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 December 31, 1998;

                                       or

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

         For transition period from ________________ to _________________

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

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
             (Exact name of registrant as specified in its charter)

                                ----------------
                   UTAH                                   87-0401400
      (State or other jurisdiction of                 (I.R.S. Employer
       Incorporation or Organization)                 Identification No.)

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

            3855 S. 500 W.
                Suite R
            Salt Lake City, Utah                             84115
(Address of principal executive offices)                  (Zip Code)

       Registrant's telephone number, including area code (801) 288-9120

     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 February 8, 1999, the Registrant had outstanding  3,219,596 shares of
Common Stock.


           Transitional Small Business Disclosure Format (check one):

                                 Yes [ ] No [X]


<PAGE>

Part I     Financial Information

Item 1:    Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets - December 31, 1998 and
 March 31, 1998................................................................1


Condensed Consolidated Statements of Operations - Nine months ended
 December 31, 1998 and 1997 and Three Months
 Ended December 31, 1998 and 1997..............................................3


Statements of Stockholders' Equity.............................................4


Condensed Consolidated Statements of Cash Flows - Nine months ended
 December 31, 1998 and 1997 and Three Months Ended
 December 31, 1998 and 1997....................................................5

Notes to Condensed Consolidated Financial Statements - December 31, 1998.......7


Item 2:    Management's Discussion and Analysis or Plan of Operation..........31


Part II    Other Information

Item 1.    Legal Proceedings..................................................34

Item 2.    Changes in Securities..............................................34

Item 3.    Defaults upon Senior Securities....................................34

Item 4.    Submission of Matters to a Vote of Security Holders................34

Item 5.    Other Information .................................................34

Item 6.    Exhibits and Reports on Form 8-K...................................34

                                        i
<PAGE>
<TABLE>
<CAPTION>



                                       AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                               Consolidated Balance Sheet


                                                         ASSETS

                                                                             December 31,           March 31,
                                                                                1998                  1998       
                                                                         -----------------     -----------------
                                                                            (Unaudited)
CURRENT ASSETS
<S>                                                                      <C>                   <C>              
   Cash                                                                  $          46,767     $          14,663
   Accounts receivable (Note 3)                                                    322,894               221,875
   Inventory (Note 1)                                                              396,923               437,003
   Marketable securities                                                           905,810               622,182
   Prepaid and other current assets                                                 32,600                44,882
                                                                         -----------------     -----------------

     Total Current Assets                                                        1,704,994             1,340,605
                                                                         -----------------     -----------------

PROPERTY AND EQUIPMENT (Note 1)

   Furniture, fixtures and equipment                                               449,823               383,638
   Capital leases                                                                1,004,553               859,185
                                                                         -----------------     -----------------

     Total depreciable assets                                                    1,454,376             1,242,823
     Less: accumulated depreciation                                               (351,843)             (118,889)
                                                                         -----------------     -----------------

     Net Property and Equipment                                                  1,102,533             1,123,934
                                                                         -----------------     -----------------

OTHER ASSETS

   Investment in unconsolidated affiliate                                          403,615                -
   Investments (Note 1)                                                             -                  1,077,500
   Intangible assets (Note 1)                                                    1,831,639             1,826,492
   Deposits                                                                         -                     68,104
                                                                         -----------------     -----------------

     Total Other Assets                                                          2,235,254             2,972,096
                                                                         -----------------     -----------------

     TOTAL ASSETS                                                        $       5,042,781     $       5,436,635
                                                                         =================     =================
</TABLE>


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

                                       1
<PAGE>
<TABLE>
<CAPTION>

                                       AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                         Consolidated Balance Sheet (Continued)


                                          LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                             December 31,           March 31,
                                                                                1998                  1998       
                                                                         -----------------     -----------------
                                                                             (Unaudited)
CURRENT LIABILITIES
<S>                                                                      <C>                   <C>              
   Accounts payable                                                      $         517,045     $         688,021
   Accrued expenses and other current liabilities                                  615,299               393,494
   Current portion of notes payable (Note 4)                                       516,457               419,781
   Current portion of notes payable, related parties (Note 5)                      705,713               184,974
   Current portion of capital lease obligations (Note 6)                           234,046               303,475
                                                                         -----------------     -----------------

     Total Current Liabilities                                                   2,588,560             1,989,745
                                                                         -----------------     -----------------

LONG-TERM DEBT

   Reserve for discontinued operations                                             450,782               450,782
   Notes payable (Note 4)                                                          750,000                14,155
   Capital lease obligations (Note 6)                                              531,956               579,963
   Notes payable, related parties (Note 5)                                         852,319             1,091,536
                                                                         -----------------     -----------------

     Total Long-Term Debt                                                        2,585,057             2,136,436
                                                                         -----------------     -----------------

     Total Liabilities                                                           5,173,617             4,126,181
                                                                         -----------------     -----------------

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY

   Unrealized loss on marketable securities and investments                       (603,872)               -
   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; 3,219,596 and
    2,929,263 shares issued and outstanding (Note 8)                                 3,219                 2,929
   Additional paid-in capital                                                    7,510,447             7,026,260
   Accumulated deficit                                                          (7,040,875)           (5,718,980)
                                                                         -----------------     -----------------

     Total Stockholders' Equity                                                   (130,836)            1,310,454
                                                                         -----------------     -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $       5,042,781     $       5,436,635
                                                                         =================     =================
</TABLE>

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

                                       2
<PAGE>
<TABLE>
<CAPTION>


                                       AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                         Consolidated Statements of Operations


                                            For the Nine Months Ended              For the Three Months Ended
                                                  December 31,                           December 31,              
                                      -----------------------------------    -----------------------------------
                                          1998                1997                1998               1997       
                                      ---------------     ---------------    ----------------    ---------------
<S>                                   <C>                 <C>                <C>                 <C>            
SALES                                 $     2,952,829     $       860,202    $      1,135,905    $       478,078

COST OF SALES                               1,873,150             427,641             741,640            253,675
                                      ---------------     ---------------    ----------------    ---------------

GROSS PROFIT                                1,079,679             432,561             394,265            224,403
                                      ---------------     ---------------    ----------------    ---------------

GENERAL AND ADMINISTRATIVE EXPENSES

  Depreciation and amortization               340,818              32,773             112,641             11,861
  General expenses                          1,746,994             810,496             524,043            303,150
                                      ---------------     ---------------    ----------------    ---------------

    Total General and
     Administrative Expenses                2,087,812             843,269             636,684            315,011
                                      ---------------     ---------------    ----------------    ---------------

    Net Loss                               (1,008,133)           (410,708)           (242,419)           (90,608)
                                      ---------------     ---------------    ----------------    ---------------

OTHER INCOME AND (EXPENSES)

  Interest income                                 318              -                      318-
  Other income and expenses                    48,282              40,823              36,865             -
  Gain of sale of assets                       48,100              -                   -                  63,712
  Interest expense                           (385,467)            (86,220)           (143,103)           (36,405)
  Equity in loss from
   unconsolidated affiliate                   (24,995)             -                  (24,995)            -     
                                      ---------------     ---------------    ----------------    ---------------

    Total Other Income and
      (Expenses)                             (313,762)            (45,397)           (130,915)            27,307
                                      ---------------     ---------------    ----------------    ---------------

  Net (Loss) Before Income Tax
   and discontinued operations             (1,321,895)           (456,105)           (373,334)           (63,301)
  Minority Interest (Note 1)                   -                   -                   -                  -
  Discontinued operations                      -                 (116,723)             -                 (18,645)
                                      ---------------     ---------------    ----------------    ---------------

  Net Loss Before Income Tax               (1,321,895)           (572,828)           (373,334)           (81,996)
  Less: Provisions for (Income
   Tax)                                        -                   -                   -                  -     
                                      ---------------     ---------------    ----------------    ---------------

NET LOSS                              $    (1,321,895)    $      (572,828)   $       (373,334)   $       (81,996)
                                      ===============     ===============    ================    ===============

BASIC LOSS PER SHARE
 OF COMMON STOCK -
 CONTINUING OPERATIONS                $         (0.42)    $         (0.25)   $          (0.12)   $         (0.03)
                                      ===============     ===============    ================    ===============

BASIC LOSS PER SHARE
 OF COMMON STOCK
 DISCONTINUED OPERATIONS              $        -          $         (0.06)   $         -         $         (0.01)
                                      ===============     ===============    ================    ===============
</TABLE>


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

                                       3
<PAGE>
<TABLE>
<CAPTION>


                                           AMERICAN RESOURCES AND DEVELOPMENT
                                           Statements of Stockholders' Equity
                                                   December 31, 1998


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

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

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

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

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

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

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

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

Eliminate GVI equity for
 merger with U.S. Golf
 Communities (Note 2)                     -            -               -              -                 (8,40          4,687,868

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

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

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

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

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

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


                                                                For the Nine Months Ended            For the Three Months Ended
                                                                     December 31,                            December 31,         
                                                            ---------------------------------    ---------------------------------
                                                              1998                1997               1998              1997       
                                                            -------------    ----------------    ---------------     -------------
OPERATING ACTIVITIES
<S>                                                         <C>              <C>                 <C>                 <C>           
  Net Loss                                                  $  (1,321,895)   $       (572,828)   $      (373,334)    $     (81,996)
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization                                 340,818              39,475            112,641            12,311
    Gain on sale of marketable securities                         (48,100)             -                  -                 -
    Common stock issued for services and interest                   6,557              85,000             -                 55,000
  Changes in operating assets and liabilities:
    (Increase) decrease in inventory                               52,052            (110,692)            48,770           187,045
    (Increase) decrease in notes and accounts
     receivable                                                  (100,176)           (165,172)           (70,826)         (129,401)
    Increase (decrease) in other current assets                    76,996               2,069             -                 (6,700)
    Increase (decrease) in accounts payable                      (200,182)            144,975           (302,667)           37,394
    Increase (decrease) in other current liabilities              150,173             258,768            (19,845)           51,988
                                                            -------------    ----------------    ---------------     -------------

     Net Cash Provided (Used) by Operating Activities          (1,043,757)           (318,405)          (611,961 )         (47,094)
                                                            -------------    ----------------    ---------------      ------------

INVESTING ACTIVITIES

  Proceeds from sale of marketable securities                     232,304              -                  -                 -
  Purchases of property and equipment                            (211,553)            (53,272)           (24,443)          (42,049)
  Reduction in cash from GVI merger                                -                  (10,047)            -                (10,047)
  Investment in land held for development                          -                 (417,892)            -                (47,631)
                                                            -------------    ----------------    ---------------   ---------------


     Net Cash Provided (Used) by Investing Activities             (20,751)           (481,211)           (24,443)          (99,727)
                                                            -------------    ----------------    ---------------     -------------


FINANCING ACTIVITIES

  Stock issued for cash                                            60,000              -                  -                 -
  Proceeds from sale of receivables, net                          168,531              -                 168,531            -
  Payments on long-term debt and capital lease
    obligations                                                  (720,992)            (63,390)          (539,448)           (2,220)
  Long-term borrowings                                          1,199,077             309,937          1,049,073            85,000
  Borrowings from related parties                                 390,000             581,385            100,046            -     
                                                            -------------    ----------------    ---------------     -------------

     Net Cash Provided (Used) by Financing Activities           1,096,612             827,932            182,826           678,156
                                                            -------------    ----------------    ---------------     -------------

INCREASE (DECREASE) IN CASH                                        32,104              28,316             41,752            36,005

CASH AND CASH EQUIVALENTS, BEGINNING
 OF PERIOD                                                         14,663              47,850              5,015            40,161
                                                            -------------    ----------------    ---------------     -------------

CASH AND CASH EQUIVALENTS, END
 OF PERIOD                                                  $      46,767    $         76,166    $        46,767     $      76,166
                                                            =============    ================    ===============     =============
</TABLE>

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

                                        5
<PAGE>
<TABLE>
<CAPTION>

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


                                                              For the Nine Months Ended
                                                                     December 31,               
                                                              1998                1997        
                                                        -----------------  ------------------
CASH PAID FOR
<S>                                                     <C>                <C>               
  Interest                                              $         268,845  $           91,606
  Income taxes                                          $          -       $           -

NON-CASH FINANCING ACTIVITIES

  Common stock issued for services and interest         $           6,557  $           85,000
</TABLE>

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

                                        6
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES

              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 are  necessary for a fair
              presentation of the statements.  The interim operating results are
              not necessarily indicative of the results for a full year.

              b.  Organization

              American  Resources  and  Development  Company  (the  Company) was
              formed as a Utah  company on March 31, 1983 under the name Leasing
              Technologies.  In March  1997,  the  shareholders  of the  Company
              approved  a name  change to  American  Resources  and  Development
              Corporation. In addition, the shareholders also approved a reverse
              split of its  common  stock on a 1 share for 20 share  basis.  The
              accompanying  consolidated financial statements have been restated
              to reflect this reverse split retroactively.

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

              Effective March 31, 1998, the Company acquired  approximately  83%
              of the issued and outstanding common stock of Pacific Printing and
              Embroidery.

              Effective July 23, 1998,  the Company  acquired 100% of the issued
              and outstanding common stock of Quade, Inc. ("Quade" ). Quade owns
              the  master   licensing   rights  of  the  U.S.  Polo  Association
              trademarks for the United States and Canada.  Effective October 8,
              1998,  the Company  formed a joint  venture  company  with Quade's
              market  licensing  rights for the U.S. Polo  Association (see Note
              2).

              c.  Principles of Consolidation

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

                                        7
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              d.  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  1,207,746 and 497,746 shares of
              GVI  unrestricted  stock at December  31, 1998 and March 31, 1998,
              respectively,   which  are  classified  as  marketable  securities
              available for sale and are carried at market value.  Any change in
              market  value from period to period will be reported as a separate
              component of stockholders' equity until realized.

              Investments  represent  862,000 shares of GVI restricted  stock at
              March 31, 1998, which were classified as investments available for
              sale.  These shares were  classified as  marketable  securities at
              September 30, 1998 as restrictions for resale expire in July 1999.

              There was an unrealized loss of $603,872 in marketable  securities
              at December 31, 1998 due to a $0.50 decline in GVI per share value
              at December 31, 1998 compared to the  Company's  recorded cost for
              GVI shares.

              e.  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.

                                        8
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              f.  Common Net Loss Per Common Share

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

              In February 1997, the Financial  Accounting Standards Board issued
              Statement  No. 128,  Earnings  per Share,  (SFAS  128),  which was
              required to be adopted on December 31,  1997.  SFAS 128 requires a
              change in the method  currently used to compute earnings per share
              and to restate all prior  periods to  disclose  diluted net income
              per common  share in addition to its current  basic net income per
              common share. Basic net loss from continuing operations per common
              share and diluted net loss from  continuing  operations per common
              share  amounts,  calculated  in  accordance  with SFAS  128,  were
              $(0.12) and $(0.03) for the quarters  ended  December 31, 1998 and
              1997,  respectively.  Basic net loss from discontinued  operations
              per common share and diluted net loss from discontinued operations
              per common share for the quarters ended December 31, 1998 and 1997
              was $-0- and $(0.01), respectively. Weighted average common shares
              outstanding  were  3,218,982 and 1,835,486 for the quarters  ended
              December  31,  1998 and  1997,  respectively,  and  3,107,537  and
              1,835,486  for the nine months  ended  December 31, 1998 and 1997,
              respectively.

              g.  Revenue Recognition

              Franchise  fees  are  recognized  as  revenue  when  all  material
              services relating to the sale have been substantially performed by
              FTI.  Material  services  relating to the  franchise  sale include
              assistance  in the  selection of a site and  franchisee  training.
              Revenue for contract screen printing, embroidery and product sales
              are recognized  when the goods have shipped.  Royalty revenue from
              sublicensee  royalty  guarantees are  recognized  equally over the
              life of the contracts.

              h.  Intangible Assets

              The excess of the Company's  acquisition  cost over the fair value
              of the net assets of the FTI acquisition  resulted in a write-down
              of  goodwill of $756,797  for the year ended  March 31,  1998.  On
              March 31, 1998, the Company also recognized goodwill of $1,826,492
              from the purchase of Pacific Print Works (a.k.a.  Pacific Printing
              and  Embroidery  LLC).  The Company  recognizes  goodwill from the
              excess of the  purchase  price of its  acquisitions  over the fair
              value  of the net  assets  acquired.  The  Company  amortizes  its
              intangible assets over a 15 year life.

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

                                        9
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 2        MERGERS AND ACQUISITIONS

              Golf Ventures, Inc.

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

                                       10
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 2 -    MERGERS AND ACQUISITIONS (Continued)

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


                                                         Prior to                GVI                 After
                                                          Merger              Adjustments          GVI Merger  
                                                   --------------------  -------------------   -----------------
CURRENT ASSETS
<S>                                                <C>                   <C>                   <C>              
   Cash                                            $           86,213    $         (10,047)    $          76,166
   Marketable securities                                       -                   692,886               692,886
   Accounts receivable                                        131,522               -                    131,522
   Inventory, real estate                                     753,131             (753,131)              -
   Inventory, merchandise                                     581,169               -                    581,169
   Notes receivable                                            75,000               -                     75,000
   Prepaid and other current assets                            33,130               -                     33,130
   Current portion of contract receivable                       1,955               (1,955)                   -     
                                                   --------------------  -------------------   -----------------

     Total Current Assets                                   1,662,120               (72,247)           1,589,873
                                                   ------------------    ------------------    -----------------

PROPERTY AND EQUIPMENT

   Model home and condominiums                                180,988             (134,788)               46,200
   Furniture, fixtures and equipment                          197,284              (15,456)              181,828
   Vehicles                                                    43,252               -                     43,252
                                                   -------------------   -----------------------------------------

Total depreciable assets                                      421,524             (150,244)              271,280
Less: accumulated depreciation                               (124,936)               4,435              (120,501)
                                                   ------------------    -------------------   -----------------

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

OTHER ASSETS

   Land held for development                               12,132,098          (11,886,098)              246,000
   Goodwill                                                   240,407               -                    240,407
   Long-term portion of contract
     receivable                                                55,993              (55,993)               -
   Deposit                                                      1,970               -                      1,970
                                                   -------------------   -----------------     -----------------

     Total Other Assets                                    12,430,468          (11,942,091)              488,377
                                                   ------------------    -----------------     -----------------

     TOTAL ASSETS                                  $       14,389,176    $     (12,160,147)    $       2,229,029
                                                   ==================    =================     =================
</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>

                                    AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                  Notes to the Consolidated Financial Statements
                                            December 31, 1998 and 1997


NOTE 2 -   MERGERS AND ACQUISITIONS (Continued)

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

     Total Current Liabilities                              4,365,565            (2,509,663)           1,855,902
                                                   ------------------    ------------------    -----------------

LONG-TERM DEBT

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

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

STOCKHOLDERS' EQUITY

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

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

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

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

              Fan-Tastic, Inc.

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

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

              Unaudited  proforma summary  information  combining the results of
              operations  of the  Company  and  FTI as if  the  acquisition  had
              occurred at the  beginning of fiscal 1997,  after giving effect to
              certain  adjustments,  including  amortization  of goodwill.  This
              proforma  summary  does not  necessarily  reflect  the  results of
              operations  as they  would  have been if the  Company  and FTI had
              constituted  a single  entity  during such  periods.  For the Year
              ended March 31, 1997

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

                                       13
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

              Finally Communities, Inc.

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

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

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

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

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

              1999         $179,480      $  538,200        28,754        86,261
              2000          269,020         807,300        28,754        86,261
              2001          357,900       1,073,700        28,754        86,261

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

                                       14
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

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

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

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

                                       15
<PAGE>
<TABLE>
<CAPTION>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997



NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

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

                                   American                                Pro Forma
                                   Resources             PPW              Adjustments          Combined  
                              -----------------   ------------------  ---------------     ----------------
CURRENT ASSETS
<S>                           <C>                 <C>                 <C>                 <C>            
Cash                          $          4,962    $          9,699    $        -          $        14,663
Marketable Securities                  622,182              -                  -                  622,182
Accounts receivable                     51,444             170,431             -                  221,875
Inventory, merchandise                 321,934             115,071             -                  437,003
Notes receivable                       115,000            (115,000)            -                   -
Prepaid and other current
  assets                                41,289               3,593             -                   44,882
                              -----------------   ------------------  ---------------     ----------------

     Total Current Assets            1,156,811             183,794             -                1,340,605
                              -----------------   ------------------  ---------------     ----------------

PROPERTY AND
 EQUIPMENT

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

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

OTHER ASSETS

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

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

     TOTAL ASSETS             $      2,316,284    $      1,293,859    $     1,826,492     $     5,436,635
                              ================    ================    ===============     ===============
</TABLE>
  
                                       16
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


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

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

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

    Total Current Liabilities        1,106,459             883,286             -                1,989,745
                              -----------------   ------------------  ---------------     ----------------

LONG-TERM DEBT

Reserve For Discontinued Operations    450,782              -                  -                  450,782
Long-term portion of notes payable      14,155              -                  -                   14,155
Long-term portion of capital
  lease obligations                     13,638             566,325             -                  579,963
Notes payable, related parties         714,699             376,837             -                1,091,536
                              -----------------   ------------------  ---------------     ----------------

     Total Long-Term Debt            1,193,274             943,162             -                2,136,436
                              -----------------   ------------------  ---------------     ----------------

STOCKHOLDERS' EQUITY

Preferred stock                            245              -                  -                      245
Common stock                             2,670              13,080            (12,821)              2,929
Additional paid-in capital           5,732,616              -               1,293,644           7,026,260
Accumulated deficit                 (5,718,980)           (545,669)           545,669          (5,718,980)
                              -----------------   ------------------  ---------------     ----------------

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

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

                                       17
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


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

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

                                                American                           Pro Forma
                                                Resources           PPW           Adjustments        Combined  
                                              -------------    -------------     -------------    --------------
SALES
<S>                                           <C>              <C>               <C>              <C>           
  Sales - screen printing 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 - screen printing and embroidery     -             1,784,167            -              1,784,167
  Cost of sales - merchandise                        774,405          -                 -                774,405
                                              -------------    -------------     -------------    --------------

          Total Cost of Sales                        774,405       1,784,167            -              2,558,572
                                              -------------    -------------     -------------    --------------

          Gross Profit                              318,705          605,803            -                924,508
                                              -------------    -------------     -------------    --------------

EXPENSES

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

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

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

Other Income and (Expenses)

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

     Total Other Income and Expenses                 21,959         (181,538)           -               (159,579)
                                              -------------    -------------     -------------    --------------

LOSS BEFORE INCOME TAXES AND
 DISCONTINUED OPERATIONS

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

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

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

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

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

                                       18
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


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

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

                                                  American                           Pro Forma
                                                 Resources          PPW            Adjustments        Combined  
                                               -------------    -------------     -------------    --------------
SALES
<S>                                            <C>              <C>               <C>              <C>           
   Sales - screen printing and embroidery      $      -         $   2,926,410     $      -         $    2,926,410
                                               -------------    -------------     -------------    --------------

      Total Sales                                     -             2,926,410            -              2,926,410
                                               -------------    -------------     -------------    --------------

 COST OF SALES

   Cost of sales - screen printing and embroidery     -             2,209,410            -              2,209,410
                                               -------------    -------------     -------------    --------------

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

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

 EXPENSES

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

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

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

 Other income and (Expenses)

   Other revenue                                      -                49,750            -                 49,750
   Interest income                                       168           -                 -                    168
   Gain on sale of assets                            215,375           -                 -                215,375
   Interest expense                                  (32,118)         (58,350)           -                (90,468)
                                               -------------    -------------     -------------    --------------

      Total Other Income and Expenses                183,425           (8,600)           -                174,825
                                               -------------    -------------     -------------    --------------

 Loss before income taxes and discontinued
  operations

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

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

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

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

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

                                       19
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 2        MERGERS AND ACQUISITIONS (Continued)

              Quade, Inc.

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

              On March  17,  1998,  the  Company  signed a Letter  of  Intent to
              acquire on 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.  these  shares  include  32,000  shares that have a
              guarantee of $5.00 per share based on the average  asking price of
              the  Company's  common  stock for the six months  ended  March 31,
              1999. The Company also guaranteed a note payable of Quade, Inc. to
              its former  partner,  with a discounted  value of $613,383.65  and
              issued  25,000 shares of common stock to Quade's  former  partner.
              Depending  on  Quade's  performance  over  the next  three  years,
              additional shares of the Company's common stock will be issued for
              this acquisition if minimum earnings levels are met as follows:


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

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

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

              The following tables set forth certain audited 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.

                                       20
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

              Effective  October 8, 1998, the Company and Jordache  Enterprises,
              through its wholly-owned subsidiary, 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 for the 1999
              third quarter from this joint venture were $24,995.

                                       21
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997

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

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

                                American                               Pro Forma
                                Resources            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>

                                       22
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997

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

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

                                          American                           Pro Forma
                                          Resources          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>

                                       23
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997

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

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

                                                 American                           Pro Forma
                                                 Resources        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                              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)           -               (316,724)
                                              -------------    -------------     -------------    --------------

     Total Other Income and Expenses                 21,959          (41,660)           -               (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)   $    (590,728)    $     (72,831)   $   (1,104,307)
                                              =============    =============     =============    ==============

Loss Per Share                                $       (0.24)                     $       -        $        (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.

                                       24
<PAGE>


                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997



NOTE 3 -      SALE OF RECEIVABLES

              In November 1998, the Company entered into an accounts  receivable
              financing agreement to sell, with recourse,  up to $1.4 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 December 31, 1998, the Company had
              $168,531 of sold but uncollected receivables. The Company received
              $423,948  from the sale of  receivables  in the third  quarter  of
              fiscal 1999 and  recognized  $4,636 in interest  expense  from the
              discount of selling these receivables.

 NOTE 4 -     NOTES PAYABLE
<TABLE>
<CAPTION>

              Notes payable are comprised of the following:
                                                                                                  December 31,
                                                                                                     1998       

<S>                                                        <C>         
              Note payable, unsecured, bearing interest at 12%, payable
               in monthly installments of $7,000, including interest.                          $          32,384

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

              Trade  draft  payable,  secured  with  inventory,  payable  in six
               monthly installments beginning January 1999 at $8,874.10
               per month.                                                                                 49,073

              Note payable to business partner in U.S. Polo Association, Ltd.
               Interest is payable quarterly at the prime rate as published by
               the Wall Street Journal plus 1% per annum.  Principal is payable
               equally over 4 years beginning October 14, 1999 and is
               secured by a pledge of the Company's stock in U.S. Polo
               Association, Ltd.                                                                       1,000,000

              Subtotal                                                                                 1,266,457

              Less current portion                                                                       516,457

              Long-term portion                                                                $         750,000
                                                                                               =================

              Maturities of long-term debt are as follows:

                                            December 31, 1999                                  $         467,384
                                            December 31, 2000                                            250,000
                                            December 31, 2001                                            250,000
                                            December 31, 2002                                            250,000
                                                                                               -----------------
                                                                                               $       1,217,384 
</TABLE>

                                       25
<PAGE>
<TABLE>
<CAPTION>

                                    AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                  Notes to the Consolidated Financial Statements
                                            December 31, 1998 and 1997


NOTE 5 -      NOTES PAYABLE, RELATED PARTIES

                                                                                                    December 31,
                                                                                                     1998       

<S>                                                                                           <C> 
              Note  payable to Banque  SCS,  secured by GVI and  Company  common
               stock.  Interest  at 14%  with  monthly  principal  and  interest
               payments  of  $6,000  with a final  balloon  payment  July  2001.
               (Banque SCS is a shareholder although it disclaims
               beneficial ownership of the shares).                                            $         339,144

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

              Note payable to Banque SCS, secured by GVI and Company
               common stock.  Interest at 16% due monthly with the entire
               loan due December 7, 1999.                                                                340,000

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

              Notes payable to the former owners of FTI  (includes  officers and
               directors of the Company). Interest rates average 9.5%.
               Unsecured, due upon demand.                                                               200,247

              Notes payable to the former shareholders of PPW (includes
               an officer and director of the Company).  Interest rates average
               12%.  Unsecured.                                                                          373,150

                                            Subtotal                                                   1,558,032

                                            Less current portion                                        (705,713)
                                                                                               -----------------

                                            Long-term portion                                  $         852,319
                                                                                               =================
</TABLE>
                                       26
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 6 -      CAPITAL LEASES

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

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

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

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

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

NOTE  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  $5,700,000 to offset future tax
              liabilities. The loss carry-forwards will begin to expire in 2008.

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

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  September  30,  1998,  there  are  94,953  shares  of series B
              preferred stock issue and outstanding. The holders of these series
              B  preferred  shares are  entitled  to an annual  cumulative  cash
              dividend of not less than sixty cents per share.  At September 30,
              1998, there is a total of $344,782 of accrued and unpaid dividends
              related to the series B preferred  stock which have been  included
              in  the  accompanying  consolidated  financial  statements.  These
              series B  preferred  shares  were  convertible  into shares of the
              Company's common stock which  conversion  option expired March 31,
              1995.

                                       27
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


NOTE 8 -      PREFERRED STOCK (Continued)

              SERIES D:

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

NOTE  9 - COMMON STOCK ISSUED BUT NOT OUTSTANDING

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

NOTE 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.

                                       28
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 1998 and 1997


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.

                      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

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

NOTE 12 - ROYALTIES COMMITMENT

              U.S. Polo Association, Ltd., which is owned 50% by the Company, is
              required  to pay  royalties  to U.S.  Polo  Association  from  the
              Company's  sale  of  USPA  product  and  revenue  from  sublicense
              royalties.  Minimum  guarantees to U.S. Polo Association from July
              1999 to July 2002 are $275,000,  $350,000,  $385,000 and $425,000.
              Minimum  guarantees  from  year  6  through  10,  if  the  Company
              exercises its option for the license with U.S.  Polo  Association,
              is $550,000 to $800,000, respectively.

              The Company has entered into sublicensing  agreements with certain
              manufacturers.  Minimum  guaranteed  royalties  to be  paid to the
              Company from these manufacturers are $290,700, $547,500, $800,000,
              $450,000  and $500,000 for the years ending March 31, 1999 through
              March 31, 2003, respectively. Certain manufacturers have an option
              to renew their  license  agreement  in years after March 31, 2003.
              Such renewal would require  additional minimum guarantees from the
              manufacturers.

                                       29
<PAGE>

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


NOTE 13 - GOING CONCERN

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

                                       30
<PAGE>

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

RESULTS OF OPERATIONS

For the Quarter Ended December 31, 1998,  Compared to the Quarter Ended December
31, 1997.

         Total  revenue  for the  quarter  ended  December  31,  1998  increased
$657,827,  or 138%, to $1,135,905,  compared with $478,078 for the quarter ended
December 31, 1997. During the current quarter  Fan-Tastic  merchandise sales and
franchise  fees/royalties  were  $203,056  and $58,394  compared to $280,605 and
$43,000 for the three months ended  December 31, 1997. The increase in franchise
and royalty  fees is  primarily  due to an increase  in  Fan-Tastic's  marketing
budget in the  current  year as  compared  to the prior year and an  increase in
operating  franchise  stores  from 6 at December  1997 to 15 at  December  1998.
Merchandise  sales declined from the prior year's  comparable  quarter primarily
due to the closure of two company  stores that were in temporary  mall locations
and a 37% decrease in comparable store sales due to reduced inventory levels per
store.  In addition,  the Company  acquired  Pacific Print Works (PPW) effective
March 31,  1998  (see  Note 2 to the  financial  statements)  which  contributed
revenue of $832,586 for the three months ended December 31, 1998.

                                       31
<PAGE>

         Fan-Tastic had a gross profit of $115,715 or 43% of sales for the three
months  ended  December  31,  1998 as  compared to $224,403 or 47% for the three
months ended  December 31, 1997. The decline in gross profit is primarily due to
lower profit margins on obsolete  inventory being sold at significant  discounts
in the third fiscal quarter of 1998. PPW had a gross profit of $254,226 or 30.5%
of sales for the three months ended December 31, 1998.

         General  expenses  increased  by $220,893  for the three  months  ended
December 31, 1998 as compared to the comparable prior year quarter.  This change
was primarily due to PPW general  expenses of $282,124 and a decrease in general
expenses for Fan-Tastic and corporate  headquarters.  The decrease in Fan-Tastic
general  expenses  was due to the  closure  of two stores  and the  decrease  in
corporate  headquarter's  general  expenses was  primarily due to a reduction in
salaries and office expenses.

         Depreciation and amortization  increased by $100,780,  primarily due to
goodwill  amortization  of $30,441 from the PPW acquisition and PPW fixed assets
depreciation of $67,568.

         Interest expense increased $106,698 for the current quarter compared to
the comparable 1997 quarter.  The increase in interest expense was due to 1) the
Company  increasing  it's debt in fiscal  1999 and for the  three  months  ended
December 31, 1998 in order to fund  operations and acquire PPW and Quade,  Inc.,
and 2) PPW's interest  expense from its  receivable  factoring and capital lease
obligations.

         The  Company  experienced  an  increase  in net  loss  from  continuing
operations of $310,033 in the current period  compared to the three months ended
December 31, 1997.  This  increase is due to the  increase in  depreciation  and
amortization, general expenses, interest expense and the PPW operational losses.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 1998, the Company had total assets of $5,042,781, total
liabilities  of  $5,173,617  and a total  stockholders'  deficiency of $130,836,
compared with total assets of  $5,436,365,  total  liabilities of $4,126,181 and
total stockholders' equity of $1,310,454 at March 31, 1998. At December 31, 1998
the Company's  current ratio was  approximately  .65 current assets to 1 current
liability. The Company's current ratio declined from September 30, 1998 due to a
$1,057,000 decline in marketable  securities.  Marketable  securities consist of
the  Company's  holdings in common  stock of Golf  Communities  of America.  The
market value of the Company's  holdings improved by over $600,000 at February 5,
1999  compared  to  December  31,  1998 due to an  increase in the price of Golf
Communities stock.

         In October 1998, the Company received  $1,000,000 in loan proceeds that
is payable  equally over 4 years  beginning  one year from the date of the loan.
These loan proceeds were used for working capital purposes and to reduce current
liabilities.

         Management  intends to improve  its  overall  financial  structure  and
provide  operating  capital through seeking the conversion of debt and preferred
stock into the Company's common stock, private placement of the Company's common
stock and sale of the Company's investment in Golf Communities of America. 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.

                                       32
<PAGE>

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.

                                       33
<PAGE>

Part II   -  Other Information

Item 1. Legal Proceedings

                 Not applicable.

Item 2. Changes in Securities

                 Not applicable.

Item 3. Default upon Senior Securities

                 Not applicable.

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

                 Not applicable.

Item 5. Other Information

                 Not applicable.

Item 6. Exhibits and Reports on Form 8-K

                 Not applicable.

                                       34
<PAGE>


                                   SIGNATURES


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


                                   AMERICAN RESOURCES AND
                                   DEVELOPMENT COMPANY
                                      (Registrant)




Date: February 11, 1998       By:  /s/Tim Papenfuss
                                   ------------
                                   Tim Papenfuss
                                   Chief Financial Officer
  
                                       35