_________

^_________

^_________

^_________

At September 30, 2003, the Company had 2,020,000 outstanding options, 300,000 outstanding warrants, 900,000 shares issuable as collateral on notes payable and preferred stock convertible into 14,329,185 shares of common stock which were not used in the computation of dilutive loss per share because their effect would be anti-dilutive.

NOTE 22 - COMMITMENTS AND CONTINGENCIES

Common Stock Conversion Right - On December 31, 2002, the Company’s former Chief Executive Officer was granted the right to convert shares of common stock that he had received under an agreement and plan of reorganization into Class A preferred stock at a rate of five shares of common stock into one share of Class A preferred stock [See Note 4].

Consulting Agreements - On April 1, 2002, the Company signed three-year consulting agreements with both Synergistic Connections, Inc. and Corporate Dynamics, Inc. (collectively “Consultants”).  The agreements call for the Company to pay $10,000 per month for consulting services.  In August 2002, the Company issued 480,000 shares of common stock to Consultants for services valued at $120,000 [See Note 17].  During the nine months ended September 30, 2003 and 2002, the services rendered by Consultants under these agreements amounted to $180,000 and $60,000, respectively.

On January 15, 2002, the Company entered into a six-month consulting agreement with Synergistic Connections, Inc. to assist the Company in selecting and negotiating the acquisition of potential merger candidates.  The Company paid $60,000 and issued stock valued at $12,500 to Synergistic Connections, Inc. as part of this agreement.

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 - COMMITMENTS AND CONTINGENCIES [Continued]

Employment Agreement - On May 8, 2003, in connection with the acquisition of RX Subsidiary, the Company signed a three-year employment agreement with both Danny Myers and Robert Lang (collectively “Employees”).  The agreement calls for the Company to pay $17,000 per month to Employees for continued management of RX Subsidiary.  The agreement also contains provisions for bonuses for expanding the operations of RX Subsidiary and for referrals of additional pharmacy companies which are acquired by the Company.  During the nine months ended September 30, 2003 and 2002, the services rendered by Employees under these agreements amounted to $58,700 and $0, respectively.

Equity Line of Credit Agreement - On November 4, 2002, the Company signed an Equity Line of Credit Agreement with Cornell Capital Partners, LP (“Cornell”).  The agreement calls for the Company to sell up to $10,000,000 of common stock to Cornell at 95% of the closing bid price for the five preceding trading days.  The agreement requires that the shares of common stock be registered with the Securities and Exchange Commission and that the shares be sold in intervals over a two-year period commencing after such registration is effective.  The agreement calls for the Company to issue common stock as payment of a commitment fee of $290,000 and associated legal fees of $10,000 which are classified as deferred stock offering costs.  The agreement also states that, at the time of each stock sale transaction, the Company will pay $500 in legal fees and pay Cornell 7% of the proceeds received.  The agreement was negotiated by consultants of the Company under finder agreements [See below].  At September 30, 2003, the commitment fee of $290,000 was still unpaid and is classified as a liability to be settled by issuance of stock [See Note 10].

Financing Agreements - In March 2003, the Company retained Douglas A. Jackson to negotiate a 5-year $6,000,000 loan for the Company.  The Company agreed to pay $12,500 plus 5% of the proceeds received by the Company.  During the nine months ended September 30, 2003, the Company paid $12,500 for services rendered by Douglas A. Jackson under this agreement.

In February 2003, the Company retained Douglas A. Jackson to negotiate a line of credit for the Company.  The Company agreed to pay $5,000 plus 5% of the proceeds received by the Company.  During the nine months ended September 30, 2003, the Company paid $5,000 for services rendered by Douglas A. Jackson under this agreement.

Finder Agreements - On April 1, 2002, the Company signed three-year finder agreements with both Synergistic Connections, Inc. and Corporate Dynamics, Inc. (collectively “Consultants”).  The agreements call for the Company to pay finders’ fees of 10% of the first $3,000,000, 8% of the next $3,000,000, 6% of the next $3,000,000, and 4% of any additional funding provided through the efforts of Consultants.  In October 2002, the Company sold 200,000 shares of common stock for cash of $50,000 which was negotiated by Consultants and the Company recorded stock offering costs of $5,000 which were offset against the proceeds [See Note 17].  In December 2002, the Company signed a $10,000,000 Equity Line of Credit Agreement which was negotiated by Consultants and the Company recorded stock offering costs of $757,000 which are classified as deferred stock offering costs [See above].  In February 2003, the Company sold 40,000 shares of common stock for cash of $10,000 which was negotiated by Consultants and the Company recorded stock offering costs of $400 which were offset against the proceeds [See Note 17].

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 - COMMITMENTS AND CONTINGENCIES [Continued]

Judgment and Voiding of Acquisition - In March 2003, the Company was notified that they were to be joined as defendants in a suit brought by AmeriSource Bergen Corporation (”AmeriSource”) against NIPSI.  The original suit by AmeriSource sought to recover $480,335 from NIPSI for failing to honor a contract.  In March 2003, AmeriSource filed a supplemental petition to enjoin any transfer of assets from NIPSI to the Company.  In April 2003, the court entered a default judgment against NIPSI.  The court found that NIPSI had fraudulently transferred assets to the Company to avoid the claims of AmeriSource.  The court voided and nullified the transfer of assets from NIPSI to the Company and ordered NIPSI to pay $551,264 to AmeriSource.  As a result of these proceedings, the asset purchase agreement between the Company, NIPSI and NIPSI General Partner was voided and the Company was released as a defendant.  The financial statements reflect the acquisition as having been voided or rescinded and any expenses associated with the voided acquisition have been classified as costs of the unsuccessful NIPSI acquisition.

NIPSI Demand Letter - In March 2003, NIPSI and NIPSI General Partner sent a demand letter to the Company to rescind the asset purchase agreement with the Company because certain conditions of the agreement were not satisfied.  NIPSI General Partner is claiming damages of $120,000 against the Company.  The financial statements reflect the acquisition as having been voided or rescinded and the expenses associated with the voided acquisition have been classified as costs of the unsuccessful NIPSI acquisition.  No accrual for possible losses or settlements, including the $120,000 in damages claimed by NIPSI General Partner, has been recorded in the accompanying financial statements.

Possible NIPSI Claims - For approximately three months, the Company operated the assets of NIPSI pursuant to an asset purchase agreement [See Note 3 and above].  The Company’s management believes that the Company is not responsible for any liabilities of NIPSI, but the possibility exists that creditors and others seeking relief from NIPSI may also include the Company in claims and suits based on the previous relationship.  The Company is not currently named in, nor are they aware of, any such claims or suits against NIPSI.  The Company’s management believes that the Company would be successful in defending against any such claims.  No accrual for possible losses or settlements has been recorded in the accompanying financial statements.  As further disclosed above, NIPSI General Partner is claiming damages of $120,000 against the Company.

Offers to Purchase - In October 2002, the Company signed an Offer to Purchase with Coastalmed Inc. and Coastalmed of Panama City, Inc. (collectively “Coastalmed”).  The offer called for the Company to purchase all of the assets of Coastalmed for $7,000,000 payable as $4,000,000 cash, $1,375,000 as a five-year 6.5% note payable with interest-only payments for the first 18 months and $1,625,000 as Class B preferred stock.  This offer expired and was replaced by a new Offer to Purchase signed in January 2003.  The new offer called for the Company to purchase 100% of the stock of Coastalmed for $8,400,000 payable as $4,900,000 cash, $1,625,000 as a five-year 6.5% note payable with interest-only payments for the first 18 months and $1,875,000 as Class B preferred stock.  The Company also issued 1,000,000 shares of common stock as partial consideration [See Note 17].  The second offer expired and, in September 2003, the Company abandoned their plans to acquire Coastalmed and expensed the associated acquisition costs of $250,000.

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 - COMMITMENTS AND CONTINGENCIES [Continued]

In September 2002, the Company signed an Offer to Purchase to acquire all of the assets of Quantum Pharmacy Alliance, Ltd. (“Quantum”).  The offer called for the Company to purchase all of the assets of Quantum for one of two financing alternatives at Quantum’s option.  The first alternative was $250,000 cash, $500,000 as a five-year 6% note payable and $400,000 as Class B preferred stock.  The second alternative was $650,000 as a five-year 6% note payable and $850,000 as Class B preferred stock.  The offer expired without a signed acquisition agreement and consummation of the proposed acquisition is not guaranteed.

Possible Legal Action - In March 2003, the Company was notified that Pre-Employment Screening, Inc., Lawrence J. Altman, Gateway Legal Services, Inc. and Fun Services of Kansas City plan to file suit to seek $12,000 for alleged violations of the Telephone Consumer Protection Act.  The Company denies the allegations and intends to vigorously defend themselves in this matter.  No accrual for possible losses or settlements has been recorded in the accompanying financial statements.

Potential Stock Issuances - Through September 30, 2003 and subsequently [See Note 24], the Company has signed notes payable totaling $138,845 which call for the Company to issue 1,513,345 shares of common stock as collateral; however, none of the shares have been issued.

Release from Liability - In September 2003, the Company’s former Chief Executive Officer approved issuing 173,747 shares of Class C preferred stock to a third party in exchange for payment of liabilities totaling $868,735 [See Note 16].  Of the liabilities to be settled, $100,335 was owed to the Company’s former Chief Executive Officer.  The Company has recorded this amount as a contingent liability in the accompanying financial statements pending payment by the third party.

NOTE 23 - CONCENTRATIONS

Accounts Receivable - At September 30, 2003, the Company has accounts receivable of $102,300 which is owed by only one customer.

Geographic Region - During the nine months ended September 30, 2003, all of the Company’s sales and operations were located in and around Southern Mississippi and Southern Alabama.

Source of Revenues - For the nine months ended September 30, 2003, all of the Company’s sales were made by RX Subsidiary through healthcare facilities which are owned or controlled by only two groups.  The loss of the business provided through these two groups of healthcare facilities could adversely affect the Company’s business and financial position.

NOTE 24 - SUBSEQUENT EVENTS

Common Stock Issuance - In October 2003, the Company issued 1,200,000 shares of common stock to settle a $290,000 liability to be settled by issuance of stock.

Conversion of Common Stock into Class A Preferred Stock - In October 2003, the Company issued 286,000 shares of Class A preferred stock in exchange for 1,430,000 shares of common stock which were then cancelled.

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 24 - SUBSEQUENT EVENTS [Continued]

Default on Notes Payable and Cancellation of Acquisition - In November 2003, the Company defaulted on the notes payable associated with the acquisition of RX Subsidiary and the former owners of RX Subsidiary called for the acquisition to be cancelled.

Designation of Class D1 Preferred Stock - The Company plans to designate an adequate number of shares of preferred stock as Class D1 to pay a stock dividend which was declared on June 2, 2003 [See Note 16].

Dissolution and Standing of AHR Subsidiary - The Company is currently working with the State of Delaware to resolve the taxes due in order for AHR Subsidiary to be in good standing and the Company is preparing articles of dissolution for AHR Subsidiary.

Notes Payable - Subsequent to September 30, 2003, the Company has signed one-year 10% notes payable totaling $53,845.  The notes call for the Company to issue common stock totaling 613,345 shares.

#

Item 2.  Management’s Discussion and Analysis of Financial Condition or Plan of Operation

Forward-Looking Statement Notice

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, operating results, and financial position.  Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors.  Such factors are discussed under the “Item 2.  Management’s Discussion and Analysis of Financial Condition or Plan of Operations,” and also include general economic factors and conditions that may directly or indirectly impact the Company’s financial condition or results of operations.

Description of Business

General

American Hospital Resources, Inc. (“AMHR” or the “Company”) originally incorporated in the State of Utah on May 9, 1972, under the name High-Line Investment & Development Company.  In 1977, the Company changed its name to Gayle Industries, Inc.  In 1978 the Company merged into its subsidiary, Swing Bike, keeping the Swing Bike name.  In 1979 the Company changed its name from Swing Bike to Horizon Energy Corp.  In 1992 the Company changed its name to Millennium Entertainment Corp.  

In 1993 the Company changed its name to New Horizon Education, Inc. and began focusing on marketing computer education programs.  The Company was not successful and in 1995 the Company sold its assets and suspended operations.  The Company remained essentially dormant from 1998 through 2000.  

In 2001, the Company recommenced operations and in June of 2002, finalized an Agreement and Plan of Reorganization with American Hospital Resources, Inc., a Delaware corporation founded on August 27, 1999.  Under the Agreement, American Hospital Resources Inc. became a wholly owned subsidiary of the Company and the Company changed its name from New Horizon Education, Inc. to American Hospital Resources, Inc.  The Company also authorized a class of 10,000,000 shares of Preferred Stock at no par value per share and changed its business strategy to focus on providing health care consulting and pharmaceutical outsourcing.  

The Company’s common stock is quoted on the OTCBB under the symbol “AMHR.”  

Nature of Business

American Hospital Resources is a healthcare services company that provides pharmacy services to long-term care providers and specialty hospitals as well as other acute care consulting and management services.  We are currently focusing on acquiring and consolidating profitable pharmacy outsourcing businesses.  We are targeting companies that provide pharmacy management services and pharmaceutical supplies to long-term care facilities such as nursing homes and hospices.  As part of our business strategy, we have structured a program designed to merge profitable regional pharmacy outsourcers into a national team.  We believe these regional providers will benefit from the enhanced buying power and market presence of a consolidated healthcare entity.  

Since acquiring our subsidiary and implementing our business plan in the summer of 2002, we have been actively engaged in identifying pharmaceutical and healthcare companies to join our proposed healthcare network.  During the past year we identified three companies that we thought would be suitable for potential acquisition and/or management.  

In October of 2002, we began negotiations to acquire the assets of Coastalmed Inc. and its subsidiary.  In January 2003, we issued 1,000,000 shares of common stock as partial and nonrefundable consideration of $250,000 for the proposed acquisition of Coastalmed.  Our efforts to acquire Coastalmed were unsuccessful and in September 2003, we abandoned the acquisition and expensed $250,000 in associated acquisition costs.

In December of 2002 we reported on Form 8-K an agreement to acquire the assets of NIPSI Healthcare of Houston LP from its general partner.  For a brief time in early 2003, we operated the assets of NIPSI pursuant to this agreement.  However, we returned the assets in March of 2003 when we learned of a lawsuit filed by AmeriSource Bergen Corporation against NIPSI.   The suit sought the return of NIPSI’s assets to satisfy a prior claim by AmeriSource.  In April of 2003, a Texas State court entered a default judgment against NIPSI in favor of AmeriSource.  As a result, the asset transfer was voided by act of law and AMHR was released from any claims.

On May 8, 2003 we finalized a Stock Purchase Agreement to acquire and operate Rx Solutions, Inc., a Mississippi healthcare corporation, as a wholly owned subsidiary of AMHR.  However, subsequent to the date of this report, in November 2003, we defaulted on the notes payable underlying the acquisition and the acquisition was cancelled.

Although our acquisition efforts have so far proven unsuccessful, we intend to continue seeking suitable healthcare and pharmaceutical companies for potential acquisition, consulting or management opportunities.  

Three and Nine Month Periods Ended September 30, 2003

All of our revenue during the three and nine month periods ended September 30, 2003 derived from sales generated by our former subsidiary, Rx Solutions, Inc.  Subsequent to the date of this report, in November 2003 we defaulted on the notes payable underlying the acquisition of Rx Solutions and the acquisition was cancelled.  Management anticipates that the loss of revenue generated by Rx Solutions will have a material negative impact on our results of operations through the end of the year.

Total revenues during the three months ended September 30, 2003 were $1,637,234 with cost of goods sold of $1,357,864 resulting in gross profit of $279,370.  However, operating expenses were $920,123 during this period and interest expense was $18,770.  As a result, we realized a net loss of $659,523 during the three months ended September 30, 2003.  

Revenues for the nine months ended September 30, 2003 were $2,606,498 with cost of goods sold of $2,050,677 resulting in gross profit of $555,821.  Operating expenses were $1,266,699 through the first nine months of 2003, consisting mainly of $1,014,693 in general and administrative expenses and $252,006 in costs resulting from the failed acquisitions of NIPSI and Coastalmed.  We also had interest expense of $31,500 during this period.  As a result, our net loss during the first nine months of 2003 was $742,378.  General and administrative expenses during all periods consisted of salaries, leases, professional fees, executive compensation, operating overhead and legal and accounting fees.

Three and Nine Month Periods Ended September 30, 2002

Total revenue during the three months ended September 30, 2002 was $118,200.  Revenues during the nine months ended September 30, 2003 were $176,300.  All revenue during these periods derived from fees received for consulting services.

Expenses during the three months ended September 30, 2002 consisted of $110,714 in general and administrative expenses resulting in net income after taxes of $3,659.  Expenses during the nine months ended September 30, 2002 consisted of $196,571 in general and administrative expenses and $1,122 in interest expenses.  As a result of the factors, AMHR realized a net loss of $25,052 through the first nine months of 2002.  General and administrative expenses during both periods consisted of executive compensation, consulting and negotiation services, office rental, legal and accounting costs and other administrative expenses.  

Higher general and administrative expenses in 2003 are largely attributable to increased payroll costs, professional fees and executive compensation incurred through acquiring our former subsidiaries and implementing our business plan.  

Liquidity and Capital Resources

Total assets at September 30, 2003 were $3,334,216 compared to total assets of $1,173,342 at December 31, 2002.  Total current assets at September 30, 2003 were $785,738 consisting of $26,248 in cash, $462,052 in net accounts receivable and $297,438.  At September 30, 2003, the Company had net property and equipment of $156,311.  Total other assets at September 30, 2003 totaled $2,392,167 consisting of $1,312,936 in goodwill, $1,069,609 in deferred stock offering costs and $9,622 in deposits.  The majority of accounts receivable, inventory and equipment at September 30, 2003 were related to the operations of Rx Solutions.

Current assets at December 31, 2002 were $51,854 consisting of $6,779 in cash, $15,000 in an advance due from NIPSI and $30,075 in prepaid expenses.  At December 31, 2002, AMHR had net property and equipment of $1,743.  Other assets at December 31, 2002 were $1,119,745 consisting of $60,321 in goodwill and $1,059,424 in deferred stock offering costs.

Total liabilities at September 30, 2003 were $2,730,422.  Current liabilities totaled $1,534,748 consisting of $256,582 in accounts payable, $290,000 in liabilities related to a proposed equity line of credit, $717,529 in the current portion of notes payable, $130,407 in accrued expenses, $61,305 in current lease obligations and $78,925 in dividends payable.  Long-term debt at September 30, 2003 was $1,195,674 consisting of $1,000,000 in liabilities related to the failed acquisition of Rx Solutions, $162,592 in notes payable and $33,082 in capital lease obligations.  

Liabilities at December 31, 2002 were $1,198,090 consisting of $1,088,150 in accounts payable and $109,940 in accrued expenses.  The significant increase in liabilities through September 30, 2003 was primarily due to signing $900,000 in notes payable to acquire a subsidiary, Rx Solutions, Inc.  The company also recorded accrued payroll and associated interest expense during both periods.  These accrued expenses were $170,287 at September 30, 2003 compared to $109,940 at December 31, 2002.  

Through the beginning of 2004 we hope to reduce liabilities and bring current our outstanding debts.  We anticipate that our operating expenses for the rest of the year will be approximately $500,000 consisting mainly of operating expenses, salaries and consulting fees.  We will also have ongoing legal and auditing expenses relating to our public reports as well as office rental and other expenses.  

Management believes that we have sufficient cash on hand to continue operations through the end of 2003, however, we will require additional funding to settle our debts and fully implement our business plan.  In November of 2002 we explored the possibility of entering an equity line of credit agreement with Cornell Capital Partners, LP that would provide up to $10,000,000 of equity financing.  To activate the line of credit, we would have to register the equity line and have the registration statement declared effective by the SEC.  We have not filed a registration statement with the SEC at the date of this report.

We have also retained a consultant to negotiate a five-year $6,000,000 loan and a supplementary line of credit to provide additional operating capital.  If these efforts are unsuccessful we may consider securing loans from officers and directors, selling additional stock or entering into debt financing.  Other than as discussed in this report, we have no material commitments for capital expenditures.  

Item 3.  Controls and Procedures

Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, AMHR, under the supervision of the chief executive and financial officer, has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures within 90 days of the filing date of this quarterly report.  Based upon the results of this evaluation, our chief executive officer and chief financial officer have concluded believes that we maintain proper procedures for gathering, analyzing and disclosing all information in a timely fashion that are required to be disclosed in its Exchange Act reports.  There have been no significant changes in our controls subsequent to the evaluation date.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Management is aware of a potential suit in the Circuit Court of the County of St. Louis, State of Missouri, Cause No. 03AC-002539TCV, dated March 25, 2003.  The suit is being brought by Pre-Employment Screening, Inc., Lawrence J. Altman, Gateway Legal Services, Inc. and Fun Services of Kansas City, Inc. The petition alleges that the company breached the Telephone Consumer Protection Act by sending unsolicited advertising faxes to plaintiffs and requests damages of $12,000 and such other relief as the court deems proper.  Management denies transmitting any faxes to the plaintiffs and regards the lawsuit as frivolous and opportunistic.  Should AMHR be formally served with this suit, it intends to deny all charges and defend itself appropriately.

Item 2.  Changes in Securities and Use of Proceeds

Preferred Stock

AMHR has authorized 10,000,000 shares of preferred stock with no par value.  The Board of Directors has established four designations of preferred stock; Series A, Series B, Series C and Series D1.  A summary of the four designations is as follows:

•

Series A.  There are 2,600,000 shares of Series A preferred stock authorized.  Series A is available only to management, directors and existing shareholders.  Each share of Series A preferred stock has the voting rights of five shares of common stock and is convertible into 5.5 shares of common stock.  Each share of Series A preferred stock is entitled to receive a $.0575 annual dividend payable monthly. At September 30, 2003 there were 1,763,290 shares of Series A preferred stock issued and outstanding.  At the date of this report, AMHR has recorded $25,348 in dividends payable on Series A preferred stock.

•

Series B.  There are 5,000,000 shares of Series B preferred stock authorized.  Series B preferred stock is only available to parties who sell a business to AMHR.  Series B preferred shares have no voting rights but are convertible into five shares of common stock.  Each share of Series B stock is entitled to receive a cumulative 6% annual dividend payable quarterly based on the purchase price or other consideration received by AMHR.  Series B preferred stock may not be transferred without the written permission of AMHR.  At September 30, 2003 there were 920,000 shares of Series B preferred stock issued and outstanding.  In September 2003 AMHR agreed to repurchase 520,000 shares of Class B preferred stock which had been issued as part of the Rx Solutions acquisition for $1,000,000, payable by November 2004.   At the date of this report, AMHR has recorded dividends payable on Series B preferred stock of $15,600.  At the date of this report the dividends had not been paid.  

•

Series C.  There are 1,200,000 shares of Series C preferred stock authorized.  Series C preferred stock has no voting rights and is entitled to receive a cumulative $.475 annual dividend payable quarterly.  Each share of Series C preferred stock may be converted into five shares of common stock after a two year waiting period and may not be transferred without the written consent of AMHR.  At September 30, 2003 there were 182,547 shares of shares of Series C preferred stock issued and outstanding.  At the date of this report, AMHR has recorded dividends payable on Series C preferred stock of $760.  At the date of this report the dividends had not been paid.

•

Series D1.  Series D1 preferred stock will only be available to beneficial owners of AMHR stock as of July 15, 2003.  Series D1 stock has no voting rights and is not entitled to a dividend.  However, D1 shareholders will be entitled to 5% of the net proceeds or liquidation value of any sale of Rx Solutions.  At September 30, 2003 there were no shares of Series D1 preferred stock issued and outstanding.  On June 2, 2003, the Board of Directors of AMHR declared a dividend of one share of Series D1 preferred stock for every 20 shares of common stock or preferred stock held as of July 15, 2003.  However, since the acquisition of Rx Solutions has failed, no dividend has been issued at the date this report was filed.   

In January 2003, the Company issued 1,000,000 shares of common stock as partial and nonrefundable consideration of $250,000 for the proposed acquisition of Coastalmed.  In September 2003, the Company abandoned their plans to acquire Coastalmed and expensed the associated acquisition costs of $250,000.

In April 2003, the Company issued 240,000 shares of Class A preferred stock for services valued at $120,000.  The securities were issued in a private transaction to accredited investors without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

From April through June 2003, the Company issued a total of 388,300 shares of Class A preferred stock with beneficial conversion features totaling $324,775 which have been accounted for as dividends on the day of issue.  The securities were issued in a private transaction to accredited investors without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In May 2003, the Company issued 720,000 shares of Class B preferred stock and signed $900,000 of notes payable to acquire RX Subsidiary.  The securities were issued in a private transaction to accredited investors without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In May 2003, our former officer and director, Mr. Chris Wheeler contributed 720,000 shares of Class A preferred stock back to the Company for cancellation.  

In May 2003, the Company issued 200,000 shares of Class B preferred stock in exchange for 1,000,000 shares of common stock which had been issued as partial and nonrefundable consideration for the proposed acquisition of Coastalmed.  The securities were issued in a private transaction to accredited investors without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In May 2003, a shareholder of the Company contributed 200,000 shares of Class A preferred stock back to the Company for cancellation.  

In May 2003, shareholders of the Company converted 305,010 shares of Class A preferred stock into 1,525,050 shares of common stock.

From June through September 2003, the Company recorded dividends payable of $78,985 on their preferred stock of which $60 has been paid.

In September 2003, the Company issued 173,747 shares of Class C preferred stock to a third party in exchange for payment of liabilities totaling $868,735 which were owed to shareholders of the Company.  Creditors have not released the Company from $100,335 of the liabilities and the Company has recorded a subscription receivable with an offsetting contingent liability for the remaining $100,335 in liabilities to be paid by the third party.

In September 2003, the Company renegotiated the notes payable related to the acquisition of RX Subsidiary which decreased the amount owed on the notes by $410,500.  Due to the related party nature of the notes payable, the debt forgiveness has been accounted for as a capital contribution.

In September 2003, the Company agreed to repurchase 520,000 shares of Class B preferred stock, which had been issued as part of the acquisition of RX Subsidiary, for $1,000,000 by November 2004.  Accordingly, the Company has reclassified these shares as preferred stock subject to mandatory redemption.

Common Stock

On February 27, 2002, the Company issued 11,000,000 shares of restricted common stock to Phase One, LLC for a $30,000 note receivable and to convert a $30,000 note payable and a $50,000 note payable to common stock as reported on Form 8-K.  Total consideration amounted to $110,000 or $.01 per share.  The issuance resulted in a change in control of the Company.  The shares were issued to an accredited investor in a private transaction without registration in reliance on the exemption provided by 4(2) of the Securities Act.   No public solicitations were made by the Company and no commissions were paid on any of the securities sales.  

On February 27, 2002, the Company issued 125,000 shares of common stock registered on Form S-8 as compensation for services rendered valued at $2,500 or $.02 per share.  

On February 27, 2002, the Company issued 450,000 shares of restricted common stock to Synergistic Connections, Inc. for services rendered valued at $5,000, or $.01 per share.  The shares were issued to an accredited investor in a private transaction without registration in reliance on the exemption provided by 4(2) of the Securities Act.   No public solicitations were made by the Company and no commissions were paid on any of the securities sales.  

In February 2002, the Company issued 500,000 shares of common stock for debt relief of $21,281, or $.04256 per share. The shares were issued to an accredited investor in a private transaction without registration in reliance on the exemption provided by 4(2) of the Securities Act.   No public solicitations were made by the Company and no commissions were paid on any of the securities sales.  

In February and March of 2002, the Company repurchased 3,198,736 shares of the Company’s issued and outstanding common stock for cash in the amount of $79,500.  The shares were purchased in a private transaction without registration in reliance on the exemption provided by 4(2) of the Securities Act.   No public solicitations were made by the Company and no commissions were paid.

On March 5, 2002, the Company issued 1,600,000 shares of common stock that had been registered on form S-8 with 1,100,000 shares going to the Company’s former president for services rendered valued at $22,000 or $.02 per share, and with 500,000 shares going to an attorney for services rendered valued at $10,000 or $.02 per share.  

In February and March of 2002, the Company repurchased 3,198,736 shares of the Company’s issued and outstanding common stock for cash in the amount of $79,500.  The shares were purchased in a private transaction without registration in reliance on the exemption provided by 4(2) of the Securities Act.   No public solicitations were made by the Company and no commissions were paid.

On April 10, 2002, the Company Issued 2,000,000 shares of common stock to Phase One, LLC for cash in the amount of $20,000.  The shares were issued in a private transaction without registration in reliance on the exemption provided by 4(2) of the Securities Act.   No public solicitations were made by the Company and no commissions were paid on the securities sales.

In May of 2002 we issued 500,000 common shares to an accredited investor to convert $40,000 in notes and accrued interest of $789.  The securities were sold in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  The investor had a pre-existing relationship with American Hospital Resources and had access to all material information pertaining to the Company’s financial condition.  No broker was involved and no commissions were paid in the transaction.

In June of 2002, pursuant to the agreement and plan of reorganization between New Horizon Education, Inc. and American Hospital Resources, Inc., we issued 3,196,873 common shares to acquire American Hospital Resources, Inc. as a wholly-owned subsidiary.  The securities were sold in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

On August 27, 2002 we issued 584,000 common shares as reported on Form S-8 filed with the Securities and Exchange Commission.  The shares were issued for consulting services valued at $146,000 or $.25 per share.  

On October 31, 2002, the Company issued 200,000 shares of previously authorized but unissued restricted common stock for cash of $50,000, or $.25 per share to two accredited investors.  The securities were sold in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  The investors had pre-existing relationships with American Hospital Resources and had access to all material information pertaining to the Company’s financial condition.  No broker was involved and no commissions were paid in the transaction.

On December 31, 2002, AMHR repurchased 13,000,000 shares of common stock Phase One, LLC, and issued 2,600,000 shares of previously authorized but unissued Series A preferred stock to Phase One, LLC.  The 13,000,000 common shares were then cancelled.  The securities were offered in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In January of 2003, we issued 1,000,000 shares of previously authorized but unissued common stock valued at $250,000 or $.25 per share to the owner of Coastalmed, Inc. as an inducement to acquire Coastalmed and its affiliated company.   The securities were issued in a private transaction to accredited investors without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In February 2003, we issued 40,000 shares of previously authorized but unissued common stock to an accredited investor for $10,000 or $.25 per share.  The securities were sold in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  The investor had a pre-existing relationship with American Hospital Resources and had access to all material information pertaining to the Company’s financial condition.  A 10% finders’ fee of $400 was paid to two consultants and netted against the proceeds of the sale.

In April 2003, the company issued of 550,000 shares of common stock for management and consulting services valued at $121,000 or $.22 per share.   The investors had a pre-existing relationship with the company.  The securities were issued in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In May 2003, the company issued of 20,000 shares of common stock for management and consulting services valued at $10,000 or $.50 per share.   The investors had a pre-existing relationship with the company.  The securities were issued in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

Option and Warrants

On December 31, 2002 the Board of Directors adopted an Incentive Stock Bonus Plan.  The plan allows the company to grant 5-year warrants to purchase shares of common stock to directors, senior management and certain key employees.  The 2003 stock bonus pool consists of 1,000,000 warrants to purchase common stock at $.25 per share.  The warrants are issued at the discretion of the Board of Directors.  On December 31, 2002, AMHR granted 300,000 warrants to purchase common stock to directors and consultants as payment for prior services collectively valued at $19,577 or approximately $.065 per warrant.  The warrants were offered in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.  At September 30, 2003, no warrants have been exercised, cancelled or forfeited.

On November 1, 2002, the Company granted a stock option to Spice Island Products Corp.  The option allows Spice Island to purchase up to 2,000,000 shares of the Company’s common stock at $0.50 per share at any time between November 1, 2002 and November 1, 2005.  The securities were offered in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.  No shares have been purchased under the option as of the filing date of this report.

In March 2002, AMHR granted 10,000 stock options to Mark Buck and 10,000 stock options to Antione Gedeon, for their services as directors.  The options vested immediately and are exercisable at $.05 per share through March of 2004.  The options were offered in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.  At September 30, 2003, none of the options had been exercised, forfeited or cancelled.

In December 2002, AMHR granted 300,000 warrants to purchase common stock to NIPSI directors and personnel in conjunction with the proposed acquisition of NIPSI.  The warrants vested immediately and are exercisable at $.25 per share through December 2007.  The options were offered in a private transaction without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.  At the date of this report, no warrants had been exercised, forfeited or cancelled.

Item 5.  Other Information

Certain Relationships and Related Transactions

In October of 2002 we began renting office space from our former president, Mr. Christopher Wheeler for $500 per month.  Rents paid to Mr. Wheeler from January 1, 2003 through September 30, 2003 were $4,500.

On September 15, 2002, AMHR signed a Purchase and Sale Agreement with Gaelic Capital Group, an entity controlled by our president, Mr. Christopher Wheeler.  Under the Agreement, AMHR paid Gaelic $94,500 for the rights to receive 6% of the sale price of the peripheral assets of Parkview Community Hospital Medical Center.  Through September 30, 2003, AMHR was still owed $218,100 under the agreement.  Parkview is currently undergoing bankruptcy reorganization and recovery of the assets is uncertain.

At September 30, 2003 we owed Chris Wheeler, our former officer and director approximately $52,175 in accrued salary.  During the nine months ended September 30, 2003

Subsequent Events:

In October 2003, AMHR issued 1,200,000 shares of common stock to settle a $290,000 liability.  The securities were issued in a private transaction to accredited investors without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In October 2003, AMHR issued 286,000 shares of Class A preferred stock in exchange for 1,430,000 shares of common stock.  The common shares were then cancelled.  The securities were issued in a private transaction to accredited investors without registration in reliance on the exemption provided by Section 4(2) of the Securities Act.  No broker was involved and no commissions were paid in the transaction.

In November 2003, the AMHR defaulted on the notes payable associated with the acquisition of RX Subsidiary and the former owners of RX Subsidiary called for the acquisition to be cancelled.

The Company is currently working with the State of Delaware to resolve the taxes due in order for AHR Subsidiary to be in good standing and the Company is preparing articles of dissolution for AHR Subsidiary.

Subsequent to September 30, 2003, AMHR signed one-year 10% notes payable totaling $53,845.  The notes call for the Company to issue common stock totaling 613,345 shares.

Effective December 15, 2003, the Board of Directors accepted the resignation of Mr. Christopher A. Wheeler as an officer and director of AMHR.  Following Mr. Whreeler’s resignation, Mark Buck, a director of AMHR was named as Chief Executive Officer and Chief Financial Officer.  The company has also moved its office to 5231 Kuaini Place, Honolulu, Hawaii, 96821.

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

Reports on Form 8-K:

AMHR did not file any reports on Form 8-K during the last 90 day period covered by this report.

SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERICAN HOSPITAL RESOURCES, INC.

Date: December 29, 2003

By: /s/ Mark Buck

Mark Buck

Chief Executive Officer

Chief Financial Officer