_________

^_________

^_________

^_________

At June 30, 2003, the Company had 2,020,000 outstanding options, 300,000 outstanding warrants and preferred stock convertible into 13,381,665 shares of common stock which were not used in the computation of dilutive loss per share because their effect would be anti-dilutive.  Dilutive loss per share was not presented, as the Company had no common stock equivalent shares for all periods presented that would effect the computation of diluted loss per share.

NOTE 20 - COMMITMENTS AND CONTINGENCIES

Common Stock Conversion Right - On December 31, 2002, the 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 Series A preferred stock at a rate of five shares of common stock into one share of Series A preferred stock [See Note 4].

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 - COMMITMENTS AND CONTINGENCIES [Continued]

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 15].  During the six months ended June 30, 2003 and 2002, the services rendered by Consultants under these agreements amounted to $60,000 and $30,000, 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.

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 six months ended June 30, 2003 and 2002, the services rendered by Employees under these agreements amounted to $34,000 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 June 30, 2003, the commitment fee of $290,000 and associated legal fees of $10,000 were still unpaid and are classified as accounts payable.

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 six months ended June 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 six months ended June 30, 2003, the Company paid $5,000 for services rendered by Douglas A. Jackson under this agreement.

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 - COMMITMENTS AND CONTINGENCIES [Continued]

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 15].  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 15].  At June 30, 2003, finders’ fees of $747,400 were still unpaid and are classified as accounts payable.

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.

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 - COMMITMENTS AND CONTINGENCIES [Continued]

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 Series B preferred stock.  This offer expired and was replaced by a new Offer to Purchase signed in January 2003.  The new offer calls 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 Series B preferred stock.  The Company also issued 1,000,000 shares of common stock as partial consideration [See Note 15].  A final acquisition agreement has not been signed and consummation of the proposed acquisition is not guaranteed.

In September 2002, the Company signed an Offer to Purchase to acquire all of the assets of Quantum Pharmacy Alliance, Ltd. (“Quantum”).  The offer calls for the Company to purchase all of the assets of Quantum for one of two financing alternatives at Quantum’s option.  The first alternative is $250,000 cash, $500,000 as a five-year 6% note payable and $400,000 as Series B preferred stock.  The second alternative is $650,000 as a five-year 6% note payable and $850,000 as Series B preferred stock.  A final acquisition agreement has not been signed 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.

NOTE 21 - CONCENTRATIONS

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

Source of Revenues - For the six months ended June 30, 2003, all of the Company’s sales were made 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.

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

#

AMERICAN HOSPITAL RESOURCES, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 - SUBSEQUENT EVENTS

Extension to Stock Purchase Agreement for RX Subsidiary - In July 2003, the Company defaulted on the notes and employment agreement underlying the acquisition of RX Subsidiary.  In August 2003, the Company entered into an agreement to extend the maturity of the $300,000 90-day no interest note payable to September 29, 2003.  The extension requires the Company to pay $40,000 in August and September 2003 in lieu of the interest and salary payments required by the Stock Purchase Agreement signed May 8, 2003.  The extension also provides for a possible renegotiation of the purchase price of RX Subsidiary on September 29, 2003.

Sales of Series C Preferred Stock - In July 2003, as part of a private stock offering, the Company sold 1.2 units of Series C preferred stock for cash of $12,000.

Designation of Series D1 Preferred Stock - The Company plans to designate an adequate number of shares of preferred stock as Series D1 to pay a stock dividend which was declared on June 2, 2003 [See Note 14].

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.

#

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 and pharmaceutical services and management consulting.  

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 the acquisition and consolidation of profitable pharmacy outsourcing businesses.  These consolidated pharmacy outsourcing companies provide pharmacy management services and pharmaceutical supplies predominantly 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 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, Coastalmed of Panama City, Inc.  Although we have been actively engaged in negotiations, the proposed acquisition has not been finalized at the date of this report.  We are currently offering a total of $8,400,000 to acquire the assets of Coastalmed, payable as $4,900,000 in cash, $1,625,000 as a five-year 6.5% note payable with interest only payments through the first 18 months and $1,875,000 as Series B preferred stock.  Pursuant to the proposed acquisition, in January of 2003 we issued 1,000,000 shares of common stock to the owner of Coastalmed as partial consideration of $250,000 towards the purchase price.  

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.  The agreement was effective as of May 1, 2003, making Rx Solutions a wholly owned subsidiary of AMHR.  

Under the Agreement, AMHR acquired 1,000 shares of Rx Solutions common stock representing all of the issued and outstanding shares of Rx Solutions.  In exchange, AMHR issued 720,000 shares of AMHR Series B preferred stock and short and long term notes totaling $900,000 to the shareholders of Rx Solutions.  A summary of the terms follows:

•

The $300,000 short-term note matures on August 8, 2003.  Any unpaid balance after August 8, 2003 is subject to an 18% interest rate.  Subsequent to the date of this report, the maturity date on the note was extended to September 29, 2003.  

•

The long term notes are payable to Mr. Lang and Mr. Myers, the two former shareholders of Rx Solutions.  Mr. Myers received a note for $306,000 and Mr. Lang received a note for $294,000.  The notes accrue interest at 7% per annum and mature on April 30, 2008.

•

Each share of AMHR Series B preferred stock is convertible to five shares of AMHR common stock.  The Series B stock is also entitled to receive a 6% annual dividend payable quarterly.  Chris Wheeler, an officer and director of AMHR, has the right to repurchase up to 300,000 shares of Series B preferred stock at $2.50 per share within 18 months of closing.

Concurrent with the acquisition, AMHR entered into a three-year management contract with the two former shareholders of Rx Solutions.  Mr. Myers and Mr. Lang will each receive an $8,500 monthly salary and be eligible for growth bonuses in exchange for managing the operations of Rx Solutions.

We intend to continue seeking suitable healthcare and pharmaceutical companies for potential acquisition, consulting or management opportunities.  

Three and Six Month Periods Ended June 30, 2003

Total revenue during the three months and six months ended June 30, 2003 was $969,264.  All revenue derived from pharmacy sales by our subsidiary, Rx Solutions, during the last two months of the second quarter of 2003.  Cost of goods sold during the same period was $692,813 resulting in gross profit of $276,451.

Total expenses for the three months ended June 30, 2003 were $259,738 consisting of $257,732 in general and administrative expenses and $2,006 in costs resulting from our unsuccessful attempt to acquire NIPSI.  We also had $12,730 in interest expense during this period resulting in net income of $3,983 for the three months ended June 30, 2003.  For the six months ended June 30, 2003 expenses consisted of $344,570 in general and administrative costs, $2,006 in failed acquisition costs and interest expense of $12,730.  As a result of these factors, we realized a net loss of $82,855 during the first six months of 2003.  General and administrative expenses during both periods consisted of professional fees, executive compensation, operating overhead and legal and accounting fees.

Three and Six Month Periods Ended June 30, 2002

Total revenue during the three months and six months ended June 30, 2002 was $58,100 with no cost of sales.  All revenue derived from fees paid for consulting services provided during the second quarter of 2002.  As a result of these factors, AMHR realized a gross profit of $58,100 during the three month and six month periods ended June 30, 2002.

Expenses during the three months ended June 30, 2002 consisted of general and administrative expenses of $60,449 and interest expense of $526.  Expenses during the six months ended June 30, 2002 consisted of $85,857 in general and administrative expenses and $1,122 in interest expenses.  As a result of the factors, AMHR realized a net loss of $2,875 during the three months ended June 30, 2002 and a cumulative net loss of $28,879 through the first six 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 payroll costs associated with implementing our business plan.  

Liquidity and Capital Resources

Total assets at June 30, 2003 were $3,511,106 compared to total assets of $1,173,342 at December 31, 2002.  Current assets at June 30, 2003 were $716,546 consisting of $8,530 in cash, $433,859 in net accounts receivable, $273,864 in inventory and $293 in prepaid expenses.  At June 30, 2003, the Company had net property and equipment of $162,393.  Other assets at June 30, 2003 totaled $2,632,167 consisting of $1,312,936 in goodwill, $1,059,609 in deferred stock offering costs, $250,000 in deferred acquisition costs and $9,622 in deposits.  The majority of accounts receivable, inventory and equipment at June 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 June 30, 2003 were $2,736,164.  Current liabilities totaled $1,890,850 consisting of $1,221,068 in accounts payable, $430,069 in the current portion of notes payable, $170,287 in accrued expenses, $60,566 in current portion of lease obligations and $8,860 in dividends payable.  Long-term debt at June 30, 2003 was $845,314 consisting of $796,681 in notes payable and $48,633 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 libilities through June 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 June 30, 2003 compared to $109,940 at December 31, 2002.  

During the next six months 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 hopes to generate sufficient operating capital through continuing operations, cash on hand, anticipated revenues from our subsidiary and anticipated cash collections from accounts receivable.  However, we will require additional capital for acquisition costs to fully implement our business plan and build our health care network.  In November of 2002 we entered an equity line of credit agreement with Cornell Capital Partners, LP that will provide up to $10,000,000 of equity financing should we require it.  To activate the line of credit, we would have to register the equity line with the Securities and Exchange Commission.  At the date of this report, we have not filed a registration statement with the SEC.  

We have also retained a consultant to negotiate a five-year $6,000,000 loan and a line of credit to provide additional operating capital.  Should it become necessary to raise additional capital, 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

Within the 90-day period prior to the date of this report, we evaluated the effectiveness and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.  There have been no significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.

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. against American Hospital Resources, Inc. f/k/a New Horizon Resources, Inc.  The suit is a petition for damages arising from an alleged violation of the Telephone Consumer Protection Act.  The petition alleges that the company breached the 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.

Management was notified via facsimile dated March 18, 2003, that they were to be joined as defendants in a suit brought by AmeriSource Bergen Corporation against NIPSI Healthcare of Houston, LP, Case No. 03-1972-A, filed in the county court at law, Court Number One, Dallas County, Texas.  In the original complaint dated February 19, 2003, AmeriSource sought to recover $480,335.28 from defendant NIPSI Healthcare of Houston for failing to honor a prior contract.  In a supplemental petition dated March 18, 2003, AmeriSource alleged that AMHR was conducting business in Texas under the name NIPSI Pharmacy of Texas and sought to enjoin any transfer of assets from NIPSI to AMHR.  On April 16, 2003, the court entered an interlocutory default judgment against NIPSI.  The court found that NIPSI had fraudulently transferred assets to AMHR to avoid the claims of AmeriSource.  The court voided the transfer of assets from NIPSI to AMHR and ordered NIPSI to pay AmeriSource $551,264.48 in actual damages, interest and attorney’s fees with interest accruing at 10% per annum.  As a result of these proceedings, the December 2002 Asset Purchase Agreement between NIPSI and AMHR was nullified by act of law and AMHR was released as a defendant.  The possibility exists that other creditors may attempt to join AMHR as co-defendant in claims against NIPSI based on the voided agreement.  However, AMHR is not aware of any other suits or claims against NIPSI and management believes AMHR would be successful in defending themselves should any such claims arise.

AMHR received by facsimile a demand letter from National Institutional Pharmacy Services, LP, the general partner of NIPSI Healthcare of Houston, LP, dated March 18, 2003.  The letter sought to rescind the December 2002 Asset Purchase Agreement between NIPSI and the Company by alleging fraud and demanding $120,000.  AMHR denies it has any obligation to NIPSI and regards the Asset Purchase Agreement as being voided by the April 16, 2003 default judgment entered against NIPSI.  At the date of this report, AMHR has not responded to the demand letter and neither party has initiated formal legal proceedings.

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 five shares of common stock.  Each share of Series A preferred stock is entitled to receive a $.0575 annual dividend payable monthly limited to 50% of earnings before interest, taxes, depreciation and amortization.  Effective July 1, 2003, the dividend will be cumulative with no earnings limitation. At June 30, 2003 there were 1,949,933 shares of Series A preferred stock issued and outstanding.  At the date of this report, AMHR has not recorded any dividends payable on Series A preferred stock because the Company had negative earnings before interest, taxes, depreciation and amortization during the six months ended June 30, 2003.

•

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 paid to the Company or the consideration received by AMHR.  Series B preferred stock may not be transferred without the written permission of AMHR.  At June 30, 2003 there were 720,000 shares of Series B preferred stock issued and outstanding.  At the date of this report, AMHR has recorded dividends payable on Series B preferred stock of $8,100.  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 June 30, 2003 there were 6,400 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 June 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.  At the date this report was filed, the D1 preferred shares had not been issued.   

In December of 2002, AMHR issued 2,600,000 shares of Series A preferred stock to Phase One, LLC in exchange for 13,000,000 shares of common stock held by Phase One.  The 13,000,000 shares of common stock were then cancelled.  The securities were issued to an accredited investor 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 April of 2003, AMHR issued 47,000 shares of Series A preferred stock for cash of $23,500 or $.50 per share.  The securities were issued to an accredited investor 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 of 2003, Mr. Chris Wheeler returned 720,000 shares of Series A preferred stock to the Company for cancellation.  

In May and June of 2003, AMHR issued 14,933 shares of Series A preferred stock for cash of $28,000 or approximately $1.875 per share.  The securities were issued to an accredited investor 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 of 2003, AMHR issued 8,000 shares of Series A preferred stock for cash of $10,000 or $1.25 per share.  The securities were issued to an accredited investor 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 of 2003, AMHR issued 720,000 shares of Series B Stock to the former shareholders of Rx Solutions, Inc. in conjunction with the acquisition of Rx Solutions as a subsidiary.  The former Rx shareholders had a preexisting relationship with AMHR and had access to the company’s financial records.  Accordingly, they are considered accredited investors.   The shares 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 June of 2003, AMHR undertook a private placement of Series C stock to accredited investors.  AMHR is offering 600 units consisting of 2,000 shares of Series C preferred stock at $10,000 per unit or $5.00 per share.  The Company has agreed to pay up to 10% in finders’ fees during the private placement.  At June 30, 2003, AMHR had sold 3.2 units to two accredited investors for cash of $32,000.  As a result, at June 30, 2003 there were 6,400 shares of Series C preferred stock issued and outstanding.  Subsequent to the date of this report, in July of 2003, AMHR sold an additional 1.2 units or 2,400 shares of Series C preferred stock to an accredited investor for cash of $12,000.  The shares were sold in a private offering to three accredited investors without registration in reliance of the exemption provided by Section 4(2) of the Securities Act.

Common Stock

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 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 February 2003, the Board of Directors authorized the issuance of 720,000 shares of common stock to four individuals for ongoing legal and consulting services.  None of these shares were issued.  In June of 2003, the Board of Directors cancelled the authorization of these shares.

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.

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 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.  

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.

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.

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.

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 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.  

On February 27, 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.  

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 June 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 June 30, 2003, none of the options 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 current president, Mr. Christopher Wheeler for $500 per month.  Rents paid to Mr. Wheeler from January 1, 2003 through June 30, 2003 were $3,000.

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 June 30, 2003, AMHR was still owed $218,100 under the agreement.  Parkview is currently undergoing bankruptcy reorganization and recovery of the assets is uncertain.

Subsequent Events:

Subsequent to the date of this report, in July of 2003, AMHR was in default on the notes payable and employment agreements associated with the acquisition of Rx Solutions, Inc.  In August of 2003 AMHR entered into an agreement to extend the maturity of the $300,000 note payable.  The agreement requires AMHR to pay $40,000 in August and September of 2003 in lieu of salary and interest payments and extends the maturity of the note to September 29, 2003.  The note was originally due on August 8, 2003.  The agreement also provides for renegotiating the purchase price of the Rx Solutions acquisition.

AMHR is currently working with the State of Delaware to bring current past-due taxes of the American Hospital Resources subsidiary.  Management anticipates that articles of dissolution will be filed in Delaware as soon as the subsidiary is in good standing.

On August 11, 2003 the Board of Directors adopted a resolution that the four series of preferred stock be designated as “classes” of preferred stock.  Effective August 11, 2003, the four classes of preferred stock are to be known as Class A, Class B, Class C and Class D.  The Board of Directors further resolved that Class D be divided into such sub-classes or series as authorized by the Board of Directors and the articles and bylaws of the Company.

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

Reports on Form 8-K:

During the last 90 day period covered by this report, the Company filed the following report on Form 8-K relating to the Agreement and Plan of Organization between American Hospital Resources and RX Solutions, Inc.

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: September 8, 2003

By: /s/Christopher A. Wheeler

Chief Executive Officer

Chief Financial Officer