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, 1998, 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)


3855 S. 500 W., Salt Lake City, Utah                   84115
--------------------------------------------------------------------------------
    (Address of Principal Executive Offices)        (Zip Code)

                                  (801)363-8961
                                  -------------
                (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. [ ]

         Issuer's revenues for its most recent fiscal year was $1,093,110.

         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 24, 1998 was $841,187.

         The number of shares  outstanding of the issuer's common equity,  as of
July 24, 1998 was 3,215,596.

                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                                              9

ITEM 3.  LEGAL PROCEEDINGS                                                    9

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                                                13


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE                                            13

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE  OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                   13

ITEM 10. EXECUTIVE COMPENSATION                                              15

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      17

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                      18

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                                    18

                                       2
<PAGE>


         The  information  contained  in this second  amended  Form 10-K for the
fiscal year ended March 31, 1998,  is as of the latest  practicable  date except
for financial information which relates to the fiscal year.


                                     PART I


Item 1.  Description of Business.

GENERAL

         American  Resources and Development  Company ("ARDCO" or the "Company")
was  incorporated  under the laws of the State of Utah on March 13, 1983,  under
the name of Leasing Technology, Incorporated. In March, 1997 the Company changed
its name to American  Resources and Development  Company.  The Company,  through
various  subsidiaries,  owns a franchisor and owner of retail  entertainment and
sports stores,  a screen printing and embroidery  company,  a master licensee of
product using the U.S. Polo  Association  trademark and an apparel  manufacturer
using the U.S.  Polo  Association  trademark  and an  investment  in a  regional
developer and management provider of golf courses and related developments. When
used throughout this report,  the Company shall include the  subsidiaries of the
Company  unless  the  context  indicates  otherwise.  In  addition  to the above
businesses,  the Company is actively  reviewing other acquisition  possibilities
wherein  the  Company  could  acquire  an  interest  in  products,   properties,
technologies  and/or  businesses  believed by management  to hold  potential for
profit.  The nature of any acquisition and the manner of any acquisition  cannot
be determined  at the present time and will be subject to the business  judgment
of  management  of the Company.  There is no assurance  that the Company will be
able to acquire an  interest  in any other  product,  property,  technology,  or
business.

         The  Company's  present  executive  offices are located  3855 South 500
West,  Suite R., Salt Lake City,  Utah 84115 and its  telephone  number is (801)
363-8961.  As of July 24,  1998,  the  Company  had one  hundred  two (102) full
fulltime equivalent  employees.  On March 27, 1997, the Company effected a 1 for
20 reverse stock split of its common stock.

FAN-TASTIC, INC.

         In March,  1997, the Company acquired 80% of the outstanding  shares of
Fan-Tastic,  Inc., a Utah Corporation  ("Fan-Tastic") and acquired the remaining
20% in June 1998, effective March 31, 1998. Fan-Tastic is a franchisor and owner
of retail  entertainment and sports stores,  dba Fan-A-Mania,  based in regional
shopping malls. As of July 24, 1998, Fan-Tastic owned 4 of its own stores with 1
in Utah and 3 in Oregon  and 11  franchisees  in the  states  of Utah,  Wyoming,
Pennsylvania,  Texas,  and countries of Barbados,  Canada and Japan.  Fan-Tastic
opened its first Fan-A-Mania store in October 1995.

         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:
Disney,  Warner Brothers,  Public Television (Sesame Street),  National Football
League,  National Basketball  Association,  Major League Baseball,  and National
Hockey  League.  Products  carried  range from  apparel  for ages  ranging  from
toddlers to adults,  collectibles  and souvenirs for fans of  entertainment  and
sports.

         In May, 1997,  Fan-Tastic  initiated a national  marketing  campaign to
promote  the  Fan-A-Mania  stores  primarily  through  advertising  in  national
magazines.   Limited  additional   marketing  will  also  be  done  at  specific
entrepreneur  shows held in strategic  regions of the United  States and through
direct marketing.

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

                                       3
<PAGE>


         -        Site evaluation and selection and lease negotiation.
         -        Store design and merchandising and display plans.
         -        Lower  inventory  costs from  negotiated  volume  pricing  and
                  simplified  buying through a consolidated  buying  program.
         -        Inventory  control  through  a  consolidated   point  of  sale
                  software  and  chain  wide   identification   of  hot  selling
                  products.
         -        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.

         International Franchising

         Fan-Tastic's  marketing efforts have resulted in international interest
in the concept, with a first store opening in Bridgetown, Barbados, in December,
1996, and the signing of a master  franchise  agreement with a Japanese  company
that opened its first store in December 1997.  Management of Fan-Tastic believes
a strong area of growth will be in the  international  market due to the growing
interest in American entertainment and sports in the global marketplace.

         Seasonality

         Approximately  36% of annual  Fan-Tastic  sales  have  occurred  in the
months of November and December.

              Suppliers

         Fan-Tastic  purchases product from a number of national licensed sports
and entertainment  manufacturers  including  Starter,  Inc., New Era,  Champion,
Applause,  Brazos  Sportswear and Changes.  Fan-Tastic is not dependent upon any
one supplier.

         Competition

         The entertainment  and sports products  industry is quite  competitive.
Most mass merchants  carry  entertainment  and sports  products and thus provide
competition  on an indirect  basis.  However,  management  believes  service and
atmosphere differentiate the marketing approach of Fan-A-Mania products from the
marketing  approach  of  mass  merchants.  Direct  competition  in  malls  where
Fan-A-Mania  stores are located comes  primarily  from  national  chains such as
Disney, Warner Brothers, and Champs. Currently,  there are no Fan-A-Mania stores
in malls with these  stores,  although  direct  competition  exists with smaller
sports stores.  Management  believes that Fan-A-Mania has differentiated  itself
for marketing  purposes by selling both entertainment and sports products and by
having an attractive appearance.

         Fan-Tastic  also  competes  with  other   franchisers  for  prospective
franchisees.  However,  there is very little direct  competition for prospective
franchisees  since  Fan-A-Mania is currently the only  entertainment  and sports
apparel,  collectible  and souvenir  oriented  franchisor  known to  management.
Fan-Tastic  also competes for suitable  store  locations  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 24, 1998, Fantastic had 21 full time equivalent employees.

                                       4
<PAGE>

PACIFIC PRINTING AND EMBROIDERY L.L.C.

In May 1998, the Company acquired approximately 83% of the outstanding shares of
Pacific Printing and Embroidery L.L.C.  (PPW).  Liabilities assumed in excess of
assets  acquired was $532,582 and 258,782  shares of the Company's  common stock
were  issued  to PPW  shareholders  with a  guaranteed  share  value  of  $5.00.
Depending  on PPW's  performance  over  the  next  three  years,  up to  258,782
additional  shares  of the  Company's  common  stock  will be  issued  for  this
acquisition  if minimum  earnings  levels  are met (See Note 2 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 which are in the decorated  sportswear  market.  The
decorated   sportwear   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; and (vi) the
increased  use of  "attitude"  apparel.  PPW believes  that these trends  should
continue to drive industry growth.

Business Strategy

PPW intends to increase its revenues and position  itself as a leading  national
screen print and  embroidery  contracter  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
embroidery these designs on blanks provided by the customers.  PPW's new product
focus during the past six months 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 hired an industry expert in March 1998, Michael
Beckman,  PPW Vice  President  of  Operations,  who oversees  PPW's  high-desity
printing.  Mr.  Beckman has been honored by industry  experts  with  significant
awards for his  creative  designs  and inks.  During the past six months PPW has
been creating  high-density  samples for its current customer as well as several
new customers.  PPW has also been able to grow its business by  specializing  in
reflective inks, environmentally safe water based printing and puff inks.

Private Label Products.  PPW manufactures  private label products for certain of
its larger retail  customers.  PPW designs each private label product by working
closely with a customer,  creating a unique  decorated  sportswear  line that is
sold under that customer's label.

Other.  Other products  include  printing on athletic  uniforms for Nike,  Inc's
organized sports.  PPW also produces custom designed graphics and screenprinting
for corporate accounts.

Design And Sales Staff.  PPW employs a staff of  approximately  4 graphic design
artists who work closely  with  customers  to create  designs for its  customers
sportswear  lines.  PPW employs six external and three internal sales people who
work closely with existing and new customers to ensure customer needs are met.

                                       5
<PAGE>

Customers

PPW's  primary  sales  are  through  national  decorated   sportswear  companies
including: Nike, Columbia Sportswear, Dr. Martens, Speedo and Jantzen. In fiscal
1998,  PPW's sales to major customers were as follows:  Nike, Inc. 22%,  Jantzen
21% and Columbia Sportswear 13%.

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.  The majority of blank apparel screen printed and
embroidered is provided by its customers.

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  duplicate  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 are dried,  making the printed design
permanent and washable.

PPW operates  five  automatic  screen  printing  presses and seven manual screen
printing presses.  Most of the automatic presses are color printing presses with
eight to fourteen color printing. 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.  PPW believes that its capacity is sufficient
for its needs and that  during  seasonal  peaks  sufficient  sources  of outside
production are available to PPW to meet its production needs, if necessary.

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 all designs are approved, the design that is to be embroidered is
formatted onto a computer  disk,  which is then  programmed  into the embroidery
machine.  Each embroidery  machine has multiple sewing heads,  permitting two to
sixty-one garments to be embroidered at one time.  Garments are trimmed,  packed
in PPW's  warehouse  and shipped  directly to the  customer or to other  Company
facilities for distribution to the customer. PPW operates seven fully automated,
multi-head embroidery machines.

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

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 racks and shelves more quickly.  PPW's
customers generally bear all shipping costs.

                                       6
<PAGE>

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 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 24,  1998,  PPW  employed  approximately  80  full-time  employees.  PPW
believes that its employee relations are good.


GOLF VENTURES, INC.

         As of April 6, 1998,  the Company owned 502,746  shares of common stock
of Golf Ventures, Inc. (hereinafter "GVI"), a publicly held Utah corporation. As
of April 6, 1998, such shares  represented  approximately 5.3% of the issued and
outstanding  common stock of GVI. This percentage was prior to the conversion of
U.S.  Golf  Communities  Preferred  Stock into common  stock,  which  conversion
occurred by July 1998 and reduced the Company's  holdings to approximately  1.4%
of the issued and  outstanding  Common  Stock of GVI. In  connection  with GVI's
merger with U.S.  Golf  Communities,  Inc.  described  below,  and to settle all
services  provided  by the  Company to GVI,  and for the  assumption  of certain
contingent  liabilities  by the Company,  GVI, in July 1998,  issued the Company
862,000 shares of common stock. As of July 24, 1998, the Company owned 1,277,000
shares of commons stock of Golf Ventures,  Inc. which represents less than 3% of
the outstanding shares of GVI.

         Until  December,   1997,   GVI's  assets  consisted  of  the  Red  Hawk
International  Golf & Country Club (hereinafter  "Red Hawk"),  Cotton Manor, and
Cotton Acres, real estate developments located near St. George, Utah.

         On November 25, 1997, GVI announced that it had completed a merger with
U.S. Golf Communities, Inc. ("U.S. Golf Communities"), an Orlando based group of
affiliated  companies  principally  engaged in the acquisition,  development and
operations management of public, private and resort golf properties and adjacent
residential  real estate  throughout  the United  States.  The  transaction  was
structured as a reverse  merger with the assets of U.S. Golf  Communities  being
merged into GVI in exchange  for the  issuance by GVI of  convertible  preferred
stock to the current  owners of U.S.  Golf  Communities.  GVI issued  sufficient
shares of preferred stock to the  shareholders of U.S. Golf  Communities so that
when converted, such shareholders would own approximately 81% of the outstanding
common stock of GVI.

                                       7
<PAGE>

         Additional  information  regarding  the business of GVI can be found in
GVI's  reports  filed with the  Securities  and Exchange  Commission.  Since the
Company has no control over GVI, its interest in GVI after November 25, 1997, is
that of a passive shareholder.

FINALLY COMMUNITIES, INC.

         On May 20, 1997, the Company  entered into an agreement with William R.
Vowell to organize and operate Finally  Communities,  Inc. Finally was organized
in order to develop  and sell  vacation  ownership  interests  in  various  type
resorts  initially  located in  Fairfield  Bay,  Arkansas.  Mr.  Vowell,  who is
president  of  Finally,  received  500,000  shares  of the  Company's  Series  E
convertible  preferred stock.  25,400 shares of the Series E preferred stock was
immediately  convertible  into common stock.  The  remaining  shares of Series E
preferred stock were  convertible into the Company's common stock after June 30,
1999,  and upon  completion  of the March  31st,  1999 audit of  Finally  with a
conversion  rate based on a 2 year  pre-tax  income of Finally  and the  average
trading price of the Company's common stock.

         Subsequent  to the  merger  of  GVI  with  U.S.  Golf  Communities  the
Company's  management  made a decision to discontinue  the remainder of its real
estate  operations.  On March 22,  1998,  the Company sold its shares in Finally
Communities, Inc. to William R. Vowell in  exchange  for the return of the stock
previously issued to Mr. Vowell

QUADE, INC.

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

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

<S>                       <C>                 <C>                      <C>                <C>
1999                      $27,671             $81,500                  47,408             142,222
2000                     $251,166            $754,000                  47,376             142,222
2001                     $499,900          $1,499,200                  47,423             142,222
</TABLE>

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

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

         In 1997,  Quade,  Inc.,  acquired from the U.S. Polo  Association  ("US
Polo") the exclusive  master  licenses rights to the US Polo name for the United
States and  Canada.  For the last year Quade,  Inc.,  has been  developing  this
property  including signing agreements with four  sub-licensees,  and serving as
licensee for knit tops including  t-shirts,  fleece and polo shirts.  Additional
information  on the  operations  of  Quade,  Inc.  will  be  forthcoming  in the
Company's June 30, 1998 10-QSB.

                                       8
<PAGE>

Item 2.  Description of Property.

         The Company's and  Fan-Tastic's  executive  offices and warehouse space
are located at 3855 South 500 West,  Suite R, Salt Lake City,  Utah 84115 and is
approximately 4,000 square feet of combined space. Fan-Tastic leases retail mall
space for its four stores that average  approximately  2,000  square  feet.  PPW
rents a 45,000  square  foot  office and  screenprinting/embroidery  facility in
Portland,  Oregon.  Lease  commitments  from fiscal 1998 through fiscal 2004 are
$368,885, $373,374, $380,097, $327,925, $112,001, and $30,216, respectively.

Item 3.   Legal Proceedings.

         No material legal proceeding is pending at this time.

         On  December  18,  1997,  the   Securities   and  Exchange   Commission
(hereinafter  the  "Commission")  filed a civil  enforcement  action  complaint,
2:97CV  0963K in the United  States  District  Court for the  district  of Utah,
Central Division,  against George Badger,  former president of the Company, Karl
Badger, president of the Company, and others, alleging violations of the general
anti-fraud provisions of the federal securities laws. The complaint alleges that
George Badger  directed a scheme to manipulate the market for securities  issued
by   GVI   through   payments   to   various   broker-dealers   and   registered
representatives. The complaint alleges that Mr. Karl Badger arranged for some of
these  payments.  The  complaint  seeks a permanent  injunction  against  future
violations  of the  federal  securities  laws,  a court  order  prohibiting  the
defendants  from  future   participation   in  offerings  of  penny  stocks  and
disgorgement  of alleged  profits.  Mr.  Karl  Badger has filed an answer to the
complaint  denying  the  material  allegations  thereof,  and filed  Motions  to
Dismiss,  and intends to vigorously  defend the action. At the present time, the
Company has agreed to advance legal expenses for Karl Badger in connection  with
this matter.  On July 14, 1998, Karl Badger resigned as President of the Company
and accepted a position as Vice President.

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

          None.

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

1995
------
1st Quarter                          3.80             2.60
2nd Quarter                         10.00             5.00
3rd Quarter                          2.60             1.20
4th Quarter                          3.80             1.20

1996
------
1st Quarter                         3.80              1.20
2nd Quarter                         3.80              1.20
3rd Quarter                         3.00              1.20
4th Quarter                         2.50              0.60

1997
------
1st Quarter                         6.50              2.50
2nd Quarter                         5.50              2.75
3rd Quarter                         5.25              2.00
4th Quarter                         1.75               .875

1998
------
1st Quarter                         3.00              1.00
2nd Quarter                         2.625             1.0625
                                    ========================

                                       9
<PAGE>

         As of July 24,  1998,  the Company had  2,931,487  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

         On March 17, 1997, the Company  acquired 80% of the outstanding  shares
of Fan-Tastic for 100,000 shares of the Company's Series D Convertible Preferred
Stock.  These shares were issued to the 8 shareholders  of  Fan-Tastic,  each of
which signed an  investment  letter.  The Company  believes that the issuance of
these  shares was exempt  from  registration  under the  Securities  Act of 1933
pursuant to Section  4(2). On May 29, 1998,  the Company  acquired the remaining
20% of Fan-Tastic and exchanged the 100,000  shares of Series D preferred  stock
for 400,000 shares of its common stock.

         On May 20, 1997 the Company  entered into an agreement  with William R.
Vowell to form Finally  Communities,  Inc. In consideration of Mr. Vowell's time
and effort to develop  the  Finally  business,  the  Company  issued Mr.  Vowell
500,000 shares of Series E Convertible  Preferred  Stock.  The Company  believes
that the  issuance  of these  shares  was  exempt  from  registration  under the
Securities  Act of 1933  pursuant  to  Section  4(2).  In  connection  with  the
Company's  sale of its shares in Finally  Communities,  Inc. in February,  1998,
these shares were returned to the Company.

         In June 1997, the Company issued 16,000 shares to two  consultants  for
promotional and  advertising  services.  Based on the knowledge,  experience and
economic strength of these persons,  the Company believes these two transactions
were exempt  from  registration  under the  Securities  Act of 1933  pursuant to
Section 4(2).

         On March 10, 1998,  the Company sold 24,000  shares of its common stock
for $30,000 to an  investor.  The Company  believes  that the shares were exempt
from  registration  under the  Securities  Act of 1933  pursuant  to Rule 505 of
Regulation D promulgated thereunder.

         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 over 80% of
the outstanding  shares of Pacific Printing and Embroidery,  L.L.C., for 258,782
shares of the Company's  common  stock.  The issance 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).

                                       10
<PAGE>

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.

RESULTS OF OPERATIONS

For the Fiscal  Year Ended  March 31,  1998,  Compared  to the Fiscal Year Ended
March 31, 1997.

         Fan-Tastic,  Inc.  was  acquired  by  the Company  in  March  1997  and
contributed  $1,093,110 in merchandise  and franchise fee revenue for the fiscal
year ended March 31, 1998. The Company's  acquisition  of  Fan-Tastic,  Inc. was
accounted as a purchase  combination,  and therefore no  Fan-Tastic  revenue was
recorded  by the  Company  in fiscal  1997.  Pro  forma  unaudited  revenue  for
Fan-Tastic  for the fiscal year ended March 31,  1997 was  $875,532.  Fan-Tastic
revenue for the fiscal year ended March 31, 1998 consisted of $964,450 in retail
sales  and  $128,650  in  franchise  fees and  royalties.  Fan-Tastic  pro forma
revenues for the comparable  1997 period were $696,866 in retail sales,  product
wholesale  sales of  $131,166  and  franchise  fees and  royalties  of  $47,500.
Management  attributes  approximately  $97,000 of the  increase in retail  store
sales in 1998 to the  inclusion  of sales for the entire 1998 fiscal year from a
store which was open for only five months in fiscal 1997.  Management attributes
approximately  $170,000 of the increase in retail store sales to improvements in
store design and  appearance  and  improved  product  mix.  Franchise  sales and
royalties   increased  in  fiscal  1998  due  to  an  increase  in  Fan-Tastic's
franchising  marketing  budget.  The Company  anticipates that its revenues from
franchise  sales and  royalties  will be double or  perhaps  slightly  more than
double the fiscal 1998 level in fiscal 1999 based on  franchise  sales  recorded
through  July 1998 and based on  management  expectations  for the results of an
increase in Fan-Tastic's  marketing budget.  Management anticipates retail store
sales could decrease by  approximately  $150,000 due to closure of two stores in
June 1998.  These stores were operated  under  temporary  leases and will not be
replaced unless acceptable  permanent locations in Utah or Oregon with favorable
lease terms can be found by October 1998.

         In May 1998, the Company also acquired  Pacific Print Works,  effective
March 31, 1998.  This contract  screen  printing and embroidery  company had pro
forma revenue for the year ended March 31, 1998 of $2.4 million.

         The Company's former subsidiary,  Golf Ventures, Inc. (GVI) merged with
U.S. Golf  Communities in November 1997,  which resulted in GVI operations being
reflected  as  discontinued  operations  for the years  ended March 31, 1998 and
1997. Actual sales of GVI increased in fiscal 1998 by $137,126 due to additional
real  estate lot sales.  The sales  increase  was  primarily  due to  additional
inventory  becoming  available  as a result of  additional  funds  provided by a
lender.

         Fan-Tastic  had a gross  profit of  $318,705  or 29.2% of sales.  Gross
profit from the GVI and Finally Community  discontinued  operations was $216,318
for the year ended March 31, 1998.

         Total  operating  expenses from  continuing  operations  increased from
$2,329,071  for the year ended March 31,  1998 as  compared to $522,309  for the
year ended March 31, 1997. This increase was due primarily to 1) Fan-Tastic, the
Company's  new  subsidiary,  incurring  general and  administrative  expenses of
$671,134;  2) the Company  writing down $756,797 of goodwill from the Fan-Tastic
purchase  in  what is a one  time  charge;  and 3)  recording  expenses  for the
issuance of stock options and stock that resulted in an expense of $441,315. The
expense for stock issuances  included  $267,000 for stock issued due to services
performed by a former Company President and is not expected to be recurring.

         The Company's other income and expenses decreased by $161,466 primarily
due to a decrease of approximately  $75,000 in the gain on sale of the Company's
investment in GVI and due to an increase of  approximately  $101,000 in interest
expense.  The increase in interest  expense was from debt incurred on Fan-Tastic
and the Company for fiscal 1998.  Interest paid for the  Company's  discontinued
operations  in GVI for  fiscal  1998 and 1997  were  capitalized  as part of the
development costs.

                                       11
<PAGE>

         The Company's  $1,720,387 gain on disposal of  discontinued  operations
was primarily due to the 862,000 of GVI shares  received from the GVI settlement
in which a net gain of $1,029,000 was recognized. The remaining gain on disposal
of GVI was from the recognition of the merger of GVI with U.S. Golf  Communities
of the approximately  $690,000 value of GVI shares held prior to the GVI merger.
The  Company  had no basis in  these  GVI  shares  when  GVI was  included  as a
consolidated subsidiary.

         The Company experienced a net loss from continuing operations in fiscal
1998 of $1,988,407  as compared to $338,884 in fiscal 1997.  The increase in the
net loss is primarily  due to the  increase in  operating  expanses as described
above.

         The  Company's  net loss for the year ended March 31, 1998 was $440,748
as compared to a net loss of $1,024,802 for the  comparable  period in 1997. The
major  difference  between the loss from  operations  and the net loss in fiscal
1998 was the gain on disposal of GVI as discussed above.

         The  Pacific  Print  Works  ("PPW")  acquisition   involves  contingent
consideration  that could result in PPW  shareholders  receiving  an  additional
258,782  shares  over the next  three  years  based on PPW  achieving  specified
earnings  (see  footnote 2 to the  financial  statements).  For example,  if PPW
achieves  earnings of $300,000 in fiscal  1999,  48,083  shares of common  stock
would be issued to PPW shareholders with a guaranteed value of $5.00 which would
result in  $240,415  of  additional  goodwill.  This  goodwill  would  result in
additional  amortization  by the  Company of $16,028 per year or $.005 per share
over 15 years.

         The unaudited pro forma  summary  information  combining the results of
operations  of the  Company and PPW is  represented  as if the  acquisition  had
occurred  at the  beginning  of fiscal  1998 and 1997,  after  giving  effect to
certain adjustments,  including the amortization of $121,229 of goodwill over 15
years.  This pro forma  summary  does not  necessarily  reflect  the  results of
operations  as they would have been if the  Company  and PPW had  constituted  a
single entity during such periods.

                                                      Fiscal Years
                                                  1998              1997
                                                  ----              ----
          Net Revenue                        $ 3,483,080         $ 2,926,410
          Net Loss                            (1,103,859)         (1,456,461)
          Net Loss per share                        (.80)               (.97)


LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 1998,  the Company had total assets of  $5,436,635,  total
liabilities of $4,126,181 and total stockholders equity of $1,310,454,  compared
with total assets of $13,323,105,  total  liabilities of $10,265,397,  and total
stockholders  equity of $3,057,708 at March 31, 1997. The significant changes in
assets,  liabilities and  stockholders  equity is due primarily to the merger of
the Company's former  consolidated  subsidiary,  Golf Ventures,  Inc., with U.S.
Golf Communities. As a result of this merger the Company no longer includes Golf
Ventures in its  consolidation.  The merger of the Company's former  subsidiary,
GVI,  provided  substantial debt relief. At March 31, 1998 the Company's current
ratio  was  approximately  .67  current  assets to 1  current  liabilities.  The
Company's  current  ratio is expected  to  continue to improve as the  Company's
862,000 restricted shares in GVI become a current asset. The restriction of sale
of these  shares  expires in July 1999.  In  addition,  the Company will seek to
convert certain debt to equity which will improve its current ratio.

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

                                       12
<PAGE>

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.


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.

         None.

                                    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         40     President, Chief Executive Officer and
                                   Director
Jeffrey S. Harden           53     Vice President and Director, President of
                                   Pacific Print Works
Karl F. Badger              43     Vice-President
Barry L. Papenfuss          37     Vice President, President of Fan-Tastic, Inc.
Timothy Papenfuss           38     Secretary/Treasurer, Chief Financial Officer
                                   and Director
Robert Mintz                52     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 and Director of the Company, and
of Timothy Papenfuss, Chief Financial Officer and Director of the Company.

         KARL F. BADGER,  Vice  President  has been with the Company  since 1992
working as the Director of Shareholder  Relations.  He was appointed  President,
CEO and Director of the Company upon resignation of George H. Badger, his father
in December 1996 and resigned  from this  position in July 1998.  Prior to 1992,
Mr. Badger was a licensed  broker/principle  for Rocky  Mountain  Securities and
Investments.  On December 18, 1997, the Securities and Exchange Commission filed
a civil enforcement action complaint against certain  individuals  including Mr.
Karl Badger (See Significant Employees and Consultants.)

                                       13
<PAGE>

         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,   Executive
Vice-President 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 13 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 and a director of
the Company and of B. Willes Papenfuss, Executive Vice-President of the Company.

         ROBERT  MINTZ,  Director  of the  Company  since July 23, 1998 upon the
Company's  acquisition of Quade, Inc. President and founder of Quade, Inc. since
1996. 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 Pittsburg.

Significant Employees and Consultants

         The following individual is a consultant to the Company.

         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 is currently providing
consulting services to the Company primarily in providing background information
on  transactions  which took place or were  begun when he was  president  of the
Company and in locating  possible  acquisitions.  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.

         On  December  18,  1997,  the   Securities   and  Exchange   Commission
(hereinafter  the  "Commission")  filed a civil  enforcement  action  complaint,
2:97CV  0963K in the United  States  District  Court for the  district  of Utah,
Central Division,  against George Badger,  former president of the Company, Karl
Badger, president of the Company, and others, alleging violations of the general
anti-fraud provisions of the federal securities laws. The complaint alleges that
George Badger  directed a scheme to manipulate the market for securities  issued
by   GVI   through   payments   to   various   broker-dealers   and   registered
representatives. The complaint alleges that Mr. Karl Badger arranged for some of
these  payments.  The  complaint  seeks a permanent  injunction  against  future
violations  of the  federal  securities  laws,  a court  order  prohibiting  the
defendants  from  future   participation   in  offerings  of  penny  stocks  and
disgorgement  of alleged  profits.  Mr.  Karl  Badger has filed an answer to the
complaint denying the material allegations thereof, has filed Motions to Dismiss
the complaint, and intends to vigorously defend the action.

         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

                                       14
<PAGE>

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).

         Messrs. Karl  Badger, Barry  Papenfuss, Timothy Papenfuss and B. Willes
Papenfuss  did not file  Forms 3 within  ten days of  becoming  officers  and/or
directors of the Company.  Messrs.  Papenfuss,  Papenfuss  and Papenfuss did not
file Forms 3, 4, or 5, when they became  directors,  nor when they were  granted
stock  options.  Messrs.  Barry  Papenfuss,  Timothy  Papenfuss  and  B.  Willes
Papenfuss  completed the requires filings pursuant to Section 16(a) on August 4,
1998.  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,  1998,  and  written  representations  of  certain of its
directors and executive  officers that no Forms 5 were required to be filed, all
other  directors  and  executive  officers  have filed with the  Commission on a
timely  basis  all  reports  required  to be filed  under  Section  16(a) of the
Exchange Act.

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,
1998, 1997 and 1996 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").

<TABLE>
                                             SUMMARY COMPENSATION TABLE
<CAPTION>

===================================================================================================================================
                                         Annual Compensation                           Long-Term Compensation
                                ---------------------------------------------        ---------------------------
              
                                                                                      Awards                Payouts
                                                                                   -------------          ----------
 
                                                                                                                               
Name and Principal                                            All Other       Restricted                                 All
Position                           Annual         Stock     Options/Fiscal     Stock         Options/                    Other 
                    Year           Salary         Bonus      Compensation      Award(s)        SARs           LTIP       Compen-
                                                                                                           Payouts       sation
                                    ($)            ($)            ($)            ($)            (#)           ($)          ($)
===================  =====       ==========     =========   =============     ==========      ========      =======     ========
<S>                  <C>           <C>          <C>           <C>              <C>           <C>             <C>          <C>
Karl Badger, Chief   1998          $73,058        -0-            -0-              -0-           -0-            -0-          -0-
Executive Officer(1) 1997          $73,058        -0-            -0-              -0-           -0-            -0-          -0-
                     1996          $73,058        -0-            -0-              -0-           -0-            -0-          -0-


George Badger(2)     1997          $50,400        -0-            -0-              -0-           -0-            -0-
                     1996          $50,400        -0-            -0-              -0-           -0-            -0-

===================  =====       ==========     =========   =============     ==========      ========      =======     ========
(1) CEO from  January  1997 to July 14, 1998 
(2) CEO from 1995 to  December  31, 1996.
</TABLE>

                                       15
<PAGE>

Employment Agreements.

         None of the Company's  officers or directors has any written employment
agreement with the Company.  Messrs. Barry and Timothy Papenfuss have employment
agreements with Fan-Tastic.

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

Option/SAR Grants in Last Fiscal Year 

         The following  table sets forth certain  information  for stock options
and stock appreciation rights granted to executive officers during fiscal 1998.
<TABLE>
<CAPTION>

                                No. of              % of total
                          Shares Underlying          Options                            Share Market                     
                            Options/SAR's         Granted during      Exercise            Price on            Expiration
          Name                  Granted          Fiscal Year 1998       Price            Grant Date              Date
          ----               ------------        ----------------       -----            ----------              ----
<S>                            <C>                      <C>             <C>                 <C>                     <C>
Karl Badger                    25,000                   24.04%          $2.00               $3.75               Oct-07

</TABLE>


Aggregated Option Exercises and Fiscal Year-End Option Values:

         The following table sets forth certain  information as to stock options
exercised  in fiscal 1998 and the value of the stock  options  held at March 31,
1998 by each Named Executive Officer.

<TABLE>
<CAPTION>
                                                                                              Value of
                        Shares                                                               Unexercised
                       Acquired        Value realized          Options                   In-the-Money Options
                    Fiscal Year 1998        with          at Fiscal Year End               at Fiscal Year End
   Name              On Exercise          Exercise     Exercisable/Unexercisable        Exercisable/Unexercisable
   ----              -----------          --------     -------------------------        -------------------------
<S>                     <C>                <C>             <C>                                  <C>
Karl Badger               -                  -                 25,000/0                            -

</TABLE>


                                       16
<PAGE>

         In  October  1997 the Board of  Directors  ratified  options  for three
officers  of the  Company  at $2.00  per  share.  The fair  market  value of the
Company's  stock at the  date of the  October  grant  was  approximately  $3.75.
Pursuant  to this  action,  Mr.  Karl  Badger was  granted an option to purchase
100,000 shares of the Company's  common stock at $2.00 per share.  In July 1998,
the Board of Directors  fully  vested Mr.  Badger's  options to purchase  25,000
shares of common  stock and  cancelled  his  remaining  options.  Both Mr. Barry
Papenfuss and Mr. Timothy Papenfuss  hold an option to purchase 20,000 shares of
the  Company's  common  stock at $2.00 per share.  Mr. Barry  Papenfuss  and Mr.
Timothy  Papenfuss'  options are fully  vested as to 5,000  shares at the end of
each fiscal year. Mr. B. Willes Papenfuss was granted options to purchase 25,000
shares of common stock at $2.00 per share in December  1998.  These  options are
fully  vested.  Employee  stock  options to purchase  90,000 shares were held by
executive  officers  at July 17,  1998,  which was 86.5% of all  employee  stock
options  outstanding.  In addition,  Mr. Barry  Papenfuss,  Tim Papenfuss and B.
Willes Papenfuss were granted options to purchase 55,518,  29,679 and 866 shares
of common stock in connection with the Fan-Tastic, Inc. acquisition.


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 April 6, 1998,  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                        848,362(1)            26.38%
P.O. Box 880
12111 Geneva 3, Switzerland

George H. Badger                               592,237              18.42%
102 West 500 South,  Suite 318
Salt Lake City, UT  84101

Don Pickett, agent for                         181,860               6.2%
Mindon Investment and The Stella Trust
P. O. Box 58548
Salt Lake City, UT  84101

Karl F. Badger                                  71,320 (3)           1.43%
102 West 500 South,  Suite 318
Salt Lake City, UT  84101

Barry L. Papenfuss                             208,566 (4)           4.52%
3855 South 500 West #R
Salt Lake City, UT 84115

Timothy M. Papenfuss                           113,823 (5)           2.43%
3855 South 500 West #R
Salt Lake City, UT 84115

B. Willes Papenfuss                             78,974 (6)           1.64%
123 13 Southeast Wagoner Street
Portland, OR   97236

Jeffrey S. Harden                              151,809               4.72%
17942 St. Clair Drive
Lake Oswego, OR 97034

Robert Mintz                                   213,333               6.63%
30 Otter Trail 
West Port, CT 06880

All Officers and Directors as a
 Group (3 persons)                             624,492              18.58%
---------------------------

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

2 Mr. George Badger is the  beneficial  owner of 130,360 shares held by his wife
Lajuana  Badger.  

3 Mr. Karl Badger is the owner of vested  options to purchase  25,000  shares of
the Company's common stock at $2.00 a share.

4 Mr. Barry  Papenfuss is the owner of vested options to purchase  60,518 of the
Company's  common  stock at  $2.00 a share.  Messrs.  Barry  Papenfuss,  Timothy
Papenfuss and B. Willes Papenfuss  are brothers.

                                       17
<PAGE>

5 Mr. Timothy Papenfuss is the owner of vested options to purchase 34,679 shares
of the Company's common stock at $2.00 a share.

6 Mr. B. Willes  Papenfuss is the  owner of vested  options to  purchase  25,866
shares of the Company's  common stock at $2.00 a share.  Mr. B. Willes Papenfuss
additionally can receive stock options as a finder's fee for company.

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.


Item 12. Certain Relationships and Related Transactions.

         George Badger, a shareholder and former Company  President,  and father
to Company President Karl Badger, has loaned the Company  $563,210.00 during the
last  thirteen  (13) months.  The terms of these loans are as follows:  Loan for
$358,000  which was  refinanced  by Banque  SCS in July  1998  with  payment  of
interest and principal of $6,000 a month with the  remaining  principal due June
2001,  secured by Company and GVI stock;  Loan for  $130,491  secured by Company
assets with interest  payable monthly at 18% with no stated  principal  payments
required;  The loan funds were used by the Company for working capital.  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 Jones, Jensen & Company, Independent Public     F-1
                 Accountants.

        (2)      Consolidated Balance Sheet as of March 31, 1998.          F-2

        (3)      Consolidated Statements of Operation for the years ended  F-4
                 March 31, 1998 and 1997. 

        (4)      Statement of Stockholders' Equity for the period          F-5
                 March 31, 1996 through March 31, 1998.

        (5)      Consolidated Statements of Cash Flows for years ended     F-6 
                 March 31, 1998 and 1997.

        (6)      Notes to Financial Statements.                            F-8

  (b)   FINANCIAL STATEMENT SCHEDULES

        (1)      Schedule VIII - Valuation and Qualifying Accounts.

        (2)      Schedule X - Supplementary Income Statement Information.



                                       18
<PAGE>

  (c)   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 (7)         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)
16.1 (2)          Letter Regarding Change in Certifying Public Accountant
21.               Subsidiaries
23.               Consent of Independent Auditor
27.               Financial Data Schedule   
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, 1988 and
                  1987, and
(28.3)*           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)*

                                       19
<PAGE>


         (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.


                                   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/ Karl F. Badger
                               ----------------------
                                Karl F. Badger



Dated: July 24, 1998

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.


                                       20
<PAGE>



      Signature                      Title                      Date
      ---------                      -----                      ----

 /s/ B. Willes Papenfuss
-------------------------      President, Chief Executive     July 24, 1998
    B. Willes Papenfuss        Officer and Director
                               (Principal Executive
                               Officer)


 /s/ Timothy M. Papenfuss
--------------------------     Secretary / Treasurer and      July 24, 1998
 Timothy M. Papenfuss          Director (Chief Financial
                               Officer, Chief Accounting
                               Officer and Controller)


                                       21
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


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

We  have  audited  the  accompanying  consolidated  balance  sheet  of  American
Resources and  Development  Company and  subsidiaries  at March 31, 1998 and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for the years ended March 31, 1998 and 1997. These consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall 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 financial position of American Resources
and  Development  Company and  subsidiaries at March 31, 1998 and the results of
their  operations  and their cash flows for the years  ended  March 31, 1998 and
1997 in conformity with generally accepted accounting principles.



Jones, Jensen & Company
Salt Lake City, Utah
July 13, 1998

                                      F-1
<PAGE>



                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                           Consolidated Balance Sheet


                                     ASSETS
                                                             March 31,
                                                               1998
CURRENT ASSETS

  Cash                                                      $      14,663
  Accounts receivable                                             221,875
  Inventory (Note 1)                                              437,003
  Marketable securities                                           622,182
  Prepaid and other current assets                                 44,882
                                                          ---------------

      Total Current Assets                                      1,340,605

PROPERTY AND EQUIPMENT (NOTE 1)

  Furniture, fixtures and equipment                               383,638
  Capital leases                                                  859,185

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

      Net Property and Equipment                                1,123,934

OTHER ASSETS

  Investments (Note 1)                                          1,077,500
  Goodwill (Note 1)                                             1,826,492
  Deposits                                                         68,104
                                                          ---------------

     Total Other Assets                                         2,972,096

     TOTAL ASSETS                                            $  5,436,635
                                                             ============


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

                                       F-2
<PAGE>
<TABLE>
<CAPTION>



                                     AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                                       Consolidated Balance Sheet (Continued)


                                        LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                     March 31,
                                                                                       1998
CURRENT LIABILITIES

<S>                                                                            <C>
  Accounts payable                                                             $         688,021
  Accrued expenses and other current liabilities                                         393,494
  Current portion of notes payable (Note 3)                                              544,781
  Current portion of notes payable, related parties (Note 4)                              59,974
  Current portion of capital lease obligations (Note 5)                                  303,475
                                                                               -----------------

     Total Current Liabilities                                                         1,989,745

LONG-TERM DEBT

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

     Total Long-Term Debt                                                              2,136,436

     Total Liabilities                                                                 4,126,181

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY

  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: 2,929,263
   shares issued and outstanding.  (Note 8)                                                2,929
  Additional paid-in capital                                                           7,026,260
  Accumulated deficit                                                                 (5,718,980)
                                                                               -----------------

      Total Stockholders' Equity                                                       1,310,454

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $       5,436,635
                                                                               =================
</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,
                                                                               1998                   1997
                                                                         -----------------     -----------------
SALES
<S>                                                                      <C>                   <C>
  Merchandise and franchise fees                                         $       1,093,110     $          -
  Cost of merchandise and franchise sales                                          774,405                -
                                                                         -----------------     -----------------

     Gross Profit                                                                  318,705                -
                                                                         -----------------     -----------------

EXPENSES

  General and administrative expenses                                            1,447,285               519,185
  Writedown of goodwill                                                            756,797                -
  Sales and marketing expenses                                                      93,175                -
  Depreciation                                                                      31,814                 3,124
                                                                         -----------------     -----------------

     Total Expenses                                                              2,329,071               522,309
                                                                         -----------------     -----------------

LOSS FROM OPERATIONS                                                            (2,010,366)             (522,309)
                                                                         -----------------     -----------------

OTHER INCOME AND (EXPENSES)

  Other revenue                                                                     15,387                -
  Interest income                                                                        5                   168
  Gain on sale of assets                                                           139,906               215,375
  Interest expense                                                                (133,339)              (32,118)
                                                                         -----------------     -----------------

       Total Other Income and (Expenses)                                            21,959               183,425
                                                                         -----------------     -----------------

 LOSS BEFORE INCOME TAXES AND
  DISCONTINUED OPERATIONS                                                       (1,988,407)             (338,884)

DISCONTINUED OPERATIONS

  Loss from operations of GVI, FCC                                                (172,728)             (685,918)
  Gain on disposal of GVI, FCC                                                   1,720,387                -
                                                                         -----------------     -----------------

        Total Discontinued Operations                                            1,547,659              (685,918)
                                                                         -----------------     -----------------

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

NET LOSS                                                                 $        (440,748)    $      (1,024,802)
                                                                         =================     =================

NET LOSS PER SHARE OF COMMON
  STOCK-CONTINUING OPERATIONS                                            $           (1,07)    $           (0.18)
                                                                         =================     =================

NET INCOME (LOSS) PER SHARE OF COMMON STOCK -
DISCONTINUED OPERATIONS                                                  $            0.83     $           (0.37)
                                                                         =================     =================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                    1,864,113             1,835,486
                                                                         =================     =================
</TABLE>

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

                                       F-4

<PAGE>
<TABLE>
<CAPTION>

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                                                       For the Years Ended
                                                                                             March 31,
                                                                                    1998                   1997
                                                                            -------------------    -----------------
OPERATING ACTIVITIES
<S>                                                                         <C>                   <C>
      Net (loss)                                                            $         (440,748)   $       (1,024,802)
      Adjustments to reconcile net (loss) to net cash
      (used) by operating activities, net of effect of
       mergers:
        Depreciation                                                                    34,371                 5,517
        Write-down of goodwill                                                         756,797                -
        Stock option and stock for services                                            441,315                -
        Gain on GVI settlement                                                      (1,699,682)               -
      Changes in operating assets and liabilities:
        (Increase) in accounts receivable                                              (10,095)               -
        Decrease in inventory, real estate                                             179,308                 5,936
        (Increase) decrease in inventory merchandise                                   (30,763)               35,688
        Decrease in other current assets                                                 7,754                58,024
        (Increase) in accounts payable and other current liabilities                   355,969               708,273
                                                                            -------------------   --------------------

          Net Cash (Used) by Operating Activities                                     (405,774)             (211,364)
                                                                            -------------------   --------------------

INVESTING ACTIVITIES

      Purchases of property and equipment                                              (50,925)              (32,610)
      Investment in land held for development                                         (411,892)           (3,796,686)
                                                                            -------------------   -------------------

        Net Cash (Used) by Investing Activities                                       (462,817)           (3,829,296)
                                                                            -------------------   -------------------

FINANCING ACTIVITIES

      Marketable securities from merger of GVI                                         622,182                -
      Loan to acquired company prior to acquisition                                   (115,000)               -
      Cash from acquisition on subsidiary                                                9,699                19,954
      Payments on long-term debt and capital lease obligations                         (45,317)           (1,045,324)
      Long-term borrowings                                                             333,840             3,246,497
      Contributions from subsidiary                                                     -                  1,076,639
      Issuance of common stock for cash                                                 30,000                -
                                                                            --------------------- ---------------------

        Net Cash Provided by Financing Activities                                      835,404             3,297,766
                                                                            --------------------  -------------------

(DECREASE) IN CASH                                                                     (33,187)             (742,894)

CASH, BEGINNING OF YEAR                                                                 47,850               790,744
                                                                            --------------------- --------------------

CASH, END OF YEAR                                                           $           14,663    $           47,850
                                                                            ====================  =====================
</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 (Continued)


                                                                                    For the Years Ended
                                                                                         March 31,
                                                                                 1998                  1997
                                                                         -----------------     ------------------


CASH PAID FOR
<S>                                                                      <C>                   <C>
  Interest                                                               $         135,644     $         370,046
  Income taxes                                                           $          -          $          -

NON CASH FINANCING ACTIVITIES

  Common stock issued for services                                       $         388,660     $          -
  Debt incurred for acquisition of inventory                             $          -          $         190,365
  Debt incurred for acquisition of land held for development             $          -          $       2,390,725
  Debt incurred for acquisition of property and equipment                $          -          $         116,800
</TABLE>


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

                                       F-7
<PAGE>

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


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES

              a. Organization

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

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

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

              b. Principles of Consolidation

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

               c. Estimates

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

               d. Cash and Cash Equivalents

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

                                       F-8
<PAGE>

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


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              e. Concentrations of Risk

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

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

              f. Inventories

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

              g. Property and Equipment

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

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

              h.  Financial Instruments

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

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

              Marketable securities represent 497,746 shares of GVI unrestricted
              stock  at  March  31,  1998,   which  are  classified  as  trading
              securities  and are carried at market value.  Any change in market
              value from period to period will be included in earnings.

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

              There  are  no  unrealized  gains  or  losses  in  either  trading
              securities or available for sales securities at March 31, 1998.

                                       F-9
<PAGE>

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


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              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. Net Loss Per Common Share

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

              In February 1997, the Financial  Accounting Standards Board issued
              Statement  No.  128,  Earnings  per Share,  (SFAS  128),  which is
              required to be adopted on December 31,  1997.  SFAS 128 requires a
              change in the method  currently used to compute earnings per share
              and to restate all prior  periods to  disclose  diluted net income
              per common  share in addition to its current  basic net income per
              common share. Basic net loss from continuing operations per common
              share and diluted net loss from  continuing  operations per common
              share  amounts,  calculated  in  accordance  with SFAS  128,  were
              ($1.07)  and  ($0.18) for the years ended March 31, 1998 and 1997,
              respectively.  Basic net loss  from  discontinued  operations  per
              common share and diluted net loss from discontinued operations per
              common share was $0.83 and $(0.32), respectively. Weighted average
              common  shares  outstanding  were  1,864,113 and 1,835,486 for the
              years ended March 31, 1998 and 1997, respectively.

              k. Profit  Recognition and Capitalization of Costs Related to Real
              Estate

              Income on the Company's  former GVI  subsidiary,  is recognized in
              accordance  with the  provisions  os FASB-66.  Revenue and profits
              from the sale of land and other real estate  have been  recognized
              using the full accrual method for all periods presented.  As such,
              each sale has been determined to have been  consummated,  with the
              buyers  initial  and  continuing  investment  determined  to  show
              adequate demonstration of commitment to pay.

              Costs  associated with real estate are accounted for in accordance
              with  the  provisions  of  FASB-  67.  Accordingly,   acquisition,
              development and construction  costs,  including property taxes and
              interest on associated debt and selling costs, are capitalized.

              l.  Revenue Recognition for Franchise Operations

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

                                      F-10
<PAGE>

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


NOTE 1 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              m.  Goodwill

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

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

NOTE 2 -      MERGERS AND ACQUISITIONS

              Golf Ventures, Inc.

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

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

                                      F-11
<PAGE>

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


NOTE 2 -    MERGERS AND ACQUISITIONS (Continued)
<TABLE>
<CAPTION>
                                                        Prior to                   GVI                After
                                                          Merger               Adjustments          GVI Merger
                                                          ------               -----------          ----------
CURRENT ASSETS
<S>                                                <C>                   <C>                   <C>
   Cash                                            $           86,213    $         (10,047)    $          76,166
   Marketable securities                                       -                   692,886               692,886
   Accounts receivable                                        131,522               -                    131,522
   Inventory, real estate                                     753,131             (753,131)               -
   Inventory, merchandise                                     581,169               -                    581,169
   Notes receivable                                            75,000               -                     75,000
   Prepaid and other current assets                            33,130               -                     33,130
   Current portion of contract receivable                       1,955               (1,955)               -
                                                   ------------------    ------------------   ------------------

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

PROPERTY AND EQUIPMENT

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

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

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

OTHER ASSETS

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

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

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

                                      F-12
<PAGE>

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


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

                                                        Prior to               GVI                  After
                                                          Merger              Adjustments           GVI Merger
                                                          ------              -----------           ----------
CURRENT LIABILITIES

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

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

LONG-TERM DEBT

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

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

STOCKHOLDERS' EQUITY

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

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

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

</TABLE>

                                      F-13
<PAGE>

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


NOTE 2 -       MERGERS AND ACQUISITIONS (Continued)

               Fan-Tastic, Inc.

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

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

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

                                                          For the
                                                         Year ended
                                                       March 31, 1997
                                                       --------------
                  Net revenue                       $        1,149,532
                  Net loss                          $       (1,142,977)
                  Net loss per share                $            (0.62)

              Finally Communities, Inc.

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

                                      F-14
<PAGE>

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


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

              Finally Communities, Inc. (Continued)

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

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

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

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

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

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

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

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

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

                                      F-15
<PAGE>

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


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

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

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

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

              PROPERTY AND
               EQUIPMENT

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

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

              OTHER ASSETS

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

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

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

                                      F-16
<PAGE>

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

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

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

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

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

              LONG-TERM DEBT

              Reserve For Discontinued Operations          138,000            -                -                138,000
              Long-term portion of notes payable            14,155            -                -                 14,155
              Long-term portion of capital
                lease obligations                           13,638           566,325           -                579,963
              Accrued interest on preferred stock          312,782            -                -                312,782
              Notes payable, related parties               714,699           376,837           -              1,091,536
                                                     --------------    --------------   ------------      -------------

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

              STOCKHOLDERS' EQUITY

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

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

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

                                      F-17
<PAGE>


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


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

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

                                                               American                           Pro Forma
                                                               Resources           PPW           Adjustments        Combined
              SALES

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

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

              COST OF SALES

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

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

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

              EXPENSES

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

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

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

              Other Income and (Expenses)

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

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

              LOSS BEFORE INCOME TAXES AND
               DISCONTINUED OPERATIONS

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

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

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

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

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

                                      F-18
<PAGE>


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


NOTE 2 -      MERGERS AND ACQUISITIONS (Continued)

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

                                                               American                           Pro Forma
                                                               Resources          PPW            Adjustments        Combined
              SALES

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

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

              COST OF SALES

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

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

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

              EXPENSES

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

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

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

              Other income and (Expenses)

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

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

              Loss before income taxes and discontinued
               operations

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

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

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

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

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

                                      F-19
<PAGE>
                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             March 31, 1998 and 1997

<TABLE>
<CAPTION>

NOTE 3 -      NOTES PAYABLE

              Notes payable are comprised of the following:
                                                                                                          March 31,
                                                                                                             1998
                                                                                                       --------------
             <S>                                                                                      <C>
              Note payable, unsecured, bearing interest at 12%, payable
               in monthly installments of $7,000, including interest                                   $       69,316

              Promissory notes,  secured by GVI stock,  bearing interest at 12%.
               Interest  due  monthly  with the entire  balance due on April 24,
               1998. Holder of note has agreed to sell GVI
               stock securing note until note is paid in full.                                                125,000

              Promissory note, secured by vehicle, bearing interest at
               11%.  Due in monthly installments of $405, including interest.                                  17,474

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

              Note payable to a bank with interest at 3% above prime per annum.
               Secured by accounts receivable and due July 31, 1998.                                          162,146
                                                                                                       --------------

              Subtotal                                                                                        558,936


              Less current portion                                                                            544,781

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

              Maturities of long-term debt are as follows:

                                                     March 31, 1999                                    $      544,781
                                                     March 31, 2000                                             4,193
                                                     March 31, 2001                                             4,592
                                                     March 31, 2002                                             4,600
                                                     March 31, 2003                                               770
                                                                                                       ----------------

                                                                                                       $      558,936
</TABLE>


                                      F-20
<PAGE>



                   AMERICAN RESOURCES AND DEVELOPMENT COMPANY
                 Notes to the Consolidated Financial Statements
                             March 31, 1998 and 1997
<TABLE>
<CAPTION>


NOTE 4 -      NOTES PAYABLE, RELATED PARTIES
                                                                                                         March 31,
                                                                                                           1998
             <S>                                                                                  <C>
              Note payable to a shareholder, secured by GVI common stock.
               Interest at 14% with monthly principal and interest payments
               of $6,000 with a final balloon payment July 2001.                                   $          358,000

              Note payable to a shareholder, secured by assets of the Company.
               Interest payable monthly at 18% with no stated principal
               payments required.                                                                             130,491

              Notes payable to the former owners of FTI  (includes  officers and
               directors of the Company). Interest rates average 9.5%.
               Unsecured due upon demand.                                                                     250,189

              Notes payable to the former shareholders of PPW (includes an
               officer and director of the Company).  Interest rates average
               12%. Unsecured due upon demand.                                                                412,830

                          Subtotal                                                                          1,151,510

                          Less current portion                                                                 59,974

                          Long-term portion                                                        $        1,091,536
                                                                                                   ==================
<CAPTION>


NOTE 5 -      CAPITAL LEASES

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

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

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

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

              Long-term portion of capital lease obligations                                       $          579,963
                                                                                                   ==================
</TABLE>
                                      F-21
<PAGE>


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


NOTE  6 -     INCOME TAXES

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

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

NOTE 7 -      PREFERRED STOCK

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

              SERIES B:

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

              SERIES D:

              As  discussed  in Note 9, the  Company  issued  100,000  shares of
              Series D  preferred  stock in  exchange  for 80% of the issued and
              outstanding  common stock of FTI.  Effective  March 31, 1998,  the
              Series D stock was converted into common stock (Note 2).

NOTE  8 - COMMON STOCK ISSUED BUT NOT OUTSTANDING

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

                                      F-22
<PAGE>

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


NOTE 9 -      STOCK OPTIONS

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

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

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

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

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

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


                                      F-23
<PAGE>

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


NOTE 10 - COMMITMENTS AND CONTINGENCIES

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

NOTE 11 - GOING CONCERN

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

                                      F-24