost for GVI shares.

              j. Income Taxes

              Income taxes consist of Federal Income and State Franchise  taxes.
              The Company has elected a March 31 fiscal  year-end  for both book
              and income tax purposes.

              The Company  accounts  for income  taxes under the  provisions  of
              Statement of Financial Accounting Standards No.109 (SFAS No. 109),
              "Accounting  for  Income  Taxes,"  which  requires  the  asset and
              liability method of accounting for tax deferrals.

              k. Net Loss Per Common Share

              Net  loss  per  common  share is  computed  based on the  weighted
              average number of common shares outstanding during the period. The
              common stock equivalents are anti-dilutive and,  accordingly,  are
              not used in the net loss per common share computation.

              In February 1997, the Financial  Accounting Standards Board issued
              Statement  No.  128,  Earnings  per Share,  (SFAS  128),  which is
              required to be adopted on December 31,  1997.  SFAS 128 requires a
              change in the method  currently used to compute earnings per share
              and to restate all prior  periods to  disclose  diluted net income
              

                                       10
<PAGE>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)


               per common share in addition to its current  basic net income per
               common  share.  Basic net loss  from  continuing  operations  per
               common share and diluted net loss from continuing  operations per
               common share  amounts,  calculated in  accordance  with SFAS 128,
               were ($0.14) and ($0.07) for the quarters ended June 30, 1998 and
               1997,  respectively.  Basic net loss from discontinued operations
               per  common   share  and  diluted  net  loss  from   discontinued
               operations  per common  share ) for the  quarters  ended June 30,
               1998  and  1997 was  $0.0  and  $(0.14),  respectively.  Weighted
               average  common shares  outstanding  were 2,949,834 and 1,864,113
               for the quarters ended June 30, 1998 and 1997, respectively.

               l.  Revenue Recognition

               Franchise  fees are  recognized  as  revenue  when  all  material
               services relating to the sale have been  substantially  performed
               by FTI.  Material services relating to the franchise sale include
               assistance  in the selection of a site and  franchisee  training.
               Revenue for contract screenprinting and embroidery are recognized
               when the goods have shipped.

               m.  Goodwill

               The excess of the Company's  acquisition cost over the fair value
               of the net assets of the FTI acquisition resulted in a write-down
               of  goodwill of $756,797  for the year ended March 31,  1998.  On
               March  31,  1998,  the  Company  also   recognized   goodwill  of
               $1,826,492  from the purchase of Pacific Print Works (aka Pacific
               Printing and  Embroidery LLC ). The Company  recognizes  goodwill
               from the excess of the purchase  price of its  acquisitions  over
               the fair value of the net assets acquired.

               The Company evaluates the  recoverability of goodwill and reviews
               the amortization  period on an annual basis.  Several factors are
               used  to  evaluate  goodwill,   including  but  not  limited  to:
               management's  plans  for  future  operations,   recent  operating
               results  and  projected,  undiscounted  cash  flows.  The primary
               method is projected, undiscounted cash flows.

NOTE 2 -       MERGERS AND ACQUISITIONS

               Golf Ventures, Inc.

               In November  1997,  Golf  Ventures,  Inc.  merged with U.S.  Golf
               Communities.  U.S. Golf Communities is the controlling company in
               this merger and  subsequent to the merger the combined  company's
               name will be changed to Golf  Communities of America (GCA).  This
               merger resulted in a less than 20% American Resources'  ownership
               in  GVI.  Therefore,  subsequent  to the  merger,  the  Company's
               investment  in GVI is reflected as an  investment  in  accordance
               with Financial  Accounting Standards Board Statement No. 121. Pro
               forma results of operations if the GVI merger would have occurred
               at the beginning of fiscal 1997 would have resulted in a decrease
               in net loss of$172,728 and $685,918 for the years ended March 31,
               1998 and 1997, respectively,  and $0.83 and ($0.37) per share for
               the same periods.  The following pro forma balance sheet reflects
               the effect of this merger.

                                       11
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

              In connection with the Company's  management  services relating to
              the  merger of GVI with U.S.  Golf  Communities  and to settle all
              claims,  and  obligations  with the  Company,  GVI issued  862,000
              shares of its  restricted  common  stock to the Company in July of
              1998. A gain of  $1,720,387,  net of expenses,  was recognized for
              the year ended March 31, 1998. This gain was recognized for fiscal
              1998 because it related to prior year activities.

<TABLE>
<CAPTION>


                                                        Prior to               GVI                 After
                                                          Merger               Adjustments          GVI Merger
CURRENT ASSETS

<S>                                                <C>                   <C>                   <C>              
   Cash                                            $           86,213    $         (10,047)    $          76,166
   Marketable securities                                            -              692,886               692,886
   Accounts receivable                                        131,522                    -               131,522
   Inventory, real estate                                     753,131             (753,131)                    -
   Inventory, merchandise                                     581,169                    -               581,169
   Notes receivable                                            75,000                    -                75,000
   Prepaid and other current assets                            33,130                    -                33,130
   Current portion of contract receivable                       1,955               (1,955)                    -
                                                   ------------------    -----------------     -----------------     
     Total Current Assets                                   1,662,120              (72,247)            1,589,873
                                                   ------------------    ------------------    -----------------

PROPERTY AND EQUIPMENT

   Model home and condominiums                                180,988             (134,788)               46,200
   Furniture, fixtures and equipment                          197,284              (15,456)              181,828
   Vehicles                                                    43,252                    -                43,252
                                                   ------------------    ------------------    -----------------
Total depreciable assets                                      421,524             (150,244)              271,280
Less: accumulated depreciation                               (124,936)               4,435              (120,501)
                                                   ------------------    -------------------   -----------------

     Net property and equipment                               296,588             (145,809)              150,779
                                                   ------------------    -----------------     -----------------

OTHER ASSETS

   Land held for development                               12,132,098          (11,886,098)              246,000
   Goodwill                                                   240,407                    -               240,407
   Long-term portion of contract
     receivable                                                55,993              (55,993)                    -
   Deposit                                                      1,970                    -                 1,970
                                                   ------------------    ------------------    -----------------
     Total Other Assets                                    12,430,468          (11,942,091)              488,377
                                                   ------------------    -----------------     -----------------

     TOTAL ASSETS                                  $       14,389,176    $     (12,160,147)    $       2,229,0290
                                                   ==================    =================     =================
</TABLE>

                                       12
<PAGE>
<TABLE>
<CAPTION>


                                       AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                     Notes to the Consolidated Financial Statements
                                                  June 30, 1998 and 1997



NOTE 2 -   MERGERS AND ACQUISITIONS (Continued)

                                                        Prior to               GVI                  After
                                                          Merger              Adjustments           GVI Merger
                                                   ------------------    ------------------    -----------------
CURRENT LIABILITIES
<S>                                                <C>                   <C>                   <C>              
   Accounts payable                                $        1,296,869    $         (898,265)   $         398,604
   Accrued expenses and other current
    liabilities                                             1,367,403              (707,474)             659,929
   Current portion of notes payable                         1,309,400              (903,924)             405,476
   Current portion of notes payable, related
    parties                                                   377,337                     -              377,337
   Current portion of capital lease
    obligations                                                14,556                     -               14,556
                                                   ------------------    ------------------    -----------------
     Total Current Liabilities                              4,365,565            (2,509,663)           1,855,902
                                                   ------------------    ------------------    -----------------

LONG-TERM DEBT

   Notes payable                                            6,550,550            (6,550,550)                   -
   Capital lease obligations                                    4,262                     -                4,262
   Notes payable, related parties                             748,087               (75,000)             673,087
                                                   ------------------    ------------------    -----------------

      Total Long-Term Debt                                  7,302,899            (6,625,550)             677,349
                                                   ------------------    ------------------    -----------------

STOCKHOLDERS' EQUITY

   Preferred stock                                                252                     -                  252
   Common stock                                                 1,868                     -                1,868
   Additional paid-in capital                              13,258,330            (8,406,498)           4,851,832
   Accumulated deficit                                    (10,539,738)            5,381,564           (5,158,174)
                                                   ------------------    ------------------    -----------------

     Total Stockholders' Equity                             2,720,712            (3,024,934)            (304,222)
                                                   ------------------    ------------------    -----------------

TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                             $       14,389,176    $      (12,160,147)   $       2,229,029
                                                   ==================    ==================    =================
</TABLE>


                                       13
<PAGE>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 2 -       MERGERS AND ACQUISITIONS (Continued)

               Fan-Tastic, Inc.

               In  March  1997,  the  Company  acquired  80% of the  issued  and
               outstanding  common stock of  Fan-Tastic,  Inc. (FTI) in exchange
               for the  issuance  of 100,000  shares of the  Company's  Series D
               preferred  stock.  FTI  is  a  franchiser  and  owner  of  retail
               entertainment  and sports  stores doing  business as Fan-A Mania.
               The  Acquisition  was  accounted  for by the  purchase  method of
               accounting,   and  accordingly,   the  purchase  price  has  been
               allocated to assets  acquired and  liabilities  assumed  based on
               their fair market value at the date of acquisition.  The acquired
               interest was valued at  $252,912,  which  represents  liabilities
               assumed in excess of assets  acquired which has been reflected as
               goodwill.  The FTI acquisition involved contingent  consideration
               based on FTI achieving specified earnings but was amended in June
               1998,  effective as of March 31, 1998,  as the Company  purchased
               the remaining 20% of the issued and  outstanding  common stock of
               FTI and eliminated the  contingent  consideration  by issuing the
               FTI shareholders 400,000 shares of the Company's common stock and
               by vesting  options to purchase  150,000  shares of the Company's
               common stock at $2.00 a share. These stock options expire on June
               30, 2000. The Company  recognized  $500,000 for the shares issued
               to FTI shareholders and $3,855 for the value of the options.  The
               fair value for these  options  was  estimated  at the date of the
               vesting  using an option  pricing  model  which was  designed  to
               estimate  the fair value of options  which,  unlike  these  stock
               options,  can be traded  at any time and are fully  transferable.
               The  assumptions as described in Note 9 were used to estimate the
               fair value of these options in addition to a trading price on the
               Company's  stock of $1.25 per share.  The $503,855  value for the
               shares  issued  and the  options  was  included  in the  $756,797
               writedown of goodwill for fiscal 1998.

               For the year ended March 31, 1997,  FTI  sustained  net losses of
               $(101,314) on gross revenues of $875,532.

               Unaudited proforma summary  information  combining the results of
               operations  of the  Company  and  FTI as if the  acquisition  had
               occurred at the beginning of fiscal 1997,  after giving effect to
               certain  adjustments,  including  amortization of goodwill.  This
               proforma  summary  does not  necessarily  reflect  the results of
               operations  as they  would have been if the  Company  and FTI had
               constituted a single entity during such periods.

                                                   For the
                                                  Year ended
                                                 March 31, 1997

                  Net revenue                 $        1,149,532
                  Net loss                    $       (1,142,977)
                  Net loss per share          $            (0.62)

              Finally Communities, Inc.

              In May  1997,  the  Company  issued  500,000  shares  of  Series E
              preferred stock in exchange for 100% of the issued and outstanding
              common stock of Finally  Communities,  Inc.  (FCI).  FCI was a new
              corporation with no prior operations organized to develop and sell
              vacation  ownership  interest in various resorts initially located
              in the State of Arkansas and develop and market other new vacation
              products.  The  seller  of FCI  remained  as  President  after the
              acquisition.

                                       14
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

              Finally Communities, Inc. (Continued)

              From May 1997 through December 31, 1997, FCI had real estate sales
              of $67,772, cost of sales of $27,771,  general expenses of $69,307
              and interest expense of $1,081. In March 1998, the Company's Board
              of Directors sold its shares in FCI to the original seller for the
              return of the stock  previously  issued to the original  seller. A
              $30,387 gain was recorded from the disposal of FCI.

              Pacific Print and Embroidery, LLC (aka Pacific Print Works)

              In December 1997, the Company  entered into a letter of intent for
              the purchase of a contract screen printing and embroidery company,
              Pacific  Print Works (PPW).  At March 31, 1998,  $115,000 had been
              advanced to PPW in the form of a note receivable. In May 1998, the
              Company  acquired over 80% of the  outstanding  shares of PPW. The
              merger is effective as of March 31, 1998 as the Board of Directors
              of PPW had agreed to transfer  control of PPW effective  March 31,
              1998,  except for  restrictions  based on  significant  changes to
              operations.  The  acquisition  was  accounted  for by the purchase
              method of accounting, and accordingly, the purchase price has been
              allocated to assets  acquired  and  liabilities  assumed  based on
              their fair market  value at the date of  acquisition.  Liabilities
              assumed in excess of assets  acquired  was  $532,582  and  258,782
              shares  of  the   Company's   common  stock  were  issued  to  PPW
              shareholders  with a guaranteed  share value of $5.00 resulting in
              goodwill of $1,826,492.  Depending on PPW's  performance  over the
              next three years,  additional shares of the Company's common stock
              will be issued for this acquisition if minimum earnings levels are
              met.

              Fiscal     Earnings Before Income Taxes     Common Shares Issuable
               Year          Low             High         Minimum       Maximum
               ----          ---             ----         -------       -------
               1999       $179,480       $  538,200        28,754       86,261
               2000        269,020          807,300        28,754       86,261
               2001        357,900        1,073,700        28,754       86,261

              Earnings  before  income  taxes  above the low level but below the
              high level will result in common  shares being issued based on the
              percentage of actual  earnings to the high earnings  multiplied by
              the maximum shares issuable for that year. For example,  in fiscal
              1999, earnings of $300,000 would result in 48,083 shares of common
              stock being issued to the PPW shareholders.

              The  following  tables  set  forth  certain  unaudited  pro  forma
              condensed combined  financial  information for the Company and PPW
              accounted for under the purchase method of accounting.

              The pro forma condensed  combined balance sheet was prepared using
              the  historical  balance sheets of the Company and PPW as of March
              31,  1998.  The  pro  forma  condensed   combined   statements  of
              operations for each of the two years ended March 31, 1998 and 1997
              were prepared using the historical statements of operations of the
              Company and PPW.

              The  pro  forma  condensed  combined  financial   information  was
              included for comparative  purposes only and does not purport to be
              indicative of the results of operations or financial position that
              actually  would have been obtained if the merger had been effected
              at the dates  indicated  of the  financial  position or results of
              operations that may be obtained in the future.

                                       15
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)
<TABLE>
<CAPTION>

                                       American Resources and Development Company
                                     Consolidated Pro Forma Combined Balance Sheets
                                                     March 31, 1998

                                                 American                                Pro Forma
                                                 Resources             PPW              Adjustments          Combined

              CURRENT ASSETS

<S>                                         <C>                 <C>                 <C>                 <C>            
              Cash                          $          4,962    $          9,699    $           -       $        14,663
              Marketable Securities                  622,182                   -                -               622,182
              Accounts receivable                     51,444             170,431                -               221,875
              Inventory, merchandise                 321,934             115,071                -               437,003
              Notes receivable                       115,000            (115,000)               -                     -
              Prepaid and other current
                assets                                41,289               3,593                -                44,882  
                                            ----------------    ----------------    -------------       ---------------
               Total Current Assets                1,156,811             183,794                -             1,340,605
                                            ----------------    ----------------    -------------       ---------------
              PROPERTY AND
               EQUIPMENT

              Furniture, fixtures and
                equipment                            158,242             271,413          (46,017)              383,638
              Leased equipment                        40,650             921,713         (103,178)              859,185
                                            ----------------    ----------------    -------------       ---------------
              Total depreciable assets               198,892           1,193,126         (149,195)            1,242,823
              Less: accumulated
                depreciation                        (118,889)           (149,195)         149,195              (118,889)
                                            ----------------    ----------------    -------------       ---------------

              Net Property and
               Equipment                              80,003           1,043,931                -             1,123,934
                                            ----------------    ----------------    -------------       ---------------
              OTHER ASSETS

              Investments                          1,077,500                   -                -             1,077,500
              Goodwill                                                                  1,826,492             1,826,492
              Deposit                                  1,970              66,134                -                68,104
                                            ----------------    ----------------    -------------       ---------------

                   Total Other Assets              1,079,470              66,134        1,826,492             2,972,096
                                            ----------------    -----------------   ---------------     ---------------

                   TOTAL ASSETS             $      2,316,284    $      1,293,859    $   1,826,492       $     5,436,635
                                            ================    ================    ===============     ===============
</TABLE>

                                       16
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997

NOTE 2- MERGERS AND ACQUISITIONS (Continued)
<TABLE>
<CAPTION>

                                       American Resources and Development Company
                                     Consolidated Pro Forma Combined Balance Sheets
                                                     March 31, 1998

                                                        American                           Pro Forma
                                                        Resources            PPW           Adjustments            Combined
                                                  ----------------    --------------     --------------       ---------------
              CURRENT LIABILITIES
<S>                                               <C>                 <C>                <C>                  <C>            
              Accounts payable                    $        391,985    $      296,036     $            -       $       688,021
              Accrued expenses and
               other current liabilities                   288,415           105,079                  -               393,494
              Current portion of notes payable             382,635           162,146                  -               544,781
              Current portion of notes
               payable - related parties                    23,974            36,000                  -                59,974
              Current portion of capital
               lease obligations                            19,450           284,025                  -               303,475
                                                  ----------------    --------------     --------------       ---------------
                  Total Current Liabilities              1,106,459           883,286                  -             1,989,745
                                                  ----------------    --------------     --------------       ---------------
              LONG-TERM DEBT

              Reserve For Discontinued Operations          138,000                 -                  -               138,000
              Long-term portion of notes payable            14,155                 -                  -                14,155
              Long-term portion of capital
                lease obligations                           13,638           566,325                  -               579,963
              Accrued interest on preferred stock          312,782                 -                  -               312,782
              Notes payable, related parties               714,699           376,837                  -             1,091,536
                                                  ----------------    --------------     --------------       ---------------
                   Total Long-Term Debt                  1,193,274           943,162                  -             2,136,436
                                                  ----------------    --------------     --------------       ---------------
              STOCKHOLDERS' EQUITY

              Preferred stock                                  245                 -                  -                   245
              Common stock                                   2,670            13,080            (12,821)                2,929
              Equity in investments                        622,182                 -                  -               622,182
              Additional paid-in capital                 5,732,609                 -          1,293,644             7,026,253
              Accumulated deficit                       (6,341,155)         (545,669)           545,669            (6,341,155)
                                                  ----------------    --------------     --------------       ---------------

                 Total Stockholders' Equity                 16,551          (532,589)         1,826,492             1,310,454
                                                  ----------------    --------------     --------------       ---------------

                 TOTAL LIABILITIES AND
                  STOCKHOLDERS' EQUITY            $      2,316,284    $    1,293,859     $    1,826,492       $     5,436,635
                                                  ================    ==============     ==============       ===============
</TABLE>


                                       17
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997

NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)
<TABLE>
<CAPTION>

                   American Resources and Development Company
            Consolidated Pro Forma Combined Statements of Operations
                                 March 31, 1998

                                                               American                           Pro Forma
                                                               Resources           PPW           Adjustments        Combined
                                                            -------------    -------------     -------------    --------------
              SALES

<S>                                                         <C>              <C>               <C>              <C>           
                Sales - screenprinting and embroidery       $           -    $   2,389,970     $           -    $    2,389,970
                Sales - merchandise and franchise fees          1,093,110                -                 -         1,093,110
                                                            -------------    -------------     -------------    --------------

                        Total Sales                             1,093,110        2,389,970                 -         3,483,080
                                                            -------------    -------------     -------------    --------------

              COST OF SALES

                Cost of sales - screenprinting and embroidery           -        1,784,167                 -         1,784,167
                Cost of sales - merchandise                       774,405                -                 -           774,405
                                                            -------------    -------------     -------------    --------------

                        Total Cost of Sales                       774,405        1,784,167                 -         2,558,572
                                                            -------------    -------------     -------------    --------------
                        Gross Profit                              318,705          605,803                 -           924,508
                                                            -------------    -------------     -------------    --------------

              EXPENSES

                 General and administrative expenses            1,447,285          771,624           121,229         2,340,138
                 Writedown of goodwill                            756,797                -                 -           756,797
                 Sales and marketing expenses                      93,175                -                 -            93,175
                 Depreciation                                      31,814          194,523                  -          226,337
                                                            -------------    -------------     -------------    --------------

                        Total Expenses                          2,329,071          966,147           121,229         3,416,447
                                                            -------------    -------------     -------------    --------------

              Loss From Operations                             (2,010,366)        (360,344)         (121,229)       (2,491,939)
                                                            -------------    -------------     -------------    --------------

              Other Income and (Expenses)

                 Other income                                      15,387            1,847                 -            17,234
                 Interest revenue                                       5                -                 -                 5
                 Gain on sale of assets                           139,906                -                 -           139,906
                 Interest expense                                (133,339)        (183,385)                -          (316,724)
                                                            -------------    -------------     -------------    --------------

                   Total Other Income and Expenses                 21,959         (181,538)                -          (159,579)
                                                            -------------    -------------     -------------    --------------
              LOSS BEFORE INCOME TAXES AND
               DISCONTINUED OPERATIONS

                 Loss from operations of GVI, FCC                (172,728)               -                 -          (172,728)
                 Gain on disposal of GVI, FCC                   1,720,387                -                 -         1,720,387
                                                            -------------    -------------     -------------    --------------

                   Total Discontinued Operations                1,547,659                -                 -         1,547,659
                                                            -------------    -------------     -------------    --------------

              INCOME TAXES                                              -                -                 -                 -
                                                            -------------    -------------     -------------    --------------

              Net Loss                                      $    (440,748)   $    (541,882)    $    (121,229)   $   (1,103,859)
                                                            =============    =============     =============    ==============

              Loss Per Share                                $       (0.57)   $       (2.07)    $           -    $        (0.80)
                                                            =============    =============     =============    ==============
</TABLE>

                                       18
<PAGE>


                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)
<TABLE>
<CAPTION>

                                       American Resources and Development Company
                          Consolidated Pro Forma Combined Statements of Operations (Continued)
                                            For the Year ended March 31, 1997
                                                       (Unaudited)

                                                               American                           Pro Forma
                                                               Resources          PPW            Adjustments        Combined
                                                            -------------    -------------     -------------    -------------- 
              SALES

<S>                                                         <C>              <C>               <C>              <C>           
                Sales - screenprinting and embroidery       $           -    $   2,926,410     $          -     $    2,926,410
                                                            -------------    -------------     -------------    --------------
                   Total Sales                                          -        2,926,410                -          2,926,410
                                                            -------------    -------------     -------------    --------------

              COST OF SALES

                Cost of sales - screenprinting and
                 embroidery                                             -        2,209,410                 -         2,209,410
                                                            -------------    -------------     -------------    --------------

                   Total Cost of Sales                                  -        2,209,410                 -         2,209,410
                                                            -------------    -------------     -------------    --------------

              Gross profit                                              -          717,000                 -           717,000
                                                            -------------    -------------     -------------    --------------

              EXPENSES

                General and administrative expenses               519,185          944,015           121,229         1,584,429
                Writedown of goodwill                                   -                -                 -                 -
                Sales and marketing expenses                            -                -                 -                 -
                Depreciation                                        3,124           74,815                 -            77,939
                                                            -------------    -------------     -------------    --------------

                   Total Expenses                                 522,309        1,018,830           121,229         1,662,368
                                                            -------------    -------------     -------------    --------------

              Loss from operations                               (522,309)        (301,830)         (121,229)         (945,368)
                                                            -------------    -------------     --------------   --------------

              Other income and (Expenses)

                Other revenue                                           -           49,750                 -            49,750
                Interest income                                       168                -                 -               168
                Gain on sale of assets                            215,375                -                 -           215,375
                Interest expense                                  (32,118)         (58,350)                -           (90,468)
                                                            -------------    -------------     -------------    --------------
                   Total Other Income and Expenses                183,425           (8,600)                -           174,825
                                                            -------------    -------------     -------------    --------------
              Loss before income taxes and discontinued
               operations

                Loss from discontinued operations                (685,918)               -                 -          (685,918)
                                                            -------------    -------------     -------------    --------------

                    Total Discontinued operations                (685,918)               -                 -          (685,918)
                                                            -------------    -------------     -------------    --------------

              Income Taxes                                              -                -                 -                 -
                                                            -------------    -------------     -------------    --------------

              Net Loss                                      $  (1,024,802)   $    (310,430)    $    (121,229)   $   (1,456,461)
                                                            =============    =============     =============    ==============

              Net loss per Share                            $       (0.56)   $       (1.20)                     $        (0.97)
                                                            =============    =============     =============    ==============  
</TABLE>

                                       19
<PAGE>


                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997
<TABLE>
<CAPTION>

NOTE 3 -      NOTES PAYABLE

              Notes payable are comprised of the following:
                                                                                                             June 30,
                                                                                                               1998

<S>                                                                                                        <C>         
              Note payable, unsecured, bearing interest at 12%, payable
               in monthly installments of $7,000, including interest                                          $63,009

              Promissory note, secured by vehicle, bearing interest at
               11%.  Due in monthly installments of $405, including interest.                                  16,856

              Convertible subordinated debentures, due June 30, 1996
               bearing interest at 12% per annum.  Interest payable
               quarterly, secured by land.                                                                    185,000

              Note payable with interest at 25%.  Interest payable in July with
                the entire note due October 24, 1998.  Secured by Company
                and GVI stock.                                                                                150,000

              Note payable to a bank with interest at 3% above prime per annum.
               Secured by accounts receivable and due August 31, 1998.                                        219,833
                                                                                                       --------------

              Subtotal                                                                                        634,698

              Less current portion                                                                            620,543

              Long-term portion                                                                        $       14,155
                                                                                                       ==============

              Maturities of long-term debt are as follows:

                                                     March 31, 1999                                    $      620,543
                                                     March 31, 2000                                             4,193
                                                     March 31, 2001                                             4,592
                                                     March 31, 2002                                             4,600
                                                     March 31, 2003                                               770
                                                                                                       --------------
                                                                                                       $      634,698
                                                                                                       ==============
</TABLE>

                                       20
<PAGE>


                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997

<TABLE>
<CAPTION>

NOTE 4 -      NOTES PAYABLE, RELATED PARTIES
                                                                                                         June 30,
                                                                                                           1998
<S>                                                                                               <C> 
              Note payable to Banque SCS, secured by GVI common stock.  Interest
               at 14% with monthly  principal  and  interest  payments of $6,000
               with  a  final  balloon  payment  July  2001.  (Banque  SCS  is a
               shareholder although it disclaims beneficial ownership
               of the shares                                                                       $          358,000

              Promissory  notes to Banque  SCS,  secured by GVI  stock,  bearing
               interest at 12%. Interest due monthly with the entire balance due
               on April 24, 1998. Holder of note has agreed to sell GVI
               stock securing note until note is paid in full.                                                170,000

              Note  payable to Banque  SCS,  secured  by GVI  common  stock.  An
                additional $300,000 was borrowed from Banque SCS in July
               1998.    Interest at 16% due monthly with the entire loan due
                December 7, 1999.                                                                              40,000

              Note payable to a shareholder, secured by assets of the Company.
               Interest payable monthly at 18% with no stated principal
               payments required.                                                                             135,491

              Notes payable to the former owners of FTI  (includes  officers and
               directors of the Company). Interest rates average 9.5%.
               Unsecured due upon demand.                                                                     271,214

              Notes payable to the former shareholders of PPW (includes an
               officer and director of the Company).  Interest rates average
               12%. Unsecured due upon demand.                                                                406,008

                          Subtotal                                                                          1,380,713
                                                                                                   ------------------      
                          Less current portion                                                               (229,974)

                          Long-term portion                                                        $        1,150,739
                                                                                                   ==================
</TABLE>

                                       21
<PAGE>


                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997



NOTE 5 -      CAPITAL LEASES

              Property and equipment  payments  under capital leases as of March
              31, 1998 is summarized as follows:

                        Year End
                        March 31,
                         1999                          $          368,389
                         2000                                     295,451
                         2001                                     253,347
                         2002                                      90,898
                                                       ------------------

              Total minimum lease payments                      1,008,085
              Less interest and taxes                             124,647
                                                       ------------------

              Present value of net minimum lease 
                payments                                          883,438
              Less current portion                                303,475

              Long-term portion of capital lease 
                obligations                            $          579,963
                                                       ==================


NOTE  6 -     INCOME TAXES

              The Company had net  operating  loss  carry-forwards  available to
              offset future taxable  income.  The Company has net operating loss
              carry-forwards  of  approximately  $5,700,000 to offset future tax
              liabilities. The loss carry-forwards will begin to expire in 2008.

              Deferred income taxes payable are made up of the estimated federal
              and state income taxes on items of income and expense which due to
              temporary  differences  between books and taxes are deferred.  The
              temporary  differences  are  primarily  caused  by the  use of the
              equity  method  for  reporting  investment  in  subsidiaries.  The
              deferred  tax  asset is offset  in full by a  valuation  allowance
              because it can not be reasonably determined that the net operating
              loss will be useable.

                                       22
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 7 -      PREFERRED STOCK

              The shareholders of the Company have authorized  10,000,000 shares
              of  preferred  stock with a par value of $0.001.  The terms of the
              preferred  stock are to be determined  when issued by the board of
              directors of the Company.

              SERIES B:

              At March 31, 1998,  there are 94,953  shares of series B preferred
              stock  issue  and  outstanding.  The  holders  of  these  series B
              preferred  shares  are  entitled  to  an  annual  cumulative  cash
              dividend  of not less than  sixty  cents per  share.  At March 31,
              1998, there is a total of $312,782 of accrued and unpaid dividends
              related to the series B preferred  stock which have been  included
              in  the  accompanying  consolidated  financial  statements.  These
              series B  preferred  shares  were  convertible  into shares of the
              Company's common stock which  conversion  option expired March 31,
              1995.

              SERIES D:

              As  discussed  in Note 2, the  Company  issued  100,000  shares of
              Series D  preferred  stock in  exchange  for 80% of the issued and
              outstanding  common stock of FTI.  Effective  March 31, 1998,  the
              Series D stock was converted into common stock (Note 2).

NOTE  8 -     COMMON STOCK ISSUED BUT NOT OUTSTANDING

              The Company has issued  160,820  shares of common stock which have
              been  offered to the holders of the Series B  preferred  stock and
              the  debentures.  The shares have not been accepted by the holders
              of those investments as of the date of the consolidated  financial
              statements.


NOTE 9 -      STOCK OPTIONS

              In August 1997, the Company's Board of Directors approved the 1997
              American  Resources  and  Development  Company  Stock  Option Plan
              (Option  Plan).  Under  the  Option  Plan,  500,000  shares of the
              Company's  common stock are reserved for issuance to Directors and
              employees.  Options are granted at a price and with vesting  terms
              as  determined by the Board of  Directors.  In October  1997,  the
              Board of Directors  granted options to purchase  140,000 shares of
              stock at $2.00. These options are exercisable  beginning March 31,
              1998,   over  staggered   periods  and  expire  after  ten  years.
              Compensation  expense of $1,458 per month will be  recognized  for
              40,000 of the  options  issued  over a 4 year  vesting  period and
              $1,458 per month will be  recognized  for  100,000 of the  options
              over a 10  year  vesting  period.  In  July  1998,  the  Board  of
              Directors changed the terms of the 100,000 options vesting over 10
              years. 25,000 of these options were fully vested and the remainder
              of the options were canceled. As a result, compensation expense of
              $52,498 was  recognized  for the year ended March 31, 1998 for the
              vesting of these options.

                                       23
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997

NOTE 9 -      STOCK OPTIONS (Continued)

              In  December  1997,  the Board of  Directors  granted  options  to
              purchase  39,000  shares  of stock at  $2.00.  These  options  are
              exercisable   beginning  March  31,  1998,  are  exercisable  over
              staggered  periods  and expire  after ten years.  No  compensation
              expense was  recognized  as the option  price was greater than the
              fair market value of the stock at the date of the option grant.

              Pro  forma  net  income  and  net  income  per  common  share  was
              determined as if the Company had accounted for its employee  stock
              options  under the fair value  method of  Statement  of  Financial
              Accounting Standards No.
              123.

              Pro forma expense in year 1 would be $30,904,  and $5,646 in years
              2 and 3, respectively,  with an increase in pro forma expenses per
              share of $0.016 in year 1 and $0.003 in years 2 and 3.

              For the pro forma  disclosures,  the options' estimated fair value
              was amortized  over their  expected  ten-year life. The fair value
              for these  options  was  estimated  at the date of grant  using an
              option pricing model which was designed to estimate the fair value
              of options which, unlike employee stock options,  can be traded at
              any time and are fully  transferable.  In  addition,  such  models
              require the input of highly subjective assumptions,  including the
              expected volatility of the stock price. Therefore, in management's
              opinion,  the  existing  models do not  provide a reliable  single
              measure of the value of  employee  stock  options.  The  following
              weighted-average  assumptions were used to estimate the fair value
              of these options.
                                                                  1997
                                                                 ------
                          Expected dividend yield                   0%
                          Expected stock price volatility          70%
                          Risk-free interest rate                 6.5%
                          Expected life of options (in years)      10


                                       24
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             June 30, 1998 and 1997


NOTE 10 - COMMITMENTS AND CONTINGENCIES

              FTI leases office and warehouse  space in Salt Lake City, Utah and
              leases  space for six retail  stores in various  locations.  Lease
              commitments  for the years ended March 31, 1999 through  March 31,
              2004 are  $368,885,  $373,374,  $380,077,  $112,011  and  $30,216,
              respectively.

NOTE 11 - GOING CONCERN

              The accompanying  financial statements have been prepared assuming
              the Company will  continue as a going  concern.  In order to carry
              out  its  operating   plans,  the  Company  will  need  to  obtain
              additional funding from outside sources.  The Company has received
              funds  from a  private  placement  and debt  funding  and plans to
              continue  making private stock and debt  placements in addition to
              selling its  investment  in GVI.  There is no  assurance  that the
              Company will be able to obtain sufficient funds from other sources
              as needed or that such funds, if available,  will be obtainable on
              terms  satisfactory  to the  Company.  Management  also intends to
              renegotiate the terms of its debt for a longer repayment period.

NOTE 12 - SUBSEQUENT EVENTS

              In 1997, Quade, Inc., acquired from the U.S. Polo Association ("US
              Polo") the exclusive  master  licenses  rights to the US Polo name
              for the United States and Canada.  For the last year Quade,  Inc.,
              has been developing  this property  including  signing  agreements
              with four  sub-licensees,  and serving as  licensee  for knit tops
              including t-shirts, fleece and polo shirts.

              On  March,  17,  1998,  the  Company  signed a Letter of Intent to
              acquire one hundred percent (100%) of the outstanding common stock
              of Quade, Inc. On July 23, 1998 the Company completed its purchase
              of Quade,  Inc. by issuing  213,333 shares of its common stock and
              by loaning  Quade  $115,000,  of which  $40,000 had been loaned by
              June 30, 1998.  These  shares  include  32,000  shares that have a
              guarantee of $5.00 per share based on the average  asking price of
              the  Company's  common  stock for the six months  ended  March 31,
              1999.  The Company will also pay  $100,000 to a former  partner of
              Quade, Inc. by December 31, 1998 and an additional  $714,000.00 is
              payable to Quade's  former  partner from  guaranteed  sub-licensee
              royalties,  even in the event no sub-licensee  royalties are paid.
              Depending  on  Quade's  performance  over  the next  three  years,
              additional shares of the Company's common stock will be issued for
              this acquisition if minimum earnings levels are met as follows:

              Fiscal    Earnings Before Income Taxes     Common Shares Issuable
               Year          Low             High        Minimum        Maximum

              1999        $ 27,671          $81,500        47,408       142,222
              2000        $251,166         $754,000        47,376       142,222
              2001        $499,900       $1,499,200        47,423       142,222

              The  additional   shares  that  are  issued  to  the  Quade,  Inc.
              shareholder also have a guaranteed value of $5.00.

              The Company is also obligated to provide an additional $125,000 to
              Quade for working  capital  purposes  and will provide a letter of
              credit  for  up to  $200,000  for  Quade  to  make  apparel  blank
              purchases.

                                       25
<PAGE>


Item 2. Management's Discussion and Analysis or Plan of Operations


RESULTS OF OPERATIONS

For the Quarter  Ended June 30,  1998,  Compared  to the Quarter  Ended June 30,
19967.

         Total revenue for the quarter ended June 30, 1998  increased  $647,873,
or 402%,  to $809,034,  compared  with  $161,161 for the quarter  ended June 30,
1997.  During the current  period  Fan-Tastic  merchandise  sales and  franchise
fees/royalties  were  $147,223  and $36,852  compared to $148,556 and $0 for the
three months ended June 30,  1997.  The increase in franchise  fees is primarily
due to an increase in Fan-Tastic's  marketing  budget in fiscal 1998 as compared
to fiscal 1997.  In addition,  The Company  acquired  Pacific  Print Works (PPW)
effective  March  31,  1998  (see  Note 2 to  the  financial  statements)  which
contributed  revenue of  $624,958  for the three  months  ended  June 30,  1998.
Revenue is expected to increase in future  quarters  due to the  acquisition  of
Quade, Inc. (see Note 12 to the financial statements).
 
         Fan-Tastic had a gross profit of $102,359 or 55.6% for the three months
ended June 30, 1998 as compared to $83,021 or 51.5% for the three  months  ended
June 30, 1997.  The  improvement in gross profit as a percentage of sales is due
to the increase in franchise  fees and royalties for the three months ended June
30,  1998.  PPW had a gross  profit  of  $206,806  or 33% of sales for the three
months ended June 30, 1998.

         Depreciation and amortization  increased by $97,671 which was primarily
due to  goodwill  of 30,442  from the PPW  acquisition  and $66,042 of PPW fixed
assets depreciation.

         General  expenses  increased by $305,892 which was primarily due to PPW
general expenses of $284,711.  General expenses are expected to continue to grow
in future quarters due to the acquisition of Quade,  Inc. in July 1998 (see Note
12 to the financial statements).

         Interest expense increased  $102,737 for the current period compared to
the comparable 1997 period.  The increase in interest expenses was due to 1) the
Company  increased  it's debt in fiscal 1998 and the three months ended June 30,
1998 in order to fund  operations  and acquire PPW and Quade,  Inc. and 2) PPW's
interest expense from its bank line of credit and capital lease obligations.

         The  Company  experienced  an  increase  in net loss of $277,463 in the
current period compared to the three months ended June 30, 1997 ($411,536 in the
current period compared with a net loss from  continuing  operations of $134,073
in the prior period.) This increase is due to the increase in  depreciation  and
amortization,  general expenses and interest expense as described above and from
the net loss from PPW operations.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30,  1998,  the Company had total assets of  $5,893,239,  total
liabilities of $4,477,666 and total stockholders equity of $1,415,573,  compared
with total assets of  $5,436,635,  total  liabilities  of  $4,126,181  and total
stockholders  equity of  $1,310,454  at March  31,  1998.  At June 30,  1998 the
Company's  current  ratio  was  approximately  .63  current  assets to 1 current

                                       26
<PAGE>

liabilities.  The Company's  current ratio is expected to continue to improve as
the  Company's  862,000  restricted  shares in GVI become a current  asset.  The
restriction  of sale of these  shares  expires in July 1999.  In  addition,  the
Company  will seek to convert  certain  debt to equity  which will  improve  its
current ratio.

         Management  intends to improve  its  overall  financial  structure  and
provide  operating  capital through seeking the conversion of debt and preferred
stock, private placement of the Company's common stock and sale of the Company's
investment  in GVI. In addition,  the Company  will need to raise  approximately
$125,000 of additional  capital to fund the  operations  of its new  subsidiary,
Quade, Inc.

                                       27
<PAGE>

Part II   -  Other Information

Item 1. Legal Proceedings

                 Not applicable.

Item 2. Changes in Securities

                 Not applicable.

Item 3. Default upon Senior Securities

                 Not applicable.

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

                 Not applicable.

Item 5. Other Information

                 Not applicable.

Item 6. Exhibits and Reports on Form 8-K

                 Not applicable.

                                       28
<PAGE>

                                   SIGNATURES


                 Pursuant to the requirements of the Securities  Exchange Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.


                                   AMERICAN RESOURCES AND
                                   DEVELOPMENT COMPANY
                                      (Registrant)



Date: August 18, 1998               By:  /Tim Papenfuss
                                         ------------
                                         Tim Papenfuss, Chief Financial Officer
                                         and Chief Executive Officer


                                       29