U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[ ]     Annual report under Section 13 or 15(d) of the Securities Exchange Act
        of 1934 For the fiscal year ended March 31, 2000, or

[ ]     Transition report under Section 13 or 15(d) of the Securities Exchange
        Act of 1934 For the Transition period from ____________ to ____________

                         Commission file number 0-18865

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                   ------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

            Utah                                         87-0401400
            ----                                         ----------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)

                     2035 N.E. 181st, Portland, Oregon 84115
                     ---------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (503) 492-1500
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Act:

   Title of each class              Name of each Exchange on which Registered
   -------------------              -----------------------------------------
          None                                         None

         Securities registered under Section 12(g) of the Act:

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of class)

         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 [ ]

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         Issuer's revenues for its most recent fiscal year was $5,949,348

         The aggregate  market value of the voting and non-voting  common equity
held by non-affiliates computed by reference to the average bid and asked prices
of such stock, as of July 27, 2001 was $237,349

         The number of shares  outstanding of the issuer's common equity,  as of
July 27, 2001 was 4,421,892.

         Documents Incorporated by Reference:           None

         Transitional Small Business Disclosure Format: Yes [ ] No [X]

<PAGE>

                                TABLE OF CONTENTS

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS                                            3

ITEM 2.  DESCRIPTION OF PROPERTY                                            8

ITEM 3.  LEGAL PROCEEDINGS                                                  8

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                9



                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS           9


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION         11

ITEM 7.  FINANCIAL STATEMENTS                                              14

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE                                          14

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE  OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                 15

ITEM 10. EXECUTIVE COMPENSATION                                            16

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    18

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                    17

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                                  19


         The information contained in this Form 10-KSB for the fiscal year ended
March 31,  2001,  is as of the latest  practicable  date  except  for  financial
information which relates to the fiscal year.

                                       2
<PAGE>

                                     PART I

Item 1.  Description of Business.

GENERAL

         American  Resources and Development  Company ("ARDCO" or the "Company")
through various subsidiaries,  owns a screen printing and embroidery company and
a franchiser of retail  entertainment  and sports stores.  When used  throughout
this report,  the Company shall include the  subsidiaries  of the Company unless
the context  indicates  otherwise.  The Company's  present executive offices are
located at 2035 N.E. 181st,  Portland,  Oregon 97230 and its telephone number is
(503)  492-1500.  As of July 27 , 2001, the Company had  eighty-three  (83) full
time employees and twelve part time employees.

PACIFIC PRINT WORKS

         In May 1998, the Company acquired approximately 83% of the outstanding
shares of Printworks,  Inc. ("Pacific Print Works" or "PPW").  213,472 shares of
the Company's  common stock were issued to PPW  shareholders  ("Sellers") with a
guaranteed  share value of $5.00.  In addition,  depending on PPW's  performance
from April 1, 1998 through  March 31, 2001,  additional  shares of the Company's
common stock would be issued to the Sellers if minimum earnings levels were met.
Based on the $5.00  guarantee  and the  Company's  share value from October 1998
through  March 1999,  the Company is  obligated  to issue  additional  shares of
common stock to the Sellers. An amendment to the PPW Stock Purchase Agreement is
being  evaluated by the Company and the Sellers in which the Company would issue
another  1,100,000  shares of the Company's  common stock to the Sellers and any
additional  earnings  requirements  by PPW or per share value  guarantee  by the
Company would be  eliminated.  In July 2001,  the Company  agreed to purchase an
additional  7% of PPW  outstanding  shares from a PPW  shareholder  for $100,000
payable in monthly  installments from July 2001 through July 2003 (See Note 4 to
the  financial  statements.)  PPW is active in the contract  screenprinting  and
embroidery business and is based in Portland, Oregon.

         Industry Trends

         PPW performs contract  screenprint,  embroidery and finishing  services
for customers,  the majority of whom are in the decorated sportswear market. The
decorated   sportswear   market,   based  upon  industry  data,   accounted  for
approximately  $14.3 billion of retail level sales in the United States in 1996,
with a  compounded  annual  growth rate of  approximately  8.8% since 1991.  PPW
believes  growth in the decorated  sportswear  market has resulted  from: (i) an
increased  preference for  comfortable  apparel  selections;  (ii) more flexible
dress codes,  including  greater  acceptance of casual clothes in the workplace;
(iii)  a  heightened   emphasis  on  physical   fitness,   including   increased
participation  in  sports;  (iv)  improved  characteristics  that have  enhanced
consumer   appeal,   including   improvements  in  fabric  weight,   blends  and
construction,  and  increased  offerings  of  size,  color  and  style;  (v) the
enhancement  of  screenprinted   graphics  and  embroidered   designs  primarily
resulting from more advanced manufacturing equipment and processes. PPW believes
that these trends should continue to drive industry growth.

         Business Strategy

         PPW's  success in  expanding  its  business  is a function  of four key
factors: 1) specialized printing techniques, including high density printing, 2)
quality of printing,  3) ability to meet customer  deadlines,  and 4) ability to
create and produce innovative designs. PPW has a demonstrated excellence in each
of these  areas with a strong  reputation  in the  industry  for its quality and
specialized  printing.  In fact,  PPW's second largest  customer was obtained in
January  1999 when  another  screenprinter  was unable to produce an order which
incorporated the latest technology,  high-density  printing.  Historically,  the
Company  has  been  able  to  produce  at  less  than  a  .75%  misprint  ratio,
considerably better than the industry standard of 2.0%.

                                        3
<PAGE>

         Timeliness of product delivery is another crucial component of business
retention  and  growth.  PPW also  excels  in this  area as  evidenced  by their
excellent  reputation for timely  delivery.  In fact, PPW has never had an order
canceled for failing to achieve a deadline.

         Lastly,  PPW  is  recognized  in  the  screenprinting  industry  as  an
innovator who is constantly  working on new  processes and  techniques.  This is
extremely  important  to PPW  customers,  all of whom are looking for the newest
applications  in order to bring fresh  products to the market.  PPW's  expertise
with  high-density  printing  is a good  example  of a new  technique  which has
received an enthusiastic reception from the apparel marketplace.  The Company is
committed to continuing  its research and  development  work in order to stay in
front of trends in the screenprinting industry and is convinced this will enable
it to expand  business  with existing  customers in addition to acquiring  other
customers presently targeted.

         Another  opportunity  for PPW results from the changing  business model
for screenprinters.  Historically,  the Company has done contract screenprinting
where  customers  purchase  unprinted  garments  and  deliver  them  to PPW  for
embellishment.  Several  existing  customers  are now asking  the  Company to do
package deals where PPW assumes  responsibility  for purchase and receipt of the
unprinted garment and then does the  screenprinting  and embroidery.  This model
will result in significant  increases in both revenue and profits.  For example,
in the new model  revenue per unit will climb from the current $.50 to $1.00 per
unit to $3.50 to $4.50 per unit.

         PPW intends to increase its  revenues and position  itself as a leading
national  screen print and  embroidery  contractor  by  continuing to pursue the
following business strategies:

         Contract Services

         PPW designs  graphics for its larger  apparel  customers  that are sold
under particular customers' labels. PPW will then screenprint or embroider these
designs on blanks  provided by the  customers.  PPW's  product focus has been on
high-density  printing.  High-density  printing is a  screenprinting  term for a
process that leaves a 3-D, sharp-edged print with excellent detail. PPW has also
been  able  to grow  its  business  by  specializing  in  reflective  inks,  and
environmentally safe water based printing.

         Other.

         Other products  include  printing on athletic  uniforms for Nike's Team
Sports Division.  PPW also produces custom designed graphics and  screenprinting
for corporate accounts.

         Design And Sales Staff.

         The  Company  employs  a staff of 3  graphic  design  artists  who work
closely with customers to create designs for its customers sportswear lines. PPW
employs two internal  sales people and three  customer  service  people who work
closely with existing and new customers to ensure customer needs are met.

         Customers

         PPW's primary sales are through national decorated sportswear companies
including: Nike, Avirex, Warnaco (Chaps Ralph Lauren licensee), Nautica, Brooks,
K-Swiss  and Karl Kani.  In fiscal  2001,  PPW's sales to major  customers  that
exceeded  10% of its total sales were as follows:  Customer A 27.6%,  Customer B
20.7%, Customer C 17.1%, and Customer D 14.8%.

         Sources of Raw Materials

         PPW does not enter into long-term  contracts  with its  suppliers.  PPW
buys its inks and embroidery thread from approximately  eight suppliers.  PPW is
not  dependent on any one  supplier.  Currently,  the majority of blank  apparel

                                       4
<PAGE>

screen  printed  and  embroidered  is  provided by its  customers  although,  as
mentioned  under  "Business  Strategy,"  For the year ended March 31, 2001,  PPW
purchased  $1,935,000 garments that were resold to customers.  Over 95% of these
garments were purchased from two vendors located in Mexico and California.

         Production and Manufacturing

         PPW  is  committed  to  controlling   costs  and  improving   operating
efficiencies.  PPW concentrates on the high value-added  production processes of
custom design,  screen  printing and embroidery at its  manufacturing  facility.
Production of PPW's  products  requires  applying  garment  decorations  through
screen printing or embroidery.

         Screen Printing.

         The screen printing  process begins with the preparation of a design by
PPW's  artists.  PPW tests new designs for  printability  and color dynamics and
produces sales and production  samples.  PPW also stocks over 140 pigment colors
and  numerous  ink bases,  which  allows  for  in-house  development  of new ink
applications and techniques.  In the printing process, screens are positioned in
automatic  printing  presses where inks are pressed through the screen to create
the design on the garment. Garments bearing designs on different portions of the
garment may move through the printing process several times. Following printing,
the  garments  run through a dryer,  making the  printed  design  permanent  and
washable.

         PPW operates seven automatic  screen  printing  presses and five manual
screen printing  presses.  The automatic presses are color printing presses with
eight to  eighteen  stations  available.  Each  press is  operated  by a team of
employees.  PPW believes  that this  approach  contributes  to the  flexibility,
quality and speed of its production process.

      Embroidery.

         The embroidery process begins with the preparation of a design by PPW's
artists.  PPW tests new designs for  embroiderability as it relates primarily to
stitch count and color  selection  and produces  sales and  production  samples.
After a design is approved,  the design that is to be  embroidered  is formatted
onto  a  computer  disk,  and  programmed  into  the  embroidery  machine.  Each
embroidery  machine has  multiple  sewing  heads,  permitting  two to  sixty-one
garments to be embroidered at one time. After the stitching is complete garments
are trimmed, packed in PPW's warehouse and shipped directly to the customer. PPW
operates seven fully automated machines with sixty-one single heads.

         Quality Control.

         PPW maintains several quality control checkpoints monitoring all phases
of production  and ensuring  that  garments meet the quality  standards of PPW's
customers.

         Product Shipment.

         PPW believes  responding  quickly to customer  requirements and meeting
delivery schedules consistently are important factors in its business. Customers
generally  select the  specific  art  designs to be printed on ordered  garments
periodically  for  delivery  within  as few as one  week  following  the  design
selection.  PPW can place garments on hangers before shipping,  affix price tags
and other product information, and can ship garments polybagged or folded. These
services  reduce the time  required  to prepare  the  garments  for  display and
thereby  enable  customers to stock their stores more quickly.  PPW's  customers
generally bear all shipping costs.

         Regulation

         PPW is  subject  to  federal,  state and local  environmental  laws and
regulations,  including laws relating to employee knowledge of, exposure to, and
disposal of inks,  dyes,  photographic  chemicals  and  cleaning  solvents.  PPW
believes that its  operations  comply in all material  respects with  applicable
environmental  laws and  regulations.  Although  PPW  continues  to make capital
expenditures  for  environmental   protection,   it  does  not  anticipate  that

                                       5
<PAGE>

significant   expenditures  will  be  required  to  remain  in  compliance  with
environmental  requirements.  There can be no  assurance,  however,  that future
changes in such laws and  regulations  will not have a material  effect on PPW's
operations.

         Competition

         The screen printing industry is highly  competitive.  PPW competes with
numerous screen printing and manufacturing  vendors,  including those with their
own  line  of  licensed  and  branded  product.  PPW  also  competes  through  a
combination of graphics and decorating  techniques.  Competitive factors include
product quality,  access to popular  licenses,  price,  ability to meet delivery
requirements  and other  aspects  of  customer  service,  changes  in styles and
consumer preferences.

         Employees

         At July 6, 2001, PPW employed approximately 83 full-time employees. PPW
believes that its employee relations are good.

FAN-TASTIC, INC.

         Acquired in 1997,  Fan-Tastic is a franchiser  of retail  entertainment
and sports stores, dba Fan-A-Mania, based in regional shopping malls. As of July
7, 2001,  Fan-Tastic  had 11  franchisees  in the states of Missouri,  New York,
North  Carolina,  Virginia,  Wyoming,  Pennsylvania,  Texas,  and  countries  of
Barbados, Canada and Japan.

         Fan-A-Mania  stores  carry a broad  range of sports  and  entertainment
products   purchased  from  national  vendors  who  are  licensed  with  various
organizations  including  the  following  entertainment  and  sports  companies:
Pokemon, Disney, Warner Brothers, Marvel Comics,  Nickelodeon,,  World Wrestling
Federation,  National Football League,  National Basketball  Association,  Major
League  Baseball,  College and the  National  Hockey  League.  Products  carried
include  apparel for ages  ranging  from  toddlers to adults,  collectibles  and
souvenirs for fans of entertainment and sports.

         With  the  sales  of each  franchise  unit to a new  owner,  Fan-Tastic
receives a franchise  fee of $19,500,  and a royalty on ongoing sales of 3 1/2%.
Principal services Fan-Tastic provides to its franchisees are as follows:

         o        Site evaluation, selection and lease negotiation.
         o        Store design, merchandise and display plans.
         o        Reduction in inventory costs resulting from chain-wide  volume
                  pricing and simplified buying.  through a consolidated  buying
                  program.
         o        Inventory  control  through  a  consolidated   point  of  sale
                  software  and  chain  wide   identification   of  hot  selling
                  products.
         o        Four days of initial training at the corporate office covering
                  all  phases of store  operations;  product  purchasing,  store
                  promotions,  etc. using the proprietary Fan-A-Mania operations
                  manual.  This initial  training is followed  closely with four
                  days of  training  at the  opening  of the store and  on-going
                  follow-up training.

Seasonality

         Approximately 43% of annual royalties have occurred from store sales in
the months of November and December.

                                       6
<PAGE>

         Competition

         The entertainment  and sports products  industry is quite  competitive.
Most mass merchants  carry  entertainment  and sports  products and thus provide
competition.  However,  management believes service and atmosphere differentiate
Fan-A-Mania stores from those mass merchants.  Direct competition in malls where
Fan-A-Mania  stores are located comes  primarily  from  national  chains such as
Disney, Warner Brothers, Champs, and department stores. Management believes that
Fan-A-Mania has  differentiated  itself from these  competitors by merchandising
both entertainment and sports products and by having an attractive appearance.

         Fan-Tastic competes with other franchisers for prospective franchisees.
However,  there is little direct  competition for prospective  franchisees since
Fan-A-Mania is currently the only entertainment and sports apparel,  collectible
and souvenir oriented  franchiser known to management.  Fan-Tastic also competes
for suitable store  locations in malls and outlet centers from a wide variety of
retailers.

         Trademarks

         Fan-Tastic owns the registered  mark,  "Fan-A-Mania"  for retail stores
featuring entertainment and sports memorabilia and clothing.

         Employees

         As of July 6, 2001, Fantastic had three full-time employees.

Item 2.  Description of Property.

         PPW rents an 85,000  square foot  office and  screenprinting/embroidery
facility in Portland,  Oregon. Lease commitments from fiscal 2002 through fiscal
2003 are $318,832, and $49,366, respectively.

Item 3.  Legal Proceedings.

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

Item 4.  Submission of Matters to a Vote of Security Holders.  None.

                                       7
<PAGE>

                                     PART II

Item 5.  Market for Common Equity & Related Stockholder Matters.

         The Company's common stock is currently traded in the  over-the-counter
market on the  Electronic  Bulletin  Board under the symbol ADCO.  The following
table  sets  forth for the  respective  period  indicated,  the high and low bid
quotations,  as adjusted  for stock splits of the  Company's  common  stock,  as
reported by the National Quotation Bureau and represents prices between dealers,
does not include retail markups, markdowns or commissions, and may not represent
actual transactions:

Calendar Quarters                           High Bid               Low Bid
-----------------                           --------               -------
1999
----
1st Quarter                                   .875                   .1875
2nd Quarter                                   .5                     .1875
3rd Quarter                                  1.906                   .156
4th Quarter                                  1.50                    .625

2000
----
1st Quarter                                  1.312                   .625
2nd Quarter                                  1.531                   .656
3rd Quarter                                  1.00                    .562
4th Quarter                                   .687                   .19

2001
----
1st Quarter                                  1.437                   .188
2nd Quarter                                   .325                   .125

         As of July 27,  2001,  the Company had  4,421,892  shares of its common
stock issued and outstanding, and there were approximately 1,300 shareholders of
record.

         As of the date  hereof,  the Company has not paid or declared  any cash
dividends.  Future  payment  of  dividends  by the  Company,  if any,  is at the
discretion of the Board of Directors and will depend, among other criteria, upon
the Company's  earnings,  capital  requirements,  and its financial condition as
well as other relative factors.  Management has followed the policy of retaining
any and all earnings to finance the  development of its business.  Such a policy
is likely to be maintained as long as necessary to provide  working  capital for
the Company's operations.

RECENT SALES OF UNREGISTERED SECURITIES

         In April 1998, the Company sold 36,000 shares of its common stock for
$45,000 to an  investor.  The shares  were exempt  from  registration  under the
Securities  Act of  1933  pursuant  to  Rule  505 of  Regulation  D  promulgated
thereunder.

         In  May  1998,   effective   March  31,  1998,  the  Company   acquired
approximately  83% of the  outstanding  shares of Printworks,  Inc., for 213,472
shares of the Company's  common stock.  The issuance of these shares were exempt
from registration pursuant to Section 4 (2) of the Securities Act of 1933.

         On July 14, 1998 the Company issued 300,000 shares to Mr. George Badger
for prior services. Based on the knowledge,  experience and economic strength of
Mr.  George  Badger,  the  Company  believes  this  transaction  is exempt  from
registration  with the  Commission  under Section 4(2) of the  Securities Act of
1933.

         On July 14, 1998 the Company  issued  56,000  shares to Mr. Don Pickett
for prior services. Based on the knowledge,  experience and economic strength of
Mr. Pickett,  the Company believes this transaction is exempt from  registration
under the Securities Act of 1933 Section 4(2).

                                       8
<PAGE>

         In July 1998, the Company  acquired 100% of the  outstanding  shares of
Quade,  Inc., for 238,333 shares of the Company's  common stock. The issuance of
these  shares  were exempt  from  registration  pursuant to Section 4 (2) of the
Securities Act of 1933. The purchase agreement with Quade, Inc. provided a $5.00
per share guarantee for shares issued to the Quade, Inc. shareholder.  In August
2000, the original  purchase  agreement  with the Quade,  Inc.  shareholder  was
amended  and  451,667  shares of  common  stock was  issued to the  Quade,  Inc.
shareholder and a former Quade, Inc.  creditor.  In return,  the $5.00 per share
guarantee  was  rescinded.  The  issuance  of  these  shares  were  exempt  from
registration  pursuant  to  Section  4 (2) of the  Securities  Act of 1933.  The
issuance of these shares were exempt from registration pursuant to Section 4 (2)
of the Securities Act of 1933.

         On January 22, 1999, the Company  granted options to Mr. James Stock to
purchase up to 160,000  shares of the Company's  common  stock.  Mr. Stock is to
provide various investor and public relations  services through January 21, 2000
and the options expire December 31, 2001. The options are not transferable,  are
exercisable  at any time  between  $.50 and $3.00 per share  (See Note 10 to the
financial statements.) Based on the knowledge,  experience and economic strength
of Mr. Stock, the Company believes this transaction is exempt from  registration
under the Securities Act of 1933 Section 4(2).

         In August 1999,  the Company  issued 15,000 shares of common stock to a
company for  investor and public  relations  services.  Based on the  knowledge,
experience  and economic  strength of this  company,  the Company  believes this
transaction  was  exempt  from  registration  under the  Securities  Act of 1933
pursuant to Section 4(2).

         In March and May 2000, the Company issued 235,000 and 28,777 shares of
common  stock,  respectively  to a company  for  investor  and public  relations
services.  In March 2000, the Company also granted  options to this same company
to purchase up to 340,000  shares of the  Company's  common  stock.  The options
expire in September 2001. The options are not  transferable,  are exercisable at
any time  between  $1.08  and $1.72  per  share  (See  Note 10 to the  financial
statements.)  Based on the knowledge,  experience and economic  strength of this
company,  the Company  believes this  transaction  was exempt from  registration
under the Securities Act of 1933 pursuant to Section 4(2).

         In May 2000,  the  Company  issued  4,000  shares of common  stock to a
company for financial  consulting services.  Based on the knowledge,  experience
and economic strength of this company, the Company believes this transaction was
exempt from  registration  under the  Securities Act of 1933 pursuant to Section
4(2).

         In August 2000,  the Company issued 100,000 shares of common stock to a
debtholder for $31,250 in interest payments. Based on the knowledge,  experience
and economic strength of this debtholder,  the Company believes this transaction
was exempt  from  registration  under the  Securities  Act of 1933  pursuant  to
Section 4(2).

         In January 2001, the Company issued 100,000 shares of common stock to a
company for  investor and public  relations  services.  Based on the  knowledge,
experience  and economic  strength of this  company,  the Company  believes this
transaction  was  exempt  from  registration  under the  Securities  Act of 1933
pursuant to Section 4(2).

         In January 2001,  the Company issued 70,000 shares of common stock each
to Barry and Tim Papenfuss  for reduction of $35,000 in debt and accrued  wages.
Barry Papenfuss is the President of Fan-Tastic, Inc. and a Vice President of the
Company.  Tim  Papenfuss  is the CFO of the  Company.  Based  on the  knowledge,
experience and economic strength of these two individuals,  the Company believes
this transaction was exempt from  registration  under the Securities Act of 1933
pursuant to Section 4(2).

Item 6.  Management's Discussion & Analysis of Financial Condition & Results
         of  Operations.

         The following information,  on a fiscal year basis, is derived from the
consolidated  financial  statements of the Company.  Such  financial  statements
include the Company and its subsidiaries.

                                       9
<PAGE>

RESULTS OF OPERATIONS

         For the Fiscal Year Ended March 31, 2001 ("Fiscal  2001"),  Compared to
the Fiscal Year Ended March 31, 2000 ("Fiscal 2000").

                                                 Year Ended March 31,
                                             2001                    2000
                                             ----                    ----
         Net sales                           100.0%                  100.0%
         Cost of sales                        87.1%                   75.4%
         Gross profit                         12.9%                   24.6%
         General expenses                     26.1%                   29.9%
         Depreciation and amortization         0.2%                    0.4%
         Loss from operations                -13.4%                   -5.7%
         Other income and expenses             0.3%                    0.1%
         Loss on write-off of GCA              0.0%                  -29.7%
         Interest expense                    -11.2%                  -12.1%
         Loss before income taxes
            and discontinued operations      -24.2%                  -47.4%
         Discontinued operations               0.0%                   18.0%
         Income taxes                          0.0%                    0.0%
         Net loss                            -24.2%                  -29.4%

         Sales for the year ended March 31, 2001 were  $5,949,348 as compared to
$4,828,053 for the year ended March 31, 2000.  Pacific Print Works ("PPW") sales
for Fiscal 2001 were $5,775,337  compared to $4,415,801 for Fiscal 2000. The 31%
increase  in  PPW's  revenue  was  due to an  increase  in  "package  sales"  to
customers.  Package sales include the sale of the garment,  primarily  T-shirts,
with  the  screenprint  and/or  embroidery.   Fiscal  2001  PPW  sales  included
$2,027,913  for  garment  sales as compared  to  $162,477  in fiscal  2000.  The
increase  in  garment  sales in fiscal  2001 came  from  three of PPW's  largest
customers.  Combined  garment sales for these three  customers was $1,733,213 in
fiscal 2001 as opposed to $80 in fiscal 2000.  The increase in garment  sales is
expected to continue as many of PPW's other large  customers  have  expressed an
interest in  purchasing  garments from PPW.  Production  sales,  primarily  from
screenprinting,  embroidery  and  finishing,  were  $3,924,201 in fiscal 2001 as
compared to  $4,665,576 in fiscal 2000.  The decrease in  production  sales were
primarily from a decrease in sales to PPW's largest customer of $592,000.

         Gross profit for Fiscal 2001 was $765,727  compared to  $1,187,465  for
Fiscal 2000,  with a Company  wide gross  profit  margin of 12.9% in Fiscal 2001
compared to 24.6% in Fiscal 2000. The decrease in gross profit was primarily due
to an increase in garments sales for PPW. The gross profit margin on Fiscal 2001
garment sales was 5.7%.  The gross profit  margin on Fiscal 2001 PPW  production
sales was 19.3%. The gross profit margin on garment sales is expected to improve
in  Fiscal  2002  as  a  higher  share  of  garment  purchases  will  come  from
international production at lower costs. PPW's gross profit margin on production
sales  decreased  in Fiscal 2001 as there were less  production  sales to reduce
fixed production costs as a percentage of sales.

         General  expenses  for  Fiscal  2001 were  $1,549,808  as  compared  to
$1,442,181  for the prior year.  The increase was  primarily  attributable  to a
$269,000  increase in PPW general  expenses offset by a reduction of $147,000 in
Fan-Tastic general expenses.  The increase in PPW general expenses were due to a
$74,000 increase in payroll costs and an increase in telephone, travel and legal
costs.  These cost increases were incurred in contemplation of the merger with a
T-shirt  manufacturing  company from Mexico. The Company also wrote off the cost
of purchasing $100,000 of PPW stock to increase its ownership in PPW to 90%. The
Fan-Tastic  general  expenses  declined  due to a reduction  in rent and payroll
expenses due to store closures.

                                       10
<PAGE>

         Depreciation  and  amortization  expenses  included  in  total  general
expenses for Fiscal 2001 was $10,193 as compared to $18,929 in Fiscal 2000.  PPW
had  depreciation  of $270,668  and  $275,260  for Fiscal 2001 and Fiscal  2000,
respectively which was included in cost of sales.

         The Company's loss from operations in Fiscal 2001 was $794,274 compared
to $273,645 in Fiscal 2000. The increase in operating losses is primarily due to
the decline in gross profit  margins  discussed  above and the $100,000  expense
from the purchase of PPW stock.

         Interest expense for Fiscal 2001 was $666,652  compared to $584,355 for
Fiscal 2000.

         In  Fiscal  2000,  the  Company  sold  its  50%  ownership  in US  Polo
Association,  Ltd. which resulted in a gain on sale of  discontinued  operations
for Fiscal 2000 of $867,587.

         For the Fiscal Year Ended March 31, 2000 ("Fiscal  2000"),  Compared to
the Fiscal Year Ended March 31, 1999 ("Fiscal 1999").

                                                 Year Ended March 31,
                                                2000               1999
                                                ----               ----
         Net sales                              100.0%             100.0%
         Cost of sales                           75.4%              78.3%
         Gross profit                            24.6%              21.7%
         General expenses                        29.9%              44.3%
         Depreciation and amortization            0.4%               4.2%
         Loss from operations                    -5.7%             -26.9%
         Other income and expenses                0.1%              -1.3%
         Gain on sale of assets                   0.0%               1.1%
         Loss on write-off of GCA               -29.7%               0.0%
         Interest expense                       -12.1%             -14.0%
         Loss before income taxes
            and discontinued operations         -47.4%             -80.3%
         Discontinued operations                 18.0%              -6.3%
         Income taxes                             0.0%               0.0%
         Net loss                               -29.4%             -86.6%


         Sales for the year ended March 31, 2000 were  $4,828,053 as compared to
$3,996,739 for the year ended March 31, 1999.  Pacific Print Works ("PPW") sales
for Fiscal 2000 were $4,415,801  compared to $3,223,417 for Fiscal 1999. The 37%
increase  in PPW's  revenue was  primarily  due to an increase in sales to PPW's
five largest  customers  with 73% of the increase in the five largest  customers
coming from PPW's largest customer. The increase with these customers is largely
due to PPW's high  density  printing  capabilities  in  addition  to the overall
quality of the printing and related services.  Sales for Fan-Tastic  declined by
approximately  $361,070  which was  primarily due to 1) Fiscal 2000 sales coming
from the equivalent of 2.1 stores over Fiscal 2000 as opposed to 4.5 stores over
the Fiscal 1999 and 2) franchise  sales and  royalties of $96,958 in Fiscal 2000
as opposed to $199,834 for Fiscal 1999 due to fewer new franchisee fees.

         Gross  profit for Fiscal 2000 was  $1,187,465  compared to $867,097 for
the prior year with a Company wide gross  profit  margin of 24.6% in Fiscal 2000
compared to 21.7% in Fiscal 1999. The increase in gross profit was primarily due
to an increase in gross profit from PPW for Fiscal 2000 of $497,000. PPW's gross
profit  increase was due to the increase in sales while the gross profit  margin

                                       11
<PAGE>

improved  due to the  increase in sales  reducing  fixed  production  costs as a
percentage of sales.

         General  expenses  for  Fiscal  2000 were  $1,442,181  as  compared  to
$1,772,155  for the prior year.  The decrease was  primarily  attributable  to a
reduction  of $104,000  and  $95,000 in  Fan-Tastic  rent and payroll  expenses,
respectively, due to store closures.

         Depreciation  and  amortization  expenses  included  in  total  general
expenses  for Fiscal 2000 was $18,929  compared to $169,420  Fiscal  1999.  This
decrease is due to the  amortization of the goodwill from the PPW acquisition in
Fiscal 1999.  There was no  amortization  from the PPW  acquisition  goodwill in
Fiscal 2000  because  this  goodwill  was  completely  written off at the end of
Fiscal 1999 which  resulted in a $1,434,239  expense.  PPW had  depreciation  of
$275,260 and $257,925  for Fiscal 2000 and Fiscal 1999,  respectively  which was
included in cost of sales.

         The  Company's  loss from  operations  in Fiscal  2000 was  $273,645 in
Fiscal 2000 compared to $1,074,478 in Fiscal 1999. The improvement in operations
is due to the increase in PPW revenues as discussed above.

         Interest expense for Fiscal 2000 was $584,355  compared to $561,335 for
Fiscal 1999. The Company expected  interest expense to be similar between Fiscal
2000 and Fiscal 1999 because the average debt  outstanding for the two years was
similar.  The Company also incurred a loss of  $1,434,239  from its write-off of
Golf Communities marketable securities (see Note 1 to the Financial Statements).
As these marketable securities were written completely off, no additional charge
will be incurred in future years.

         In  Fiscal  2000,  the  Company  sold  its  50%  ownership  in US  Polo
Association,  Ltd. which resulted in a gain on sale of  discontinued  operations
for Fiscal  2000 of  $867,587.  In Fiscal  1999 the  Company  incurred a loss of
$252,972 from its Quade and US Polo Association, Ltd. operations.

LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2001,  the Company had total assets of  $1,763,333,  total
liabilities of $5,954,973, and total stockholders deficit of $4,191,640 compared
with total assets of  $2,080,720,  total  liabilities  of  $5,038,145  and total
stockholders deficit of $2,957,425 at March 31, 2000. The significant changes in
assets, liabilities and stockholders equity is due primarily to the reduction in
stockholders equity due to losses from operations and interest expense. At March
31, 2001 the Company's current ratio was approximately  .181 current assets to 1
current  liabilities.  The Company  will seek to convert  certain debt to equity
which will improve its current ratio.

         Management  intends to improve  its  overall  financial  structure  and
provide operating capital through improving operations, private placement of the
Company's common stock and seeking the conversion of debt and preferred stock to
common stock.

PLAN OF OPERATIONS

         Statements  made or  incorporated  in this  report  include a number of
forward-looking statements within the meaning of Section 27(a) of the Securities
Act  of  1933  and  Section  21(e)  of the  Securities  Exchange  Act  of  1934.
Forward-looking  statements include,  without limitation,  statements containing
the words anticipates,  believes, expects, intends, future, and words of similar
import which express management's  belief,  expectations or intentions regarding
the Company's  future  performance  or future events or trends.  Forward-looking
statements  may not reflect  actual  operations  because they involve  known and
unknown risks,  uncertainties and other factors, which may cause actual results,
performance or achievements of the Company to differ materially from anticipated
future  results,  performance  or  achievements  expressly  or  implied  by such
forward-looking statements. In addition, the Company undertakes no obligation to
publicly update or revise any forward-looking statement,  whether as a result of
new information, future events or otherwise.

                                       12
<PAGE>

Item 7.  Financial Statements and Supplementary Data.

         See Item 13. Exhibits and Reports on Form 8-K.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         There have been no  disagreements  with  accountants  on accounting and
financial disclosure.

                                       13
<PAGE>

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act.

Directors and Executive Officers

         The  following  table sets forth the name,  age and office held by each
director  and  officer  of the  company,  followed  by a  brief  resume  of each
individual.

NAME                    AGE     POSITION HELD
----                    ---     -------------

B. Willes Papenfuss     43      President, Chief Executive Officer and
                                Director
Jeffrey S. Harden       56      Vice President and Director, President of
                                Pacific Print Works
Barry L. Papenfuss      40      Vice President, President of Fan-Tastic, Inc.
Timothy Papenfuss       41      Secretary/Treasurer, Chief Financial Officer
                                and Director
Robert Mintz            55      Vice President and Director, President
                                of Quade, Inc.

         B.  WILLES  PAPENFUSS,  President  and  Director  of the  Company,  was
appointed  Executive  Vice-President,  of the  Company in  December,  1997.  Mr.
Papenfuss joined Fan-Tastic, Inc. as Vice-President  International in May, 1995.
He was Vice-President of U.S. Bank from 1991 to 1993, and Senior  Vice-President
of U.S. Bank from 1993 to 1995. Mr.  Papenfuss  graduated from the University of
Washington with a Masters of Business  Administration  in 1985. Mr. Papenfuss is
the brother of Barry Papenfuss,  Vice-President  of the Company,  and of Timothy
Papenfuss, Chief Financial Officer and Director of the Company.

         JEFFREY S. HARDEN, Vice President and Director of the Company,  and has
been with the Company  since  Pacific  Print Works was  acquired by ARDCO in May
1999.  President of Pacific Print Works since 1993.  Division Vice  President of
West Coast sales with London Fog from 1987 to 1993.  Sales  Manager with Jantzen
from 1979 to 1987.  Education  includes two years at Texas A & M and three years
at Ohio Wesleyan.

         BARRY L. PAPENFUSS,  Vice President and is the President of Fan-Tastic,
which  position  he has held since  1994,  and has been with the  Company  since
Fan-Tastic  was acquired by ARDCO in March,  1997. Was a Director of the Company
from March 1997 through July 14, 1998.  From  1990-1994,  Mr.  Papenfuss was the
controller of The Pro Image, a sports apparel company and from 1985-1990,  was a
consultant  with Deloitte and Touche,  an  international  accounting  firm.  Mr.
Papenfuss  graduated from Brigham Young  University.  Mr. Barry Papenfuss is the
brother of Mr. Timothy Papenfuss,  Secretary/Treasurer,  Chief Financial Officer
and a director  of the  Company and of B.  Willes  Papenfuss,  President  of the
Company and a director of the Company.

         TIMOTHY M.  PAPENFUSS,  chief  financial  officer  and  director of the
Company,  is chief financial officer of Fan-Tastic,  Inc., which position he has
held since April,  1994. Mr. Papenfuss was appointed chief financial officer and
a director  of the  Company  in  August,  1997.  From 1990 to April,  1994,  Mr.
Papenfuss was a manager and senior manager with Ernst and Young.  Mr.  Papenfuss
has 9 years of professional accounting experience.  Mr. Papenfuss graduated from
Brigham Young  University  in 1983 with a bachelors  degree in  accounting.  Mr.
Papenfuss is the brother of Barry  Papenfuss,  vice president of the Company and
of B. Willes Papenfuss, President of the Company and a director of the Company.

                                       14
<PAGE>

         ROBERT  MINTZ,  Director  of the  Company  since July 23, 1998 upon the
Company's  acquisition of Quade, Inc.  President of U.S. Polo Association,  Ltd.
since  October 1998.  President and founder of Quade,  Inc. from 1996 to October
1998. Director of Women's Apparel at London Fog from 1994 to 1995.  President of
Bugle Boy  Womens  from 1987 to 1993.  Division  President  for  Lizwear  at Liz
Claibourne  from 1984 to 1987. Mr. Mintz has a bachelors  degree in anthropology
from the University of Pittsburgh.

Significant Employees and Consultants

         The  following  individual  was a  consultant  to the Company from 1997
through June 1998.

         GEORGE H. BADGER, resigned as President,  Chief Executive Officer and a
Director of the Company on December 31, 1996.  Mr.  Badger  served as a director
since June 1992,  and was  President  since 1995.  Mr.  Badger was indicted on a
number of charges and was arraigned in the U.S.  Federal  District Court for the
Southern  District of New York on October 9, 1996.  The Company has been advised
that the indictment related to alleged unlawful and undisclosed  compensation to
securities  brokers and promoters to induce them to cause  customers to purchase
securities  issued by GVI and the  Company.  The Company has been  advised  that
Mr.Badger has pleaded guilty to counts of: (i)  conspiracy to commit  securities
fraud; (ii) securities fraud; (iii) criminal contempt; and (iv) perjury.

         Compliance  with Section 16(a) of the Securities Act of 1934 by Company
Officers, Directors and 10% Shareholders.

         Section  16(a) of the  Securities  Exchange Act of 1934 (the  "Exchange
Act") requires the Company's directors and executive  officers,  and persons who
own more than ten percent (10%) of a registered  class of the  Company's  equity
securities to file with the Commission  initial reports of beneficial  ownership
and reports of changes in beneficial  ownership of Common Stock and other equity
securities of the Company. The rules promulgated by the Commission under Section
16(a) of the  Exchange  Act require  those  persons to furnish the Company  with
copies of all reports filed with the Commission pursuant to Section 16(a).

         Based  solely  upon a  review  of  Forms  3,  Forms  4 and  Forms 5 and
amendments thereto furnished to the Company pursuant to Rule 16a-3(e) during the
fiscal year ended March 31, 2001, Forms 4 and 5 were required to be filed by all
directors  and  executive  officers  by  February  15,  2001  and May  15,  2000
respectively  and were not filed until July 2001.  The Company has not  received
any Forms 4 and 5 from any  shareholder  who owns more than five  percent of the
Company's outstanding common stock..

Item 10. Executive Compensation.

         The  Company  has  not  had  a  bonus,   profit  sharing,  or  deferred
compensation plan for the benefit of its employees, officers of directors.

         The following table sets forth the annual compensation paid and accrued
by the Company for  services  rendered  during the fiscal  years ended March 31,
2001, 2000 and 1999 to (i) the Company's  Chief Executive  Officer and (ii) each
other executive  officer of the Company or its subsidiary  serving at the end of
the last completed  fiscal year whose salary and bonus exceeded  $100,000 during
the last fiscal year ("Named Executive Officer").

                                       15
<PAGE>
<TABLE>
<CAPTION>
                                           SUMMARY COMPENSATION TABLE

                                       Annual Compensation         Long-Term Compensation
                                     ----------------------- -------------------------------------
                                                                 Awards                 Payouts
-------------------------- --------- ------------ ---------- ----------- ------------ ------------ ----------- ------------
                                                                                      Securities
                                                               Other                   Underly-
                                                               Annual    Restricted     Ing Op-                 All Other
                                                              Compen-       Stock       Tions/        LTIP       Compen-
   Name And Principal       Fiscal     Salary       Bonus      sation       Award        SARs       Payouts      Sation
        Position             Year         $           $          $            $           (#)         ($)          ($)
-------------------------- --------- ------------ ---------- ----------- ------------ ------------ ----------- ------------
<S>                          <C>       <C>        <C>            <C>          <C>       <C>            <C>          <C>
B. Willes Papenfuss,         2001      $72,020        0          0            0         166,544        0            0
   Chief Executive           2000      $24,930        0          0            0         102,112        0            0
   Officer                   1999      $38,000        0          0            0            0           0            0
-------------------------- --------- ------------ ---------- ----------- ------------ ------------ ----------- ------------
Jeffrey S. Harden            2001      $94,900     $21,150       0            0          40,000        0            0
   President of PPW          2000      $96,000     $43,094       0            0          34,424        0            0
-------------------------- --------- ------------ ---------- ----------- ------------ ------------ ----------- ------------
</TABLE>

Employment Agreements.

         None of the Company's  officers or directors has any written employment
agreement with the Company.

Director Compensation

         Directors of the Company have been  partially  reimbursed  for expenses
incurred  by them on  behalf of the  Company.  No salary or fee has been paid to
directors.  It is  anticipated  that the  Company  may  establish  some fees for
directors  at such  time as the  Company  has  sufficient  funds  to pay fees to
directors.

Stock Options
<TABLE>
<CAPTION>
                                       Option/SAR Grants in Last Fiscal Year
----------------------------- ------------------ ----------------- ----------------- ------------------------
                                  Number of      Percent of total
                                 Securities        Options/SARs     Exerscise or
            Name                 Underlying         Granted to        Base price         Expiration date
                                Options/SARs       Employees in         ($/Sh)
                                 Granted (#)       Fiscal year
----------------------------- ------------------ ----------------- ----------------- ------------------------
<S>                                <C>                <C>               <C>             <C>
B. Willes Papenfuss                166,544            27.3%             $0.25           January 16, 2008
----------------------------- ------------------ ----------------- ----------------- ------------------------
Jeffrey S. Harden                  40,000              6.6%             $0.25           January 16, 2008
----------------------------- ------------------ ----------------- ----------------- ------------------------

<CAPTION>
                          Aggregated Option Exercises and Fiscal Year-End Option Values:
----------------------------- ------------------ ----------------- --------------------- --------------------
                                                                        Number of
                                                                        Securities            Value of
                                                                        Underlying         Unexercised in-
                                   Shares                              Unexercised            The-money
            Name                 Acquired on      Value realized     Options/SARs at       Options/SARs at
                                Exercise (#)           ($)              FY-end (#)           FY-end ($)
                                                                       Exercisable/         Exercisable/
                                                                      Unexercisable         Unexercisable
----------------------------- ------------------ ----------------- --------------------- --------------------
<S>                                   <C>               <C>          <C>                        <C>
B. Willes Papenfuss                   0                 0            197,566/166,544            $0/$0
----------------------------- ------------------ ----------------- --------------------- --------------------
Jeffrey S. Harden                     0                 0             111,793/40,000            $0/$0
----------------------------- ------------------ ----------------- --------------------- --------------------
</TABLE>
                                       16
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management.

         The following  table sets forth  information,  to the best knowledge of
the Company,  as of July 27, 2001,  with respect to the beneficial  ownership of
the  Company's  Common  Stock by (i) each person  known by the Company to be the
beneficial owner of more than 5% of the Company's outstanding Common Stock; (ii)
each  director;  and (iii) all current  directors  and  executive  officers as a
group.

NAME AND ADDRESS OF                           NUMBER OF               PERCENT
BENEFICIAL OWNER                             SHARES OWNED             OF CLASS
----------------                             ------------             --------
Banque SCS Alliance SA                         858,515 (1)             19.4%
11 Route De Florissant Case Portal 3733
12111 Geneva 3, Switzerland

George H. Badger                               551,927 (2)             12.5%
550 Northmont Way
Salt Lake City, UT  84103-3323

Stockbroker Presentations, Inc.              1,238,364 (9)             26.01%
2232 East Semeran Blvd.
Apopks, FL  32703

Barry L. Papenfuss                             348,857 (4)              7.54%
9659 S. Chavez Dr.
S. Jordan, UT 84095

Timothy M. Papenfuss                           331,278 (5)              7.11%
3441 S. Medford Dr.
Bountiful, UT 84010

B. Willes Papenfuss                            292,310  (6)             6.27%
12313 SE Wagner Street
Portland, OR 97236

Jeffrey S. Harden                              273,602  (7)             6.02%
17942 St. Clair Dr.
Lake Oswego, OR 97034

Robert Mintz                                   471,000  (8)            10.6%
30 Otter Trail
Westport, CT 06880

All Officers and Directors
  as a Group (5 persons)                     1,717,047                 32.7%


1 Banque SCS  Alliance SA  disclaims  beneficial  ownership  but has provided no
additional information to the Company to identify the beneficial owners.

2 These shares also include 294,750 shares held in an irrevocable  trust for the
benefit of Mr.  Badger's  children,  for which he does not act as  trustee.  Mr.
Badger disclaims beneficial ownership of these shares.

                                       17
<PAGE>

4 Mr. Barry  Papenfuss is the owner of vested options to purchase  20,000 of the
Company's  common stock at $2.00 a share.  Mr. Barry Papenfuss also is the owner
of options to purchase  257,217 shares of the Company's common stock at $.25 per
share,  of which 206,649 are vested with the remaining  70,568 vesting over four
years beginning January 2002. Messrs. Barry Papenfuss,  Timothy Papenfuss and B.
Willes Papenfuss are brothers.

5 Mr. Timothy Papenfuss is the owner of vested options to purchase 20,000 shares
of the Company's  common stock at $2.00 a share.  Mr. Timothy  Papenfuss also is
the owner of options to purchase 288,702 shares of the Company's common stock at
$.25 per share,  of which 238,134 are vested with the remaining  70,568  vesting
over four years beginning January 2002.

6 Mr. B. Willes  Papenfuss  is the owner of vested  options to  purchase  25,000
shares of the Company's  common stock at $2.00 a share.  Mr. B. Willes Papenfuss
also is the owner of options to purchase  339,110 shares of the Company's common
stock at $.25 per share, of which 239,202 are vested with the remaining  124,908
vesting over four years beginning January 2002.

7 Mr. Jeffrey Harden's shares include 82,030 held by his wife, Lynn Harden,  and
2,413  and  2,413  shares  held by his  children,  Brittany  and  Blake  Harden,
respectively.  Mr.  Jeffrey  Harden  also is the owner of  options  to  purchase
151,793 shares of the Company's common stock at $.25 per share, of which 121,793
are vested with the remaining  30,000 vesting over four years beginning  January
2002.

8 Mr. Robert Mintz is the owner of vested  options to purchase  20,000 shares of
the Company's common stock at $.25 a share, all of which are vested.

9  Stockbroker  Presentations,  Inc.,  in March 2000,  was  granted  warrants to
purchase  340,000  shares  of  common  stock.  The  warrants  can  be  exercised
immediately,  expire  September 2001 and were issued with grant prices of $1.08,
$1.32, $1.49 and $1.72 per share for 85,000 shares of common stock each.

Item 12. Certain Relationships and Related Transactions.

George Badger, a shareholder and former Company President,  and father to former
Company President Karl Badger,  has provided loans to the Company.  At March 31,
2001, the Company owed Mr. Badger  $315,859 with interest and principal  payment
of $5,000 per month.  This note is due  October 31,  2001.  On July 14, 1998 the
Company issued 300,000 shares to Mr. George Badger for prior services.

Item 13. Exhibits and Reports on Form 8-K.

         The following financial statements, schedules, reports and exhibits are
filed with this Report:

         (a)      FINANCIAL STATEMENTS

                  (1)      Report  of  HJ  &  Associates,  Independent
                           Public Accountants.                              F-1

                  (2)      Consolidated  Balance Sheet as of March 31,
                           2001.                                            F-2

                  (3)      Consolidated  Statements  of Operation  for
                           the years  ended  March 31,  2001 and 2000.      F-4

                  (4)      Statement of  Stockholders'  Equity for the
                           period  April 1,  1999  through  March  31,
                           2001.                                            F-6

                  (5)      Consolidated  Statements  of Cash Flows for
                           years ended March 31, 2001 and 2000.             F-7

                  (6)      Notes to Financial Statements.                   F-9

                                       18
<PAGE>

         (d)      Exhibits

         The following exhibits are filed herewith or are incorporated
by  reference to exhibits  previously  filed with the  Securities  and
Exchange Commission.  The Company shall furnish copies of exhibits for
a reasonable  fee  (covering  the expense of  furnishing  copies) upon
request.

Exhibit No.                         Exhibit Name

3.1 (1)      Articles of Incorporation
3.2 (2)      Amendment to Articles of Incorporation
3.3 (1)      By-Laws
3.4 (7)      Amendment on name change
3.5 (7)      Amendment on Series D designation
3.6 (7)      Amendment on Series E designation
10.1 (1)     Agreement with TechKNOWLOGY, Inc.
10.2 (1)     Financing Agreement
10.3 (1)     Exchange of Shares Agreement
10.4 (1)     Option Contract
10.5 (1)     Extension to Option Contract
10.6 (1)     Further Amendment to Option Agreement
10.7 (1)     Purchase Agreement
10.8 (1)     Amendment to Purchase Agreement
10.9 (1)     Addendum to Purchase Agreement
10.10 (1)    Purchase Agreement (Stella Trust)
10.11 (2)    Agreement of Joint Project
10.12 (2)    Amendment to Agreement of Joint Project
10.13 (2)    Dynamic American Option
10.14 (2)    Land Sale Agreement
10.15 (2)    Assignment of Trust Deed and Trust Deed Note
10.16 (2)    Promissory Note (Johnson)
10.17 (3)    TKI Dealer Agreement
10.18 (4)    Modification Agreement
10.19 (4)    Land Sales Agreement (Mindon)
10.20 (4)    Sales Agreement (Property Alliance)
10.21 (5)    Assignment Agreement
10.22 (6)    Agreement with The Stella Trust and Mindon Investments
             (Pickett Group)
10.23 (6)    Acquisition Agreement with Golf Ventures, Inc.
10.24 (6)    Settlement Agreement and General Release (TKI)
10.25 (7)    Stock Purchase Agreement (Fantastic)
10.26 (7)    Agreement (Vowell/Finally)
10.27        Termination Agreement (Vowell/The Company)
10.28        Stock Exchange Agreement (Pacific Print Works)
10.29        Stock Exchange Agreement (Quade, Inc.)
10.30        Employee Stock Option Plan
10.31        Funding Fee Agreement (Badger)
10.32        GVI Settlement Agreement
10.33        U.S. Polo Association Shareholders' Agreement
10.34        Secured Promissory Note with Jordache Enterprises, Inc.
10.35        U.S. Polo Association Ltd. Stock Redemption Agreement
10.36        Promissory Note with Miltex Industries
10.37        Promissory Note with George Badger
10.38        Alliance Financial accounts receivable factor Agreement

                                       19
<PAGE>

10.39        Gateway Acceptance Company accounts receivable factor Agreement
10.40        Promissory Note and Settlement Agreement with Gregory McWade
10.41        Promissory Note and Settlement Agreement with Gary Lange
16.1 (2)     Letter Regarding Change in Certifying Public Accountant
21.          Subsidiaries
23.          Consent of Independent Auditor
27.          Financial Data Schedules
99.1 (2)     List of Third Party Loans to TechKNOWLOGY, Inc.
(28.1)*
99.2 (2)     Lease of LTI Office
(28.2)*
99.3 (2)     Financial Statements for years ended March 31, 1989, (28.3)*
             1988 and 1987, and quarter ended June 30, 1989, as prepared by
             Dale K.Barker Co., P.C.
99.4 (4)     Class "A" Preferred Stock
(28.4)*
99.5 (4)     Debenture
(28.5)*

         (1)  Incorporated  by reference to the Form 10  Registration  Statement
filed with the Commission October 16, 1990, File No.0-18865.

         (2)   Incorporated   by  reference  to  Amendment  No.  1  to  Form  10
Registration Statement filed with the Commission May 23, 1991, File No. 0-18865.

         (3)   Incorporated   by  reference  to  Amendment  No.  2  to  Form  10
Registration  Statement  filed with the  Commission  August 12,  1991,  File No.
0-18865.

         (4)   Incorporated   by  reference  to  Amendment  No.  3  to  Form  10
Registration  Statement  filed with the Commission  November 13, 1991,  File No.
0-18865.

         (5)   Incorporated   by  reference  to  Amendment  No.  4  to  Form  10
Registration  Statement  filed with the Commission  February 13, 1992,  File No.
0-18865.

         (6) Incorporated by reference to Form 10-K for the year ended March 31,
1993

         (7)  Incorporated  by reference to form 10-KSB for the year ended March
31, 1997.

(*) Exhibits  previously filed as Exhibits 28.1 through 28.5 are now depicted as
99.1 through 99.5.

(b) The  Registrant  filed a report on Form 8-K on March 17, 1997  outlining the
acquisition  by the Company of Fan-Tastic,  Inc. on March 17, 1997,  identifying
the Company's name change from Leasing  Technology,  Inc. to American  Resources
and Development Company and a one for twenty (1:20) reverse stock split effected
on the Company's common stock.

                                       20
<PAGE>

                                   SIGNATURES

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

                                    AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                                    (Registrant)

                                    By:  /s/ Timothy M. Papenfuss
                                        ---------------------------------
                                        Timothy M. Papenfuss

Dated: July 27, 2001

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

      Signature                         Title                         Date

/s/ B. Willes Papenfuss         President, Chief Executive         July 27, 2001
-----------------------         Officer and Director
 B. Willes Papenfuss            (Principal Executive Officer)

/s/ Timothy M. Papenfuss        Secretary / Treasurer and          July 27, 2001
------------------------        Director (Chief Financial
 Timothy M. Papenfuss           Officer, Chief Accounting
                                Officer and Controller)

                                       21
<PAGE>

                          INDEPENDENT AUDITORS' REPORT



Shareholders and Board of Directors
American Resources and Development Company and Subsidiaries
Salt Lake City, Utah

We  have  audited  the  accompanying  consolidated  balance  sheet  of  American
Resources and  Development  Company and  Subsidiaries  at March 31, 2001 and the
related consolidated  statements of operations,  stockholders' equity (deficit),
and cash flows for the years ended  March 31,  2001 and 2000 These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
American  Resources and Development  Company and  Subsidiaries at March 31, 2001
and the  results of their  operations  and their cash flows for the years  ended
March  31,  2001 and  2000 in  conformity  with  generally  accepted  accounting
principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As discussed in Note 12 to
the consolidated financial statements, the Company has suffered recurring losses
from operations and its total liabilities exceed its total assets,  which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 12. The consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

HJ & Associates, LLC
Salt Lake City, Utah
June 26, 2001

                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                           Consolidated Balance Sheet

                                     ASSETS

                                                                                                    March 31,
                                                                                                     2001
                                                                                               -----------------
CURRENT ASSETS
<S>                                                                                            <C>
   Cash and cash equivalents                                                                   $          23,759
   Accounts receivable, net (Note 1)                                                                     609,456
   Inventory (Note 1)                                                                                    170,065
   Prepaid and other current assets                                                                       10,982
                                                                                               -----------------
     Total Current Assets                                                                                814,262
                                                                                               -----------------

PROPERTY AND EQUIPMENT (NOTE 1)
   Furniture, fixtures and equipment                                                                     461,954
   Capital leases                                                                                      1,277,899
                                                                                               -----------------
     Total depreciable assets                                                                          1,739,853
     Less: accumulated depreciation                                                                     (878,240)
                                                                                               -----------------
     Net Property and Equipment                                                                          861,613
                                                                                               -----------------

OTHER ASSETS
   Deposits                                                                                               87,458
                                                                                               -----------------
   Total Other Assets                                                                                     87,458
                                                                                               -----------------
   TOTAL ASSETS                                                                                $       1,763,333
                                                                                               =================

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

                                      F-2
<PAGE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                     Consolidated Balance Sheet (Continued)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                                                    March 31,
                                                                                                     2001
                                                                                               -----------------
CURRENT LIABILITIES
<S>                                                                                            <C>
   Accounts payable                                                                            $       1,377,463
   Accrued expenses and other current liabilities                                                        897,799
   Line of credit (Note 3)                                                                               363,888
   Current portion of notes payable (Note 4)                                                             475,727
   Current portion of notes payable, related parties (Note 5)                                          1,168,269
   Current portion of capital lease obligations (Note 6)                                                 219,930
                                                                                               -----------------
   Total Current Liabilities                                                                           4,503,076
                                                                                               -----------------

LONG-TERM DEBT
   Reserve for discontinued operations (Note 2)                                                          810,842
   Notes payable (Note 4)                                                                                220,084
   Notes payable, related parties (Note 5)                                                               210,669
   Capital lease obligations (Note 6)                                                                    210,302
                                                                                               -----------------
     Total Long-Term Debt                                                                              1,451,897
                                                                                               -----------------
     Total Liabilities                                                                                 5,954,973
                                                                                               -----------------

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS' EQUITY (DEFICIT)
   Preferred stock, par value $0.001 per share: 10,000,000
    shares authorized; issued and outstanding: 94,953
    Series B shares, 150,000 Series C shares                                                                 245
   Common stock, par value $0.001 per share: 125,000,000
    shares authorized; issued and outstanding: 7,404,752
    shares issued and 4,421,817 outstanding (Note 9)                                                       4,422
   Additional paid-in capital                                                                          7,845,635
   Accumulated deficit                                                                               (12,041,942)
                                                                                               -----------------
      Total Stockholders' Equity (Deficit)                                                            (4,191,640)
                                                                                               -----------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                     $       1,763,333
                                                                                               =================
</TABLE>

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

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                      Consolidated Statements of Operations

                                                                                    For the Years Ended
                                                                                         March 31,
                                                                          --------------------------------------
                                                                                2001                 2000
                                                                          ------------------   -----------------
<S>                                                                       <C>                  <C>
SALES
  Sales                                                                   $        5,949,348   $       4,828,053
  Cost of sales                                                                    5,183,621           3,640,588
                                                                          ------------------   -----------------
     Gross Profit                                                                    765,727           1,187,465
                                                                          ------------------   -----------------

EXPENSES

  General and marketing expenses                                                   1,549,808           1,442,181
  Depreciation and amortization                                                       10,193              18,929
                                                                          ------------------   -----------------
     Total Expenses                                                                1,560,001           1,461,110
                                                                          ------------------   -----------------
LOSS FROM OPERATIONS                                                                (794,274)           (273,645)
                                                                          ------------------   -----------------

OTHER INCOME AND (EXPENSES)

  Loss on write-off of GCA                                                            -               (1,434,239)
  Other income (expenses)                                                             20,575               3,541
  Interest expense                                                                  (666,652)           (584,355)
                                                                          ------------------   -----------------
       Total Other Income and (Expenses)                                            (646,077)         (2,015,053)
                                                                          ------------------   -----------------
 LOSS BEFORE INCOME TAXES AND
  DISCONTINUED OPERATIONS                                                         (1,440,351)         (2,288,698)
                                                                          ------------------   -----------------

DISCONTINUED OPERATIONS
  Gain on disposal of USPA (Note 2)                                                   -                  867,587
                                                                          ------------------   -----------------
        Total Discontinued Operations                                                 -                  867,587
                                                                          ------------------   -----------------

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

NET LOSS                                                                          (1,440,351)         (1,421,111)
                                                                          ------------------   -----------------

OTHER COMPREHENSIVE LOSS
   Loss on valuation of marketable securities                                         -                   -
                                                                          ------------------   -----------------

     Total Other Comprehensive Loss                                                   -                   -
                                                                          ------------------   -----------------

NET COMPREHENSIVE LOSS                                                    $       (1,440,351)  $      (1,421,111)
                                                                          ==================   =================

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

                                      F-4
<PAGE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                Consolidated Statements of Operations (Continued)

                                                                                    For the Years Ended
                                                                                         March 31,
                                                                          --------------------------------------
                                                                                2001                 2000
                                                                          ------------------   -----------------
<S>                                                                       <C>                  <C>
BASIC LOSS PER SHARE OF COMMON
  STOCK-CONTINUING OPERATIONS                                             $            (.36)   $           (0.64)
                                                                          ===================  =================
BASIC INCOME (LOSS) PER SHARE OF COMMON STOCK -
DISCONTINUED OPERATIONS                                                   $              -     $            0.24
                                                                          ==================   =================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                      4,009,136           3,549,495
                                                                          ==================   =================
</TABLE>

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

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                              AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                        Consolidated Statements of Stockholders' Equity (Deficit)
                                                         March 31, 2001 and 2000




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

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

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

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

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

Net loss for the year ended
 March 31, 2000                   -             -              -            -             -              -            (1,421,111)
                               ---------    ----------      -------  -----------  --------------  -------------   --------------
Balance, March 31, 2000        3,875,953         3,876      244,953          245          -           7,640,045      (10,601,591)

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

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

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

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

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

Net loss for the year
 ended March 31, 2001                                                                                                 (1,440,351)
                               ---------    ----------      -------  -----------  --------------  -------------   --------------
Balance, March 31, 2001        4,421,817    $    4,422      244,953  $       245  $       -       $   7,845,635   $  (12,041,942)
                               =========    ==========      =======  ===========  ==============  =============   ==============
</TABLE>

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

                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                      Consolidated Statements of Cash Flows

                                                                                   For the Years Ended
                                                                                         March 31,
                                                                          --------------------------------------
                                                                                  2001                2000
                                                                          ------------------   -----------------
<S>                                                                       <C>                  <C>
OPERATING ACTIVITIES
   Net loss                                                               $      (1,440,351)   $      (1,421,111)
   Adjustments to reconcile net loss to net cash
    provided by operating activities, net of effect of
    mergers:
     Gain on sale of USPA, Ltd.                                                         -               (867,587)
     Expense purchase of PPW stock (see Note 2)                                      100,000
     Depreciation and amortization                                                   281,110             294,188
     Stock option and stock for services                                             187,842             107,927
     Loss on write-off of GCA marketable securities                                     -              1,434,239
     Changes in operating assets and liabilities:
     (Increase) in accounts receivable                                              (22,627)             (70,169)
     Decrease in inventory                                                            62,245              61,458
     (Increase) decrease in other assets                                            (21,605)             (86,959)
     Increase (decrease) in accounts payable and other
      current liabilities                                                          1,166,111             497,577
     Increase (decrease) in deferred revenue                                        (20,000)              10,000
     Increase in reserve for discontinued operations                                  75,854              74,865
                                                                          ------------------   -----------------
       Net Cash Provided by Operating Activities                                     368,579              34,428
                                                                          ------------------   -----------------

INVESTING ACTIVITIES
   Proceeds from sale of USPA, Ltd.                                                     -                221,470
   Proceeds from sale of marketable securities                                         2,485              33,059
   Purchases of property and equipment                                              (57,632)             (62,876)
                                                                          -------------------  -----------------
     Net Cash Provided (Used) by Investing Activities                               (55,147)             191,653
                                                                          ------------------   -----------------

FINANCING ACTIVITIES
   Cash from exercise of stock options                                                 5,960               -
   Net proceeds on line of credit                                                   (52,283)              48,326
   Payments on long-term debt and capital lease obligations                        (364,693)            (347,260)
   Note payable borrowings                                                           112,429              39,800
                                                                          ------------------   -----------------
     Net Cash Used by Financing Activities                                         (298,587)            (259,134)
                                                                          -------------------  -----------------

INCREASE (DECREASE) IN CASH                                                           14,845             (33,053)

CASH, BEGINNING OF YEAR                                                                8,914              41,967
                                                                          ------------------   -----------------

CASH, END OF YEAR                                                         $           23,759   $           8,914
                                                                          ==================   =================

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

                                      F-7
<PAGE>
<CAPTION>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                Consolidated Statements of Cash Flows (Continued)

                                                                                   For the Years Ended
                                                                                         March 31,
                                                                          --------------------------------------
                                                                                  2001                2000
                                                                          ------------------   -----------------
<S>                                                                       <C>                  <C>
CASH PAID FOR
  Interest                                                               $         260,383     $         344,901
  Income taxes                                                           $            -        $            -

NON CASH FINANCING ACTIVITIES
  Common stock issued for services and compensation                      $         118,553     $         107,927
  Common stock issued for reduction of interest or debt payable                     80,606                  -
  Purchase of seven percent of PPW stock for notes payable                         100,000                  -
  Conversion of interest payable into notes payable                                 46,560                  -
</TABLE>

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

                                      F-8
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

         a. Principles of Consolidation

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

         b. Estimates

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

         c. Cash and Cash Equivalents

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

         d. Concentrations of Risk

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

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

         e. Inventories

         Inventories  are  stated  at the  lower  of cost or  market  using  the
         first-in,  first-out method.  Inventory consists of items available for
         resale.

         f. Property and Equipment

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

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

         g. Accounts Receivable

         Accounts receivable are shown net of the allowance for bad debts of
         $47,947 at March 31, 2001.

                                      F-9
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         h. Financial Instruments

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

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

         At March 31,  2000,  the Company  held  1,045,000  shares of GCA stock.
         Because of GCA filing for bankruptcy in July of 1999, substantial doubt
         exists  regarding the ability of the Company to recover its  investment
         in GCA. At June 15, 2001,  GCA was still in Chapter 11  bankruptcy  and
         its market value was $0.06 per share. Furthermore,  the majority of the
         Company's  stock in GCA is restricted and the Company does not have the
         ability to have the  restriction  removed because GCA is not current in
         its SEC filings.  As a result, the Company wrote off its cost in GCA at
         March 31, 2000 and incurred a loss of $1,434,239.

         i. Income Taxes

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

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

         j. Basic Loss Per Common Share

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

         Basic net loss from continuing  operations per common share and diluted
         net  loss  from   continuing   operations  per  common  share  amounts,
         calculated in accordance with SFAS 128, were $(.36) and $(0.64) for the
         years  ended March 31,  2001 and 2000,  respectively.  Basic net (loss)
         income from  discontinued  operations  per common share and diluted net
         loss from  discontinued  operations  per  common  share  were $0.00 and
         $0.24,  respectively.  Weighted average common shares  outstanding were
         4,009,136  and  3,549,495  for the years ended March 31, 2001 and 2000,
         respectively.

         k. Revenue Recognition

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

                                      F-10
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         l. Goodwill

         On March 31, 1998, the Company  recognized  goodwill of $1,696,412 from
         the  purchase  of  Pacific  Print  Works  (aka  Pacific   Printing  and
         Embroidery  LLC). The Company  amortized  $128,198 of goodwill from the
         PPW  acquisition  in fiscal 1999. In the fourth quarter of fiscal 1999,
         the Company  wrote-off its remaining  goodwill from the PPW acquisition
         due to a permanent  impairment,  resulting in an additional  expense of
         $1,568,215.  The  Company  recognizes  goodwill  from the excess of the
         purchase  price of its  acquisitions  over  the  fair  value of the net
         assets acquired.

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

         m. Advertising

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

         n. Change in Accounting Principle

         The  Company  has adopted the  provisions  of FIN 44,  "Accounting  for
         Certain Transactions  Involving Stock Compensation (an iterpretation of
         APB Opinion No. 25)" This interpretation is effective July 1, 2000. FIN
         44 clarifies the application of Opinion No. 25 for only certain issues.
         It does not address any issues  related to the  application of the fair
         value method in Statement No. 123. Among other issues, FIN 44 clarifies
         the  definition  of employee for  purposes of applying  Opinion 25, the
         criteria for determining  whether a plan qualifies as a noncompensatory
         plan, the accounting  consequence of various modifications to the terms
         of a previously  fixed stock  option or award,  and  accounting  for an
         exchange of stock compensation  awards in a business  combination.  The
         adoption  of this  principal  had no material  effect on the  Company's
         consolidated financial statements.

         The  Company  has  adopted  the  provision  of FASB  Statement  No. 140
         "Accounting  for  Transfers  and  servicing  of  Financial  Assets  and
         Extinguishments  of  Liabilities  (a  replacement of FASB Statement No.
         125.)" This statement  provides  accounting and reporting  standard for
         transfers  and  servicing of financial  assets and  extinguishments  of
         liabilities.  Those standards are based on consistent  application of a
         financial-components  approach  that  focuses  on  control.  Under that
         approach,  the transfer of financial assets, the Company recognized the
         financial and servicing  assets it controls and the  liabilities it has
         incurred,   derecognizes   financial   assets  when  control  has  been
         surrendered,  and  derecognizes  liabilities  when  extinguished.  This
         statement provides consistent standards for distinguishing transfers of
         financial  assets  that are  sales  from  transfers  that  are  secured
         borrowings.  This statement is effective for transfers and servicing of
         financial  assets and  extinguishments  of liabilities  occurring after
         March 31,  2001.  This  statement  is  effective  for  recognition  and
         reclassification   of  collateral  and  for  disclosures   relating  to
         securitization  transactions  and  collateral  for fiscal  years ending
         after December 15, 2000. The adoption of this principle had no material
         effect on the Company's consolidated financial statements.

                                      F-11
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         o. Prior Period Reclassification

         Certain  2000  amounts  have  been   reclassified  to  conform  to  the
         presentation of the 2001 consolidated financial statements.

NOTE 2 - MERGERS AND ACQUISITIONS

         Golf Ventures, Inc.

         In November  1997,  Golf Ventures,  Inc., a former Company  subsidiary,
         merged  with U.S.  Golf  Communities.  U.S.  Golf  Communities  was the
         controlling  company in this  merger and  subsequent  to the merger the
         combined  company's name changed to Golf  Communities of America (GCA).
         This merger resulted in a less than 20% American  Resources'  ownership
         in GVI. Therefore,  subsequent to the merger, the Company's  investment
         in GVI is reflected  as an  investment  in  accordance  with  Financial
         Accounting Standards Board Statement No. 121.

         The Company has a reserve for  discontinued  operations  of $810,842 at
         March 31, 2001.

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

         In May 1998,  the Company  acquired  83% of the  outstanding  shares of
         Pacific  Print Works (PPW).  The  acquisition  was accounted for by the
         purchase method of accounting, and accordingly,  the purchase price was
         allocated to assets  acquired and  liabilities  assumed  based on their
         fair market value at the date of  acquisition.  Liabilities  assumed in
         excess  of assets  acquired  was  $629,252  and  213,472  shares of the
         Company's  common  stock  were  issued  to  PPW  shareholders   with  a
         guaranteed share value of $5.00 resulting in goodwill of $1,686,411. In
         addition,  depending  on PPW's  performance  from April 1, 1998 through
         March 31, 2001,  additional  shares of the Company's common stock would
         be issued to the Sellers if minimum  earnings levels were met. Based on
         the $5.00  guarantee  and the  Company's  share value from October 1998
         through March 1999, the Company is obligated to issue additional shares
         of common stock to the Sellers.  An amendment to the PPW Stock Purchase
         Agreement  is being  evaluated  by the Company and the Sellers in which
         the  Company  would issue  another  1,100,000  shares of the  Company's
         common stock to the Sellers and any additional earnings requirements by
         PPW or per share value  guarantee by the Company  would be  eliminated.
         Effective  May 2, 2001,  the Company  agreed to buy an additional 7% of
         PPW  from  a  PPW   shareholder   for  $100,000,   payable  in  monthly
         installments  through  July  2003 (See Note 4).  The  $100,000  for the
         additional  PPW shares were  expensed for the year ended March 31, 2001
         as the Company had previously  written off all goodwill  related to the
         purchase of PPW (see Note 1, l.).

         Quade, Inc. and U.S. Polo Association, Ltd.

         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.

         On July 23, 1998, the Company purchased Quade by issuing 238,333 shares
         of its common stock.

                                      F-12
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 2 - MERGERS AND ACQUISITIONS (Continued)

         Effective  October 8,  1998,  the  Company  and  Jordache  Enterprises,
         through its  affiliate,  Iron Will,  Inc.  ("Iron Will") formed a joint
         venture  company,  U.S. Polo  Association,  Ltd. (US Polo), to hold the
         master license  granted by the US Polo  Association  and to perform all
         licensing  activities relating to the US Polo Association  licenses and
         trademarks for the United States and Canada.  The Company and Iron Will
         each owned 50% of US Polo and management and the Board of Directors for
         US Polo were  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. The Company's
         investment  in this joint  venture was  accounted  for under the equity
         method of  accounting.  The  Company's  share of losses from this joint
         venture for the year ended March 31, 1999 were $127,268.

         In March 1999, the Company's Board of Directors made a decision to sell
         its 50% ownership in U.S. Polo to Iron will. In June 1999,  the Company
         closed its sale of U.S.  Polo  ownership to Iron Will.  For its sale of
         U.S. Polo, the Company  received the cancellation of $1,000,000 in debt
         from Jordache Enterprises,  the cancellation of $13,185 in interest and
         cash of $221,470.  In addition,  the Company  received  another $70,000
         upon the collection of U.S. Polo royalties earned through May 31, 1999.

         The results of  operations  of Quade,  Inc. and U.S.  Polo for the year
         ended  March 31,  1999 has  generated  a loss of  $252,972  on sales of
         $232,712.  A gain  on the  disposal  of  U.S.  Polo  for  $867,587  was
         recognized  for year ending  March 31,  2000.  No income tax benefit or
         expense has been  attributed to the disposal of U.S. Polo. In addition,
         the Company and the former owner of Quade  amended the  original  stock
         purchase agreement.  Under the amendment,  an additional 451,667 shares
         of common stock were issued to the former owner of Quade and to a Quade
         creditor and the additional earnings requirements by Quade or U.S. Polo
         to receive additional  Company common stock was eliminated.  In return,
         the $5.00 per  share  guaranteed  value of the  initial  common  shares
         issued to the Quade shareholder was removed.

NOTE 3 - LINE OF CREDIT

         In December  2000,  the  Company  entered  into an accounts  receivable
         financing  agreement  to  sell,  with  recourse,  up to $1  million  of
         receivables,  net of a 15% collection  reserve.  The Company is charged
         prime  (as  defined  by Bank of  America)  plus  8% per  annum  for all
         receivables  sold and uncollected  under this financing  agreement.  At
         March 31,  2001 the  Company  had a payable of  $363,888  for net funds
         advanced  from its  accounts  receivable  line of credit.  The  Company
         received $4,632,798 and $3,355,182 from the sale of receivables for the
         Years ended March 31, 2001 and 2000 and recognized  $98,668 and $95,606
         in interest  expense  from the discount of selling  these  receivables,
         respectively.

                                      F-13
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 4 - NOTES PAYABLE
<TABLE>
<CAPTION>
         Notes payable are comprised of the following:
                                                                                                   March 31,
                                                                                                 2001
                                                                                          -----------------
         <S>                                                                              <C>
         Note payable, unsecured, bearing interest at 12%, payable in
          monthly installments of $7,000, including interest. Due on demand.              $          19,916

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

         Note payable to debtholder of PPW, unsecured. Modified in August
          2000. Modified agreement requires payments of $145,000 through
          February 2002 without interest. Additional principal payments of
          $147,084 will be required if payments are not made timely plus 9%
          interest. A gain on the modification of debt for $137,084 will be
          recorded when there is no risk of default on this debt.                                   292,084

         Note payable to shareholder of PPW for purchase of 7% of PPW
          shares, unsecured. Note requires monthly payments of $3,000 from
          July 2001, increasing to $5,000 in July 2002 with a final $9,000
          payment July 2003. The note is non-interest bearing but will
          accrue interest at 9% from inception if the Company is non-timely
          on payments.                                                                              100,000

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

             Subtotal                                                                               695,811

             Less current portion                                                                 (457,727)
                                                                                          -----------------

             Long-term portion                                                            $         220,084
                                                                                          =================

             Maturities of long-term debt are as follows:
                                       March 31, 2002                                     $         475,727
                                       March 31, 2003                                               196,084
                                       March 31, 2004                                                24,000
                                                                                          -----------------
                                                                                          $         695,811
                                                                                          =================

                                      F-14
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000

<CAPTION>
NOTE 5 - NOTES PAYABLE, RELATED PARTIES
                                                                                              March 31,
                                                                                                 2001
                                                                                          -----------------
         <S>                                                                              <C>
         Note payable to Miltex Industries, secured by 2,934,193 shares of
          the Company's common stock. Interest at 15% with monthly
          principal and interest payments of $11,000 with a final balloon
          payment December 31, 2001. Note is in default.                                  $         770,054

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

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

         Notes payable to shareholders (includes officers and directors of
          the Company).  Interest rates average 10.5%.  Unsecured, due on
          demand, but not expected to be repaid until 2003.                                         226,648
                                                                                          -----------------

                                       Subtotal                                                   1,378,938

                                       Less current portion                                      (1,168,269)
                                                                                          -----------------

                                       Long-term portion                                  $         210,669
                                                                                          =================

         Maturities of notes payable, related parties are as follows:
                                       March 31, 2002                                     $       1,168,269
                                       March 31, 2003                                               210,669
                                                                                          -----------------
                                                                                          $       1,378,938
</TABLE>

NOTE 6 - CAPITAL LEASES

         Property and equipment payments under capital leases as of March 31,
         2001 is summarized as follows:
<TABLE>
<CAPTION>
         <S>                                                                              <C>
                              Year End
                              March 31,
                              2002                                                        $         240,765
                              2003                                                                  125,335
                              2004                                                                   87,408
                              2005                                                                   32,379
                                                                                          -----------------

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

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

         Long-term portion of capital lease obligations                                   $         210,302
                                                                                          =================
</TABLE>
                                      F-15
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 6 - CAPITAL LEASES (Continued)

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

NOTE 7 - INCOME TAXES

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

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


         Income tax Benefit at statutory rate                    $     46,200
         Valuation allowance                                          (46,000)
                                                                 ------------
                                                                 $       -0-
                                                                 ============

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

         Net Operating Loss Carryforward                         $  1,318,000
         Valuation allowance                                       (1,318,000)
                                                                 ------------
                                                                 $       -0-
                                                                 ============

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

NOTE 8 - PREFERRED STOCK

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

         SERIES B:

         At March 31, 2000,  there are 94,953 shares of series B preferred stock
         issued and outstanding.  The holders of these series B preferred shares
         are  entitled to an annual  cumulative  cash  dividend of not less than
         sixty cents per share. At March 31, 2001,  there is a total of $466,533
         of accrued and unpaid dividends related to the series B preferred stock
         which have been  included in the  accompanying  consolidated  financial
         statements.  These  series B  preferred  shares were  convertible  into
         shares of the Company's  common stock which  conversion  option expired
         March 31, 1995.

                                      F-16
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 9 - COMMON STOCK ISSUED BUT NOT OUTSTANDING

         The Company has issued  160,820  shares of common  stock which had been
         offered  to the  holders  of the  Series  B  preferred  stock  and  the
         debentures.  The shares have not been  accepted by the holders of those
         investments as of the date of the  consolidated  financial  statements.
         Additionally,  the Company has issued  2,934,193 shares of common stock
         as collateral for the note payable to Banque SCS (Note 5).

NOTE 10 - STOCK OPTIONS

         In  March  2001 and  August  1997,  the  Company's  Board of  Directors
         approved the 2001 and 1997 American  Resources and Development  Company
         Stock  Option  Plans,  respectively  (Option  Plans).  Under the Option
         Plans,  1,500,000 shares of the Company's common stock are reserved for
         issuance to Directors and employees. Options are granted at a price and
         with vesting terms as determined by the Board of Directors.

         In August 1999 and January 2001, the Board of Directors granted options
         to purchase  696,291 and 599,723  shares of common stock at $0.25.  The
         options issued in August 1999 are currently vested.  The options issued
         in  January  2001 vest over four  years.  The  options  were  issued to
         various  employees,  officers  and  directors  of the  Company for past
         services,  risk  associated  with various debt incurred by officers for
         the Company and  guarantees by officers of Company debt, and for future
         services.  No compensation expense was recognized,  as the option price
         was greater  than the fair market value of the stock at the date of the
         option grant.

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

         In October  1997,  the Board of Directors  granted  options to purchase
         140,000  shares  of stock  at  $2.00.  These  options  are  exercisable
         beginning March 31, 1998,  over staggered  periods and expire after ten
         years.  Compensation expense of $1,458 per month will be recognized for
         40,000 of the options  issued  over a 4 year  vesting  period.  In July
         1998, the Board of Directors  changed the terms of the 100,000  options
         vesting  over 10 years.  25,000 of these  options were fully vested and
         the remainder of the options were canceled.  As a result,  compensation
         expense of $52,498 was recognized for the year ended March 31, 1998 for
         the vesting of these options.

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

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

         On March 1, 2000, the Company  granted options to a company to purchase
         up to 340,000 shares of the company's common stock.  This company is to
         provide various investor relations  services.  The Company recognized a
         $32,385 expense over 4 months from the date of the grant based upon the
         value of the options as calculated  from an option pricing  model.  The
         options  expire  September  1,  2001,  are  not  transferrable  and are
         exercisable at any time at the following rates:

                                      F-17
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 10 - STOCK OPTIONS (Continued)

                   85,000 shares         at      $1.08 per share;
                   85,000 shares         at      $1.32 per share;
                   85,000 shares         at      $1.49 per share;
                   85,000 shares         at      $1.72 per share.

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

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

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

                                                                March 31,
                                                                 2001
                                                               ----------
                   Expected dividend yield                         0%
                   Expected stock price volatility                70%
                   Risk-free interest rate                       6.5%
                   Expected life of options (in years)            10

NOTE 11 - COMMITMENTS AND CONTINGENCIES

         Office Lease

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

         Legal Proceedings

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

                                      F-18
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000


NOTE 12 - GOING CONCERN

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

NOTE 13 - BUSINESS SEGMENTS

         Effective March 31, 1999, the Company adopted SFAS No. 131, "Disclosure
         about Segments of an Enterprise and Related  Information."  The Company
         conducts its operations principally in the contract screen printing and
         embroidery  industry  with  Pacific  Print  works,  Inc. and the retail
         franchise industry with Fan-Tastic, Inc.

         Certain financial  information  concerning the Company's  operations in
         different industries is as follows:
<TABLE>
<CAPTION>
                                                For the
                                               Years Ended          Pacific                            Corporate
                                                March 31,         Print Works       Fan-Tastic        Unallocated
                                                ---------         -----------       ----------        -----------
              <S>                                 <C>          <C>               <C>               <C>
              Net sales                           2001         $      5,775,337  $       174,011   $         -
                                                  2000                4,415,801          412,252             -

              Operating income (loss)             2001                 (406,772)        (246,391)             -
               applicable to industry             2000                  181,348         (202,951)             -
               segment

              General corporate expenses          2001                     -                -              235,506
               not allocated to industry          2000                     -                -              252,041
               segments

              Writedown of goodwill               2001                  100,000             -                 -
                                                  2000                     -                -                 -

              Interest expense                    2001                 (401,746)         (62,841)         (202,335)
                                                  2000                 (339,253)         (38,746)         (206,356)

              Other income (expenses)             2001                      904            8,671            11,000
               including interest and gain        2000                    7,469           (4,174)       (1,433,994)
               and loss on write-down of
               marketable securities

                                      F-19
<PAGE>

                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY

                 Notes to the Consolidated Financial Statements
                             March 31, 2001 and 2000

NOTE 13 - BUSINESS SEGMENTS (Continued)
<CAPTION>
                                                For the
                                               Years Ended          Pacific                            Corporate
                                                March 31,         Print Works       Fan-Tastic        Unallocated
                                                ---------         -----------       ----------        -----------
              <S>                                 <C>          <C>               <C>               <C>
              Income (loss) from
               discontinued operations            2001                      -               -                 -
                                                  2000                      -               -              867,587

              Assets                              2001                 1,740,714          17,347             5,272

              Depreciation and
               amortization                       2001                   270,668           5,472               721
                                                  2000                   279,260          12,013             2,915

              Property and equipment
               acquisitions                       2001                    57,632            -                 -
                                                  2000                   272,468           6,007              -
</TABLE>

                                      F-20