UNITED STATES
                       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 September 30, 1999;

                                       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.)

                                 --------------

                             2035 N.E. 181st
                              Gresham, OR                               97230
                  (Address of principal executive offices)           (Zip Code)

        Registrant's telephone number, including area code (503) 492-1500

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 November 11, 1999,  the  Registrant had  outstanding  3,615,953  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 - September 30, 1999
           and March 31, 1999                                                 3

           Condensed Consolidated Statements of Operations -Six months
           ended  September  30, 1999 and 1998 and Three  months ended
           September 30, 1999 and 1998                                        5

           Statements of Stockholders' Equity                                 7

           Condensed  Consolidated  Statements  of  Cash  Flows  - Six
           months ended  September  30, 1999 and 1998 and Three months
           ended September 30, 1999 and 1998                                  9

           Notes to  Condensed  Consolidated  Financial  Statements  -
           September 30, 1999                                                11


Item 2:    Management's Discussion and Analysis or Plan of Operation         28


Part II    Other Information

Item 1.    Legal Proceedings                                                 29

Item 2.    Changes in Securities                                             29

Item 3.    Defaults upon Senior Securities                                   29

Item 4.    Submission of Matters to a Vote of Security Holders               29

Item 5.    Other Information                                                 30

Item 6.    Exhibits and Reports on Form 8-K                                  30


                                  2
<PAGE>
<TABLE>
<CAPTION>

                                     AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                             Consolidated Balance Sheet


                                                       ASSETS

                                                                               September 30,        March 31,
                                                                                   1999               1999
                                                                           ------------------  -----------------
CURRENT ASSETS
<S>                                                                        <C>                 <C>
   Cash and cash equivalents                                               $            1,190  $          41,967
   Accounts receivable, net (Note 1)                                                  486,007            516,660
   Inventory (Note 1)                                                                 278,517            293,768
   Prepaid and other current assets                                                     9,902             15,400
   Marketable securities (Note 1)                                                      37,000            157,500
   Net assets of discontinued operations (Note 14)                                     74,040            282,508
                                                                           ------------------  -----------------

     Total Current Assets                                                             886,656          1,307,803
                                                                           ------------------  -----------------

PROPERTY AND EQUIPMENT (NOTE 1)

   Furniture, fixtures and equipment                                                  413,697            395,253
   Capital leases                                                                   1,083,340          1,090,032
                                                                           ------------------  -----------------

     Total depreciable assets                                                       1,497,037          1,485,285
     Less: accumulated depreciation                                                  (481,902)          (355,492)
                                                                           ------------------  -----------------

     Net Property and Equipment                                                     1,015.135          1,129,793
                                                                           ------------------  -----------------

OTHER ASSETS

   Marketable securities (Note 1)                                                     253,000            857,938
                                                                           ------------------  -----------------

   Total Other Assets                                                                 253,000            857,938
                                                                           ------------------  -----------------

   TOTAL ASSETS                                                            $        2,154,791  $       3,295,534
                                                                           ==================  =================

The accompanying notes are an intergral part of these consolidated financial statements.
</TABLE>
                                        3
<PAGE>
<TABLE>
<CAPTION>

                                      AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                        Consolidated Balance Sheet (Continued)


                                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                               September 30,        March 31,
                                                                                   1999               1999
                                                                           ------------------  -----------------
CURRENT LIABILITIES
<S>                                                                        <C>                 <C>
   Accounts payable                                                        $          435,254  $         366,028
   Accrued expenses and other current liabilities                                     661,698            397,800
   Line of credit (Note 3)                                                            315,580            367,845
   Current portion of notes payable (Note 4)                                          289,751            587,323
   Current portion of notes payable, related parties (Note 5)                       1,038,471             47,104
   Current portion of capital lease obligations (Note 6)                              280,658            282,497
                                                                           ------------------  -----------------

   Total Current Liabilities                                                        3,021,412          2,048,597
                                                                           ------------------  -----------------

LONG-TERM DEBT

   Deferred revenue                                                                    10,000             10,000
   Reserve for discontinued operations (Note 2)                                       697,342            660,123
   Notes payable (Note 4)                                                             244,197          1,001,819
   Notes payable, related parties (Note 5)                                            335,117          1,395,148
   Capital lease obligations (Note 6)                                                 347,757            495,030
                                                                           ------------------  -----------------

     Total Long-Term Debt                                                           1,634,413          3,562,120
                                                                           ------------------  -----------------

     Total Liabilities                                                              4,655,825          5,610,717
                                                                           ------------------  -----------------

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS' EQUITY (DEFICIT)

   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: 4,376,773
    shares issued and  3,640,953 outstanding.  (Note 9)                                 3,640              3,174
   Other comprehensive losses                                                      (1,160,626)          (435,188)
   Additional paid-in capital                                                       7,452,148          7,297,066
   Accumulated deficit                                                             (8,796,441)        (9,180,480)
                                                                           ------------------  -----------------

      Total Stockholders' Equity (Deficit)                                         (2,501,034)        (2,315,183)
                                                                           ------------------  -----------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)                                                            $        2,154,791  $       3,295,534
                                                                           ==================  =================

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

</TABLE>

                                        4
<PAGE>
<TABLE>
<CAPTION>


                                             AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                                Consolidated Statements of Operations


                                                                   For the Six Months Ended          For the Three Months Ended
                                                                         September 30,                      September 30,
                                                                     1999              1998              1999             1998
                                                               ---------------   ---------------  ----------------  ---------------
<S>                                                            <C>               <C>              <C>               <C>
NET SALES                                                      $     2,069,089   $      1,735368  $        941,000  $       926,334

COST OF SALES                                                        1,561,885         1,323,565           726,537          686,010
                                                               ---------------   ---------------  ----------------  ---------------

GROSS PROFIT                                                           507,204           411,803           214,463          240,324
                                                               ---------------   ---------------  ----------------  ---------------

GENERAL AND ADMINISTRATIVE EXPENSES

   Depreciation and amortization                                        15,618            66,735             6,606           57,723
   General expenses                                                    713,395           976,692           386,065          502,147
                                                               ---------------   ---------------  ----------------  ---------------

     Total General and Administrative Expenses                         729,013         1,104,307           392,671          559,870
                                                               ---------------   ---------------  ----------------  ---------------

LOSS FROM OPERATIONS                                                  (221,809)         (667,558)         (178,208)        (319,546)
                                                               ---------------   ---------------  ----------------  ---------------

OTHER INCOME AND (EXPENSES)

   Other income and expenses                                            20,981            10,418            17,002          (13,694)
   Gain on sale of assets                                               -                 48,100            -                28,695
   Interest expense                                                   (278,417)         (242,365)         (132,311)        (135,323)
                                                               ---------------   ---------------  ----------------  ---------------

     Total Other Income and (Expenses)                                (257,436)         (183,847)         (115,309)        (120,322)
                                                               ---------------   ---------------  ----------------  ---------------

LOSS BEFORE INCOME TAXES AND
 DISCONTINUED OPERATIONS                                              (479,245)         (948,561)         (293,517)        (439,868)
                                                               ---------------   ---------------  ----------------  ---------------

DISCONTINUED OPERATIONS

   Gain from sale of USPA                                              869,336            -                 55,947           -
Loss from operations of USPA                                            (5,871)           -                 -               (97,156)
                                                               ---------------   ---------------  ----------------  ---------------
   Loss from operations of USPA                                        (5,871)          (97,156)                            -
(97,156)
     Total Discontinued Operations                                     863,465            -                 55,947          (97,156)
                                                               ---------------   ---------------  ----------------  ---------------

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

NET INCOME                                                     $       384,220   $      (948,561) $       (237,570) $      (537,024)
                                                               ===============   ===============  ================  ===============

OTHER COMPREHENSIVE GAIN (LOSS)

   Gain (loss) on valuation of marketable securities           $      (725,438)  $       452,905  $         72,406  $        -

     Total Other Comprehensive Gain (Loss)                            (725,438)          452,905            72,406           -
                                                               ---------------   ---------------  ----------------  ---------------

NET COMPREHENSIVE GAIN (LOSS)                                  $      (341,218)  $      (495,656) $       (165,164) $      (537,024)
                                                               ===============   ===============  ================  ===============

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

</TABLE>
                                        5
<PAGE>
<TABLE>
<CAPTION>
                                             AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                      Consolidated Statements of Stockholders' Equity (Deficit)
                                                     September 30, 1999 and 1998


                                                                                            Other
                                           Common Stock                                Preferred Stock
                                  Comprehensive                  Paid-In    Accumulated                  Additional
                                      Shares          Amount     Shares        Amount         Loss         Capital         Deficit
                                    ---------     ----------     ------     -----------     -------      ----------     -----------
<S>                                 <C>        <C>               <C>      <C>          <C>               <C>           <C>
Balance, April 1, 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 for the year ended
 March 31, 1998                             -             -            -            -            -                  -      (440,748)
                               --------------  ------------  -----------  -----------  ----------------  ------------  -------------

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

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

</TABLE>
                                        6
<PAGE>
<TABLE>
<CAPTION>
                                              AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                       Consolidated Statements of Stockholders' Equity (Continued)
                                                       September 30, 1999 and 1998



                                                                                            Other
                                           Common Stock                                Preferred Stock
                                  Comprehensive                  Paid-In    Accumulated                  Additional
                                      Shares          Amount     Shares        Amount         Loss         Capital         Deficit
                                    ---------     ----------     ------     -----------     -------      ----------     -----------
<S>                                 <C>        <C>               <C>      <C>          <C>               <C>           <C>
Balance, March 31, 1998             2,929,263   $     2,929      244,953  $       245  $         -       $  7,026,260  $ (5,718,980)

Stock issued for cash                  48,000            48            -            -            -             59,954             -

Stock issued for Quade
 acquisition (Note 2)                 238,333           238            -            -            -            417,678             -

Stock adjustment on PPW
 acquisition (Note 2)                 (45,310)          (45)           -            -            -           (226,505)            -

Expense recognized for
 vested options                             -             -            -            -            -             17,496             -

Stock issued for loan                   4,000             4            -            -            -              2,183             -

Loss on valuation of
 marketable securities                      -             -            -            -     (435,188)                 -             -

Net loss for the year ended
 March 31, 1999                             -             -            -            -            -                  -    (3,461,500)
                               --------------  ------------  -----------  -----------  ----------------  ------------  -------------

Balance, March 31, 1999             3,174,286         3,174      244,953          245     (435,188)         7,297,066    (9,180,480)

Loss on valuation of
 marketable securities                      -             -            -            -     (725,438)                 -             -

Expense recognized for
 vested options                             -             -            -            -            -              8,748             -

Stock issued for Quade
 acquisition (Note 2)                 451,667           451            -            -            -            144,099             -

Stock issued for consulting
 services                              15,000            15            -            -            -              2,235             -

Net income for the six months
 ended September 30, 1999                   -             -            -            -            -                  -       384,220
                               --------------  ------------  -----------  -----------  ----------------  ------------  -------------

Balance, September 30, 1999         3,640,953   $     3,640      244,953  $       245  $(1,160,626)       $ 7,452,148   $(8,796,260)
                               ==============  ============  ===========  ===========  ===========       ============   ============

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

</TABLE>
                                        7
<PAGE>
<TABLE>
<CAPTION>


                                             AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                                Consolidated Statements of Cash Flows


                                                                For the Six Months Ended             For the Three Months Ended
                                                                       September 30,                       September 30,
                                                                  1999              1998             1999              1998
                                                              ---------------   ---------------  ---------------   ---------------
OPERATING ACTIVITIES
<S>                                                           <C>               <C>              <C>               <C>
  Net income (loss)                                           $       384,220   $      (948,561) $      (165,164)  $      (537,025)
  Adjustments  to  reconcile  net  income  to net
   cash  provided  by  operating activities:
    Gain on sale of USPA, Ltd.                                       (869,336)           -                -                 -
    Depreciation and amortization                                     141,706           228,177           69,694           123,232
    Common sock issued for services and interest                       10,983            -                 6,609            -
    Gain (loss) on sale of marketable securities                       -                (48,100)          -                (28,695)
  Changes in operating assets and liabilities net of Quade acquisition:
    (Increase) decrease in inventory                                   15,251             3,282            5,254           (70,734)
    (Increase) decrease in accounts receivable                        (52,712)         (150,921)        (188,259)          (73,752)
    Increase (decrease) in other current assets                         5,499            53,287          (15,213)           75,441
    Increase (decrease) in accounts payable                            69,226           122,485           35,904            81,966
    Increase (decrease) in other current liabilities                  301,117           101,999          221,172           127,603
                                                              ---------------   ---------------  ---------------   ---------------

      Net Cash Provided (Used) by Operating Activities                  5,954          (638,352)         (30,003)         (301,964)
                                                              ---------------   ---------------  ---------------   ---------------

INVESTING ACTIVITIES

  Proceeds from sale of marketable securities                          -                232,304           -                 91,194
  Proceeds from sale of USPA, Ltd.                                    221,470            -                -                 -
  Purchases of property and equipment                                  -                (74,110)          -                 (4,934)
                                                              ---------------   ---------------  ---------------   ---------------

      Net Cash Provided (Used) by Investing Activities                221,470           158,194           -                 86,260
                                                              ---------------   ---------------  ---------------   ---------------

FINANCING ACTIVITIES

  Stock issued for cash                                                -                 60,000           -                 15,000
  Payments on notes payable and capital lease obligations            (147,273)         (207,338)         (79,685)         (121,091)
  Proceeds (payments) from notes payable                               -                150,000          (12,694)           -
  Borrowings (payments) from related party debt                       (68,664)          400,000          (23,939)          300,000
  Net (borrowings) payments on factoring line of credit               (52,264)           67,848           60,036            10,161
                                                              ---------------   ---------------  ---------------   ---------------

      Net Cash Provided (Used) by Financing Activities               (268,201)          470,510          (56,282)          204,070
                                                              ---------------   ---------------  ---------------   ---------------

INCREASE (DECREASE) IN CASH                                           (40,777)           (9,648)         (86,285)          (11,634)

CASH, BEGINNING OF PERIOD                                              41,967            14,663           87,475            16,649
                                                              ---------------   ---------------  ---------------   ---------------

CASH, END OF PERIOD                                           $         1,190   $         5,015  $         1,190   $         5,015
                                                              ===============   ===============  ===============   ===============

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

</TABLE>
                                        8
<PAGE>
<TABLE>
<CAPTION>


                                              AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                           Consolidated Statements of Cash Flows (Continued)


                                                                 For the Six Months Ended           For the Three Months Ended
                                                                       September 30,                       September 30,
                                                                  1999              1998             1999              1998
                                                              ---------------   ---------------  ---------------   ---------------
CASH PAID FOR
<S>                                                           <C>               <C>              <C>               <C>
  Interest                                                    $       195,298   $       203,364  $        87,253   $        83,669
  Income taxes                                                $        -        $        -       $        -        $        -

NON-CASH FINANCING ACTIVITIES

  Common stock issued for services                            $        10,983   $        -       $         6,609   $        -
  Equipment purchased through capital
     lease obligation                                         $        -        $       144,312  $        -        $        -

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

</TABLE>
                                        9
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


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.  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)

               c.  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.

               d.  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.

               e.  Concentrations of Risk

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

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

               f.  Inventories

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

                                       10
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 1 -       SIGNIFICANT ACCOUNTING POLICIES (Continued)

               g.  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.

               h.  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  145,000 shares of free trading
               GVI stock  valued at $37,000  and  1,015,000  shares of GVI stock
               pledged as collateral on notes  payable  valued at $253,750.  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 loss of $725,438 in marketable securities
               at  September  30, 1999 due to a $1.00  decline in the  Company's
               recorded cost per GVI share.

               i.  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.

               j.  Basic Loss Per Common Share

               Basic los per  common  share is  computed  based on the  weighted
               average  number of common shares  outstanding  during the period.
               The common stock equivalents are antidilutive  and,  accordingly,
               are not used in the net loss per common share computation.  Fully
               diluted  loss per share is the same as the  basic  loss per share
               because of the antidilutive nature of common stock equivalents.

                                       11
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 1 -       SIGNIFICANT ACCOUNTING POLICIES (Continued)

               j.  Basic Loss Per Common Share (Continued)

               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 ($0.08) and
               ($0.17)  for the  quarters  ended  September  30,  1999 and 1998,
               respectively.  Basic net income from discontinued  operations per
               common share was $0.02 and $0.00, respectively.  Weighted average
               common shares  outstanding  were  3,618,779 and 3,153,795 for the
               quarters ended September 30, 1999 and 1998, respectively.

               k.  Revenue Recognition for Franchise Operations

               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  screen  printing,  embroidery  and product
               sales are recognized when the goods have been shipped.

               l.  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
               $1,696,412  from the purchase of Pacific Print Works (aka Pacific
               Printing and Embroidery LLC). The Company  amortized  $128,198 of
               goodwill from the PPW  acquisition  in fiscal 1999. In the fourth
               quarter of fiscal  1999,  the  Company  wrote-off  its  remaining
               goodwill from the PPW acquisition due to a permanent  impairment,
               resulting in an  additional  expense of  $1,568,215.  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.

               m.  Recent Accounting Pronouncements

               The Company adopted Statement of Financial  Accounting  Standards
               (SFAS) No. 130, "Reporting  Comprehensive Income" during the year
               ended March 31,  1999.  SFAS No. 130  established  standards  for
               reporting  and  display of  comprehensive  income  (loss) and its
               components (revenues,  expenses,  gains and losses) in a full set
               of general purpose financial statements.  This statement requires
               that an enterprise classify items of other  comprehensive  income
               by  their  nature  in  a  financial  statement  and  display  the
               accumulated balance of other comprehensive income separately from
               retained  earnings and additional  paid-in  capital in the equity
               section of a balance sheet.  SFAS No. 130 is effective for fiscal
               years   beginning  after  December  15,  1997.  The  Company  has
               retroactively  applied  the  provisions  of this new  standard by
               showing  the  other  comprehensive  income  (loss)  for all years
               presented.

                                       12
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 1 -       SIGNIFICANT ACCOUNTING POLICIES (Continued)

               n.  Advertising

               The  Company   follows  the  policy  of  charging  the  costs  of
               advertising to expense as incurred.

               o.  Prior Period Reclassification

               Certain 1998  balances have been  reclassified  to conform to the
               presentation of the 1999 consolidated financial statements.

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 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  for the year ended March 31, 1998 and $0.83 per
               share.

               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.  The
               Company has a reserve for discontinued  operations of $660,123 at
               March 31, 1999.

               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
               $629,252 and 213,472  shares of the  Company's  common stock were
               issued to PPW shareholders with a guaranteed share value of $5.00
               resulting   in  goodwill  of   $1,686,411.   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.

                                       13
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 2 -       MERGERS AND ACQUISITION (Continued)

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

                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 statements of operations for the
               year  ended  March 31,  1998 was  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  that actually would have
               been  obtained  if the  merger  had been  effected  at the  dates
               indicated  or results of  operations  that may be obtained in the
               future.

                                       14
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

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

                                                               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>

                                       15
<PAGE>


                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 2         MERGERS AND ACQUISITIONS (Continued)

               Quade, Inc.

               In 1997,  Quade, Inc. acquired from the U.S. Polo Association the
               exclusive  master  licenses  rights  to the US Polo  name for the
               United States and Canada.  From its  inception,  Quade,  Inc. had
               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 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.

               Effective October 8, 1998, the Company and Jordache  Enterprises,
               through its  affiliate,  Iron Will,  Inc.  ("Iron Will") formed a
               joint venture company, U.S. Polo Association,  Ltd. (US Polo), to
               hold the master license granted by the US Polo Association and to
               perform  all  licensing   activities  relating  to  the  US  Polo
               Association  licenses and  trademarks  for the United  States and
               Canada.  The  Company  and Iron  Will each own 50% of US Polo and
               management  and the  Board  of  Directors  for US Polo is  shared
               equally by the Company  and Iron Will.  For its  ownership  in US
               Polo, the Company  contributed,  through Quade,  Inc., all assets
               and  liabilities  relating to the business of the licensing of US
               Polo including the master  license and  sublicense  agreements in
               the US Polo name and trademarks.  Iron Will contributed $900,000.
               US Polo used $613,384 of the $900,000 equity  contribution to pay
               the note  payable  to the  former  partner  of  Quade,  Inc.  The
               Company's investment in this joint venture is accounted for under
               the equity method of  accounting.  The Company's  share of losses
               from this joint  venture  for the year ended  March 31, 1999 were
               $127,268.

               In June 1999,  the Company  sold its 50%  ownership in US Polo to
               Iron Will (See Note 14). In addition,  the Company and the former
               owner of Quade  amended the original  stock  purchase  agreement.
               Under the  amendment,  the  additional  426,667  shares of common
               stock  were  issued  to the  former  owner of Quade  without  any
               additional earnings requirments by Quade or US Polo and the $5.00
               guarantee value of the common shares issued to Quade was removed.

               The  following  tables  set  forth  certain  unaudited  pro forma
               condensed  combined  financial  information  for the  Company and
               Quade,   Inc.   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 Quade,  Inc. as
               of March 31, 1998. The pro forma condensed combined statements of
               operations for Quade,  Inc. for the year ended March 31, 1998 was
               prepared  using the  historical  statements  of operations of the
               Company and Quade.

               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.

                                       16
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


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

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

                                               American                              Pro Forma
                                               Resources           Quade            Adjustments           Combined
                                          -----------------   ---------------     ---------------    ----------------
              CURRENT ASSETS
<S>                                       <C>                 <C>                 <C>                <C>
              Cash                        $         14,663    $        -          $        -         $         14,663
              Marketable Securities                622,182             -                   -                  622,182
              Accounts receivable                  221,875             -                   -                  221,875
              Inventory, merchandise               437,003             23,456              -                  460,459
              Notes receivable                      -                  -                   -                   -
              Prepaid and other current
                assets                               44,882           109,779              -                  154,661
                                          -----------------   ---------------     ---------------    ----------------
                   Total Current Assets          1,340,605            133,235              -                1,473,840
                                          -----------------   ---------------     ---------------    ----------------

              PROPERTY AND
               EQUIPMENT

              Furniture, fixtures and
                equipment                          383,638             -                   -                  383,638
              Leased equipment                      859,185            -                   -                  859,185
                                          -----------------   ---------------     ---------------    ----------------
              Total depreciable assets           1,242,823             -                   -                1,242,823
              Less: accumulated
                depreciation                      (118,889)            -                   -                 (118,889)
                                          ----------------    ---------------     ---------------    ----------------

              Net Property and
               Equipment                         1,123,934             -                   -                1,123,934
                                          -----------------   ---------------     ---------------    ----------------
              OTHER ASSETS

              Royalties receivable                  -                 120,000              -                  120,000
              Investments                        1,077,500             -                   -                1,077,500
              Intangible assets                  1,826,492             -                  989,129           2,815,621
              Deposit                               68,104             -                   -                   68,104
                                          -----------------   ---------------     ---------------    ----------------

                   Total Other Assets            2,972,096            120,000             989,129           4,081,225
                                          -----------------   ---------------     ---------------    ----------------

                   TOTAL ASSETS           $      5,436,635    $       253,235     $       989,129    $      6,678,999
                                          ================    ===============     ===============    ================
</TABLE>

                                       17
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


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

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

                                                        American                            Pro Forma
                                                        Resources          Quade            Adjustments      Combined
                                                   -----------------   ---------------    ---------------  -------------
              CURRENT LIABILITIES
<S>                                                  <C>               <C>              <C>               <C>
              Accounts payable                       $     688,021     $      -         $      -          $     688,021
              Accrued expenses and
               other current liabilities                   393,494           244,411           -                637,905
              Current portion of notes payable             419,781           651,868          (92,454)          979,195
              Current portion of notes
               payable - related parties                   184,974            -                -                184,974
              Current portion of capital
               lease obligations                           303,475            -                -                303,475
                                                   -----------------   ---------------    ---------------  -------------
                  Total Current Liabilities              1,989,745           896,279          (92,454)        2,793,570
                                                   -----------------   ---------------    ---------------  -------------
              LONG-TERM DEBT

              Reserve for discontinued
                operations                                 450,782            -                -                450,782
              Long-term portion of notes payable            14,155            -                -                 14,155
              Long-term portion of capital
                lease obligations                          579,963            -                -                579,963
              Notes payable, related parties             1,091,536            -                -              1,091,536

                   Total Long-Term Debt                  2,136,436            -                -              2,136,436
                                                   -----------------   ---------------    ---------------  -------------
              STOCKHOLDERS' EQUITY

              Preferred stock                                  245            -                -                    245
              Common stock                                   2,929             1,000             (762)            3,167
              Additional paid-in capital                 7,026,260            -               438,301         7,464,561
              Accumulated deficit                       (5,718,980)         (644,044)         644,044        (5,718,980)
                                                   -----------------   ---------------    ---------------  -------------

                 Total Stockholders' Equity              1,310,454          (643,044)       1,081,583         1,748,993
                                                   -----------------   ---------------    ---------------  -------------
                 TOTAL LIABILITIES AND
                  STOCKHOLDERS' EQUITY               $   5,436,635     $     253,235    $     989,129     $   6,678,999
                                                     =============     =============    =============     =============
</TABLE>

                                       18
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


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

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

                                                               American                           Pro Forma
                                                               Resources        Quade            Adjustments        Combined
                                                            -------------    -------------     -------------    --------------
<S>                                                         <C>              <C>               <C>              <C>
              SALES                                         $   1,093,110    $     206,391     $      -         $    1,299,501

              COST OF SALES                                       774,405          219,618            -                994,023
                                                            -------------    -------------     -------------    --------------

                        Gross Profit (Loss)                       318,705          (13,227)           -                305,478
                                                            -------------    -------------     -------------    --------------

              EXPENSES

                 General and administrative expenses            1,447,285          535,841            -              1,983,126
                 Writedown of goodwill                            756,797           -                 -                756,797
                 Sales and marketing expenses                      93,175           -                 -                 93,175
                 Depreciation and amortization                     31,814           -                 72,831           104,643
                                                            -------------    -------------     -------------    --------------

                        Total Expenses                          2,329,071          535,841            72,831         2,937,741
                                                            -------------    -------------     -------------    --------------

              Loss From Operations                             (2,010,366)        (549,068)          (72,831)       (2,632,265)
                                                            -------------    -------------     -------------    --------------

              Other Income and (Expenses)

                 Other income                                      15,387           -                 -                 15,387
                 Interest revenue                                       5           -                 -                      5
                 Gain on sale of assets                           139,906           -                 -                139,906
                 Interest expense                                (133,339)         (41,660)           -               (174,999)
                                                            -------------    -------------     -------------    --------------

                   Total Other Income and Expenses                 21,959          (41,660)           -                (19,701)
                                                            -------------    -------------     -------------    --------------

              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)   $    (590,728)    $     (72,831)   $   (1,104,307)
                                                            =============    =============     =============    ==============

              Loss Per Share                                $       (0.24)   $       (0.35)    $      -         $        (0.59)
                                                            =============    =============     =============    ==============
</TABLE>


               Pro forma adjustments include a $1,061,960 addition to intangible
               assets for  license and  trademark  rights net of fiscal 1998 pro
               forma accumulated  amortization of $72,831. License and trademark
               rights were valued based on acquired liabilities over assets plus
               the value of the  Company's  stock  issued for  Quade.  Pro forma
               adjustment  for  additional  paid-in  capital  and  common  stock
               represent  the value of common stock issued for the  acquisition.
               Pro forma  adjustment  for notes  payable  was made to impute the
               note from Quade's  former  partner to its present  value at a 10%
               interest rate.

                                       19
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998



NOTE 3 -       LINE OF CREDIT

               In November 1998, the Company entered into an accounts receivable
               financing  agreement to sell, with recourse,  up to $1,000,000 of
               receivables,  net of a 15%  collection  reserve.  The  Company is
               charged  .065%  daily for all  receivables  sold and  uncollected
               under this financing  agreement.  At March 31, 1999 and September
               30,  1999,  the Company had a payable of $367,845  and  $315,580,
               respectively,   for  net  funds   advanced   from  this  accounts
               receivable line of credit.  The Company received  $1,163,873 from
               the sale of  receivables  for the year ended  March 31,  1999 and
               recognized  $24,560 in  interest  expense  from the  discount  of
               selling these receivables.

 NOTE 4 -      NOTES PAYABLE
<TABLE>
<CAPTION>

               Notes payable are comprised of the following:
                                                                                                        September 30,
                                                                                                        1999
<S>                                                                                               <C>
              Note payable, unsecured, bearing interest at 12%, payable
               in monthly installments of $7,000, including interest.  Due on
               demand.                                                                            $            26,603

              Convertible subordinated debentures, originally due June 30, 1996
               bearing interest at 12% per annum.  Interest payable
               quarterly.                                                                                     187,000

              Trade  drafts  payable,  secured  with  inventory,  payable in six
               monthly installments beginning June 1999, with payments from
               $1,909 to $3,021 per month.                                                                     28,253

              Notes payable to a shareholder of PPW.  Interest rates
               average 10%, due on demand, unsecured.                                                         244,196

              Notes payable with three vendors with interest rates averaging
               12%; partially secured by equipment, due in 2000.                                               47,896
                                                                                                  -------------------

              Subtotal                                                                                        533,948

              Less current portion                                                                           (289,751)

              Long-term portion                                                                   $           244,197
                                                                                                  ===================
</TABLE>

                                       20
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 4 -      NOTES PAYABLE (Continued)
<TABLE>
<CAPTION>

              Maturities of long-term debt are as follows:

                                           <S>                                               <C>
                                            March 31, 2000                                     $         289,751
                                            March 31, 2001                                               244,197
                                            March 31, 2002                                                -
                                            March 31, 2003                                                -
                                                                                               -----------------
                                                                                               $         533,948
</TABLE>

NOTE 5 -      NOTES PAYABLE, RELATED PARTIES
<TABLE>
<CAPTION>

                                                                                                   September 30,
                                                                                                     1999

             <S>                                                                               <C>
              Note payable to Miltex  Industries,  secured by 700,000  shares of
               GVI and 600,000 shares of the Company's common stock. Interest at
               15% with monthly principal and interest payments
               of $11,000 with a final balloon payment September 2000.                         $         721,970

              Note payable to a shareholder, secured by GVI stock.  Interest
               payable monthly at 13.5% with interest and principal payments
               of $5,000 per month.  Due September 2000.                                                 316,501

              Notes payable to shareholders (includes officers
               and directors of the Company).  Interest rates average 10.5%.
               Unsecured, due on demand, but not expected to be repaid
               until 2003.                                                                               335,117

                                            Subtotal                                                   1,373,588

                                            Less current portion                                      (1,038,471  )
                                                                                               -----------------

                                            Long-term portion                                  $         335,117
                                                                                               =================

              Maturities of notes payable, related parties are as follows:

                                            March 31, 2000                                     $          47,104
                                            March 31, 2001                                             1,008,555
                                            March 31, 2002                                               317,929
                                                                                               -----------------

                                                                                               $       1,373,588
</TABLE>
                                       21
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 6 -      CAPITAL LEASES
<TABLE>
<CAPTION>

              Property and equipment  payments  under capital leases as of March
31, 1999 is summarized as follows:
                                   Year End
                                   March 31,
                                  <S>                                                         <C>
                                   2000                                                        $         357,482
                                   2001                                                                  318,944
                                   2002                                                                  158,568
                                   2003                                                                   61,669
                                   2004                                                                   33,381
                                                                                               -----------------

              Total minimum lease payments                                                               930,044
              Less interest and taxes                                                                   (152,517)

              Present value of net minimum lease payments                                                777,527
              Less current portion                                                                      (282,497)

              Long-term portion of capital lease obligations                                   $         495,030
                                                                                               =================
</TABLE>

               The Company  recorded  depreciation  expense of $196,606  for the
               year ended March 31, 1999.

NOTE 7 -      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  $7,500,000 to offset future tax
               liabilities.  The loss  carry-forwards  will  begin to  expire in
               2014.

               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.

NOTE 8 -      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, 1999,  there are 94,953 shares of series B preferred
               stock  issued 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,
               1999,  there  is a  total  of  $352,589  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.

                                       22
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 9 -      COMMON STOCK ISSUED BUT NOT OUTSTANDING

              The Company has issued  160,820  shares of common  stock which had
              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. Additionally, the Company has issued 600,000 shares of
              common  stock as  collateral  for the note  payable  to Banque SCS
              (Note 5).

NOTE 10 -     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.

              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.

                                       23
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 10 -      STOCK OPTIONS (Continued)

               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:
                                                                March 31,
                                                                 1999

                     Expected dividend yield                      0%
                     Expected stock price volatility             70%
                     Risk-free interest rate                     6.5%
                     Expected life of options (in years)         10

               On January 22, 1999, the Company  granted options to a consultant
               to purchase up to 160,000  shares of the Company's  common stock.
               The  consultant  is  to  provide  various   investor  and  public
               relations  services  through  January 21, 2000 and the Company is
               recognizing  an expense of $6,000  over the term of the  services
               based upon the value of the options as calculated  from an option
               pricing  model.  The options expire in December 31, 2001, are not
               transferrable  and are  exercisable  at any time at the following
               rates:

                     40,000  shares at $0.50 per share;  40,000  shares at $1.00
                     per share;  40,000 shares at $2.00 per share; 40,000 shares
                     at $3.00 per share.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

              Office Lease

              The Company  leases office and warehouse  space in Salt Lake City,
              Utah and  Portland,  Oregon and leases space for retail  stores in
              various locations. Lease commitments for the years ended March 31,
              2000 through March 31, 2003 are $269,526,  $270,198, $224,391, and
              $34,698, respectively.

              Legal Proceedings

              The  Company  is  involved  in various  claims  and legal  actions
              arising in the  ordinary  course of  business.  In the  opinion of
              management,  the ultimate  disposition  of these  matters will not
              have  a  material  adverse  effect  on  the  Company's   financial
              position, results of operations, or liquidity.

                                       24
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 12 -     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.

NOTE 13 -     BUSINESS SEGMENTS

              Effective  March 31,  1999,  the  Company  adopted  SFAS No.  131,
              "Disclosure   about   Segments  of  an   Enterprise   and  Related
              Information."  Prior period  amounts have been restated to conform
              to the  requirements of this statement.  The Company  conducts its
              operations   principally  in  the  contract  screen  printing  and
              embroidery  industry with Pacific Print works, Inc. and the retail
              franchise industry with Fan-Tastic, Inc.

              Certain financial information  concerning the Company's operations
              in different industries is as follows:
<TABLE>
<CAPTION>

                                                  For the
                                                  Six Months Ended     Pacific                            Corporate
                                                  September 30,      Print Works        Fan-Tastic       Unallocated
                                                  -------------      -----------        ----------       -----------
<S>                                               <C>              <C>               <C>
              Net sales                           1999             $      1,886,860  $       182,228
                                                  1998                    1,335,507          399,861
              Operating income (loss)
               applicable to industry
               segment                            1999                        2,450         (110,098)
                                                  1998                     (248,159)         (98,722)
              General corporate expenses
               not allocated to industry
               segments                           1999                                                 $       114,160
                                                  1998                                                          64,116

              Interest expense                    1999                     (159,185)         (19,278)          (99,954)
                                                  1998                     (126,605)         (27,938)          (87,823)

              Other income (expenses)
               including interest and gain
               on sale of securities              1999                       17,888            3,093            -
                                                  1998                       17,905          (10,800)           50,613
</TABLE>
                                       25
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 1999 and 1998


NOTE 13 -     BUSINESS SEGMENTS (Continued)
<TABLE>
<CAPTION>


                                                  For the
                                                  Six Months Ended     Pacific                            Corporate
                                                  September 30,      Print Works        Fan-Tastic       Unallocated
                                                  -------------      -----------        ----------       -----------
<S>                                               <C>              <C>               <C>
              Gain from discontinued
               operations                         1999                                                 $       867,215
                                                  1998                                                          -

                                                     As of
                                                 September 30,
                                                  1999 and for
                                                 The Six Months
                                                  Then Ended

              Assets                              1999             $      1,610,392  $       179,099   $       365,300

              Depreciation and
               amortization                       1999                      134,860            6,497             2,378
                                                  1998                       66,042            7,272            31,630
              Property and equipment
               acquisitions                       1999                       -                -                 -
</TABLE>

NOTE 14 -     NET ASSETS OF DISCONTINUED OPERATIONS

              In March 1999, the Company's Board of Directors made a decision to
              sell its 50%  ownership in U.S.  Polo to Iron Will.  In June 1999,
              the Company  closed its sale of U.S. Polo  ownership to Iron Will.
              For its sale of U.S. Polo, the Company  received the  cancellation
              of $1,000,000 in debt from Jordache Enterprises,  the cancellation
              of $13,185 in interest  and cash of  $221,470.  In  addition,  the
              Company  received  $74,040 in October 1999 from the  collection of
              U.S. Polo royalties earned through May 31, 1999, and could receive
              up to another $30,000.

              The results of  operations  of Quade,  Inc. and U.S.  Polo for the
              year ended  March 31,  1999 has  generated  a loss of  $252,972 on
              sales of $232,712.  The net assets of the discontinued  operations
              at March 31, 1999 are included in the  consolidated  balance sheet
              as a  single  amount  of  $282,508  which  consists  primarily  of
              receivables,  inventories,  accounts  payable  and  the  Company's
              investment  accounted for under the equity method in U.S.  Polo. A
              gain on the disposal of U.S. Polo was recognized in the six months
              ended  September 30, 1999 for  $873,086.  No income tax benefit or
              expense has been attributed to the disposal of U.S. Polo.

                                       26
<PAGE>

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

Forward Looking Statements

The statements in this report  concerning  certain expected future expenses as a
percentage of net sales,  future financing and working capital  requirements and
availability,  and the Year 2000 issue constitute  forward - looking  statements
that are subject to risks and  uncertainties.  These  risks  could cause  actual
results or activities to differ  materially  from those  expected.  Factors that
could adversely affect cost of sales and general expenses as a percentage of net
sales include, but are not limited to, increased competitive factors, changes in
consumer  preferences,  as well as an inability to increase sales. Other factors
could include a failure  adequately fund  operations.  In addition,  unfavorable
business  conditions,  or  changes in the  general  economy  could have  adverse
effects.  Factors that could  materially  affect future  financing  requirements
include,  but are not limited to, the ability to obtain additional  financing on
acceptable  terms.  Factors that could materially  affect future working capital
requirements  include,  but are not limited to, the factors listed above and the
industry factors and general business conditions noted above. Factors that could
materially  affect  the  Year  2000  issue  include,  but  are not  limited  to,
unanticipated costs associated with any required  modifications to the Company's
computer  systems and  associated  software,  failures  of  external  systems of
suppliers, business partners or governmental agencies.

RESULTS OF OPERATIONS

The following  table sets forth,  for the periods  indicated,  selected  Company
income statement data expressed as a percentage of net sales.
<TABLE>
<CAPTION>
                                              Quarter Ended September 30              Six Months Ended September 30
                                                1999                 1998                1999                1998
                                                ----                 ----                ----                ----
<S>                                             <C>                  <C>                 <C>                 <C>
Net sales                                       100.0%               100.0%              100.0%              100.0%
Cost of sales                                    77.2%                74.1%               75.5%               76.3%
Gross profit                                     22.8%                25.9%               24.5%               23.7%
General expenses                                 41.0%                54.2%               34.5%               56.3%
Depreciation and amortization                     0.7%                 6.2%                0.8%                3.8%
Loss from operations                            -18.9%               -34.5%              -10.7%              -38.5%
Other income and expenses                         1.8%                -1.5%                1.0%                0.6%
Gain on sale of assets                            0.0%                 3.1%                0.0%                2.8%
Interest expense                                -14.1%               -14.6%              -13.5%              -14.0%
Loss before income taxes
   and discontinued operations                  -31.2%               -47.5%              -23.2%              -49.1%
Discontinued operations                           5.9%                 0.0%               41.7%               -5.6%
Income taxes                                      0.0%                 0.0%                0.0%                0.0%
Net income                                      -25.2%               -47.5%               18.6%              -54.7%
</TABLE>


For the three months ended September 30, 1999 ("second quarter 99"), compared to
the three months ended September 30, 1998 ("second quarter 98"):

Sales for the three months ended  September 30, 1999 were  $941,000  compared to
$926,334 for the three  months ended  September  30, 1998.  Pacific  Print Works
("PPW")  sales for the three  months  ended  September  30,  1999 were  $851,386
compared to $710,549 for the three months ended September 30, 1998. The $140,837
increase  in PPW's  revenue was  primarily  due to an increase in sales to PPW's
four  largest  customers.  The increase  with these  customers is largely due to
PPW's high density  printing  capabilities in addition to the overall quality of
the printing and related  services.  PPW expects a similar or larger increase in
sales over the next two  quarters  based on its  relationship  and  orders  with
existing customers in addition to PPW samples with potential new customers.

Sales for  Fan-Tastic  declined by $126,171  which was  primarily  due to second
quarter  99 sales  coming  from four  stores as  opposed to six stores in second
quarter 98 and franchise sales of $78,000 in the second quarter 98 as opposed to
zero in the second quarter 99.

Gross  profit and the gross  profit as a  percentage  of sales  declined for the
second quarter 99 compared to the second quarter 98, $214,463 and 22.8% compared
to $240,324 and 25.9%.  The decrease in gross  profit was  primarily  due to the
decline in Fan-Tastic  franchise sales as noted above. The gross profit from PPW
operations increased by approximately $60,000.

General and  administrative  expenses for the second quarter 99 were $386,065 as
compared to $502,147  for the second  quarter  98.  Fan-Tastic  saw a decline in
general and  administrative  expenses of approximately  $50,000 due to less rent
and payroll expenses resulting from the closure of 2 stores. The Company expects
general and  administrative  expenses over the next two quarter to be similar to
the second quarter 99 amount.

Depreciation  and  amortization  expenses  were $6,016 in the second  quarter 99
compared to $57,523 for the second quarter 98. This decrease is primarily due to
zero goodwill amortization in the second quarter 99 as the Company wrote off all
goodwill from the PPW acquisition at March 31, 1999.

The loss from  operations  for the  second  quarter 99 was  reduced to  $178,208
compared to $319,546  for the second  quarter 98. The  reduction  in the loss is
primarily  due to the  increase  in  sales  and the  reduction  in  general  and
administrative expenses as discussed above.

Interest expense for the second quarter 99 was $132,311 compared to $135,323 for
the prior year.

                                       27
<PAGE>

The Company had a $55,947  gain from the sale of its 50%  ownership in USPA Ltd.
in the second  quarter  99. For its sale of USPA Ltd.,  in June 1999 the Company
received the cancellation of $1,000,000 in debt from Jordache  Enterprises,  the
cancellation  of $13,185 in interest  and cash of  $221,470.  In  addition,  the
Company  received  $74,040  in October  1999 from the  collection  of U.S.  Polo
royalties earned through May 31, 1999.

For the six months months ended  September 30, 1999 ("YTD 99"),  compared to the
six months ended September 30, 1998 ("YTD 98"):

Sales for the six months ended  September 30, 1999 were  $2,069,089  compared to
$1,735,368  for the six months ended  September  30, 1998.  Pacific  Print Works
("PPW")  sales for the six  months  ended  September  30,  1999 were  $1,886,860
compared to $1,335,507 for the six months ended September 30, 1998. The $551,353
or 41% increase in PPW's  revenue was  primarily  due to an increase in sales to
PPW's four largest  customers.  The increase with these customers is largely due
to PPW's high density  printing  capabilities in addition to the overall quality
of the printing and related  services.  PPW expects a similar or larger increase
in sales over the next six quarters  based on its  relationship  and orders with
existing customers in addition to PPW samples with potential new customers.

Sales for  Fan-Tastic  declined by $217,663  which was  primarily  due to YTD 99
sales  coming from four stores as opposed to six stores in YTD 98 and  franchise
sales of  $112,000  YTD 98 as opposed to zero for YTD 98.  Franchise  sales from
October 1999 through  March 31, 2000 are expected to increase  compared to April
1, 1999 through  September 30, 1998 but  franchise  sales beyond fiscal 2000 are
based upon the amount of advertising incurred.

Gross profit and the gross profit as a percentage of sales increased for the YTD
99 compared to the YTD 98,  ($507,204 and 24.5% compared to $411,803 and 23.7%).
The increase in gross profit was  primarily due to the increase in PPW sales and
gross profit for the YTD 99 compared to YTD 98 ($417,000 vs.  $246,000) that was
partially reduced by a decline in Fan-Tastic franchise sales as noted above.

General and administrative  expenses for the YTD 99 were $713,395 as compared to
$976,692 for the YTD 98. Fan-Tastic saw a decline in general and  administrative
expenses  of  approximately  $10,000  due to  less  rent  and  payroll  expenses
resulting  from the  closure  of 2  stores.  The  Company  expects  general  and
administrative  expenses  over the next six  months to be  similar to the YTD 99
amount.

Depreciation  and amortization was $15,618 in the YTD 99 compared to $66,735 for
the YTD 98. This decrease is primarily due to zero goodwill  amortization in the
YTD 99 as the Company wrote off all goodwill from the PPW  acquisition  at March
31, 1999.

The loss from  operations  for the YTD 99 was  reduced to  $221,809  compared to
$667,558  for the YTD 98.  The  reduction  in the loss is  primarily  due to the
increase in sales and the  reduction in general and  administrative  expenses as
discussed above.

Interest expense for the second quarter 99 was $278,417 compared to $242,365 for
the prior year,  which was due to a greater amount of debt  outstanding  for YTD
99.

                                       28
<PAGE>

The Company had a $869,336  gain from the sale of its 50% ownership in USPA Ltd.
in the YTD 99. For its sale of USPA Ltd., in June 1999 the Company  received the
cancellation of $1,000,000 in debt from Jordache  Enterprises,  the cancellation
of $13,185 in interest and cash of $221,470.  In addition,  the Company received
$74,040  in October  1999 from the  collection  of U.S.  Polo  royalties  earned
through May 31, 1999.



LIQUIDITY AND CAPITAL RESOURCES

At  September  30,  1999 the  Company  had  total  assets of  $2,154,791,  total
liabilities of $4,655,825 and total stockholders  deficit of $2,501,034 compared
with total assets of  $3,295,534,  total  liabilities  of  $5,610,717  and total
stockholders  deficit of  $2,315,183  at March 31, 1999.  The changes in assets,
liabilities and stockholders deficit is due primarily to the decline in value of
the Company's  investment in GVI. At March 31, 1999 the Company's  current ratio
was  approximately .47 current assets to 1 current  liabilities  compared to .19
current  assets to 1 current  liabilities  at September 30, 1999. The decline in
the  Company's  current  ratio is primarily  due to $990,000  notes payable with
related parties becoming current at September 30, 1999. 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 private  placement of the Company's  common stock and
seeking the conversion of debt and preferred stock to common stock.  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.

Year 2000 Issues:

Many computer  hardware and software  systems and  equipment  with software were
designed with two digit year codes that did not recognize century and millennium
fields.  As a result,  these systems may calculate  dates for year 2000 as 1900,
which may cause  errors in  information  or system  failures.  The  Company  has
evaluated its internal computer hardware and software systems and equipment with
software  and does not  expect  the costs to remedy  year  2000  problems  to be
material to the Company's  financial  position,  results of operations,  or cash
flows.  The Company  believes  that  necessary  modifications  will be made on a
timely basis. However, the readiness of the Company's suppliers relating to year
2000 may vary. It is possible that any significant  supplier failures could have
a material adverse impact on the Company's operations and financial results.


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.

                                       29
<PAGE>

Item 5. Other Information

                 Not applicable.


Item 6. Exhibits and Reports on Form 8-K

                 Not applicable.


                                   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)

/s/ B. Willes Papenfuss      President, Chief Executive        November 11, 1999
-----------------------
    B. Willes Papenfuss      Officer and Director
                             (Principal Executive
                              Officer)



/s/ Timothy M. Papenfuss     Secretary / Treasurer and         November 11, 1999
 Timothy M. Papenfuss        Director (Chief Financial
                             Officer, Chief Accounting
                             Officer and Controller)

                                       30