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, 2001;

                                       or

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

        For transition period from ________________ to _________________


                    American Resourses & 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 13, 2001, the Registrant had outstanding 4,421,817 shares of
Common Stock.

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

                                       -1-
<PAGE>

Item 1:  Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets - September 30,
           2001 and March 31, 2001                                          3

         Condensed Consolidated Statements of Operations - Six
           months ended September 30, 2001 and 2000 and Three
           months ended September 30, 2001 and 2000                         5

         Statements of Stockholders' Equity                                 7

         Condensed Consolidated Statements of Cash Flows - Six
           months ended September 30, 2001 and 2000 and Three
           months ended September 30, 2001 and 2000                         8


         Notes to Condensed Consolidated Financial Statements -
           September 30, 2001                                              10


Item 2:  Management's Discussion and Analysis or Plan of Operation         19


Item 1.    Legal Proceedings                                               22

Item 2.    Changes in Securities                                           22

Item 3.    Defaults upon Senior Securities                                 22

Item 4.    Submission of Matters to a Vote of Security Holders             22

Item 5.    Other Information                                               22

Item 6.    Exhibits and Reports on Form 8-K                                22

                               -2-
<PAGE>
<TABLE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                           Consolidated Balance Sheet


                                     ASSETS

                                                                             September 30,         March 31,
                                                                                 2001                2001
                                                                           ------------------  -----------------
<S>                                                                        <C>                 <C>
CURRENT ASSETS
   Cash and cash equivalents                                               $            4,235  $          23,759
   Accounts receivable, net (Note 1)                                                1,164,849            609,456
   Inventory (Note 1)                                                                 736,751            170,065
   Prepaid and other current assets                                                     9,060             10,982
                                                                           ------------------  -----------------

     Total Current Assets                                                           1,914,895            814,262
                                                                           ------------------  -----------------

PROPERTY AND EQUIPMENT (NOTE 1)

   Furniture, fixtures and equipment                                                  472,981            461,954
   Capital leases                                                                   1,359,241          1,277,899
                                                                           ------------------  -----------------

     Total depreciable assets                                                       1,832,222          1,739,853
     Less: accumulated depreciation                                                (1,004,952)          (878,240)
                                                                           ------------------  -----------------

       Net Property and Equipment                                                     827,270            861,613
                                                                           ------------------  -----------------

OTHER ASSETS

   Deposits                                                                           100,679             87,458
                                                                           ------------------  -----------------

     Total Other Assets                                                               100,679             87,458
                                                                           ------------------  -----------------

     TOTAL ASSETS                                                          $        2,842,844  $       1,763,333
                                                                           ==================  =================
</TABLE>

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

                                       -3-
<PAGE>
<TABLE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                     Consolidated Balance Sheet (Continued)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                             September 30,         March 31,
                                                                                 2001                2001
                                                                           ------------------  -----------------
<S>                                                                        <C>                 <C>
CURRENT LIABILITIES
   Accounts payable                                                        $        2,114,048  $       1,377,463
   Accrued expenses and other current liabilities                                   1,101,183            897,799
   Line of credit (Note 3)                                                            904,880            363,888
   Current portion of notes payable (Note 4)                                          442,227            475,727
   Current portion of notes payable, related parties (Note 5)                       1,168,257          1,168,269
   Current portion of capital lease obligations (Note 6)                              159,238            219,930
                                                                           ------------------  -----------------

     Total Current Liabilities                                                      5,889,833          4,503,076
                                                                           ------------------  -----------------

LONG-TERM DEBT
   Reserve for discontinued operations (Note 2)                                       835,215            810,842
   Notes payable (Note 4)                                                             194,584            220,084
   Notes payable, related parties (Note 5)                                            186,169            210,669
   Capital lease obligations (Note 6)                                                 189,478            210,302
                                                                           ------------------  -----------------

     Total Long-Term Debt                                                           1,405,446          1,451,897
                                                                           ------------------  -----------------

     Total Liabilities                                                              7,295,279          5,954,973
                                                                           ------------------  -----------------

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: 7,404,752
    shares issued and 4,421,817 outstanding.  (Note 9)                                  4,422              4,422
   Additional paid-in capital                                                       7,854,408          7,845,635
   Accumulated deficit                                                            (12,311,510)       (12,041,942)
                                                                           ------------------  -----------------

      Total Stockholders' Equity (Deficit)                                         (4,452,435)        (4,191,640)
                                                                           ------------------  -----------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                 $        2,842,844  $       1,763,333
                                                                           ==================  =================
</TABLE>

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

                                       -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,
                                                               ---------------------------------  ---------------------------------
                                                                   2001              2000              2001             2000
                                                               ---------------   ---------------  ----------------  ---------------
<S>                                                            <C>               <C>              <C>               <C>
NET SALES                                                      $     3,781,727   $     2,700,297  $      2,501,575  $     1,338,775

COST OF SALES                                                        3,172,517         2,233,624         2,025,159        1,287,380
                                                               ---------------   ---------------  ----------------  ---------------

GROSS PROFIT                                                           609,210           466,673           476,416           51,395
                                                               ---------------   ---------------  ----------------  ---------------

GENERAL AND ADMINISTRATIVE EXPENSES

   Depreciation and amortization                                         2,400             6,417             1,100            2,908
   General expenses                                                    637,557           829,930           309,049          368,038
                                                               ---------------   ---------------  ----------------  ---------------

     Total General and Administrative Expenses                         639,957           836,347           310,149          370,946
                                                               ---------------   ---------------  ----------------  ---------------

GAIN (LOSS) FROM OPERATIONS                                           (30,747)         (369,674)           166,267        (319,551)
                                                               ---------------  ---------------   ----------------  ---------------

OTHER INCOME AND (EXPENSES)

   Other income and expenses                                             6,521            10,032             3,285            (939)
   Interest expense                                                  (245,342)         (312,173)         (109,480)        (146,622)
                                                               ---------------   --------------   ---------------   --------------

     Total Other Income and (Expenses)                               (238,821)         (302,141)          (106,195)       (147,561)
                                                               ---------------  ----------------  ----------------  ---------------

GAIN (LOSS) BEFORE INCOME TAXES                                      (269,568)         (671,815)            60,072        (467,112)
                                                               --------------    --------------   ----------------  --------------


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


NET INCOME (LOSS)                                              $     (269,568)   $     (671,815)  $         60,072  $     (467,112)
                                                               ===============   ===============  ================  ==============


OTHER COMPREHENSIVE GAIN (LOSS)

   Gain (loss) on valuation of marketable securities           $         -       $          -     $          -      $          -

     Total Other Comprehensive Gain (Loss)                               -                  -                -                 -
                                                               ---------------   ---------------  ----------------  ---------------

NET COMPREHENSIVE GAIN (LOSS)                                  $      (269,568)  $      (671,815) $         60,072  $     (467,112)
                                                               ===============   ===============  ================  ==============


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

                                       -5-
<PAGE>
<CAPTION>
                                     AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                  Consolidated Statements of Operations (Continued)

                                                                    For the Six Months Ended        For the Three Months Ended
                                                                         September 30,                       September 30,
                                                               --------------------------------   --------------------------------
                                                                     2000             2000              2001            2000
                                                               --------------    --------------   ----------------  --------------
<S>                                                            <C>               <C>              <C>               <C>
BASIC LOSS PER SHARE OF COMMON STOCK -
 CONTINUING OPERATIONS                                         $        (0.06)   $        (0.17)  $            .01  $        (0.12)
                                                               ==============    ==============   ================  ==============


BASIC LOSS PER SHARE OF COMMON STOCK -
 DISCONTINUED OPERATIONS                                       $            -    $            -   $              -  $            -
                                                               ==============    ==============   ================  ==============

</TABLE>

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

                                       -6-
<PAGE>
<TABLE>
<CAPTION>
                                              AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                             Consolidated Statements of Stockholders' Equity
                                                       September 30, 2001 and 2000


                                        Common Stock              Preferred Stock          Other           Additional
                               ----------------------------  ------------------------   Comprehensive        Paid-In    Accumulated
                                  Shares          Amount        Shares     Amount           Loss             Capital      Deficit
                               -------------   ------------  -----------  -----------   -------------      ----------   ------------
<S>                             <C>          <C>              <C>      <C>               <C>           <C>            <C>
Balance, April 1, 1999          3,174,286          3,174      244,953          245          (435,188)     7,297,066      (9,180,480)

Stock issued for Quade
 acquisition (Note 2)             451,667            452            -            -                 -        144,099               -

Stock issued for consulting
 services                         250,000            250            -            -                 -        181,384

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

Recognition of loss on
 valuation of marketable
 securities                             -              -            -            -           435,188              -               -

Net loss for the year ended
 March 31, 2000                         -              -            -            -                 -              -      (1,421,111)
               --- ----         ---------    -----------      -------  -----------       -----------   ------------   -------------

Balance, March 31, 2000         3,875,953          3,876      244,953          245                 -      7,640,045     (10,601,591)

Stock issued for consulting
 services                         192,777            193            -            -                 -         82,841               -

Stock issued for interest
 on debt                          140,087            140            -            -                 -         45,466               -

Stock exchanged for debt
 with related parties             140,000            140            -            -                 -         34,860               -

Stock issued to employees
 under Employee Stock
 Plan                              73,000             73            -            -                 -         24,927               -

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

Net loss for the year
 ended March 31, 2001                                                                                                    (1,440,351)
                                ---------    -----------      -------  -----------       -----------   ------------   -------------

Balance, March 31, 2001         4,421,817    $     4,422      244,953  $       245       $         -   $  7,845,635   $ (12,041,942)
                                =========    ===========      =======  ===========       ===========   ============   =============

Expense recognized for
 vested options                         -              -            -            -                 -                          8,773

Net loss for the six months
 ended September 30, 2001                                                                                                  (269,568)

Balance at
  September 30, 2001            4,421,817    $     4,422      244,953     $    245       $         -    $ 7,854,408    $(12,311,510)
                                =========    ===========      =======  ===========       ==========    ============   =============
</TABLE>

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

                                       -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,
                                                              ---------------------------------  ---------------------------------
                                                                    2001              2000             2001              2000
                                                              ---------------   ---------------  ---------------   ---------------
<S>                                                           <C>               <C>              <C>               <C>
OPERATING ACTIVITIES
  Net income (loss)                                           $     (269,568)   $      (671,815) $        60,072   $      (467,112)
  Adjustments to reconcile net income
   to net cash provided by operating activities:
    Depreciation and amortization                                     126,712           140,307           61,798            72,110
    Common stock issued for services and interest                       8,773           118,669            4,376             4,374
  Changes in operating assets and liabilities:
    (Increase) decrease in inventory                                 (566,686)           54,482         (304,057)           32,016
    (Increase) decrease in accounts receivable                       (555,393)           65,301         (548,872)           12,536
    (Increase) decrease in other current assets                       (11,299)           (9,815)          (9,151)          (12,815)
Increase (decrease) in accounts payable                               736,588           419,240          326,629           526,152
    Increase (decrease) in other current liabilities                  242,687           243,340          102,586           103,318
                                                              ---------------   ---------------  ---------------   ---------------

      Net Cash Provided (Used) by Operating Activities               (288,186)          359,709         (306,619)          270,579
                                                              ---------------   ---------------  ---------------   ---------------

INVESTING ACTIVITIES
  Proceeds from sale of marketable securities                               -             2,485                -                 -
  Purchases of property and equipment                                 (11,027)          (10,662)            (878)           (6,412)
                                                              ---------------   ---------------  ----------------- ---------------

      Net Cash Provided (Used) by Investing Activities                (11,027)           (8,177)            (878)                -
                                                              ---------------   ---------------  ----------------- ---------------

FINANCING ACTIVITIES
  Payments on capital lease obligations                              (177,791)         (159,319)         (67,776)         ((81,566)
  Proceeds (payments) from notes payable                              (59,000)          (10,151)         (36,500)                -
  Borrowings (payments) from related party debt                       (24,512)           46,700          (11,257)           15,310
  Net borrowings (payments) on factoring line of credit               540,992          (227,940)         426,076          (188,524)
                                                              --------------- -----------------  ---------------   ---------------

      Net Cash Provided (Used) by Financing Activities                279,689          (350,710)         310,543          (254,780)
                                                              ----------------  ---------------  ---------------   ---------------

INCREASE (DECREASE) IN CASH                                           (19,524)              822            3,046             9,387

CASH, BEGINNING OF PERIOD                                              23,759             8,914            1,189               349
                                                              ---------------   ---------------  ---------------   ---------------

CASH, END OF PERIOD                                           $         4,235   $         9,736  $         4,235   $         9,736
                                                              ===============   ===============  ===============   ===============
</TABLE>

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

                                       -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,
                                                              ---------------------------------  ---------------------------------
                                                                    2001              2000             2001              2000
                                                              ---------------   ---------------  ---------------   ---------------
<S>                                                           <C>               <C>              <C>               <C>
CASH PAID FOR
  Interest                                                    $       107,549   $       123,060  $        48,220   $        72,771
  Income taxes                                                $             -   $             -  $             -   $             -

NON-CASH FINANCING ACTIVITIES
  Common stock issued for services                            $         8,773   $       118,669  $         4,376   $         4,374
  Equipment purchased through capital
    lease obligation                                          $        81,342   $             -  $        81,342   $             -
</TABLE>

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

                                       -9-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000


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
         2001 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.
         Effective for fiscal quarters ending after March 15, 2000, the
         Securities and Exchange Commission adopted a rule requiring companies'
         independent auditors review the companies' financial information prior
         to the companies filing their Quarterly Reports on Form 10- QSB with
         the Commission. The Company's September 30, 2001 Form 10-QSB was not
         reviewed prior to submission to the Commission. A Form 8-K will be
         filed when the review is completed by the independent auditors.

         b. Principles of Consolidation

         The accompanying consolidated financial statements include American
         Resources and Development Company and its subsidiaries, Pacific
         Printing and Embroidery L.L.C. (PPW) and Fan-Tastic, Inc. (FTI).

         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 times, 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. Inventory consists of items available for
         resale.

                                      -10-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000

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. Accounts Receivable

         Accounts receivable are shown net of the allowance for returns and bad
         debts of $90,585 at September 30, 2001.

         i. Financial Instruments

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

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

         j. Income Taxes

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

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

         k. Basic Loss Per Common Share

         Basic loss 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.

         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 $.01 and $(.12) for the
         three months ended September 30, 2001 and 2000, respectively. Basic net
         (loss) income from discontinued operations per common share and diluted
         net loss from discontinued operations per common share were $0.00 and
         $0.00, respectively. Weighted average common shares outstanding were
         4,421,817 and 4,008,730 for the three months ended September 30, 2001
         and 2000, respectively.

                                      -11-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         l. Revenue Recognition

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

         m. Goodwill

         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.

         o. Advertising

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

NOTE 2 -MERGERS AND ACQUISITIONS

         Golf Ventures, Inc.

         In November 1997, Golf Ventures, Inc., a former Company subsidiary,
         merged with U.S. Golf Communities. U.S. Golf Communities was 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.

         The Company has a reserve for discontinued operations of $835,215 at
         September 30, 2001

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

         In May 1998, the Company acquired 83% of the outstanding shares of
         Pacific Print Works (PPW). The acquisition was accounted for by the
         purchase method of accounting, and accordingly, the purchase price was
         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. In
         addition, depending on PPW's performance from April 1, 1998 through
         March 31, 2001, additional shares of the Company's common stock would
         be issued to the Sellers if minimum earnings levels were met. Based on
         the $5.00 guarantee and the Company's share value from October 1998
         through March 1999, the Company is obligated to issue additional shares
         of common stock to the Sellers. An amendment to the PPW Stock Purchase
         Agreement is being evaluated by the Company and the Sellers in which
         the Company would issue another 1,100,000 shares of the Company's
         common stock to the Sellers and any additional earnings requirements by
         PPW or per share value guarantee by the Company would be eliminated.

                                      -12-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000

 NOTE 3 -LINE OF CREDIT

         In November 1998, the Company entered into an accounts receivable
         financing agreement to sell, with recourse, up to $1 million 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 September 30 and March 31, 2001, the Company
         had a payable of $904,880 and $363,888, respectively, for net funds
         advanced from this accounts receivable line of credit. The Company
         received $3,656,750 and 2,242,992 from the sale of receivables for the
         six months ended September 30, 2001 and 2000 and recognized $36,600 and
         $60,386 in interest expense from the discount of selling these
         receivables, respectively.


NOTE 4 - NOTES PAYABLE
<TABLE>
<CAPTION>
              Notes payable are comprised of the following:
                                                                                                 September 30,
                                                                                                     2001
                                                                                               -----------------
              <S>                                                                              <C>
              Note payable, unsecured, bearing interest at 12%, payable in
               monthly installments of $7,000, including interest.  Due on demand.             $          19,916

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

              Note payable to debtholder of PPW, unsecured. Modified in August
               2000. Modified agreement requires payments of $102,500 through
               February 2002 without interest. Additional principal payments of
               $147,084 will be required if payments are not made timely plus 9%
               interest. A gain on the modification of debt for $137,084 will be
               recorded when there is no risk of default on this debt.                                   242,084

              Note payable to shareholder of PPW for purchase of 7% of PPW
               shares, unsecured. Note requires monthly payments of $3,000 from
               July 2001, increasing to $5,000 in July 2002 with a final $9,000
               payment July 2003. The note is non-interest bearing but will
               accrue interest at
               9% from inception if the Company is non-timely on payments.                                91,000

               Note payable to former shareholder of PPW, unsecured. Interest rate
                 of 10%.  Due on demand, unsecured.                                                       96,811
                                                                                               -----------------

              Subtotal                                                                                   636,811

              Less current portion                                                                      (442,227)
                                                                                               -----------------

              Long-term portion                                                                $         194,584
                                                                                               =================

              Maturities of long-term debt are as follows:
                                            September 30, 2002                                 $         442,227
                                            September 30, 2003                                           194,584
                                                                                               -----------------

                                                                                               $         636,811

                                      -13-
<PAGE>
<CAPTION>
NOTE 5 - NOTES PAYABLE, RELATED PARTIES

                                                                                                  September 30,
                                                                                                       2001
                                                                                               -----------------
              <S>                                                                              <C>
              Note payable to Miltex Industries, secured by 2,934,193 shares of
               the Company's common stock. Interest at 15% with monthly
               principal and interest payments of $11,000 with a final
               balloon payment December 31, 2001.  Note is in default.                         $         770,054

              Note payable to a shareholder, secured by GCA stock.  Interest
               payable monthly at 13.5% with interest and principal payments
               of $5,000 per month.  Due October 31, 2001.  Note is in default                           315,859

              Notes payable to a Company owned by a shareholder.  Interest
               payable at 72% with interest and principal payments due currently.                         66,377

              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.                                         202,136
                                                                                               -----------------

                                            Subtotal                                                   1,354,426

                                            Less current portion                                      (1,168,257)
                                                                                               -----------------

                                            Long-term portion                                  $         186,169
                                                                                               =================



              Maturities of notes payable, related parties are as follows:
                                            September 30, 2002                                 $       1,168,257
                                            September 30, 2003                                           186,169
                                                                                               -----------------

                                                                                               $       1,354,426


 NOTE 6 -     CAPITAL LEASES

              Property and equipment payments under capital leases as of March
              31, 2001 is summarized as follows:

                                   Year End
                                   March 31,
                                   2002                                                        $         240,765
                                   2003                                                                  125,335
                                   2004                                                                   87,408
                                   2005                                                                   32,379
                                                                                               -----------------

              Total minimum lease payments                                                               485,887
              Less interest and taxes                                                                    (55,655)
                                                                                               -----------------

              Present value of net minimum lease payments                                                430,232
              Less current portion                                                                      (219,930)
                                                                                               -----------------

              Long-term portion of capital lease obligations                                   $         210,302
                                                                                               =================
</TABLE>

                                      -14-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000


NOTE 6 - CAPITAL LEASES (Continued)

         The Company recorded depreciation expense on capitalized lease
         equipment of $210,689 and $232,589 for the years ended March 31, 2001
         and 2000, respectively.

NOTE 7 - INCOME TAXES

         Deferred taxes are provided on a liability method whereby deferred tax
         assets are recognized for deductible temporary differences and
         operating loss and tax credit carryforwards and deferred tax
         liabilities are recognized for taxable temporary differences. Temporary
         differences are the differences between the reported amounts of assets
         and liabilities and their tax bases. Other temporary differences are
         created by the use of the equity method for reporting investments in
         subsidiaries. Deferred tax assets are reduced by a valuation allowance
         when, in the opinion of management, it is more likely than not that
         some portion or all of the deferred tax assets will not be realized.
         Deferred tax assets and liabilities are adjusted for the effects of
         changes in tax laws and rates on the date of enactment.

         The Income tax benefit for the year ending March, 31, 2001 differs from
         the amount computed at the federal statutory rates as follows:

                   Income tax Benefit at statutory rate          $      46,200
                   Valuation allowance                                 (46,200)
                                                                 -------------
                                                                 $           -
                                                                 =============

         Deferred tax assets for the year ending March 31, 2001 are comprised of
         the following:

                   Net Operating Loss Carryforward               $   1,318,000
                   Valuation allowance                              (1,318,000)
                                                                 -------------
                                                                 $           -
                                                                 =============

         At March 31, 2001, the Company had a net operating loss carryforward of
         approximately $4,700,000 that may be offset against future taxable
         income through 2021. These losses will start to expire in the year 2014
         and not included in this carryforward is about $1,600,000 in
         carryforwards net operating losses created from Golf Ventures, Inc.
         that most likely will not be allowed to be offset by any future
         operations of the Company. No tax benefit has been reported in the
         financial statements because the Company believes there is a 50% or
         greater chance the carryforward will expire unused. Accordingly, the
         potential tax benefits or the loss carryforward are offset by a
         valuation allowance of the same amount.


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, 2000, 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.

                                      -15-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000


NOTE 8 - PREFERRED STOCK (Continued)

         At March 31, 2001, there is a total of $466,533 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.

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 2,934,193 shares of common stock
         as collateral for the note payable to Banque SCS (Note 5).

NOTE 10 - STOCK OPTIONS

         In March 2001 and August 1997, the Company's Board of Directors
         approved the 2001 and 1997 American Resources and Development Company
         Stock Option Plans, respectively (Option Plans). Under the Option
         Plans, 1,500,000 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 August 1999 and January 2001, the Board of Directors granted options
         to purchase 696,291 and 599,723 shares of common stock at $0.25. The
         options issued in August 1999 are currently vested. The options issued
         in January 2001 vest over four years. The options were issued to
         various employees, officers and directors of the Company for past
         services, risk associated with various debt incurred by officers for
         the Company and guarantees by officers of Company debt, and for future
         services. 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.

         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.

         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. 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.

         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.

                                      -16-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000


NOTE 10 - STOCK OPTIONS (Continued)

         Pro forma expense in year 1 would be $77,660, and $75,335, 28,579,
         $22,933 in years 2 , 3, and 4, respectively, with an increase in pro
         forma expenses per share of $0.02 in year 1, $0.02 in year 2 and $0.01
         in years 3 and 4.

         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.

         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,
                                                                   2001
                                                                  ----------
                Expected dividend yield                              0%
                Expected stock price volatility                     70%
                Risk-free interest rate                            6.5%
                Expected life of options (in years)                  10


NOTE 11 - COMMITMENTS AND CONTINGENCIES

         Office Lease

         The Company leases office and warehouse space in Portland, Oregon.
         Lease commitments for the years ended March 31, 2002 through March 31,
         2003 are $318,832 and $49,366, 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.

                                      -17-
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           September 30, 2001 and 2000


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. 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." 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>                <C>
 Net sales                                   2001         $   3,670,641   $       111,086    $
                                             2000             2,610,953            89,344

 Operating income (loss)                     2001                85,730           (35,039)
 applicable to industry                      2000               (57,087)         (126,932)
 segment

 General corporate expenses                  2001                                                81,438
 not allocated to industry                   2000                                               185,664
 segments

 Interest expense                            2001              (168,701)          (19,935)      (56,706)
                                             2000              (198,842)          (24,442)      (88,889)

 Other income (expenses)                     2001                 6,521                 -             -
                                             2000                  (968)                -        11,000

 Assets                                      2001         $   2,793,989   $        45,804         3,051

 Depreciation and                            2001               126,312               400             -
  amortization                               2000               135,890             3,936           481

 Property and equipment                      2001                92,369                 -             -
  acquisitions                               2000                10,662                 -             -
</TABLE>

                                      -18-
<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 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 to
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.

The following table sets forth, for the periods indicated, selected Company
income statement data expressed as a percentage of net sales.

                                         Three Months            Six Months
                                     Ended September 30,     Ended September 30,
                                     -------------------     -------------------
                                      2001      2000          2001       2000
                                      ----      ----          ----       ----

Net sales                            100.0%    100.0%       100.0%      100.0%
Cost of sales                        81.0%      96.2%        83.9%       82.7%
Gross profit                         19.0%       3.8%        16.1%       17.3%
General expenses                     12.4%      27.5%        16.9%       30.7%
Depreciation and amortization        0.0%        0.2%         0.1%        0.2%
Loss from operations                 6.6%      -23.9%        -0.8%      -13.7%
Other income and expenses            0.1%       -0.1%         0.2%        0.4%
Interest expense                     -4.4%     -11.0%        -6.5%      -11.6%
Gain (Loss) before income taxes      2.4%      -34.9%        -7.1%      -24.9%
Income taxes                         0.0%        0.0%         0.0%        0.0%
Net Income (loss)                    2.4%      -34.9%        -7.1%      -24.9%

For the three months ended September 30, 2001 ("second quarter fiscal 2002"),
compared to the three months ended September 30, 2000 ("second quarter fiscal
2001"):

Sales for the three months ended September 30, 2001 were $2,501,575 as compared
to $1,338,775 for the three months ended September 30, 2000. Pacific Print Works
("PPW") sales for the second quarter fiscal 2002 were $2,434,822 compared to
$1,300,605 for second quarter fiscal 2001. Production sales, primarily from
screenprinting, embroidery and finishing, were $907,445 in second quarter fiscal
2002 as compared to $855,222 in second quarter fiscal 2001. Second quarter
fiscal 2002 PPW sales included $1,527,377 for garment sales as compared to
$445,133 for the second quarter fiscal 2001. Certain customers request "package
sales" which include the sale of the garment, primarily T-shirts, with the
screenprint and/or embroidery. The increase in garment sales in second quarter
fiscal 2002 came from the sale of patriotic design T-shirts and other garments.
The increase in garment sales is expected to continue as many of PPW's other
large customers have expressed an interest in purchasing package sales from PPW.

Gross profit for the three months ended September 30, 2002 was $476,416 as
compared to $51,395 for the three months ended September 30, 2000. The increase
in gross profit was primarily due to an increase in garments sales for PPW with
a higher gross margin.

                                      -19-
<PAGE>

General expenses for the second quarter fiscal 2002 were $309,049 as compared to
$368,038 for the first quarter fiscal 2001. The decrease was primarily
attributable to a reduction of $54,000 in Fan-Tastic general expenses related to
closing the last of Fan-Tastic retail stores September 2001.

Depreciation and amortization expenses included in total general expenses for
the second quarter fiscal 2002 was $1,100 as compared to $2,908 for the second
quarter fiscal 2001. PPW had depreciation of $61,699 and $69,602 for the second
quarter fiscal 2002 and 2001, respectively, which was included in cost of sales.

The Company's gain from operations for the second quarter fiscal 2002 was
$166,267 compared to a loss of $319,551 for the second quarter fiscal 2001. The
improvement in operations is primarily due to the increase in package sales as
discussed above.

Interest expense for second quarter fiscal 2002 was $109,480 compared to
$146,622 for the second quarter fiscal 2001. The decline in interest expense was
primarily due to a reduction of $8,300 in interest from the accounts receivable
factor due to an improved interest rate on the accounts receivable factor
arrangement, and a reduction in capitalized lease interest expense due to the
decreasing capitalized lease payable balance and elimination of interest from a
note payable to a PPW debtholder due to a modification in the debt terms in
August 2000. The Company is accruing but not paying $20,000 of monthly interest
on $187,000 in debentures, and debt to Miltex Industries and debt with various
shareholders.

For the six months ended September 30, 2001 ("YTD fiscal 2002"), compared to the
six months ended September 30, 1999 ("YTD fiscal 2001"):

Sales for the six months ended September 30, 2001 were $3,781,727 compared to
$2,700,297 for the six months ended September 30, 2000. Pacific Print Works
("PPW") sales YTD fiscal 2002 were $3,670,641 compared to $2,610,953 for the YTD
fiscal 2001 sales. PPW production sales, primarily from screenprinting,
embroidery and finishing, were $2,046,358 YTD fiscal 2002 as compared to
$2,124,000 YTD fiscal 2001. YTD fiscal 2002 PPW sales included $1,629,283 for
garment sales as compared to $486,597 for the YTD fiscal 2001. Certain customers
request "package sales" which include the sale of the garment, primarily
T-shirts, with the screenprint and/or embroidery. The increase in garment sales
for YTD fiscal 2002 came from the sale of patriotic design T-shirts and other
garments. The increase in garment sales is expected to continue as many of PPW's
other large customers have expressed an interest in purchasing package sales
from PPW.

Gross profit increased and the gross profit as a percentage of sales decreased
for YTD fiscal 2002 as compared to the YTD fiscal 2001, $609,210 and 16.1%
compared to $466,673 and 17.3%. The increase in gross profit margin was
primarily due to an increase in garments sales for PPW with a higher gross
margin.

General and administrative expenses for the YTD fiscal 2002 were $637,557 as
compared to $829,930 for the YTD fiscal 2000. The decrease in general and
administrative expenses is primarily due to $110,000 in investor relation
expenses incurred in the first quarter fiscal 2001 as compared to none in YTD
fiscal 2002 and a reduction of $88,000 in Fan-Tastic general expenses related to
closing the last of Fan-Tastic retail stores September 2001.

The loss from operations before other income and expenses for the YTD fiscal
2002 was a loss of $30,747 as opposed to a loss of $369,674 for the YTD fiscal
2001. The improvement in operations was due to the increase in gross profit and
a decline in general expenses as discussed above.

Interest expense for the YTD fiscal 2002 was $245,342 compared to $312,173 for
the prior year. The decline in interest expense was primarily due to a reduction
of $27,000 in interest from the accounts receivable factor due to an improved
interest rate on the accounts receivable factor arrangement, and a reduction in
capitalized lease interest expense due to the decreasing capitalized lease
payable balance and elimination of interest from a note payable to a PPW
debtholder due to a modification in the debt terms in August 2000. The Company
is accruing but not paying $20,000 of monthly interest on $187,000 in
debentures, and debt to Miltex Industries and debt with various shareholders.

                                      -20-
<PAGE>

For the three months ended September 30, 2000 ("second quarter fiscal 2001"),
compared to the three months ended September 30, 1999 ("second quarter fiscal
2000"):

Sales for the three months ended September 30, 2000 were $1,338,775 compared to
$941,000 for the three months ended September 30, 1999. Pacific Print Works
("PPW") sales for the second quarter fiscal 2001 were $1,300,605 compared to
$851,386 for the second quarter fiscal 2000. The $449,219 increase in PPW's
revenue was primarily due to a $412,000 increase in sales to a customer in the
second quarter fiscal 2001 compared to the second quarter fiscal 2000. Sales in
the second quarter fiscal 2001 included T-shirt garments of $445,000 in addition
to screen printing revenue.

Gross profit and the gross profit as a percentage of sales declined for the
second quarter fiscal 2001 as compared to the second quarter fiscal 2000,
$51,395 and 3.8% compared to $214,463 and 22.8%. The decline in gross profit was
primarily due to an increase in production salaries and wages, an increase in
costs of garments sold to customers of $430,000 with a profit of $9,000 on these
garments, an increase in materials for garment finishing, screen and freight
costs and an increase in rent costs. Production salaries and wages increased
$34,000 due to an increase of 5% in production volume and a pay increase to the
top three production management employees. Materials used for garment finishing
and screens increased $25,000 due to the increase in production. Rent costs
increased by $39,000 because PPW required extra space due to the increase in
revenue (i.e., $1,338,775 for second quarter fiscal 2001 compared to $941,000
for second quarter fiscal 2000.)

General and administrative expenses for the first quarter fiscal 2001 were
$368,038 as compared to $386,065 for the second quarter fiscal 2000.

The gain (loss) from operations before other income and expenses for the second
quarter fiscal 2001 was a loss of $319,551 as opposed to a loss of $178,208 for
the second quarter fiscal 2000.

Interest expense for the second quarter fiscal 2001 was $146,622 compared to
$132,311 for the prior year.

For the six months ended September 30, 2000 ("YTD fiscal 2001"), compared to the
six months ended September 30, 1999 ("YTD fiscal 2000"):

Sales for the six months ended September 30, 2000 were $2,700,297 compared to
$2,069,089 for the six months ended September 30, 1999. Pacific Print Works
("PPW") sales YTD fiscal 2001 were $2,610,953 compared to $1,886,860 for the YTD
fiscal 2000 sales. The $724,093 increase in PPW's revenue was primarily due to a
$412,000 and $366,000 increase in sales to PPW's two largest customers YTD
fiscal 2001 compared to YTD fiscal 2000. The increase to these customers is
largely due to PPW's high density printing capabilities in addition to the
overall quality of the printing and related services.

Gross profit and the gross profit as a percentage of sales declined slightly for
YTD fiscal 2001 as compared to the YTD fiscal 2000, $466,673 and 17.3% compared
to $507,204 and 24.5%. The decline in gross profit margin was primarily due to
an increase in production salaries and wages, an increase in costs of garments
sold to customers of $346,000 with a profit of $16,000 on these garments, an
increase in materials for garment finishing, screen and freight costs and an
increase in rent costs. Rent costs increased by $78,000 because PPW required
extra space due to the increase in revenue (i.e., $2.7 million for the six
months ended September 30, 2000 compared to $2.1 million for the six months
ended September 30, 1999.)

General and administrative expenses for the YTD fiscal 2001 were $829,930 as
compared to $713,395 for the YTD fiscal 2000. The increase in general and
administrative expenses is primarily due to $110,000 in investor relation
expenses incurred in the first quarter fiscal 2001.

The gain (loss) from operations before other income and expenses for the YTD
fiscal 2001 was a loss of $369,674 as opposed to a loss of $221,809 for the YTD
fiscal 2000.

Interest expense for the YTD fiscal 2001 was $312,173 compared to $278,417 for
the prior year.

The Company had a $869,336 gain from the sale of its 50% ownership in USPA Ltd.
in the YTD fiscal 2000 without any similar gain for YTD fiscal 2001.

                                      -21-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

 At September 30, 2001, the Company had total assets of $2,842,844, total
liabilities of $7,295,279 and total stockholders' deficit of $4,452,435 compared
with total assets of $1,763,333, total liabilities of $5,954,973 and total
stockholders deficit of $4,191,640 at March 31, 2001. The changes in assets,
liabilities and stockholders equity is due primarily to losses from operations
and interest expense. At September 30, 2001 the Company's current ratio of
current assets to current liabilities was approximately .33. 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.

Item 1. Legal Proceedings

         Not applicable.

Item 2. Changes in Securities

         Not applicable.

Item 3. Defaults upon Senior Securities

         Not applicable.

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

         Not applicable.

Item 5. Other Information

         Effective for fiscal quarters ending after March 15, 2000, the
Securities and Exchange Commission adopted a rule requiring companies'
independent auditors review the companies' financial information prior to the
companies filing their Quarterly Reports on Form 10-QSB with the Commission. The
Company's September 30, 2001 Form 10-QSB was not reviewed prior to submission to
the Commission. A Form 8-K will be filed when the review is completed by the
independent auditors.

Item 6. Exhibits and Reports on Form 8-K

         Not applicable.

         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 13, 2001
-----------------------      Officer and Director
    B. Willes Papenfuss      (Principal Executive
                             Officer)




/s/ Timothy M. Papenfuss     Secretary / Treasurer and        November 13, 2001
------------------------     Director (Chief Financial
 Timothy M. Papenfuss        Officer, Chief Accounting
                             Officer and Controller)


                                      -22-