<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C.  20549
                                    FORM 10-Q
(MARK  ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT  OF  1934

               FOR THE QUARTERLY PERIOD ENDED:  SEPTEMBER 30, 2002

                                       OR

[ ] TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)  OF THE SECURITIES
    EXCHANGE  ACT  OF  1934

FOR  THE  TRANSITION  PERIOD  FROM __________________  TO  _____________________

                         COMMISSION FILE NUMBER:  1-8645

                              MEGO FINANCIAL CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                          NEW YORK          13-5629885
                                    (I. R. S.  EMPLOYER
          (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
                               IDENTIFICATION NO.)

                   4310 PARADISE ROAD, LAS VEGAS, NEVADA 89109
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (702) 737-3700
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


     Indicate  by  check  mark  whether the registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or  for  such shorter period that the
registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.   [X] YES    [ ]  NO

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     As of September 30, 2002, there were 6,591,393 shares of Common Stock, $.01
par  value  per  share,  of  the  Registrant  outstanding.

<PAGE>
<TABLE>
<CAPTION>

                      MEGO FINANCIAL CORP. AND SUBSIDIARIES



                                      INDEX
                                      -----
<S>                                      <C>
                                                                                       Page
                                                                                       ----

PART I  FINANCIAL  INFORMATION  (unaudited)

Item 1.  Condensed  Financial  Statements

          Condensed  Consolidated  Balance  Sheets  at  September  30, 2002, and
          December  31,  2001

          Condensed Consolidated Statements of Operations for the Three and Nine
          Months  Ended  September  30,  2002,  and  August  31,  2001

          Condensed  Consolidated  Statements  of Cash Flows for the Nine Months
          Ended  September  30,  2002,  and  August  31,  2001

          Notes  to  Condensed  Consolidated  Financial  Statements

Item 2.   Management's Discussion and Analysis of Financial Condition and Results
          of  Operations

Item 3.  Quantitative  and  Qualitative  Disclosures  About  Market  Risk

Item 4.  Controls  and  Procedures

PART II  OTHER  INFORMATION

Item 1.  Legal  Proceedings

Item 2.  Changes  in  Securities

Item 3.  Defaults  Upon  Senior  Securities

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

Item 5.  Other  Information

Item 6.  Exhibits  and  Reports  on  Form  8-K

Signatures

Certifications

                                        i


</TABLE>
<PAGE>

PART  I   FINANCIAL  INFORMATION
ITEM  1.  CONDENSED  FINANCIAL  STATEMENTS

                      MEGO FINANCIAL CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (thousands of dollars)
                                   (unaudited)
<TABLE>
<CAPTION>
<S>                                                                         <C>        <C>
   ASSETS                                                                SEPTEMBER 30,   DECEMBER 31,
                                                                              2002          2001
                                                                         ------------- --------------
Cash and cash equivalents                                                     $  1,308       $  1,271
Restricted cash                                                                  6,835          6,708
Notes receivable, net of allowance of $11,491 and $14,557
  at September 30, 2002 and December 31, 2001, respectively                    113,740        109,347
Retained interests in receivables sold                                           2,549          3,688
Vacation ownerships held for resale                                             22,470         17,865
Land and improvements inventory                                                  6,312          2,757
Assets available for sale                                                        3,499          3,468
Property and equipment, net                                                     21,666          9,690
Deferred financing costs, net                                                    2,516          2,071
Deferred selling costs                                                           2,506          5,422
Other assets                                                                    13,921         15,409
Assets related to discontinued operations                                            -         15,156
                                                                         ------------- --------------

          TOTAL ASSETS                                                        $197,322       $192,852
                                                                         ============= ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
  Notes collateralized by receivables                                         $ 98,564       $106,599
  Notes related to inventory, working capital
    and personal property financing                                             48,127         24,931
  Accounts payable                                                               7,147          1,873
  Accrued liabilities                                                           14,212         12,274
  Interest rate swap liabilities                                                 4,981          2,251
  Deferred income                                                                2,917          2,097
  Reserve for notes receivable sold with recourse                                2,454          3,560
  Customer deposits                                                              1,412          2,831
  Deferred income taxes                                                              -          1,289
  Liabilities related to discontinued operations                                     -          9,545
                                                                         ------------- --------------

          Total liabilities before subordinated debt                           179,814        167,250
                                                                         ------------- --------------

Subordinated debt                                                                    -          4,211

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.01 par value (5,000,000 shares authorized, none                 -              -
    issued and outstanding)
  Common stock, $.01 par value (50,000,000 shares authorized;  6,591,393
    and 3,500,557 shares issued and outstanding at September 30, 2002 and
    December 31, 2001, respectively)                                                66             35
  Additional paid-in capital                                                    25,015         13,068
  Retained earnings (accumulated deficit)                                       (4,285)         9,773
  Accumulated other comprehensive loss                                          (3,288)        (1,485)
                                                                         ------------- --------------

          Total stockholders' equity                                            17,508         21,391
                                                                         ------------- --------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $197,322       $192,852
                                                                         ============= ==============

</TABLE>

See notes to condensed consolidated financial statements.

                                       1

<PAGE>
                      MEGO FINANCIAL CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           (thousands of dollars, except share and per share amounts)
                                   (unaudited)
<TABLE>
<CAPTION>
<S>                                                       <C>          <C>          <C>          <C>
                                                             THREE MONTHS ENDED         NINE MONTHS ENDED
                                                          -----------------------    -----------------------
                                                          SEPTEMBER 30, AUGUST 31,   SEPTEMBER 30,  AUGUST 31,
                                                              2002        2001         2002         2001
                                                          ----------   ----------    -----------------------
REVENUES
  Vacation ownership sales                                $    5,759   $   15,031   $   23,344   $   44,471
  Land sales                                                   4,301        5,839       17,264       17,570
  Interest income                                              4,078        5,075       12,611       14,284
  Travel income                                                  235            -          235            -
  Resort income:
    Resort management fees                                       785          738        2,394        2,194
    Golf course, shop and services                                42            -           42            -
    Food and beverage                                             10            -           10            -
  Other                                                          397          641          941        1,294
                                                          -----------  -----------  -----------  -----------
          Total revenues                                      15,607       27,324       56,841       79,813
                                                          -----------  -----------  -----------  -----------
COSTS AND EXPENSES
  Direct cost of:
    Vacation ownership sales                                   1,183        2,205        4,004        7,729
    Land sales                                                   481          849        2,409        2,590
    Golf course, shop and services                                 4            -            4            -
    Food and beverage                                              4            -            4            -
  Interest expense related to consumer financing               2,506        2,095        7,068        6,327
  Interest expense related to inventory, working capital
    and personal property financing                            1,732          941        3,356        2,843
  Selling and operational expenses:
    Vacation ownership                                         1,958        4,755        7,850       14,511
    Land sales                                                 2,019        2,301        5,779        5,908
    Travel related                                                69            -           69            -
    Golf course, shop and services                               114            -          114            -
    Food and beverage                                             10            -           10            -
    Software related                                              34            -           34            -
  Marketing expenses                                           5,378        5,944       14,160       16,898
  Portfolio and funding costs                                    812        1,061        2,724        2,878
  General and administrative                                   5,590        1,793       14,209       10,559
  Provision for cancellations                                  1,216          255        4,440        7,329
  Depreciation                                                   327        3,646        1,301          781
  Maintenance fees                                               467          106        1,368          731
  Hotel operations, net                                           75         (114)          67         (140)
  Restructuring charges                                            -            -        2,480            -
                                                          -----------  -----------  -----------  -----------
          Total costs and expenses                            23,979       25,837       71,450    $   78,944
                                                          -----------  -----------  -----------  -----------


(LOSS) INCOME FROM CONTINUING OPERATIONS                      (8,372)       1,487      (14,609)         869
   BEFORE INCOME TAX (EXPENSE) BENEFIT

INCOME TAX (EXPENSE) BENEFIT                                    (559)         419          292          455
                                                          -----------  -----------  -----------  -----------


(LOSS) INCOME FROM CONTINUING OPERATIONS                      (8,931)       1,906      (14,317)        1,324
                                                          ===========  ===========  ===========  ===========
Discontinued operations
  Income (loss) from discontinued operations                      17           24          392         (189)
  Income tax (expense) benefit                                    (6)          (8)        (133)          64
                                                          -----------  -----------  -----------  -----------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX            11           16          259         (125)
                                                          -----------  -----------  -----------  -----------
NET (LOSS) INCOME APPLICABLE TO COMMON STOCK              $   (8,920)  $    1,922   $  (14,058)  $    1,199
                                                          ===========  ===========  ===========  ===========

NET (LOSS) INCOME PER COMMON SHARE
  Basic and diluted:
    From continuing operations                            $    (1.42)  $     0.54   $    (2.66)  $     0.38
    From discontinued operations                               (0.00)        0.01         0.04        (0.04)
                                                          -----------  -----------  -----------  -----------
     Net (loss) income                                    $    (1.42)  $     0.55   $    (2.62)  $     0.34
                                                          ===========  ===========  ===========  ===========
    Weighted-average number of common shares               6,304,008    3,500,557    5,373,727    3,500,557
                                                          ===========  ===========  ===========  ===========
</TABLE>

            See notes to condensed consolidated financial statements.

                                        2


                      MEGO FINANCIAL CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (thousands of dollars)
                                   (unaudited)
<TABLE>
<CAPTION>
<S>                                                                                     <C>        <C>


                                                                                          NINE MONTHS ENDED
                                                                                      --------------------------
                                                                                      SEPTEMBER 30,   AUGUST 31,
                                                                                          2002          2001
                                                                                      -----------   ------------
CASH  FLOWS  FROM  OPERATING  ACTIVITIES
  Net (loss) income                                                                     $(14,058)       $  1,199
                                                                                      -----------   ------------
  Adjustments to reconcile net (loss) income to net cash used in operating activities:
    Charges to allowance for cancellations                                                (7,516)         (6,097)
    Provision for cancellations                                                            4,440           7,329
    Gain on sale of business                                                                (542)              -
    Gain on sale of notes receivable                                                           -            (376)
    Gain on sale of other investments and other assets                                         -             (83)
    Cost of vacation ownership interest and land sales                                     6,413          10,319
    Depreciation                                                                           1,301             781
    Repayments on notes receivable                                                        29,779          36,628
    Additions to notes receivable                                                        (32,032)        (64,797)
    Purchase of land and vacation ownership interests                                     (8,106)         (7,025)
    Proceeds from the sale of notes receivable                                                 -           5,637
  Changes in operating assets and liabilities:
    Restricted cash                                                                         (127)         (2,037)
    Retained interests in receivables sold                                                 1,139            (791)
    Deferred financing costs                                                                (445)           (256)
    Deferred selling costs                                                                 2,916            (228)
    Other assets                                                                           2,481           3,188
    Accounts payable                                                                       4,928            (109)
    Accrued liabilities                                                                     (105)            847
    Interest rate swap liabilities                                                           927             463
    Deferred income                                                                          820           2,373
    Customer deposits                                                                     (1,419)            172
    Deferred income taxes                                                                 (1,289)           (978)
    Assets related to discontinued operations                                                414             (72)
    Liabilities related to discontinued operations                                            25              80
                                                                                      -----------   ------------
          Net cash used in operating activities                                          (10,056)        (13,833)

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                                                      (1,725)         (6,932)
  Proceeds from the disposition of business                                                5,714              70
  Proceeds from the sale of other investments                                                  -             144
  Acquisition of business (Note 6)                                                           247               -
                                                                                      -----------   ------------
          Net cash provided by (used in) investing activities                              3,742          (6,718)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from borrowings                                                                34,245          61,234
  Reduction of debt                                                                      (33,649)        (38,899)
  Payments on subordinated debt                                                           (4,211)            (75)
  Proceeds from issuance of common stock                                                   9,966               -
                                                                                      -----------   ------------
          Net cash provided by financing activities                                        6,351          22,260

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                     37           1,709

CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD                                              1,271              15
                                                                                      -----------   ------------
CASH AND CASH EQUIVALENTS END OF PERIOD                                                 $  1,308        $  1,724
                                                                                      ===========   ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

  Cash paid for interest, net of amounts capitalized                                    $ 10,535        $ 12,054

Non-cash investing and financing activities related to acquisitions:
  Fair value of assets acquired                                                         $ 14,624        $      -
  Issuance of common stock                                                              $ (1,907)       $      -
  Liabilities assumed or incurred                                                       $(12,530)       $      -

</TABLE>


            See notes to condensed consolidated financial statements.



<PAGE>

                      MEGO FINANCIAL CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2002
                                   (UNAUDITED)

1.     BASIS  OF  PRESENTATION

     The  accompanying  condensed  consolidated financial statements present the
results of operations, financial position and cash flows of Mego Financial Corp.
(the  "Company"  or  "LESR").

     The  accompanying condensed consolidated financial statements have not been
audited.  We  have  condensed  or  omitted  certain  information  and  footnote
disclosures  normally  included  in financial statements presented in accordance
with  accounting  principles generally accepted in the United States for interim
financial  information  and with the instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they  do  not include all of the information and
footnotes  required  by  accounting  principles generally accepted in the United
States  for  complete  financial  statements.

In  February  2002,  the  Company  changed its fiscal year end from August 31 to
December  31  and  filed  a  transition report on Form 10-KT for the four months
ended December 31, 2001 in accordance with applicable requirements. Accordingly,
the  financial  information  for  the three and nine months ending September 30,
2002  is  based  on the Company's new fiscal year. The information presented for
the  three and nine months ended August 31, 2001 is based on the Company's prior
fiscal  year  and  is  considered  to  be  comparable  to the September 30, 2002
information  for  purposes  of  this  quarterly  report.

The  financial  information  furnished  herein  reflects  adjustments  of normal
recurring  entries that are necessary for a fair presentation of the results for
the  interim periods.  The condensed consolidated financial statements should be
read  in  conjunction  with  the  consolidated financial statements and notes to
those  financial  statements included in our transition report on Form 10-KT for
the  transition  period  September 1, 2001 to December 31, 2001.  The results of
operations  for  the  nine  months  ended September 30, 2002 are not necessarily
indicative  of the results to be expected for the year ending December 31, 2002.

     ORGANIZATION

     Mego  Financial Corporation (dba Leisure Industries Corporation of America)
(LESR)  is a New York corporation formed in 1954 with headquarters in Las Vegas,
Nevada.  In  1969,  it's wholly owned subsidiary, Leisure Homes Corporation (fka
Preferred  Equities  Corporation  (LHC) made its initial entry into the vacation
interval  ownership business and land sales. Today LESR is comprised of business
units  strategically  aligned  to  provide  a  turnkey vacation solution for the
travel  and leisure markets. LESR executes its business activities through three
primary  subsidiaries:  Leisure  Homes  Corporation  (LHC),  Leisure  Services
Corporation  (LSC)  Leisure  Resorts  Corporation  (LRC).  Leisure  Services
Corporation  and Leisure Resorts Corporation are new corporations that commenced
operations  in  this  fiscal  year.

<PAGE>


Leisure  Industries had a management change of control on January 17, 2002.  The
Company,  under  new  management,  adopted a new business plan and has been in a
rigorous  turnaround  process since that time.  New management is leveraging the
core  businesses  and  customer base to reposition and expand the Company into a
fully  integrated,  broad-based  travel  and  leisure  company.  The  Company is
shifting  its  marketing efforts toward a higher-end, more profitable travel and
leisure  consumer  market  and  is also creating additional revenue sources that
incorporate  travel-associated,  transaction-based  revenue  streams.

These  fundamental  changes in the overall structure and direction have resulted
in  the  incurrence  of non-recurring general and administrative costs resulting
primarily from the turnaround effort. These costs are approximately $750,000 and
$1.1  million for the three and nine months ended September 30, 2002. Turnaround
expenses  include  a  system-wide  change  of  the  Company's  signage and other
logo-related  hard  goods,  financial  restructuring,  changes in the healthcare
benefits  package,  relocation  of  the  Company's  operations  offices  and the
creation of two new subsidiaries that expanded the base business of the Company.

LESR's  primary business has been conducted through its wholly owned subsidiary,
LHC.  LHC  is  engaged  in  the  development,  operation, sales and marketing of
vacation  interval  resorts.  LHC also develops and sells parcels of raw land to
consumers  primarily  as  sites  for  second home or  vacation  homes.

Consumer financing is provided by LHC to both land and vacation interval buyers.
The  Company  has  an  owner  base  of  approximately  75,000 owners.

LHC  operated  its vacation ownership resorts under the "Ramada Vacation Suites"
name  through  a licensing agreement with Cendant prior to May 2002.  Subsequent
to  the  change in ownership, the Company terminated the licensing agreement and
launched  the  re-branding  of  its  properties  under the Leisure Resorts name.
These  properties are sold as vacation intervals by LHC, but managed pursuant to
management agreements with Home Owner Associations (HOA) by the Company's wholly
owned  subsidiary,  LRC.

LRC  will  also  manage the two golf courses of Cimarron Golf Club, located near
Palm  Springs,  California,  that were acquired during the period. Management of
these  facilities  is  expected  to commence in the fourth quarter of 2002. (See
Note  6).

LSC  is  responsible  for  the  company's  customer  care initiatives, including
central reservation services for the Company's vacation interval owners. Central
reservations also makes reservations for interval owners from non-Leisure Resort
properties  that  are  eligible  to  stay  at the Company's resorts by virtue of
exchanges  through Resort Condominiums International (RCI). Central reservations
also  reserves  rooms  for  transient guests. Accountability for delivery of the
Company's  travel  products  such  as discounted airfares, car rentals, cruises,
excursions,  etc.  is  also  included  in  the  operations  of  this subsidiary.

LSC  developed  a  retail brand during the period, Leisure Vacation Store (LVS).
The  Leisure  Vacation  Store, www.leisurevacationstore.com, is a portal through
                               ----------------------------

<PAGE>


which travel products are marketed. The portal also generates leads for LHC. The
site  was  launched  during  the  period.  The  retail  extension of the Leisure
Vacation Store was  initiated  during the period with the signing of a lease for
retail  space  in  a  premier  regional shopping mall (Fashion Show Mall) in Las
Vegas.  Subsequent  to  the  close  of the period, the Company opened the store,
which  offers  full service travel products and services, concierge services and
previews  of  our  vacation  interval  offerings to potential buyers of vacation
intervals.

     LSC  began,  during the prior period and extended its operations during the
current  period,  to  manage  two  travel  consolidators, Adventure Bound Travel
located  in  Tempe,  AZ  and  Cheap  Seats  Travel, Inc. located in Los Angeles,
California.  The  Company  has  an  option  to  purchase either or both of these
companies.  As  a result of the management agreements, the Company has reflected
only  the  management fees as revenues during the period but has incurred all of
the start-up cost related to establishing a complete travel operation during the
prior  period  and  the  current  period.

     The  Company's  call  center operations are also executed by LSC.  The call
center,  the  Leisure Vacation Stores and travel services all generate leads for
Leisure  Homes  Corporation in addition to their other services.  Therefore, LHC
participates  in  bearing  a  portion  of  the  cost  of  these  activities.

     PRINCIPLES  OF  CONSOLIDATION

     The condensed consolidated financial statements include the accounts of the
Company  and  all of its wholly owned subsidiaries, as required by Section 3A-03
of  Regulation S-X. All significant inter-company balances and transactions have
been  eliminated.

     USE  OF  ESTIMATES

     The  preparation  of  condensed  consolidated  financial  statements  in
conformity  with  accounting  principles generally accepted in the United States
requires  management  to  make estimates and assumptions that affect the amounts
reported  in  the  condensed  consolidated financial statements and accompanying
notes.  Actual  results  could  differ  from  those  estimates.

     EARNINGS  (LOSS)  PER  COMMON  SHARE

     Basic  earnings (loss) per common share are computed by dividing net income
(loss) available to common stockholders by the weighted average number of common
shares  outstanding during the period.  Diluted earnings (loss) per common share
is  computed  in  the  same  manner as basic earnings (loss) per share, but also
gives effect to all dilutive stock options and warrants using the treasury stock
method.

As  of  September 30, 2002, and August 31, 2001, options to purchase 510,150 and
48,570  shares  of  common  stock  respectively, at prices ranging from $4.00 to
$6.00  per  share


<PAGE>


were  outstanding.  As  of  September  30,  2002, warrants to purchase 1,746,020
shares  of  common  stock  at  prices ranging from $2.50 to $6.00 per share were
outstanding.  No warrants were outstanding at August 31, 2001. These options and
warrants  were  not  included  in  the computation of diluted earnings per share
because  they  would  be  anti-dilutive as a result of losses from operations or
application of the treasury stock method. The options, which expire beginning on
September  22,  2003, through September 22, 2008, and the warrants, which expire
beginning  on  April  20, 2003, through June 25, 2007 were still outstanding at
September  30,  2002.


     REVENUE  RECOGNITION

     LESR  recognizes  revenue  primarily  from  the sales of vacation ownership
interests  and  land  parcels,  interest  income, interest income from retained
interests  in  receivables sold, and management fees from operating and managing
vacation  ownership  properties through LRC.  The Company periodically sells its
consumer  receivables  while  generally retaining the servicing rights.  Revenue
from  sales  of  vacation  ownership  interests and land is recognized after the
requisite  rescission  period  has expired and at such time as the purchaser has
paid  at  least 10% of the sales price for sales of vacation ownership interests
and  20%  of  the  sales  price for land sales.  Land sales typically meet these
requirements  within  six  to  ten  months  of  closing,  and  sales of vacation
ownership  interests typically meet these requirements at the time of sale.  The
sales  price  is  recorded as revenue and the allocated cost related to such net
revenue of the vacation ownership interest or land parcel is recorded as expense
in the period that revenue is recognized.  When revenue related to land sales is
recognized,  the portion of the sales price attributable to uncompleted required
improvements,  if  any,  is  deferred.

     SALES  OF  NOTES  RECEIVABLE  AND  RELATED  RETAINED  INTEREST

     When  the Company sells notes receivable, it retains a residual interest in
the future cash flows from the portfolio sold and usually retains the associated
servicing  rights.  The  sales  are  generally  subject  to  limited  recourse
provisions  as  provided  in  the  respective notes receivable sales agreements.
Under  these  agreements,  the  Company  is  generally  obligated  to replace or
repurchase  notes  receivable  that  become  60  to  90  days  delinquent or are
otherwise  subject  to  replacement or repurchase in either cash or receivables.
Reserve  for  notes  receivable  sold  with  recourse  represents  the Company's
estimate  of the fair value of future credit losses to be incurred in connection
with the recourse provisions of the sales agreements, based on historical static
pool  loss  information  accumulated by the Company and is shown separately as a
liability  in  the  Company's  condensed  consolidated  balance  sheets.

Gain or loss on sale of the receivables depends in part on the previous carrying
amount  of  the  notes receivable sold, allocated between the notes sold and the
retained  interest  based  on their relative fair value at the date of transfer.
The  Company  generally  estimates fair value on the retained interests (both at
the  point of the related receivable sale and periodically thereafter), based on
the  present  value  of  future  expected  cash  flows  using  management's best
estimates  of  the key assumptions including default rates, rates of prepayment,
loss  severity  and  discount  rates  commensurate  with  the  risks  involved.

     The  Company's  retained  interests in receivables sold are carried at fair
value  as  either  derivatives  or  available-for-sale  investments.  Unrealized

<PAGE>


holding  gains  or losses on the retained interests in notes receivable sold are
included  in  earnings  for  those  transactions structured so that the Company,
through  its  retained  interest,  receives  fixed interest amounts and pays the
buyer variable amounts based on a floating interest rate index, as the resulting
financial  interest meets the definition of a derivative in accordance with SFAS
No.  133.  Unrealized  holding  gains,  or  losses,  on  retained  interests  in
receivables sold not meeting the definition of a derivative would be included in
stockholders'  equity,  net  of  income  taxes.  Declines  in fair value in such
retained  interests  below  amortized  cost  caused  by changes in the amount or
timing  of  cash  flows  to  be  received  are  reflected  in  earnings.

     RECLASSIFICATIONS

     Certain  prior  period  amounts  have  been  reclassified to conform to the
current  period  presentation.

2.     NEW  ACCOUNTING  STANDARDS

     The  Accounting  Standards  Executive  Committee  ("AcSEC") of the American
Institute  of  Certified Public Accountants ("AICPA") began a project to address
the  accounting  for  timeshare  transactions  in 1997. The proposed guidance is
currently  in  the  drafting  stage  of  the  promulgation process and no formal
exposure  draft  has  been  issued  to date; therefore, the Company is unable to
assess the possible impact of this proposed guidance. Currently, these rules are
not effective and there is no assurance they will become effective. In the event
they  are  adopted,  it  is  likely  that  a  final  pronouncement  on timeshare
transactions  will  not  be  effective  until  the  Company's fiscal year ending
December  31,  2005.

     In  June  2001,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standard  ("SFAS")  No.  141,  "Business
Combinations,"  and  SFAS No. 142, "Accounting for Goodwill and Other Intangible
Assets."  SFAS  No. 141 eliminated the use of the pooling-of-interests method of
accounting  for  business  combinations  initiated  after  June  30, 2001 and is
effective  for  any  business  combination  accounted for by the purchase method
completed  after  June  30,  2001.  Under the new rules, goodwill and intangible
assets  deemed  to have indefinite lives will no longer be amortized but will be
subject  to  annual  impairment tests in accordance with SFAS No. 142. Effective
for fiscal years beginning after December 15, 2001, other intangible assets will
continue to be amortized over their useful lives. The provisions of SFAS No. 141
and  No. 142 were adopted by the Company effective January 1, 2002. The adoption
of  SFAS No. 141 and No. 142 did not have an impact on the results of operations
or  financial  position  of  the  Company.

The  FASB  issued SFAS No. 143, "Accounting for Asset Retirement Obligations" in
August  2001.  This  statement  is  effective  for  fiscal years beginning after
December 15, 2003.  This new statement is not expected to have any impact on the
results  of  operations  or  financial  position  of  the  Company.

In  December  2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or  Disposal  of  Long-Lived  Assets" that is applicable to the Company's fiscal
2002  financial  statements.  The FASB's new rules on asset impairment supersede
SFAS  No.  121,  "Accounting  for  the  Impairment  of Long-Lived Assets and for

<PAGE>


Long-Lived  Assets to Be Disposed Of," and provide a single accounting model for
the disposition of long-lived assets.  In the first quarter of 2002, the Company
adopted  SFAS No. 144, which resulted in the financial statement presentation of
Central  Nevada Utilities Corporation ("CNUC"), a wholly owned subsidiary of the
Company  and  its  operating  results as discontinued operations.  (See Note 4).

In  April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4,  44,  and 62, Amendment of FASB Statement No. 13, and Technical Corrections."
For  most  companies,  SFAS  No.  145  will  require  gains  and  losses  on
extinguishments  of  debt  to  be  classified  as income or loss from continuing
operations  rather than as extraordinary items as previously required under SFAS
No.  4.  Extraordinary treatment will be required for certain extinguishments as
provided in Accounting Principles Board Opinion No. 30. SFAS No. 145 also amends
SFAS  No.  13 to require certain modifications to capital leases be treated as a
sale-leaseback  and  modifies  the  accounting  for sub-leases when the original
lessee  remains  a  secondary obligor (or guarantor).  SFAS No. 145 is effective
for  transactions  occurring  after  May 15, 2002, and is not expected to have a
material  impact  on  the  results  of  operations  or financial position of the
Company.

     FASB  Statement  No.  146,  "Accounting  for  Costs Associated with Exit or
Disposal  Activities,"  addresses  financial  accounting and reporting for costs
associated  with  exit or disposal activities and nullifies EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring)."  The
principal  difference  between  SFAS  No.146  and Issue 94-3 relates to SFAS No.
146's  requirements for recognition of a liability for a cost associated with an
exit  or  disposal  activity.  SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred.  Under  Issue  94-3, a liability for an exit cost as generally defined
in  Issue  94-3  was recognized at the date of an entity's commitment to an exit
plan.  A fundamental conclusion reached by the FASB in this Statement is that an
entity's  commitment  to  a  plan, by itself, does not create an obligation that
meets the definition of a liability.  Therefore, this SFAS No. 46 eliminates the
definition  and  requirements for recognition of exit costs in Issue 94-3.  This
SFAS  No.  46  also  establishes  that  fair  value is the objective for initial
measurement  of  the  liability.  The provisions of this statement are effective
for  exit or disposal activities that are initiated after December 31, 2002, and
is  not  expected  to  have  a  material  impact on the results of operations or
financial  position  of  the  Company.

3.     INTEREST  RATE  SWAPS

     In  August 2000, to manage its exposure to interest rate risk the Company's
prior  management  entered into an interest rate swap agreement, with a notional
amount  of  $25  million  that  expires  in  August  2005.  The  Company's prior
management  entered  into another similar interest rate swap agreement in August
2001 for a notional amount of $20 million that expires in August 2006. The swaps
effectively  convert  the  floating  interest  rate  on certain of the Company's
long-term debt obligations into fixed interest rates. At September 30, 2002, and
December 31, 2001, the fair value of the swap liabilities was approximately $5.0
million  and  $2.3 million, respectively. Changes in the fair value of the swaps
are  recorded  in  accumulated  other  comprehensive  loss.  (See  Note  7).

<PAGE>


     The  Company  accrued  interest expense of $1.4 million for the nine months
ended September 30, 2002 and $402,000 for the nine months ended August 31, 2001.
Of  the  accrued  amounts,  the  Company  paid  $686,000  and  $402,000  for the
respective  periods.  The  remaining  accrued  balances  are  shown  in  accrued
liabilities.

Management  has  determined  these  agreements  are  not  required  based on the
economic  climate and its future operations.  Management intends to seek ways to
terminate  or  reduce  the  obligations of these agreements in the future.  Such
termination  or  elimination  could  have  a  negative  effect  on the Company's
operating  results.

4.     DISCONTINUED  OPERATIONS

     On  October 2, 2001, Utilities Inc. agreed to acquire substantially all the
assets  of  CNUC for $5.5 million ("Asset Sale"). The transaction was subject to
the  approval  of the Nevada Public Utilities Commission ("PUC"), which gave its
approval  on April 9, 2002. On April 11, 2002, the Company consummated the sale.
As  a  result, the Company has recognized a gain on the sale of CNUC's assets of
approximately  $542,000 in the accompanying statement of operations for the nine
months  ended  September 30,2002. The net proceeds of $5.2 million from the sale
were  used  to  repay  outstanding  principal and interest on subordinated debt,
accrued  interest  and  the  at-risk  payment  thereon.  At  December  31, 2001,
significant  assets  included  in  discontinued  operations consisted of cash of
approximately  $429,000, restricted cash of approximately $927,000, and property
and  equipment, net of accumulated depreciation, of approximately $12.0 million.
At  December  31,  2001  significant  liabilities  included  in liabilities from
discontinued  operations  consisted of accrued liabilities of approximately $9.4
million  and deferred revenue of approximately $185,000. Discontinued operations
for  the  nine  months  ended  September  30,  2002 and August 31, 2001 included
revenues  of  approximately  $453,000  and  $1.3  million,  respectively.

5.     VACATION  OWNERSHIP  INVENTORY

Vacation  ownership  inventory  consists  of  the  following  (in  thousands)

<TABLE>
<CAPTION>
<S>                                             <C>                  <C>
                                                September 30,     December 31,
                                                    2002              2001
                                                -------------     ------------
Vacation ownership interest                           $17,929          $13,771
Vacation ownership interests under development          4,541            4,094
                                                -------------     ------------
                                                      $22,470          $17,865
                                                =============     ============
</TABLE>

6.     ACQUISITIONS

     The  Company  accounts  for  its  acquisitions using the purchase method as
required by SFAS No. 141.  Accordingly, the amounts assigned to the identifiable
assets and liabilities acquired in connection with the acquisitions are based on
estimated  fair  values  as  of  the date of the acquisition, with the remainder


<PAGE>


recorded  as  goodwill.  The  fair  values  were  determined  by  the  Company's
management,  generally  based upon information supplied by the management of the
acquired  entities  and  valuations  prepared  by independent appraisal experts.

On August 15, 2002, the Company acquired all of the outstanding capital stock of
Atlantic  Development  Corporation  ("AD").  The  principal asset of AD is 2,019
acres  of land in northern Arizona. The Company plans to develop and market this
land  as  second  home  and  vacation  home  sites.  The  Company is required to
construct  approximately  50  miles of basic roadway as part of the acquisition.
Construction  of  the  infrastructure is underway and the sale of the parcels in
one-acre  increments  is expected to begin 1st quarter 2003. Additionally, under
the  terms  of the purchase agreement, the Company has an understanding with the
owner  to acquire an additional 20,000 acres of land adjacent to these lots. The
aggregate  purchase  price  was  $1.7  million,  including $247,000 of cash, the
issuance  of  540,416  shares  of the Company's common stock valued at $2.47 per
share  ($1.3  million),  which  was  the average quoted market price immediately
before  and  after  the  acquisition,  and  acquisition  costs  of approximately
$136,000. Under the terms of the purchase agreement, the Company may be required
to  issue  an additional 558,735 shares of common stock to the sellers if shares
of  the  Company's  common  stock  are  not  traded  at  $6.00  or  more for ten
consecutive  days  within  24  months  after  the  purchase.

On  September  10,  2002, the Company acquired all of the outstanding membership
interests  in Cimarron Golf Club, LLC ("CGC"). CGC includes two membership based
courses  and  a  26,000  square  foot  clubhouse.  The golf course is part of an
amenities  package  offered  to purchasers of vacation intervals at the adjacent
Cimarron  Resort.  The  aggregate purchase price of $12.4 million consisted of a
$920,000  note,  the  incurrence of acquisition costs of approximately $976,000,
and  the  assumption  of  debt  of approximately $9.9 million and liabilities of
approximately  $620,000.

The  results of operations of each of the above described acquisitions have been
included  in  the condensed consolidated results of operations and statements of
cash flows of the Company since the date of acquisition. The following pro forma
financial  information  presents  the  results  of  operations of the Company as
though  the  acquisitions  had  been  made  as  of  December  1, 2001. Pro forma
adjustments  have  been  made  to  give  effect  to  interest expense related to
acquisition  debt, the related tax effects and the effect upon basic and diluted
earnings  per  share.


(In  thousands)
<TABLE>
<CAPTION>

<BTB>
<S>                                      <C>            <C>           <C>           <C>

                                              Three Months Ended          Nine Months Ended
                                         -------------------------   -------------------------
                                         September 30,  August 31,   September 30,  August 31,
                                             2002          2001           2002        2001
                                         -------------  ----------   -------------  ----------
Total revenues                                 15,881       27,678          59,072     82,048
Net (loss) income applicable to common
  stock                                        (9,601)       1,074         (15,922)      (288)
Net  (loss)  income  per  common  share:
   Basic                                        (1.52)        0.31           (2.96)     (0.08)
   Diluted                                      (1.52)        0.31           (2.96)     (0.08)

</TABLE>

     The pro forma results in the preceding table are not necessarily indicative
of  what the actual condensed consolidated results of operations might have been
if the acquisitions had been effective at the beginning of the periods presented
or  the results which may be achieved in the future.  These pro forma results do
not  include  increased  revenue  from  sales of vacation ownership or land as a
result  of  the Cimarron Resort purchase of unsold inventory or the Arizona land
included  in  the  purchase  of  Atlantic  Development.

<PAGE>


On  August  15,  2002, the Company acquired all of the assets of FareQuest, Inc.
and  15,975  warrants  to purchase the common stock of ARINC ("ARINC Warrants").
FareQuest  is  an  application  service provider that is designed to help travel
agents  and their clients to search for, compare, book, and report on web fares.
It  is  available  to corporate and leisure travelers, but only through a client
relationship  with  a  travel agent.  This acquisition is expected to complement
the Company's core business and allows the Company to expand the travel services
it  offers.  Immediately  after  the  acquisition,  the Company formed FareQuest
Acquisition  Corporation,  a  wholly  owned  subsidiary  of  the  Company  (the
"Corporation")  and  conveyed  all  assets,  contracts  and  other  rights,  and
properties  previously held by FareQuest, Inc. to the Corporation. The aggregate
purchase price of $305,001 was paid through the issuance of 41,667 shares of the
Company's  common  stock  at  $2.52  per  share ($105,001), which was the quoted
market price on the acquisition date, and the issuance of a warrant to acquire a
twenty  percent  interest,  adjustable to seventeen and fifteen percent based on
certain  conditions as defined in the purchase agreement, in the Corporation for
an  exercise  price of $10.  The warrant expires on April 15, 2012.  The Company
has  the  option  to repurchase the warrant at any point during the twenty-four
months following the sixth month of the acquisition date at its then fair market
value.  The  Company may also be required to repurchase the warrant for $200,000
payable  in  the  Company's  common stock or by surrendering the ARINC warrants.

On  September  10,  2002, the Company completed the acquisition of the remaining
development  rights  and  256 developed vacation ownership intervals at Cimarron
Resort.  As a result of this transaction, the Company has increased its vacation
ownership  inventory  held  for  sale  by  $4.6  million.  Cimarron Resort is an
upscale  vacation  interval  resort  located near Palm Springs, California.  The
property will be marketed as Cimarron Golf Resort, A Leisure Industries Company,
and  is  approved  for  242  villas,  forty  which are built, representing 2,080
vacation  ownership intervals.  The Company intends to develop the remaining 202
units,  with  construction  of forty new villas expected to commence in November
2002.  The  aggregate  purchase price of $4.6 million consisted of approximately
$383,000  in  cash,  the  assumption  or incurrence of $3.7 million in debt, the
assumption   or  incurrence  of  liabilities  of  approximately  $385,000,  and
acquisition  costs  of  approximately  $427,000.

7.     COMPREHENSIVE  INCOME

Total  comprehensive  loss  was  approximately $892,000 and $1.8 million for the
three  and  nine  months ended September 30, 2002.  Total comprehensive loss was
approximately  $687,000  and $722,000 for the three and nine months ended August
31,  2001.  In  the respective periods for 2002 and 2001, the difference between
net  income  (loss)  and total comprehensive income (loss) was due to unrealized
losses  on  interest  rate  swaps.  (See  Note  3,  Interest  Rate  Swaps)

<PAGE>


8.     COMMITMENTS  AND  CONTINGENCIES

     In  the  ordinary  course  of  its  business, the Company from time to time
becomes  subject to claims or proceedings relating to the purchase, subdivision,
sale  and/or  financing  of  real  estate.  Additionally, from time to time, the
Company  becomes  involved  in  disputes with existing and former employees. The
Company  believes  that  substantially  all  of  the  claims and proceedings are
incidental  to  its  business.

In  addition  to  its  other  ordinary course litigation, on February 9, 2000, a
class  action complaint was filed in Nevada District Court, County of Clark, No.
A 414827,  by  Robert  and  Jacqueline Henry, husband and wife, and Kenneth and
Janet  Shosted  individually  and  on  behalf  of  all others similarly situated
against  LHC  and  certain  other  defendants.

The  complaint asserts six claims for relief against defendants: breach
of  deed  restrictions,  two  claims  for breach of contract, unjust enrichment,
consumer fraud in violation of NRS 41.600 and violation of NRS 119.220, with all
claims  arising  out of the alleged failure to provide water and sewer utilities
to purchasers of land in the subdivisions commonly known as Calvada Valley North
and  Calvada  Meadows  located  in  Nye  County,  Nevada.

On  September  5,  2001, the Court refused to certify a class for the claims of:
breach of contract, unjust enrichment, consumer fraud in violation of NRS 41.600
and  violation of NRS 119.220. Accordingly, the defendants are no longer subject
to  class  claims for monetary damages. The defendants' only potential liability
to the certified class is for the construction of water and sewer facilities. In
July 2002, the defendants filed a motion for Summary Judgment on which the court
has  not yet ruled. The case is scheduled for a jury trial on February 19, 2003.
The  Company  does  not believe that any likely outcome of this case will have a
materially  adverse  effect  on  the Company's financial condition or results of
operations.
<PAGE>


On  March  22,  1999,  an  action  was filed in Nevada District Court, County of
Clark,  No.  A  400918,  by  Beatrice Marie Salvati, Gregory Salvati, Lisa Marie
Mannon  and  Jewelene  Nelson, as Special Administratrix of the Estate of Ernest
Salvati,  Jr.  against  LHC and the Company. The plaintiffs' complaint asked for
damages  based  on  the death of Ernest Salvati, Jr. while he was a guest at the
Las Vegas resort managed by LHC. Mr. Salvati was walking to his room on a public
street outside of the resort when he was shot and killed by an unknown assailant
who  was  stealing his wife's purse. The plaintiffs' are alleging negligence and
wrongful  death  against  LHC  and the Company and are seeking damages including
pain  and  suffering.  The defendants' have filed a motion for Summary Judgment.
The  plaintiffs'  have  filed  a  motion for a jury trial. The case is currently
scheduled for a non-jury trial on January 21, 2003. The Company does not believe
that  any  likely  outcome of this case will have a materially adverse effect on
the  Company's  financial  condition  or  results  of  operations.

During  the  period  the  Company  was  threatened with litigation by the former
President  of the Company for non-payment of the severance agreement between the
parties.  Subsequent to the end of the period, the Company suspended all related
severance  payments  and notified the former President that the Company may have
claims  that exceed the amount due pursuant to the terms of that agreement.  The
Company  has  been unable to establish the total amount of the potential claims;
therefore,  it  will  continue  to  cause all payments to be suspended until the
amount  of the potential claims can be established.  Such decision of Management
may  result  in  potential  litigation  with  the  Company's  former  President.

     At  various  times  in  the general course of business, the Company and LHC
have  each  been  named  in  other  lawsuits.  The  Company believes that it has
meritorious defenses to these lawsuits and that resolution of these matters will
not  have  a  material  adverse  effect on its financial condition or results of
operations.

     In  July  2002, the Company entered into an agreement to lease office space
at 7700 Irvine Center Drive, Irvine, California for a period of seven years. The
premises  will  be used as a sales office. The lease provides for a monthly base
rent of $18,664. It is anticipated that occupancy will occur, and the lease will
commence,  in  the  fourth  quarter  of  2002.

     In  accordance  with the Company's new sales strategy, notices of intent to
terminate  leases  at the following off property consumer ("OPC") locations were
given  during, or subsequent to, the reporting period. All locations will not be
closed  until the 4th  quarter 2002.

                        OPC LOCATION                   $RENT/QTR
                  ----------------------------------  ------------
                  OPC - 42nd Street                     60,000
                  OPC - Barbary Coast Hotel & Casino   165,000
                  OPC - Grand Ave.                     180,000
                  OPC - Sahara Hotel & Casino          150,000
                  OPC - Showcase Mall                   75,415

<PAGE>


9.     RESTRUCTURING  COSTS  AND  OTHER  CHARGES

     In  January  2002,  the  Company's  Board  of Directors approved a business
restructuring  to  be  implemented  by  management.  Among  other  things,  this
restructuring  included:  the  reorganization of senior management including the
elimination  or  termination  of  10  positions;  relocation of corporate office
facilities  from  1500  E.  Tropicana  Avenue  and  4310  Paradise  Road to more
efficient  office  facilities;  discontinuance  of  the  license  agreement with
Cendant  Corporation  whereby  the  Company licensed the use of the name "Ramada
Vacation  Suites"  in its vacation ownership and resort operations; and approval
of  change in the name of the resort facilities from "Ramada Vacation Suites" to
"Leisure  Resorts."

During  the  quarter  ended March 31, 2002, the Company recorded a non-recurring
charge  of  approximately  $2.5 million.  Included in this total were: severance
benefits  associated with former senior management and officers of approximately
$1.9  million;  future  rental expense to be incurred on vacated office space of
$311,000;  and  non-cash  charges associated with the termination of the Cendant
license  agreement  for  approximately  $308,000.  As of September 30, 2002, the
Company has paid in cash approximately $1.4 million for charges related to these
activities.  The  Company  incurred  in the prior period as well as this period,
substantial  non-recurring  costs  in  eliminating  the Ramada signage and brand
identification  at  all  of  its resorts and within its operations.  The Company
continued  through  this  period  and  expects  to continue to incur substantial
charges  in  re-branding the properties and the various service products.  These
charges  include  but  are  not  limited  to signage, sales materials, corporate
identifiers  and  changes  in  state  registrations  and other public documents.
Restructuring  charges,  in certain cases, are based on estimates and subject to
change;  however,  the Company does not believe revisions to the above estimates
will  be  material.

Management  also  discontinued  the  OPC  marketing operation during the period.
During  the  nine  month  period ended September 30, 2002, the Company had a net
expense  of  $4.6  million  for these activities. The Company will incur charges
related  to  the  OPC  operations  through  the  fourth  quarter  of  2002.

The  migration  to  a new financial system was completed in August.  This system
migration  addressed  the  general  ledger,  accounts  payable, cash management,
purchasing,  inventory,  distribution  and fixed assets.  These software modules
are  fully  integrated  and  provide  functionality that enables the creation of
integrated  financial  reporting  without  duplicate  data  entry  or  manual
manipulation  of  the data.  It also provides the ability to perform operational
and  cost  analysis  at various levels such as company, department, product line
and project with simple query tools provided in the financial suite.  The direct
cost  of  the  migration  was  $202,000 in software and implementation services.
Additionally,  there  has been an increase in operational costs as processes and
procedures  have been modified to capture and leverage the data available in the
financial  suite.  This increase in the operational cost will be short lived and
it  is  anticipated  that  the operational costs will begin to decrease in 2003.

In  addition  to  the  financial  suite  migration,  the  move to outsource loan
servicing  was  completed  subsequent  to  the  period to Concord Servicing. The
outsourcing  of  these  services provides for more accurate and timely access to
loan  data  combined with a decrease in operational labor costs. There were very
few costs incurred in this migration, and all of the labor costs were covered by
existing  personnel.  Management projects that outsourcing this non-core service
will  result  in  a  more  efficient  and  less  costly  operation.

<PAGE>

10.     NOTES  PAYABLE

     On  July  1,  2002, the Company issued $4 million in convertible debentures
("Ashford  Debentures")  to Ashford Capital Partners and affiliates ("Ashford").
The  Ashford  Debentures  bear  interest at a rate of 7.5% per annum and require
quarterly interest payments of $37,500 commencing on October 1, 2002 through its
maturity  on  June  30,  2006.  The  interest rate will be adjusted to 9.5% per
annum in the Event of a Default, as defined in the Ashford Debenture agreements.
The  Ashford  Debentures  allow Ashford to convert any or all of the outstanding
principal and interest into shares of the Company's common stock at a conversion
price  of  $5.00  per  share.  Converted principal and interest are deemed fully
paid.  Additionally,  in connection with the issuance of the Ashford Debentures,
Ashford  received  200,000 warrants that allow the holder to redeem each warrant
for  one  share  of  the Company's common stock at a purchase price of $4.00 per
share.  The  warrants  generally  expire  forty-eight  months  from  issuance.

     On  September  5,  2002,  the  Company  issued  a  $250,000 promissory note
("Crestview I Note") to Crestview Capital Fund I ("Crestview I").  The Crestview
I  Note  bears  interest at a rate of 12% per annum.  The principal and interest
are  payable thirty days from the date of issuance.  The Company and Crestview I
intend,  at  the  option  of Crestview I, to replace the Crestview I Note with a
convertible  secured  promissory  note  ("Crestview  I  Note Transfer").  If the
Crestview I Note Transfer does not occur prior to the maturity date, the Company
will  issue  50,000 warrants to Crestview I.  Each warrant allows Crestview I to
purchase  one share of the Company's common stock at a strike price of $2.50 and
is  callable  at  $7.00.  Additionally,  in  connection with the issuance of the
Crestview I Note, Crestview I received 12,500 warrants ("Crestview I Warrants").
The  warrants  entitle  the  holder  to redeem each warrant for one share of the
Company's  common stock at a purchase price of $2.50 per share.  The Crestview I
Warrants  expire  on  September  10,  2005.

     On  September  5,  2002,  the  Company  issued  a  $250,000 promissory note
("Crestview  II  Note")  to  Crestview  Capital  Fund  II ("Crestview II").  The
principal  and  interest  of  $15,000  are  payable thirty days from the date of
issuance.  If  the outstanding principal and interest are unpaid at the maturity
date,  the  Company  is  required to pay $100,000 in penalties to Crestview II.
The  Company  and Crestview II intend, at the option of Crestview II, to replace
the  Crestview II Note with a convertible secured promissory note ("Crestview II
Note  Transfer").  If the Crestview II Note Transfer does not occur prior to the
maturity  date,  the  Company  will issue 50,000 warrants to Crestview II.  Each
warrant  allows Crestview II to purchase one share of the Company's common stock
at a strike price of $2.50 and is callable when the stock price of the Company's
common  stock  trades at $7.00 or higher for five consecutive trading days.  The
Crestview  II  Note is secured by certain assets of the Company, as described in
the  Crestview II Note agreement.  Additionally, in connection with the issuance
of  the  Crestview II Note, Crestview II received 12,500 warrants ("Crestview II
Warrants")  allowing  it  to  redeem each warrant for one share of the Company's
common  stock at a purchase price of $2.50 per share.  The Crestview II Warrants
expire  on  September  10,  2005.

     On September 12, 2002, the Company issued to Charles K. Stewart ("Stewart")
a  $1.0 million promissory note ("Stewart Note").  The Stewart Note provides for
<PAGE>


interest  at  7.5  percent per annum. The outstanding principal and interest are
due  thirty  days  from the date of issuance. The Company and Stewart intend, at
the  option  of  Stewart, to replace the Stewart Note with a convertible secured
promissory  note  ("Stewart  Note  Transfer").  The  Stewart  Note is secured by
certain  assets  of  the  Company,  as  described in the Stewart Note agreement.
Additionally,  in  connection  with  the  issuance  of the Stewart Note, Stewart
received  200,000  warrants  ("Stewart  Warrants")  allowing  it  to redeem each
warrant for one share of the Company's common stock at a purchase price of $2.50
per share. The Stewart Warrants expire on September 11, 2007. Charles K. Stewart
is  a shareholder of the Company. Subsequent to the period this note was reduced
by  $500,000.

     On  September  12,  2002,  the  Company  issued  to Castle Creek Technology
Partners  ("Castle")  a $1.0 million promissory note ("Castle Note"). The Castle
Note  bears  interest  at  a  rate  of  7.5  percent  per annum. The outstanding
principal  and  interest  are  due thirty days from the date of issuance. In the
Event  of a Default, as defined in the Castle Note agreement, and which includes
the  failure to pay the outstanding principal and interest by the maturity date,
the interest rate will retroactively increase to 15%. The Castle Note is secured
by  certain  assets and revenues of the Company, as described in the Castle Note
agreement.

     On  September  27,  2002,  the  Company  issued to Troon and Co ("Troon") a
secured  promissory  note  in the amount of $750,000 ("Troon Note I"). The Troon
Note  I  bears  interest  at  a rate of 7.5 percent per annum. The principal and
interest  are  payable  on November 15, 2002. Subsequent to the period this note
was  increased  by  $1,250,000.  In  the  event the outstanding principal and
interest  are  not paid by December 15, 2002, the interest rate will increase to
12.5%.  The  Troon  Note  I is secured by certain receivables of the Company, as
described  in  the  Troon Note I agreement. Additionally, in connection with the
issuance  of  the  Troon  Note  I,  Troon  was  granted 200,000 warrants ("Troon
Warrants").  Each  warrant  is  redeemable for one share of the Company's common
stock  at  a  purchase  price  of  $2.50 per share. The Troon Warrants generally
expire  on September 27, 2007. Ross Mangano, a Trustee of Troon, is a Director
of  the  Company.

     On  June  4,  2002, Doerge Capital Collateralized Bridge Fund LP ("Doerge")
agreed  to  advance the Company up to $2 million to fund its working capital. In
return, the Company issued a secured promissory note to Doerge for an amount not
to  exceed  $2 million ("Doerge Note"). The Doerge Note was amended and restated
on August 16, 2002 to increase the borrowings under the Doerge Note to an amount
not  to  exceed  $3.5  million.  The  Doerge Note bears interest at a rate of 18
percent  per annum. The principal and accrued interest are due on the earlier of
the  Company's  receipt  of  amounts  in excess of $1 million from any financing
activities, as described in the Doerge Note agreement, or December 14, 2002. The
Doerge  Note is collateralized by certain assets of the Company, as described in
the  Doerge  Note agreement. At September 30, 2002, the Company had exceeded the
maximum allowable borrowings under the Doerge Note. Subsequent to the period the
Doerge  Note  was  amended  to reflect the increased borrowings and extended the
maturity date. The amendment is expected to occur in December 2002. At September
30,  2002,  the  outstanding  balance  on  the  Doerge  Note  was  approximately
$3,950,000.  David  Doerge  and  Doerge  collateralized  Bridge  Fund  LP  are
shareholders  of  the  Company.

     Additionally,  in  connection  with the issuance of the Doerge Note, Doerge
was granted 150,000 warrants ("Doerge Warrants"). Each warrant is redeemable for
one  share of the Company's common stock at a purchase price of $4.00 per share.
The Company may call the Doerge Warrants at certain purchase price, as described
in the Doerge Warrant agreement. The Doerge Warrants generally expire on June 4,
2012.
<PAGE>


11.     INCOME  TAXES

     Deferred  income  tax  assets  and  liabilities  are  determined based upon
differences  between  the financial statement and income tax bases of assets and
liabilities  using  enacted  tax  rates  in  effect  for  the  year in which the
differences  are expected to reverse.  The realization of deferred tax assets is
based  on historical tax positions and expectations about future taxable income.
Valuation  allowances  are  recorded  related  to  deferred  tax assets if their
realization  does  not meet the "more likely than not" criteria of SFAS No. 109,
"Accounting  for  Income  Taxes."


<TABLE>
<CAPTION>
<S>                                                   <C>       <C>    <C>       <C>
                                                           Three Months Ended          Nine Months Ended
                                                       -------------------------   -------------------------
                                                       September 30,  August 31,   September 30,  August 31,
                                                           2002          2001           2002        2001
                                                       -------------  ----------   -------------  ----------

(Loss) income before income taxes                        $   (8,372)   $  1,487        $(14,609)    $    869


Tax at the statutory federal rate                            (2,846)        506          (4,967)         295
(Decrease) Increase in income taxes resulting from:
    Changes in certain income tax liability reserves              -         (95)          5,126          224
    Changes in certain income tax asset reserves              2,293           -               -            -
                                                       -------------  ----------   -------------  ----------
Income tax (expense) benefit                             $     (553)       $411         $   159     $    519
                                                       =============  ==========   =============  ==========

</TABLE>

12.     RESTATEMENT  -  NINE  MONTHS  ENDED  AUGUST  31,  2001

     Certain  amounts  have  been  restated  for the three and nine months ended
August  31, 2001 in connection with adjustment of net gain on sale of two office
buildings  in  accordance  with  SFAS  No.  98,  "Accounting for Leases", Sale -
Leaseback  Transactions  Involving  Real  Estate.  To restate the three and nine
months  ended August 31, 2001, the Company recorded amortization of the deferred
gain  of $41,000 and $122,000, respectively, as a reduction of interest expense,
net  of  tax  of  $27,000 and $82,000, respectively. This resulted in net income
applicable  to  common stock of $1.9 million and $1.2 million, respectively, and
earnings  per  share of $0.55 and $0.34, respectively from net income applicable
to common stock of $1.9 million and $1.1 million and earnings per share of $0.55
and  $0.31,  respectively.

<PAGE>


13.     SUBSEQUENT  EVENTS

     Subsequent  to  the end of the period, on October 2002, the Company entered
into  an  agreement  to  lease retail space in the Fashion Show Mall, located at
3200  South  Las  Vegas Boulevard, Las Vegas, Nevada for a period of five years.
The  Company  commenced  occupancy on November 1, 2002. The lease provides for a
monthly  base  rent  of  $12,150 with an adjustment in the third year. The lease
also  provides for an annual percentage rent of 8% of the amount of annual gross
sales  generated  by  the  location.

     On  November  15, 2002, the Company completed the sale of approximately $30
million  in  notes  receivable  ("portfolio")  secured  by  land to Land Finance
Company, an affiliate of Textron Financial Corporation. Pursuant to the terms of
the  agreement,  the  Company will retain a residual interest in the future cash
flows  from  the portfolio sold and will retain the associated servicing rights.
The  Company  is obligated to replace or repurchase notes receivable that become
more  that  120  days  contractually  past  due  or  are  otherwise  subject  to
replacement  or  repurchase  in either cash or receivables up to a maximum of 15
percent of the portfolio. The Company is required to establish a 10 percent cash
reserve  to  secure  its repurchase and replacement agreement. Proceeds from the
sale  of  the  portfolio  will  be  used  to  retire  land  receivable  related
hypothecated  debt  with  Finova  and  Textron.  The  Company does not expect to
receive  any  cash  proceeds from the sale of the Portfolio. The Company has not
determined whether it will recognize either a gain or a loss on the transaction.
The  Company has structured the transaction to qualify for sale accounting under
SFAS  140.  The  funding  of the transaction is scheduled for November 27, 2002.
Upon  funding,  the Company will have additional land receivable lines available
to  it from Textron pursuant to its existing and new receivable lines. (See Note
14  Issues  Affecting  Liquidity).

     On  October  1,  2002,  the  Company  entered  into  a  Securities Purchase
Agreement  ("Agreement")  with  Vestcap  International  Management, Ltd. and its
affiliates ("VestCap"). Under the terms of the Agreement, Vestcap agreed to loan
the  Company  an amount not to exceed $1 million. Borrowings under the Agreement
would  be  evidenced by the issuance of convertible debentures by the Company to
Vestcap.

     On  October  2, 2002, the Company borrowed $700,000 under the Agreement and
issued  two  convertible  debentures  in  the  amount  of  $250,000 each and one
convertible debenture in the amount of $200,000 (collectively known hereafter as
"Debentures").  The  Debentures  bear  interest  at a rate of 10% per annum. The
principal  and  accrued interest are payable on September 30, 2003. In the Event
of  a Default, as defined in the Debentures, and which includes a failure to pay
the  outstanding  principal and interest by the maturity date, the interest rate
will  increase  to  25%  per  annum.

     Pursuant  to  the  terms  of  the Agreement and the Debentures, Vestcap may
convert  all  or  any portion of the Debentures, including any accrued interest,
into shares of the Company's common stock. The conversion may take place only on
the  conversion  date  and at the conversion price, as defined in the Debentures
and  Agreement.  Converted  principal  and  interest  are  deemed  fully  paid.

     Additionally,  the  Agreement  provides  for  the issuance of warrants that
allow  the  holder  to redeem each warrant for one share of the Company's common
stock.  The  Company  is  required  to issue warrants on the conversion date, as
defined in the Debentures and Agreement and on the day Vestcap has signified its
intent  to  exercise  the  Put.  The  warrant redemption price and the number of
warrants to be issued will be determined in a manner more fully described in the
Agreement.  The  issued  warrants  are  fully  transferable,  are  exercisable
immediately  upon issuance, and expire on October 31, 2007. The Company may call
the  warrants  provided  that  the  closing  price of the Company's common stock
exceeds  $7.00  per share for twenty  consecutive  trading  days.

     The  Agreement  requires  the Company to issue new debentures to Vestcap if
the  Company  issues  debentures  or other debt obligation to other parties with
terms  more  favorable  than  the  terms  in the Debentures. The Company is also
required to issue new warrants to Vestcap if it issues warrants to other parties
with  redemption  terms  more favorable than the redemption terms in the warrant
agreements.

     The  Company  also granted Vestcap a put option ("Put") whereby the Company
is  required  to  redeem  all  or a portion of the Debentures not converted into
shares of the Company's common stock The redemption price will be 115 percent of
the  sum  of  the  principal  balance  of  the Debentures to be redeemed and the
related  accrued  interest ("Put Price"). The Put Price will be payable in three
consecutive  monthly  installments  commencing on the date Vestcap has signified
its  intent  to  exercise the Put. The Company's obligation to pay the Put Price
will  be  evidenced  by the issuance of promissory notes to Vestcap. Interest on
the  promissory  notes  will  accrue at 10% per annum beginning on the day after
Vestcap  has  signified its intent to exercise the Put. Vestcap may exercise the
Put  only  at  certain  times  and under certain conditions, as described in the
Debentures  and  the  Agreement.


On  November  1,  2002, the Company issued a $500,000 secured promissory note to
Troon  ("Troon  Note  II"). The Troon Note II matures on November 8, 2002 and is
secured  by  certain  assets  of  the Company, as described in the Troon Note II
agreement.  In  the  event the Company does not pay the outstanding principal by
November 8, 2002, the Troon Note II will retroactively accrue interest at a rate
of  10 percent  per  annum.  The  Company  is  in  default  due  to  non-payment
of the outstanding  principal.

     On  November 5, 2002, the Company issued to Katherine Buchanan ("Buchanan")
a  $500,000  promissory  note  ("Buchanan  Note").  The Buchanan Note matures on
November  30,  2002 and bears interest at a rate of 10 percent per annum. In the
Event  of  a  Default,  as  defined  in  the  Buchanan Note agreement, and which
includes a failure to pay the outstanding principal and interest by the maturity
date,  the  interest  rate  will  increase  to  25  percent  per  annum.

     Subsequent  to  September  30,  2002,  the  Company  was  in  default  for
non-payment  of  the  following  notes: Crestview I, Crestview II, Stewart Note,
Troon  Note  and  the  Castle Note. The total amount of these borrowings is $2.0
million.  The  Company  expects  to  pay  the  outstanding principal and accrued
interest  by  December 15,  2002.


14.     ISSUES  AFFECTING  LIQUIDITY AND MANAGEMENT'S PLANS

     The  primary  issues  affecting the liquidity of the Company relates to the
(a)  amount and quality of its revenues; (b) the terms, conditions and status of
the  receivable  lines  of  credit outstanding to LHC; (c) the collection of its
notes  receivables;  and  (d)  its  ability to obtain equity or working capital.

During  the  period,  the  revenue  of  the  Company's  primary subsidiary, LHC,
declined  from  $27.3 million to $15.6 million for the corresponding period. The
decline  in  revenues  resulted in fewer receivables being available to generate
cash  flow  from  its  receivable  lines.  The  reduction  in  revenues  was due
primarily  to  changes  in  sales practices, underwriting criteria for financing
consumers  and  a  lack  of  consumer  acceptable  inventory  during the period.

LHC  is  required  to  comply with certain financial and non-financial covenants
under lines of credit agreements.  The lines of credit are provided for vacation
ownership  and  land  separately.  The  Company's  primary lender was previously
FINOVA.  At  the  end  of  2001,  the  Company was notified that FINOVA would be
phasing  out  of its commitments to the vacation ownership industry and that the
Company's  lines  would  be  extended  until  December  31,  2002.

During  the  prior  period,  LHC reached an agreement with FINOVA to discontinue
advances pursuant to both its vacation ownership and land credit facilities. LHC
also agreed to repay or restructure the outstanding amount of $52.0 million. The
Company  intends  to  sell  approximately  $20.0 million of its notes receivable
pursuant  to  a  note purchase agreement entered into on November 15, 2002, with
another  of the Company's lenders, Textron (see Subsequent Events) to reduce the
outstanding  amount  that  will  be  due  to  FINOVA  on  December  31,  2002.

The  inability of LHC to process its land receivables pursuant to the previously
existing  FINOVA  receivable  line caused the Company to fully utilize its other
land  receivables  facilities during the period.  As a result, the Company ended
the  period  without  adequate  land  receivable  lines  available  to  fund its
operations.  Pursuant  to  the  terms of the agreement with Textron entered into
<PAGE>


subsequent to the period, the Company will have additional land receivable lines
available.

During  the  period, another lender of the Company, Capital Source, declared LHC
and  the Company in default pursuant to a non-financial covenant relating to the
time  to submit plans and commence construction on a Las Vegas property that was
the  subject  of  an  acquisition  and  development  loan.  The Company paid the
defaulted  loan  subsequent  to  the  period.  However,  during a portion of the
period, the Company was not permitted to process notes receivable to this lender
pursuant  to  its  receivable  line.  The result of the lender's failure to fund
pursuant  to  the  receivable  line  during  this  period  directly affected the
Company's  liquidity.

During  the  period, the Company effected the implementation of a new integrated
financial  reporting  system and technology platform.  The transition to the new
system  resulted  in  the  Company  experiencing certain recording and reporting
problems that resulted in an increase in its accounts payable during the period.

In  periods  prior  to  the  change  of  management,  the  Company,  through its
subsidiary LHC, had generated sales for which it had not properly documented the
respective  sales.  The  result  of  these process failures caused the Company's
escrow  agent  to  hold  approximately  $2.8 million dollars due to the Company.
During  the period, the Company reorganized its finance division and implemented
new  process  procedures  that  caused  these funds to be released on a periodic
basis.  However,  most  of  the funds were released subsequent to the end of the
quarter.

Pursuant  to the Company's various lender agreements, the Company is required to
replace delinquent notes receivables with either cash or replacement notes of an
equal  amount.  During  the nine months, the Company replaced an estimated $24.0
million  of  previously  sold  or  pledged  notes. The excessive amount of notes
receivable  that  was  required  to  be  replaced  due to a lack of underwriting
criteria,  sales  practices  and  verification  process  caused  the  Company to
experience  an  excessive  loss  of  liquidity.

     Due  to  the various aforementioned issues, the Company, during the period,
had  to  raise  additional  equity,  issue  new convertible debentures and incur
expenses  related  to  short  term  financing that increased the expenses of the
Company  and  limited  its  current  operations.

The  Company  at the close of the period had $9.6 mm of unencumbered receivables
that  could  not  be  applied  to  its  receivable  lines of credit due to title
problems created by the sales closing, title transfer and recording practices of
prior  management.  During the forthcoming 12 months, new Management believes it
will  be successful in obtaining financing from its existing receivable lines of
credit  to  improve its liquidity. It is noted that certain of these receivables
secures the repayment of the notes payable to Troon, Crestview, Castle Creek and
Stewart  (See  Note  9).

15.  STOCK OPTION PLAN

The  Company has two stock option plans, one adopted in 1993 and amended in 1997
(the  "1993  Option  Plan"),  and  one adopted on July 1, 2002 (the "2002 Option
Plan").  The 1993 Option Plan provides for the granting of up to 170,833 options
and  the  2002  Option  plan  provides  for  granting  up  to  500,000  options.

Both  the  1993 and 2002 Option Plans provide for the granting of both incentive
and  non-qualified  stock  options  to  key  personnel,  including  officers and
directors  of the company, at the discretion of the Compensation Committee. Each
plan  limits the exercise price of the options at no less than the quoted market
price of the common stock on the date of grant. The option term is determined by
the  Board  of  Directors or the Compensation Committee, provided that no option
may  be  exercisable  more  then 5 years after the date of its grant. Generally,
under  the  1993 and 2002 Option Plans options to employees vest over five years
at  20%  per  annum.


<PAGE>
ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS


CAUTIONARY  NOTICE  REGARDING  FORWARD-LOOKING  STATEMENTS

     The  following  Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations  contains  certain  forward-looking  statements and
information  relating to the Company that are based on the beliefs of management
as  well  as  assumptions  made  by  and  information  currently  available  to
management.  Such  forward-looking  statements  include, without limitation, the
Company's  expectations  and  estimates as to the Company's business operations,
including the introduction of new vacation ownership and land sales programs and
future  financial performance, including growth in revenues, net income and cash
flows.  In  addition,  included  herein  the  words  "anticipates,""believes,"
"estimates,"  "expects,"  "plans,"  "intends"  and  similar expressions, as they
relate  to  the  Company  or  its  management,  are intended to identify forward
looking  statements.  Such statements reflect the current views of the Company's
management  with  respect  to  future  events  and are subject to certain risks,
uncertainties  and  assumptions.

The  economic downturn in the tourism industry following the September 11, 2001,
terrorist attacks had an adverse impact on the operating results of the Company.
The  general  economic  downturn  has  had  a  direct  impact  on  the Company's
operations  in the marketplace, which has continued through the current quarter.
While  management  believes  this  event  will not have a material effect on the
operations  in the future, there can be no assurance that the travel and tourism
industry  will return to its pre-September 11 levels.  The Company has customers
who both fly and drive to the various resort locations.  At this time, there can
be  no  assurance  that  the  economic downturn, due to a decrease in travel and
anxiety  about  possible terrorist attacks, and the current economic uncertainty
within  the  travel  industry  will  not  extend  to  future  periods.

Management  has  been  engaged  in  acquiring  new  inventory  for  its vacation
ownership  and  land  sales  division;  a  change  of  its  sales  and marketing
operations;  financial  restructuring  of  its  consumer  finance portfolio; the
implementation  of  new financing and technology systems and significant changes
in its public reporting procedures.  All of these changes were undertaken during
the  first three quarters of 2002 and come to completion in the current quarter.
While  many  of these changes will not be reflected in the Company's operations
until future quarters, major expenses were incurred in the last nine months that
have  had  an  adverse  effect  on  the Company's financial results for the same
period.  While  management  believes  the  effect  of its changes will result in
improved  operations  in  the  coming  quarters,  there  can be no assurance the
operating  results  of  the  Company  will  improve.

     In  addition,  the  Company  specifically  advises readers that the factors
listed  under  the  caption "Liquidity and Capital Resources" could cause actual
results  to  differ  materially  from  those  expressed  in  any forward-looking
statement.  Should  one  or more of these risks or uncertainties materialize, or
should  underlying  assumptions  prove  incorrect,  actual  results  may  vary
materially  from  those  described herein as anticipated, believed, estimated or
expected.

The  following  discussion  and  analysis should be read in conjunction with the
Company's  Form  10-KT  for  the  transition  period  from September 1, 2001, to
December  31,  2001,  the  Form  10-Q for the quarterly periods ending March 31,
2002,  and  June 30, 2002, the other public filings of the Company including all
8-K's  and  S-3  filings  and  the  Condensed Consolidated Financial Statements,
including  the  notes  thereto,  contained  elsewhere  herein.


GENERAL  DISCUSSION

     LESR's  primary business is the development, operation, sales and marketing
of vacation interval resorts. LHC also develops and sells parcels of raw land to
consumers  primarily  as  sites  for  second  homes  or vacation homes. Consumer
financing  is  provided  to both land and vacation interval buyers, however, the
Company  does  not  offer  consumer  finance  to  unrelated  consumers.

The  Resorts  are  sold  as  vacation  intervals by LHC, but managed pursuant to
management agreements with Home Owner Associations (HOA) by the Company's wholly
owned  subsidiary, LRC. LRC will also manage the two golf courses, Cimarron Golf
Club,  located  near  Palm  Springs,  CA  that  were acquired during the period.
Management  of  these  facilities  is expected to commence in the fourth quarter
2002.  LRC  does  not  currently  but  may in the future offer resort management
services  to  unrelated parties. If such services are provided they will compete
with  numerous  hospitality  management  entities  some  of  whom  would be more
established  and  have  greater  resources  than  LRC.

LSC  is  responsible  for  the  company's  customer  care initiatives, including
central reservation services for the Company's vacation interval owners. Central
reservations also makes reservations for interval owners from non-Leisure Resort
properties  that  are  eligible  to  stay  at the Company's resorts by virtue of
exchanges through Resort Condominiums International (RCI).  Central reservations
also  reserves  rooms  for transient guests.  Accountability for delivery of the
Company's  travel  products  such  as discounted airfares, car rentals, cruises,
excursions,  etc.  is  also  included  in  the  operations  of  this subsidiary.

LSC  developed  a  retail brand during the period, Leisure Vacation Store (LVS).
The  Leisure  Vacation  Store, www.leisurevacationstore.com, is a portal through
which  travel products are marketed.  The portal also   generates leads for LHC.
The  site  was  launched  during the period. The retail extension of the Leisure
Vacation  Store  was initiated during the period with the signing of a lease for
retail  space  in  a  premier  regional shopping mall (Fashion Show Mall) in Las
Vegas.  Subsequent  to  the  close  of the period, the Company opened the store,
which  offers  full service travel products and services, concierge services and
previews  of  our  vacation  interval  offerings to potential buyers of vacation
intervals.


COMPETITION

     Vacation  Ownership  Industry
     -----------------------------

The  interval ownership industry has been one of the fastest growing segments in
the  travel and leisure space with an historical annual growth rate of 16%.   In
2001,  the market's growth rate dropped to 8% as a result of September 11th, but
still  maintained  positive  momentum  in  part  due  to the entrance of branded
developers  as  well  as  shifts  in  travel  behavior  and the evolution of the
product.

The  entrance  of branded interval developers such as Marriott, Disney and Hyatt
has  helped to sustain growth in the marketplace.  The addition of Ritz-Carlton,
Four  Seasons and other luxury hotel owners to the market has also increased the
acceptance  of  vacation  ownership to a more economically secure customer. Many
consumers  already  have  an  established  relationship  with these brands and a
comfort  level  with  known  brand  names  has  provided  a  level  of trust and
confidence  in  the vacation ownership product.  The entrance of these companies
has  helped  legitimize the industry and improve its reputation.  They have also
participated  in  the growth through the increase in market share by the brands.
In  addition  to  the internationally known brands, the industry has hundreds of
independent operators that compete with the Company.  Many of these have greater
resources,  better  products,  more locations and more efficient operations than
the  Company.

All  of  the  competitors  in  the  vacation ownership industry offer or provide
consumer  financing  to the consumer.  Some have larger financing facilities and
better  financing  agreements  than  does  the  Company.
<PAGE>
     Land  Sales
     -----------

Sales  of second home and vacation homes composed an $11.5 billion industry in
2001.  The  Company  has  been  selling  land for future development since 1969.
Historically,  the Company has sold property in Colorado and Nevada. The Company
normally  competes  with local real estate developers within the geographic area
of  its  sales.  During  the  past  two  years,  the  Company  depleted its land
inventory.

During  the  period,  management  acquired 2,019 one acre lots in Mohave County,
Arizona.  This  acquisition  will  provide  the  Company  with land inventory to
fulfill  its immediate future land sales objectives.  The Company has registered
an  initial  850  lots  in  Arizona  and  is  in the process of registering this
property  for  sale  in  other  states.

     The  Company  expects to continue to be in the land sales business directed
at  the  second  and  vacation home market.  It will face competition from local
developers,  national  auction  companies and individual owners who seek to sell
their  properties.  The  Company  does  not  know  of another travel and leisure
company  competing  in  this  market  area.

     Travel  Industry
     ----------------

One  year later, the travel industry is still feeling the effects from September
11th.  Many  people  who  were  hesitant to travel are even more so now.  And if
they  do,  they  are  staying  closer  to home.  These travelers who are tending
toward more regionally focused travel in drive-to destinations have affected the
industry  with  a  decrease  in  air  travel  purchase.

As  a  result  of  these  and other factors, many travel companies are reporting
lower  than  expected  earnings  in  both  the provider and distribution arenas.

The Company's travel operations were started in the second quarter of this year.
The Company plans to utilize the travel operations to reduce long term marketing
costs  for  its  vacation  ownership  sales,  to  provide travel services to its
clients  and to utilize travel and other leisure services as additional benefits
to  our  members.  In  these  areas, management expects to realize cost savings.

The  operations have been hindered by traditional costs related to starting up a
new business segment including, but not limited to, the recruitment and training
of  personnel;  the  establishment  of  an  infrastructure to provide up to date
technology  to  the  marketplace;  and  the  education  of other segments of the
Company.

Management  began  the  travel  operation  with management contracts for two air
consolidators as a basis for its business.  While the Company has entered into a
<PAGE>

Letter  of  Intent  (LOI)  to acquire these operations, it has not completed the
transaction  awaiting  final  due  diligence  and Board approval. The Company is
exploring  the  possibility  of  acquiring  one  or  both  of  these operations.

The Company competes with existing travel operations, airlines, hotels, Internet
travel  sites  such as Expedia, Travelocity and Orbitz; ticket distributors such
as Ticketmaster; and air consolidators and wholesalers such as Cheap Tickets and
Carlson  Travel.  Most  of  these  companies  have  resources  in  excess of the
Company's  and  compete  in  a  larger  marketplace.

ORGANIZATION

The  Company  was formed in 1954 as a New York corporation. Prior to January 17,
2002,  the  Company  had  operations  in  numerous subsidiaries with the primary
operation  conducted  through  a Nevada corporation established in 1969, Leisure
Homes  Corporation  (fka  Preferred  Equities Corporation). In January 2002, the
Company  effected  a  change of its Board of Directors and senior management and
the  operations  of  the  Company  were  restructured and reorganized during the
subsequent  period.

     The  Company  currently  operates  within  five  business  segments.  These
business  segments  are  Vacation  Ownership (timeshare) Resorts; Land Sales and
Development;  Consumer  Finance;  Resort  Management  and  Travel  and  Leisure
services.   The  Company's  Vacation  Ownership,  Land development and sales and
consumer  finance  operations are performed through its wholly owned subsidiary,
Leisure  Homes  Corporation ("LHC").  LHC develops and sells parcels of raw land
to  be  used  primarily as sites for second and/or vacation homes and originates
consumer financing to the purchasers of the vacation ownership and land parcels.
By  providing  financing  to  virtually  all  of  its  customers, LHC originates
consumer  receivables  that  it  hypothecates,  sells  and  services.

     Vacation  Ownership,  Land  Sales  and  Consumer  Finance
     ---------------------------------------------------------
     LHC  acquires, develops and markets vacation ownership interests in resorts
located  in popular high volume vacation destinations such as Steamboat Springs,
Colorado  (two  resort locations); Indian Shores and Orlando, Florida; Honolulu,
Hawaii;  Las  Vegas  and  Reno,  Nevada  and Brigantine, New Jersey (adjacent to
Atlantic  City, New Jersey).  During the past three months, the Company acquired
Cimarron  Golf  Resort  and  the Cimarron Golf Club in Palm Springs, California.
Prior  to  the  Company  completing the registration of Cimarron Golf Resort for
public  sale  as  a  Vacation Ownership property, the Company has entered into a
short  term  sales  and  marketing  contract with Raintree Resorts International
(Club  Regina)  to  sell up to 100 intervals per month in Mexico on a short term
basis.

     LHC  develops  and  sells  land  for  second  or  vacation homes.  LHC also
provides  financing  to  the  Company's  customers.

     Resort  Management
     ------------------

     Leisure  Resorts  Corporation  ("LRC"),  a  wholly  owned subsidiary of the
Company, manages each vacation ownership property and receives management income
in  connection  therewith.  LRC  will begin managing the Cimarron Golf Resort in
the  first  quarter  of 2003.  Until such time, the Cimarron Golf Resort will be
<PAGE>


managed  pursuant  to  a  contract  with  RCI  Management.

     Travel
     ------
     Leisure  Services  Corporation  ("LSC"),  a  wholly owned subsidiary of the
Company  provides  travel services to the leisure vacation ownership marketplace
and  customer  service  to  the  Company's  existing  owners.

The  Company has incorporated Leisure Industries Corporation of America, Inc. in
Delaware  and  proposes,  subject  to  stockholder  approval, to merge into that
company  and  thus  change  its  name  and  corporate  domicile from New York to
Delaware.  Management  intends  to file a proxy to accomplish this merger during
the  first  quarter  2003.

The  Company  has  1,611 units representing 82,201 vacation intervals, including
Cimarron  inventory,  which  was  acquired during the period.  At the end of the
period,  10,127  intervals  remained  unsold.


       ASSOCIATIONS       SUITES     INTERVALS     UNSOLD     UNSOLD %
      ------------------ --------- ------------- ----------- ----------
       GF TOWERS             93         4,743         334       7.04%
       GF VILLAS             94         4,794         339       7.07%
       GF TERRACES           50         2,550         313      12.27%
       GF SUITES            102         5,202         334       6.42%
       GF FOUNTAINS          48         2,448          71       2.90%
       GF WINNICK            12           612          16       2.61%
       GF TERRACES FOUR      68         3,468          67       1.93%
       GF PLAZA              22         1,122         201      17.91%
       LAS VEGAS SUB-TOTAL  489        24,939       1,675       6.72%
       BRIGANTINE INN        91         4,641         707      15.23%
       BRIGANTINE VILLAS     17           867          83       9.57%
          RENO                  95         4,845         624      12.88%
       HONOLULU              80         4,080         669      16.40%
       STEAMBOAT SUITES      60         3,060         814      26.60%
       STEAMBOAT HILLTOP     56         2,856       1,305      45.69%
       ORLANDO I            120         6,120         235       3.84%
       ORLANDO II            42         2,142       2,013      93.98%
       INDIAN SHORES         32         1,632          71       4.35%
          CIMARRON RESORT       40         2,080         256      12.31%
                         --------- ------------- ----------- ----------
       GRAND TOTAL        1,611        82,201       10,127      12.32%

<PAGE>

     Vacation ownership interests offered by Leisure Homes in its resorts (other
than  Hawaii)  generally consist of undivided fee interest in a particular unit.
The  vacation  owner  acquires  the  perpetual  right  to  weekly occupancy of a
residence  unit  each  year  that  is  represented  by  a  deed  of  trust.

     During  the  period,  the  Company's  vacation  ownership inventory did not
consist  of the quantity or the quality to allow it to compete in its respective
markets and achieve future revenue growth.  Management established the objective
of  acquiring  existing  inventory,  converting  existing  developments into new
inventory  and  renovating  old  inventory.

The  Company's  primary  focus  is  on  its  Las Vegas property.  Management has
established  an  objective to acquire existing developed property adjacent to or
in  proximity  to  its  existing  inventory.  During the first quarter 2002, the
Company  acquired  a  20  unit  apartment  complex  that  is being renovated and
converted  into  20  two  bedroom units (1,040 intervals).  The Company projects
these  units  will  be  available  for  sale  in  the  first  quarter  2003.

Management  established  the  objective  of  acquiring  existing  properties  in
Southern  California  (see Acquisitions); New Jersey; Branson, Missouri; Hawaii,
Texas  and  the  Caribbean.  During  the period the Company began to perform due
diligence  on  properties  in  each of these areas, however, the Company has not
reached  and  does  not  know  if  it  will reach any agreements on any of these
potential  opportunities. During the period, the Company completed due diligence
and  negotiations  on  a  property  in the Caribbean, deciding not to pursue the
proposed acquisition as well as discontinuing negotiations with Raintree Resorts
on  all  properties  owned  or  managed  by  it  except for Cimarron Golf Resort
purchased  by  the  Company  during  the  period (see acquisitions). The Company
incurred  a one-time cost of approximately $500,000 conducting the due diligence
on  these  properties  during  the nine month period. Management expects it will
continue  to  incur  additional  due  diligence charges, primarily consisting of
professional or consulting fees during the next two quarters as it completes its
review  of  potential  properties.

     Land  Sales
     -----------

     The  Company  was  engaged in the retail sale of undeveloped land in Nevada
and Colorado through its wholly owned subsidiary LHC.  Prior to the beginning of
the  period  approximately 80,000 acres of recreational and retirement home lots
were  sold  in  subdivisions  in  the  Pahrump  Valley, Nevada; Huerfano County,
Colorado;  and Park County, Colorado.  LHC has little land remaining for sale in
these  locations.  Existing  land  inventory  was  not  of the size, location or
developed  to  the  extent  to  permit  sales  that  could  comply  with the new
underwriting  standards established by management for future consumers of second
home  or  vacation  properties.

During the period, the Company purchased more than 2,000 acres in Mohave County,
Arizona  to  replace  the  depleted  land  inventory in Nevada and Colorado (see
Acquisitions)  and  installed  the  initial  roads  required for development and
sales.  Typically,  the  land is used by purchasers as sites for second homes or
vacation  homes.  Residential lots generally range in size from one-quarter acre
to  five  acres,  while  commercial  and  industrial  lots  have varied in size.
Residential  lots  range  in price from $17,000 to $39,000 per acre.  Commercial
<PAGE>


and  industrial  lots  range  in price from $45,000 to $94,000.  The Company has
registered  the  land  for sale in Arizona and is in the registration process in
Nevada  and  California.  Management  projects  sales will commence in the first
quarter  2003.

                                             UNSOLD         UNSOLD
                            TOTAL          INVENTORY      INVENTORY
LOCATION     (LOTS)       INVENTORY       AS OF 6/28/02  AS OF 9/30/02
--------------------    -------------    -------------- --------------
Pahrump  Valley,  NV       30,648             186             222
Huerfano  County,  CO         948              26              26
Park  County,  CO           4,173             121              94

     The  Company  is  required from time to time to cancel the sale of lots and
parcels  as a result of payment defaults or customer cancellations.  Events that
may  cause a rise in unsold inventory include foreclosures, a release of a trust
deed  by  the title company, outright purchase of additional land by the Company
or  cancelled  sales.  In such events, the Company places the returned inventory
into  its  unsold  category.

LHC provides financing for land sales requiring a 20% down payment. The terms of
loans  offered  to  land  purchasers  are  one,  five, and ten years, similar to
vacation  interval  credit  policies.  Interest  rates  are  fixed  based on the
current  financing  grids  for  site  products and vary between 13.5% and 15.5%.
Credit  approval  or denial is determined according to standardized underwriting
requirements.  The owner's rescission period is limited to 180 days or such time
as  may  be  required by each state.   The Company allows this period of time to
enable  purchasers  to travel from where they live or made their purchase to the
actual  site  of  the  land  purchase  to  inspect  the  land  they  are buying.

Management  is  improving  the  "quality"  of  the  sale  by  instituting  new
underwriting  criteria,  eliminating exchanges. An effective collections program
is  being  implemented  and  the  Company is eliminating the use of non-recourse
notes.   Past  practices  are  also  being  improved by allowing only solidified
deals  to  be  recorded  or  pledged  to  a  lender.

     During  the  period,  the Company  acquired  2,019  lots  of  raw  land  of
approximately  one  acre  each  in  Northern Arizona.  This acquisition was made
through  the issuance of 540,416 shares of the Company's common stock, priced at
$2.47  and a cash payment of $200,000.  The Company has reached an understanding
with  the  owners  of  adjacent property, potentially providing a source of land
inventory  for  future  years.  This  property  can  be acquired on an as needed
basis.  Management  initiated  the  steps required to register the land for sale
with  the  appropriate regulatory agencies in preparation for sale.  The Company
has  received  approval to sell the property from the State of Arizona and is in
the  process  of  registering  the  property  for  sale  in  other  states.
<PAGE>

     Financial  Services
     -------------------

     Leisure  Industries  Corporation supports the sales of its land parcels and
vacation  intervals  by  providing  financing services to purchasers through its
subsidiary,  Leisure  Homes  Corporation.

Notes secured by deeds of trust and mortgages generally evidence this financing.
These  notes  receivable  are  payable over a period up to twelve years and bear
interest at rates ranging from 12.5 percent to 15.5 percent.  Revenue from sales
of  vacation  ownership  interests  and  land  is recognized after the requisite
rescission  period  has  expired  and  at such time as the purchaser has paid at
least  10  percent  of  the  sales price for vacation ownership interests and 20
percent  of  the  sales price for land parcels.  Land sales typically meet these
requirements  within  three  to  ten  months  of  closing  and sales of vacation
ownership  interests typically meet these requirements at the time of sale.  The
sale  price  is  recorded  as revenue and the allocated cost related to such net
revenue  is  recorded as expense in the period that revenue is recognized.  When
revenue  related  to  land  sales  is recognized, the portion of the sales price
attributable  to  uncompleted  required  improvements,  if  any,  is  deferred.

Notes  receivable  with  payment  delinquencies  of  90  days  or more have been
considered  in determining the allowance for cancellations.  Cancellations occur
when  the  note  receivable  is  determined to be uncollectible, and the related
collateral,  if any, has been recovered or is in the process of being recovered.
Cancellation  of  a  note receivable in the quarter the related sales revenue is
recognized  is  accounted for as a reversal of the revenue with an adjustment to
gross  sales.  Cancellation  of  a note receivable subsequent to the quarter the
revenue  was  recognized  is  charged  to  the  allowance  for  cancellations.

The Company generally sells its notes receivable at par value.  When the Company
sells  notes  receivable,  it retains certain participation in the cash flows of
the notes receivable sold and generally retains the associated servicing rights.
The  sales  are  generally subject to limited recourse provisions as provided in
the  respective  notes receivable sales agreements.  Under these agreements, the
Company  is generally obligated to replace or repurchase accounts that become 60
to  90  days delinquent or are otherwise subject to replacement or repurchase in
either  cash  or  receivables.  Reserve  for notes receivable sold with recourse
represents  the  Company's  estimate of losses to be incurred in connection with
the  limited recourse provisions of the sales agreements and is shown separately
as  a  liability  in  the  Company's  Balance  Sheet.

     Gain on sale of receivables depends in part on the previous carrying amount
of  the  financial assets involved in the transfer, allocated between the assets
sold  and  the retained interests based on their relative fair value at the date
of  the  transfer.  To obtain fair values on the retained interests (both at the
point  of  the related receivable sale and periodically thereafter), the Company
generally  estimates  fair  value  based on the present value of future expected
cash  flows  estimated  using  management's  best  estimates  of  certain  key
assumptions  including;  default  dates, rates of prepayment, loss reserve rates
and  discount  rates  commensurate  with  the  risks  involved.
<PAGE>


The  Company's  retained interests in receivables sold are carried at fair value
as  either  derivatives  or  available-for-sale investments.  Unrealized holding
gains  or  losses  on  the retained interests are included in earnings for those
transactions  structured  so  that  the Company, through its retained interests,
receives  fixed  interest amounts and pays the buyer variable amounts based on a
floating rate index, as the resulting financial interest meets the definition of
a  derivative  in  accordance  with  Statement  of  Financial  Standards No. 133
"Accounting  for  Derivative  Instruments  and  Hedging Activities."  Unrealized
holding gains, if any, on retained interests in receivables sold not meeting the
definition  of  a  derivative  would be included in stockholders' equity, net of
income  taxes.  Losses  in  such  retained  interests are reflected in earnings.

     Provision  for  cancellations  relating  to notes receivable is recorded as
expense  in  amounts  sufficient to maintain the allowance at a level considered
adequate  to provide for anticipated losses resulting from customers' failure to
fulfill  their  obligations  under  the  terms  of  their notes receivable.  LHC
records  provision for cancellations at the time revenue is recognized, based on
historical  experience  and current economic factors.  The related allowance for
cancellations  represents  LHC's  estimate  of  the  amount of the future credit
losses to be incurred over the lives of the notes receivable.  The allowance for
cancellations  is  adjusted  for  actual  cancellations  experienced,  including
cancellations related to previously sold notes receivable, which were reacquired
pursuant  to the recourse obligations, discussed herein.  Such allowance is also
reduced  to  establish  the  separate liability for reserve for notes receivable
sold  with  recourse.  LHC's  judgment  in  determining  the  adequacy  of  this
allowance  is based upon a periodic review of its portfolio of notes receivable.
These  reviews  take  into  consideration changes in the nature and level of the
portfolio,  historical cancellation experience, current economic conditions that
may  affect  the  purchasers'  ability  to  pay,  changes  in collateral values,
estimated  value  of  inventory  that  may  be  reacquired and overall portfolio
quality.  Changes  in  the allowance as a result of such reviews are included in
the  provision  for  cancellations.

     Fees  for  servicing  notes  receivable  originated  by  LHC  and sold with
servicing  rights retained are generally based on a stipulated percentage of the
outstanding  principal  balance of such notes receivable and are recognized when
earned.  Costs  to service notes receivable are recorded to expense as incurred.
Interest  earned  on  notes  receivable sold, less amounts paid to investors, is
reported  as  financial  income.  Retained  interests  in  receivables  sold are
amortized  systematically  to  reduce  notes  receivable  servicing income to an
amount representing normal servicing income and the present value discount. Late
charges  and  other miscellaneous income are recognized when collected. Interest
income  represents  the  interest received on loans held in LHC's portfolio, the
accretion  of  the  discount  on  the retained interests in receivables sold and
interest  on  cash  funds.

     Land  sales as of September 30, 2002, exclude $9.2 million of sales not yet
recognized  under generally accepted accounting principles because the requisite
payment  amounts have not yet been received or the respective rescission periods
have  not  yet expired. Of the $9.2 million unrecognized land sales, the Company
estimates  that  it  will  ultimately  recognize $7.8 million of revenues, which

<PAGE>


would  be  reduced  by  a  related  provision for cancellations of $1.2 million,
estimated  deferred  selling  costs  of  $2.2  million and cost of sales of $1.2
million,  for  an  estimated  net  profit  of  $3.3  million.

Resort  Management  and  Operations
-----------------------------------

     LRC  conducts  the  day-to-day  business of operating and maintaining 1,082
rooms  in nine vacation interval resorts including the grounds and common areas.

The  Company  commenced  operations  of  LRC during the period; consolidated the
resort management operations into this subsidiary; and commenced a change in the
operations.

During  the  period,  a  National Accounts Program was initiated to improve cost
efficiencies  and  achieve  economies  of  scale  by centralizing the purchasing
function.  The  use of certain products has been standardized across the system,
and  now  every  room  has  uniform  soap  products,  coffee  service, and small
appliances.  LRC  is  in the process of standardizing the uniforms of the resort
personnel.

The  Company's  new  Leisure  Care  Program has been implemented system wide for
achieving a higher standard in the maintenance of the rooms.  Under this program
each  room  will  be  inspected and repaired as necessary three times each year,
instead  of  the  former  practice  of  performing  maintenance  once  per year.

     In  September a payroll forecasting and tracking system with an analysis of
payroll by week, day or minutes by occupied room (POR) was implemented.  A yield
management  team  was  created  to  drive transient traffic into the resorts for
greater  utilization  of  off-season  or  vacant  rooms.

An  outline  for  the  Leisure  Resorts  corporate structure for the resorts was
prepared,  key  positions filled, and the Company instituted a food and beverage
operation at Leisure Resorts Hilltop in Steamboat Springs, Colorado, and Leisure
Resorts  Orlando,  Florida.  These facilities are expected to become operational
in  the  fourth  quarter.  The  quality assurance program was established at the
corporate  level,  and  the Company decided to  bring the security, housekeeping
and  grounds  maintenance  functions  in-house,  under  the  corporate umbrella.

     Two  programmatic  additions  were  evaluated  for implementation in future
quarters:  a phone system with call accounting, and in-room movies and Internet.
Both  of  these  programs  are  guest  conveniences as well as sources of future
revenue.  Management  intends  to  implement these programs in the first quarter
2003.

The  Company  fully  implemented  a  customer  service  training program for 704
employees  during  the  period.

Leisure  Industries also purchased the Cimarron Golf Club LLC from OB Sports LLC
during  the  period.  Two  golf  courses, a championship course and an executive
<PAGE>


course,  were  acquired  in  the  purchase.  Leisure  Resorts  Corporation  is
responsible  for  the  operation  of  the  golf  courses and for integrating the
operation  of  Cimarron  Resort  into  Leisure  Resorts

     Home  Owner  Association  (HOA)  Management  Services
     -----------------------------------------------------

     HOA Management Services, a division within Leisure Services Corporation, is
responsible  for  the  administration  and execution of the Company's management
agreements  with the home owner's associations at the Company's various vacation
interval  ownership  locations.

     In  general,  Leisure Resorts, through HOA Management Services provides all
services and personnel required to administer the affairs of the associations it
manages,  according  to  established  rules,  regulations, bylaws, or Covenants,
Conditions  and  Restrictions  (CC&Rs).  HOA  Management  Services  prepares the
annual  budgets  for  each  association and distributes them to all owners after
board  adoption.  This  division  is  also responsible for collecting assessment
fees  and  enforcing  payment  of  assessments  to  include periodic statements,
delinquent  notices, liens and foreclosures.  The Company administers budgets of
approximately $20 million per year and receives management fees of approximately
$3.5 million  annually.

     HOA  Management  Services  maintains  bank  accounts  for  each association
including  an  operational  account,  tax  account  and  reserve  account.  HOA
Management  engages  an independent auditor annually for the preparation of year
end  financial  statements  which  are  distributed  to  all  owners.

     HOA  Management  Services also prepares the reserve analyses to ensure that
proper  funds  are  available  for  capital  expenditures  and  replacements  of
furniture, fixtures and equipment.  HOA Management Services also determines that
insurance  and/or bonds required for any purpose remain in force.  A reservation
system  that  efficiently  meets  the  reservations  rules  or  practices of the
association  is  also  a  performance  requirement.

Leisure  Industries  currently has management agreements with the following Home
Owner  Associations:

Brigantine  Inn  Resort  Club  Condominium  Association     Brigantine,  NJ
Brigantine  Villas  Condominium  Association                Brigantine,  NJ
Grand  Flamingo  Towers  Owners  Association                Las  Vegas,  NV
Grand  Flamingo  Villas  Owners  Association                Las  Vegas,  NV
Grand  Flamingo  Terraces  Owners  Association              Las  Vegas,  NV
Grand  Flamingo  Suites  Owners  Association                Las  Vegas,  NV
Grand  Flamingo  Fountains  Owners  Association             Las  Vegas,  NV
Grand  Flamingo  Winnick  Owners  Association               Las  Vegas,  NV
Grand  Flamingo  Terraces  Four  Owners  Association        Las  Vegas,  NV
Grand  Flamingo  Plaza  Owners  Association                 Las  Vegas,  NV
Reno  Spa  Resort  Club  Owners  Association                Reno,  NV
RVS-Orlando  Owners  Association                            Orlando,  FL
RVS-Orlando  II  Owners  Association                        Orlando,  FL

<PAGE>

Aloha  Bay  Condominium  Association                        Indian  Shores,  FL
Hilltop  Resort  Owners  Association                        Steamboat  Spgs,  CO
Suites  at  Steamboat  Owners  Association                  Steamboat  Spgs,  CO
White  Sands  Waikiki  Resort  Club  Owners  Association    Honolulu,  HI

     The  seventeen  associations  HOA Management Services currently administers
represent 50,000 timeshare owners. Each management agreement has an initial term
followed  by automatically renewable terms with an annual review by the Board of
Directors.

All HOAs are non-profit associations with Articles of Incorporation filed in the
states in which they are located.  Each association is governed by a five-member
Board  of  Directors or, in the case of RVS-Orlando II, Hilltop Resort and White
Sands  Waikiki  Resort Club, a three-member board.  In most instances, the Board
of  Directors  has  an  owner majority.  In all instances, Leisure Industries is
represented on the Board. Board terms range from one to three years and there is
a  required  meeting  held for all owners annually with the primary action being
the  election  of directors and the review of the year-end financial statements.


                          HOME OWNER ASSOCIATION FACTS
<TABLE>
<CAPTION>
<S>                <C>    <C>            <C>   <C>         <C>         <C>       <C>
                                                 ADMIN     ANNUAL
                  SUITES INTERVALS   MGMT FEE      FEE     BUDGET      MGMT FEE   ADMIN FEE
------         ---------  --------   ---------  --------  --------    ---------  ----------
BRIGANTINE INN        91   4,641           15%      No    $1,444,290   $265,206   $      0
BRIGANTINE VILLAS     17     867           15%      No    $  409,998   $ 53,477   $      0
GF TOWERS             93   4,743           10%     Yes    $1,058,683   $204,959   $ 95,000
GF VILLAS             94   4,794           10%     Yes    $1,050,636   $202,883   $ 95,000
GF TERRACES           50   2,550           10%     Yes    $1,255,866   $110,079   $ 54,475
GF SUITES            102   5,202           10%     Yes    $1,101,490   $171,626   $111,450
GF FOUNTAINS          48   2,448           10%     Yes    $  749,311   $118,847   $ 48,960
GF WINNICK            12     612           10%     Yes    $  289,491   $ 25,408   $ 12,243
GF TERRACES FOUR      68   3,468           10%     Yes    $1,622,944   $147,540   $ 69,360
GF PLAZA              22   1,122           10%     Yes    $  669,583   $ 58,144   $ 22,440
RENO                  95   4,845           10%     Yes    $1,832,453   $157,859   $ 96,900
ORLANDO I            120   6,120           15%      No    $2,455,554   $320,290   $      0
ORLANDO II            42   2,142           15%      No    $1,011,931   $113,600   $      0
INDIAN SHORES         32   1,632           15%      No    $  705,963   $ 92,082   $      0
STEAMBOAT SUITES      60   3,060           10%     Yes    $1,493,938   $135,813   $ 61,200
STEAMBOAT HILLTOP     56   2,856           10%     Yes    $1,429,187   $128,108   $ 62,832
HONOLULU              80   4,080            3%     Yes    $2,154,947   $ 60,477   $ 83,200
GRAND TOTAL        1,082  55,182                         $20,736,265 $2,366,398   $813,060


</TABLE>
NOTES:
-    Effective  January  1,  2003, pursuant to a majority membership vote of all
     Las  Vegas associations, the eight Las Vegas HOAs will be combined into one
     association. This will result in the elimination of the administrative fee,
     an  increase  in  the  management  fee  from  10% to 15% and an increase in
     intervals  of  one  per  existing  suite,  or  489  in  total.

<PAGE>

-    The  management  fee  is calculated as an agreed percentage (10% or 15%) of
     all  budgeted expenses, excluding the management fee itself and any deficit
     repayment.
-    The  administrative fee is payment by the home owner association to Leisure
     Industries  Corporation  for  support  services  such  as accounting, human
     resources,  payroll,  purchasing,  collections,  etc.

     By  virtue  of management expertise, shared technology or economy of scale,
Leisure  Industries  Corporation,  through  its  subsidiary,  Leisure  Resorts
Corporation,  offers  the  following  to  the  home  owner  associations:

o    INTERNAL  EXCHANGE PROGRAM. This allows owners at any resort to exchange to
     another  Leisure resort, based on availability, at no additional cost. This
     creates  a  tremendous  amount  of  value  and  options  for  the consumer.

o    CENTRALIZED  PURCHASING.  Leisure's  central  purchasing  combines  the
     purchasing power of all associations' contracts for services to benefit all
     HOAs.

o    CUSTOMER  CARE.  Through  technology  and  the  economy  of  combining  the
     servicing  needs  of  all  associations, Leisure maintains ongoing customer
     services  that  include  reservations, refinancing, collections, historical
     files  and  one-on-one  contact.

o    ADMINISTRATIVE  SUPPORT.  Utilizing  the entire resources available through
     Leisure  Industries  Corporation,  the  HOAs  and  each resort team has the
     day-to-day  support  of:  Human  Resources/Training,  Payroll,  Purchasing,
     Finance/Accounting,  Deeds  &  Records,  Resort  Operations,  Information
     Systems, Safety & Security, HOA Management, Advertising/Communications, and
     Legal  Services.

If  an Association were to outsource each of these tasks, the burden would cause
a  substantial  increase  in  annual  assessments.


o    HOA  MANAGEMENT.  Proper  and  professional  legal  governance of each HOA.
     Leisure  Resorts  maintains informal Advisory Committees at each resort who
     correspond  directly  with  the  Board of Directors and meet on a quarterly
     basis.  Along  with  the  internal comment card program, employee and owner
     suggestion  programs and a "best practices" approach, customer satisfaction
     levels  at  each  Leisure  Resort  are  over  90%.

     TRAVEL

Travel  services  comprise  an important segment of Leisure Industries' business
strategy and activities. Travel, as positioned within the context of our overall
operation,  is  a  benefit of ownership of a Leisure vacation interval or a land
parcel.  It  reduces  marketing  costs  to the Company, provides additional lead
generation, provides new owner benefits and creates an ongoing relationship with
the  buyer  and  potential  buyers.  Leisure's  travel  division executes travel
services through management contracts with Cheapseats and Adventure Bound Tours.
The  Company is in the process of evaluating the purchase of these two entities.
<PAGE>


Adventure Bound Tours is an international airfare consolidator and Cheapseats is
a  domestic airfare consolidator.  Air consolidators have contracted prices with
the  airlines  and  sell to the travel agency community for a set service fee or
commission.  They  compete  with  purveyors  of  web-based  fares.  Consolidator
agreements allow us to sell to other agencies and to provide our owner base with
advantages.

Through  the  travel  division  of  the  Company's  subsidiary, Leisure Services
Corporation,  the  Company  begins  the  vacation  interval  sales  process  by
conducting  marketing  programs  to  generate  leads.  The  call  center  and
telemarketing  operations  are  used to generate interest in potential customers
for  visits  to our resorts and attendance at a sales presentation.  The Company
is  preparing  to  use travel incentives as the premium for attracting potential
customers  to  our  sales  presentations.

The  travel  division  also generates interest in our "mini-vacations," in which
our current owners may travel to other resorts for 3 days/2 nights, experience a
different  resort  other  than the one in which they currently own, and possibly
purchase  additional  vacation  intervals  or  upgrade their unit type to a more
spacious  unit.

"Mini-vacations"  are  also  offered  to  persons referred to the Company by our
current  owners  as well as to persons who have previously toured our properties
but  haven't  yet purchased.  Our travel component then also has the opportunity
to  capture  more  of the sale by offering air travel and car rental services to
the  same  customer.

Once  on  property  and  having  attended  a  sales  presentation the Company is
preparing  to further incentivize the customer to buy by offering a free cruise,
a  free  stay  at  one  of  our  resorts  or  a  two  for  one  airline  ticket.

The  encouragement  to  purchase  travel, land or a vacation interval is further
supported  in this division by our central reservation services, a subset of our
overarching  Customer  Care  function.  Central  Reservations  makes  guest
reservations,  executes the trading of interval weeks for stays at other resorts
in  our system by current owners, facilitates trading to other timeshare resorts
not  owned  by  Leisure  Industries,  and  assists  by storing an owner's unused
interval  weeks  for  future  use.

Central  Reservation also accepts the reservations of "transient guests" (people
who  stay at our resorts, but who are not owners) and tour wholesalers.  Broader
customer services issues arising throughout the Company are also handled through
Customer  Care.

The  Company  brought  our  Leisure  Vacation  Store  web  site,
www.leisurevacationstore.com, live during the period.  Leisure Vacation Store is
the Internet aspect of our travel service offerings.  Customers can buy domestic
airfares,  international  air travel, rental cars, and hotel accommodations over
the  web.  Leisure  Vacation  Store  offers  three  levels  of  participation.
Discounted travel services may be purchased by any person visiting the web site.
Deeper  discounts  are  available  to people who have attended an interval sales
presentation  but  have  not  yet  purchased.  The  deepest discounts of all are
offered  to  our  current  owners.

<PAGE>

Leisure  Vacation  Store  will  also  have  a retail representation.  During the
period  a lease was signed for a store within a mall in Las Vegas, through which
the  Company  will  offer  full  service  travel  agency  products and services,
concierge  services  and  a  preview  of  our  vacation  interval  offerings.

RESULTS  OF  OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2002, COMPARED TO THREE MONTHS ENDED AUGUST 31,
2001

     Total  revenues  for the Company decreased 42.2 percent or $11.4 million to
$15.6  million  during  the  three  months  ended  September 30, 2002 from $27.0
million  during  the  three  months  ended August 31, 2001. The net decrease was
primarily  due to management decisions and changes implemented. Management began
implementing decisions in the prior periods that continued in the current period
that  directly had an effect of reducing revenues.  These decisions included but
were  not  limited  to (1) eliminating certain inventory from the sales process;
(2) changing certain sales practices; (3) eliminating certain types of marketing
programs;  (4)  introducing  new sales commission programs; (5) establishing new
underwriting  criteria  for consumer financing; and (6) re-organizing the sales,
marketing  and  finance  (consumer)  departments.  In  addition  to the internal
changes  made  by management, the Company received a negative effect on revenues
from  a  lingering reduction in consumer travel and the down turn in the overall
economic  climate  in  the  market  areas  of  Houston,  Orlando and New Jersey.

Gross sales of vacation ownership interests decreased to $5.8 million during the
three  months  ended  September  30,  2002,  from $15.0 million during the three
months  ended  August  31,  2001,  a  decrease  of  61.7  percent.

Gross  sales  of  land  decreased  to $4.3 million during the three months ended
September  30,  2002  from $5.8 million during the three months ended August 31,
2001,  a  decrease  of 26.3 percent. The provision for cancellations represented
15.2  percent  and  13.1  percent,  respectively, of gross sales of land for the
three  months  ended  September  30,  2002,  and  August  31,  2001.

The reasons for these reductions of revenues are reflected in the reasons stated
for  the  overall  decline  in  revenues  for  the  nine  month  period.

The  provision  for  cancellations  decreased  to 15.0 percent of gross sales of
vacation  ownership  interest for the three months ended September 30, 2002 from
16.4 percent for the three months ended August 31, 2001. Management periodically
reviews  its  allowance  for  bad debts and makes appropriate adjustments to its
provision  expense  to  adjust  for  changes  in  its  portfolio.

Revenues  related  to  the  Management  Fees  charged  by  the  Company  for the
Management  and Operation of the Resorts increased during the three months ended
September  30,  2002  to  $785,000,  up  6.4  percent  from  $738,000  three
<PAGE>

months  ended August 31, 2001.  The management fee is based on a certain percent
of  the  Resort's operating budget, and this increase is the result of increases
in  those  budgets.

There  was a decrease of $1.0 million in interest income to $4.1 million for the
three  months  ended  September  30, 2002 from $5.1 million for the three months
ended  August 31, 2001.  This decrease was the result of a decrease in financial
income, which is included in interest income and represents cash received on the
interest  spread  related  to  the sold portfolio. During the three months ended
August 31, 2001, there were interest rate drops of 50 basis points that resulted
in  valuation differences in the Retained Interest of Receivables Sold, which in
turn  resulted  in  additional  financial  income.  For  the  three months ended
September  30,  2002,  there  were  no  interest  rate  drops.

Interest  income  related  to  the  Company's  owned  portfolio remained at $4.2
million  during  the  three  months  ended September 30, 2002, and for the three
months ended August 31, 2001.  Management began a reorganization of the consumer
finance division of LHC during the prior periods. At the close of the period LHC
held  $125.3  million  of  consumer  receivables and had issued $98.6 million of
notes  payable  or  had  effected  a  78.7  percent  advance  rate  against  its
receivables. Management has established a reserve of $11.5 million (9.2 percent)
for  potential  losses  in  this  portfolio.

Management  has  established  an  objective  of  selling its previously recorded
portfolio of land and vacation ownership receivables.  Subsequent to the period,
management  entered  into  an  agreement  to  sell  $29 million of its portfolio
consisting  of  land  receivables from its lenders FINOVA and Textron to Textron
Financial  Corporation.  (See  Subsequent  Events,  Note  13)

Management  intends  to  effect similar transactions during the coming quarters;
however, there is no assurance that any such future sale may be concluded due to
the quality of the remaining portfolio, current market conditions and investment
opportunities  for  competing  products.

It  should  be  noted  that  almost  all  of  the  revenues for this period were
generated  by  the  Company's wholly owned subsidiary, Leisure Homes Corporation
(LHC).  During  the  period  management  launched  the new operations of Leisure
Services  Corporation  (LSC)  that  recorded  minimal  revenues,  as did Leisure
Resorts  Corporation  (LRC).

Total  operating  costs  and expenses for the Company decreased to $24.0 million
for  the  three months ended September 30, 2002 from $25.8 million for the three
months  ended  August  31, 2001, a decrease of $1.9 million or 7.2 percent.  The
net  decrease  resulted  primarily  from  a  decrease  in  LHC's direct costs of
vacation  ownership interest sales to $1.2 million from $2.2 million, a decrease
of 46.3 percent, and a decrease to  $9.6 million from $13.0 million in marketing
and  sales  expenses,  a  decrease  of  26.2  percent.

During  the period the Company continued to incur costs from previous periods
related  to  the  launching  of  the  travel  and  service  subsidiary, LSC; due
diligence  and  acquisition  costs  related  to the acquisition of Cimarron Golf
Resort,  Cimarron  Golf  Club, Atlantic Development Corporation (Arizona land)
and  FareQuest;  financing  fees  related  to  the  debt,  equity  and financial
<PAGE>

restructuring;  and  consultants  and  temporary  employees  involved  in  the
deployment  of  the  Company's  new  financial  and  technology  systems.

A  pretax  loss  of  $8.4  million  was  recorded  during the three months ended
September  30,  2002 compared to pretax income of $1.5 million earned during the
three  months  ended  August  31,  2001.  This loss is attributable to corporate
actions  related  to its restructuring, new acquisitions, the re-branding of the
properties,  the  development  of  new systems and infrastructure to support the
growth  of  the  Company  and  the  launching  of new initiatives related to the
integrated  travel  and  leisure  services,  in  addition  to  the other reasons
included  in  this  document.

Income  tax  expense  of  $565,000 was recorded for the three month period ended
September  30,  2002, compared to an income tax benefit of $411,000 recorded for
the  three  month  period ended August 31, 2001.  The income tax calculation for
the  period  ended  August 31, 2001, was reduced due to the use of net operating
loss  carry  forwards,  which  were  previously  fully reserved and were used to
offset  income  on  a consolidated basis.  Income taxes are recorded based on an
ongoing  review  of  related  facts  and  circumstances.

The  net  loss  applicable  to  common stock amounted to $8.9 million during the
three  month  period ended September 30, 2002, compared to net income applicable
to  common  stock of $1.9 million during the three month period ended August 31,
2001,  primarily  due  to  the  foregoing.

NINE  MONTHS  ENDED  SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED AUGUST 31,
2001

     The Company had several significant changes during the first nine months of
the  fiscal  year.

     Assets
     ------

     The Company's note receivables net of allowance for bad debt from consumers
increased from $109.3 million to $113.7 million or an increase of 4.4 million or
4%,  between  December  31,  2001,  to  September 30, 2002. This increase is the
result  of  sales  made  during  the  period  offset  by  principal payments and
cancellations.

     Vacation  ownerships  held  for  resale  increased  from  $17.9  million on
December  31,2001  to  $22.5  million  at  September  30,  2002.  Land inventory
increased  from  $2.8  million  to  $6.3  million  during  the same period. This
increase  reflects  Management's objective of acquiring new inventory as well as
the  acquisition  of  inventory  through  a  new  foreclosure  policy.

     Property  and Equipment increased from $9.7 million to $21.7 million during
the  nine  month  period. This increase reflects the acquisition of the Cimarron
Golf  Club near Palm  Springs,  CA  and the development of its new technological
infrastructure.

     The  Company  reduced  deferred  selling  costs  from  $5.4 million to $2.5
million  between  December  31,  2001  and  September 30, 2002. The reduction in
deferred  selling  costs is directly related to a reduction of sales in LHC, the
vacation  ownership  and  land  sales  subsidiary,  as  well  as  the  new sales
commission  structure,  new  selling  procedures  and  the implementation of new
consumer  finance  underwriting  criteria.  This really does not affect deferred
selling  cost  but  is  directly  related  to  unrecognized  sales.

     Liabilities
     -----------

     The  Company reduced its consumer note payable from $106.6 million to $98.5
million. This reduction is due to the Company repayment of debt, the elimination
of  delinquent  consumer  notes that were not replaced with new consumer payable
and  the  foreclosure  policies  implemented  by  the  Company.

     Notes payable for inventory, equipment and working capital increased during
the  period  from  $21.9  million  to  $35.6  million. The increase was directly
related to acquisitions and the lack of liquidity the Company experienced during
this  period.

     Accounts  payable  increased  from  $1.9  to  $7.1  million during the nine
months.  The  increase in accounts payable was the result of new operations that
were  launched  during  this  period;  the use of consultants and an increase in
professional  fees related to acquisitions and the restructuring; the failure of
certain  systems  during  this  reporting period that prevented the Company from
recording  and as a result paying certain payables that normally would have been
paid in the period; and the lack of liquidity the Company experienced during the
restructuring.

     The  Company  increased  its  borrowing through the issuance of convertible
debentures from $3 million to $5.5 million and its short term borrowings by $7.2
million  during the nine month period. All of the increases were the result of a
lack  of  liquidity  as  outlined  herein.  While  the Company does not have any
assurance  that  the  holders  of  the convertible debentures will convert their
debenture  into  equity  and  the conversion prices are in excess of the current
market price of the Company's common stock, Management projects these debentures
will  be convertible pursuant to the terms of their agreements. (See Liquidity.)

     The  Company  increased  its  paid  in  capital from $13.0 million to $25.0
million  during  the nine month period. The increase in paid in capital reflects
the  sale of stock to offset losses and to finance growth. Management intends to
continue  to  utilize  the  capital  markets,  when  available,  to  finance its
operations.

     Revenues
     --------

Total  revenues  for  the  Company  decreased 28.4 percent, or $22.6 million, to
$56.9 million during the nine months ended September 30, 2002 from $79.4 million
during  the nine months ended August 31, 2001. The decrease was primarily due to
decrease in vacation ownership and land sales from $62.0 million during the nine
months  ended  August  31,  2001  to  $40.6 million during the nine months ended
September  30,  2002.  Specifically, vacation ownership sales decreased by $21.1
million  (47.5  percent)  and land sales decreased by $.3 million (1.7 percent),
and  interest  income  decreased  to  $12.6 million during the nine months ended
September  30,  2002, from $14.3 million during the nine months ended August 31,
2001. The net decrease was primarily due to management decisions that began with
the  adoption  of  a  new  business  plan,  the  restructuring  of  the  overall
operations,  changes  implemented in its primary subsidiary LHC and the start up
operation  of  LSC and LRC. Management began implementing decisions in the prior
periods  that  continued  in  the  current  period  that  had a direct effect of
reducing  revenues.  These  decisions  included  but  were  not  limited  to (1)
eliminating  certain
<PAGE>

inventory  from  the  sales  process;  (2) changing certain sales practices; (3)
eliminating  certain  types  of  marketing  programs;  (4) introducing new sales
commission  programs;  (5)  establishing  new underwriting criteria for consumer
financing;  and  (6)  re-organizing  the sales, marketing and finance (consumer)
departments. In addition to the internal changes made by management, the Company
received  a  negative  effect on revenues from a lingering reduction in consumer
travel  and  the downturn in the overall economic climate in the market areas of
Houston,  Orlando  and  New  Jersey.

     Gross  sales  of  vacation  ownership  interests decreased to $23.3 million
during  the  nine  months ended September 30, 2002 from $44.5 million during the
nine months ended August 31, 2001, a decrease of $21.2 million, or 47.5 percent.
The  provision for cancellations remained at approximately 14.5 percent of gross
sales  of  vacation  ownership interests for the nine months ended September 30,
2002  and  for the nine months ended August 31, 2001. At September 30, 2002, the
allowance  for  bad  debts  was  $11.5  million, or 9.2 percent of the portfolio
balance,  down  from  $14.6 million, or 11.7 percent of the portfolio balance at
December  31,  2001.

     Gross sales of land decreased to $17.3 million during the nine months ended
September  30,  2002  from $17.6 million during the nine months ended August 31,
2001,  a  decrease  of $306,000, or 1.7 percent. The provision for cancellations
increased  to  12.4  percent  of  gross  land  sales  for  the nine months ended
September  30,  2002 from 9.4 percent for the nine months ended August 31, 2001.
Management  continues  to  review  its  allowance for bad debts and periodically
makes  adjustments  to  its  provision  expense.  During  the  nine months ended
September  30,  2002,  management increased its provision expense to account for
inadequacies  in  the  portfolio  primarily  due  to the economic slowdown since
August  2001. Management anticipates an improvement in its portfolio performance
as  a  result  of  the  sale of a portion of its land portfolio. (See Subsequent
Events.)

     Interest  income  decreased  to  $12.6  million  for  the nine months ended
September 30, 2002 from $14.2 million for the nine months ended August 31, 2001,
a  decrease  of  $1.7  million,  or 11.7 percent, primarily due to a decrease in
financial income, a component of interest income. An increase in the outstanding
obligation  to  replace  delinquencies  has  caused a reduction of the amount of
financial income the Company would record from the sold portfolio. This decrease
was  partially offset by an increase in the spread on those sold portfolios with
variable,  pass-through  interest  rates.  (See  Liquidity.)

     During  the nine months ended September 30, 2002, and the nine months ended
August 31, 2001, other income increased $22,000, or 2.4 percent to $950,000 from
$928,000,  respectively.  Other  income  is comprised of forfeiture income, late
charges  on  its portfolio and other miscellaneous income earned by the Company.

<PAGE>

     Expenses
     --------

     Total  operating  costs  and  expenses  for  the Company decreased to $69.0
million  for the nine months ended September 30, 2002 from $78.9 million for the
nine  months ended August 31, 2001, a decrease of $10.0 million or 12.6 percent.
The  decrease  resulted  primarily  from  a decrease in direct costs of vacation
ownership  and land sales to $6.4 million from $10.3 million, a decrease of $3.9
million  or  37.9  percent;  a decrease in marketing and sales expenses to $28.0
million  from  $37.3 million, a decrease of $9.3 million or 24.9 percent; and an
increase  in  General  and  Administrative  expenses to $14.2 million from $10.6
million,  an  increase  of $3.6 million or 34.0 percent. The increase is General
and  Administrative  expenses  is  due primarily to the following (1) the use of
consultants  and  temporary  employees to perform reorganization and new program
implementations;  (2) costs related to raising capital and short term financing:
(3) the start up of two new subsidiaries; (4) the change of the corporate brand;
(5)  the  development  and implementation of a new technological infrastructure;
and  (6)  costs  related  to  due  diligence of potential opportunities and cost
related  to  completed  acquisitions.

     The  decrease  in  direct  costs  of  vacation  ownership and land sales is
attributable  to  a decrease in net vacation ownership and land sales during the
nine  months  ended  September  30, 2002 compared to the nine month period ended
August  31, 2001. As a percentage of gross sales of vacation ownership interests
and  land,  marketing  and  sales  expenses, reflected in the operations of LHC,
decreased to 45.0 percent for the nine months ended September 30, 2002 from 60.1
percent for the nine months ended August 31, 2001. The overall increase in sales
and  marketing  expense  on a corporate basis increased to 68.4 percent of total
revenues  due  primarily  to  the  changes  related  to  corporate branding; the
launching of LSC and the initiation of several new programs; and the recruitment
and  training  of new marketing personnel. Additionally, the marketing and sales
divisions  of  the  company  include  many fixed components, including salaries,
wages  and  benefits,  lease  costs, guest promotional and advertising costs and
other  costs  that  are not directly incremental based on additional sales being
made.

     Profit  (Loss)
     --------------

     Pre-tax  loss  of  $14.2  million  was  earned during the nine months ended
September 30, 2002 compared to pre-tax income of $700,000 during the nine months
ended  August  31,  2001. It should be noted that all of the losses for the nine
month period were attributed to factors and changes that were related to changes
in  management,  direction  and  to  position  the  Company  for  future growth.

     An  income  tax  benefit of $159,000 was recorded for the nine months ended
September 30, 2002 compared to an income tax benefit of $519,000 recorded during
the nine months ended August 31, 2001. The income tax calculation for the period
ended  August  31,  2001  was reduced due to the use of net operating loss carry
forwards, which were previously fully reserved and were used to offset income on
a  consolidated basis. Income taxes are recorded, and the liability is adjusted,
based  on  an  ongoing  review  of  related  facts  and  circumstances.
<PAGE>

     Net  loss  applicable  to  common  stock  was $14.0 million during the nine
months  ended  September  30,  2002  compared to net income applicable to common
stock  of  $1.2  million during the nine months ended August 31, 2001, primarily
due  to  the  foregoing.

     LIQUIDITY  AND  CAPITAL  RESOURCES

     The following discussion relates to our financial position at September 30,
2002,  and  the  results of our operations for the period then ended. In January
2002, the Company's new management adopted a business plan of reorganization and
restructuring  contemplating,  among  other things, the substantial expansion of
our  vacation  resort business, and the initiation and acquisition of businesses
that expand the core business into a travel and leisure entity. (See "Business -
Recent  Events"  in Form 10-KT for the transition period from September 1, 2001,
to  December  31,  2001, for a discussion of the elements of our business plan.)
This  change  in  our  business  model,  as  well as the risks and uncertainties
inherent  in  our  historical  business,  are  expected  to cause our results of
operations  and  the  components  thereof to change materially in the future. In
addition,  we  will  require  substantial additional capital in the near term to
implement  certain elements of our business plan, including the acquisitions and
business  expansion.  There  is  no  assurance that we will be able to raise the
necessary  capital in a timely manner and on terms acceptable to us. Any failure
to raise the necessary capital may have a material adverse effect on our current
operations  and  future  financial  results.  At  September  30,  2002,  LHC had
arrangements,  as amended for subsequent agreement revisions, with institutional
lenders  for  the  financing of receivables in connection with sales of vacation
ownership  interests  and  land  and  the  acquisition  of  vacation  ownership
properties  and land, which provide for lines of credit of up to an aggregate of
$150.0  million.  Such  lines  of credit are secured by vacation ownership, land
receivables  and mortgages. At September 30, 2002, an aggregate of $98.6 million
was  outstanding  under such lines of credit and $51.4 million was available for
borrowing (subject to the availability of qualified collateral). Under the terms
of  these  lines  of  credit,  LHC  may  borrow  65 percent to 90 percent of the
balances of the pledged vacation ownership and land receivables. LHC is required
to  comply  with  certain  covenants  under these agreements, which, among other
things, require LHC to meet certain minimum tangible net worth requirements. The
most  stringent  of  such  requirements  provides  that  LHC maintains a minimum
tangible  net  worth of $27.5 million. At September 30, 2002, LHC's tangible net
worth was $28.7 million. Summarized lines of credit information and accompanying
notes  relating  to  these  lines  of  credit outstanding at September 30, 2002,
consist  of  the  following:

<TABLE>
<CAPTION>
<S>                       <C>      <C>       <C>                    <C>              <C>                   <C>
                                               BALANCES AT SEPT 30, 2002
                                              --------------------------
                       OUSTANDING  MAXIMUM            REVOLVING            MATURITY
LENDER                 BORROWINGS BORROWINGS      EXPIRATION DATE (A)      DATE (A)            INTEREST RATE
-------               ----------- -----------     --------------------     ---------           -------------
 FINOVA                   $49,786  $      0        December 31, 2002       Various            Prime + 2.0% (Floor)  12.00%
 General Electric (GECC)   20,928    30,000        April 30, 2003          Various            Libor + 4.0 - 4.25%    5.79%
 Textron                   20,200  $ 35,000        December 1, 2002        Various            Prime + 2.0 - 3.0%     6.25%
 Capital Source             7,512    15,000        August 8, 2004         August 8, 2004      Prime + 2.5%           7.25%
 HSBC                         138     5,000        February 4, 2002                           Prime + 1.0%           5.25%
                          -------  --------  ---------------------
                          $98,564  $ 85,000
                          =======  ========
</TABLE>
<PAGE>



<PAGE>
     (a)  As it has typically done in the past, management expects to extend the
          Revolving Expiration Date and Maturity Date on similar terms. When the
          Revolving  Expiration Date expires as shown, the loans convert to term
          loans  with  maturities  as  stated  or  extended.

     LHC  is  required  to  comply  with  certain  financial  and  non-financial
covenants under lines of credit agreements. Among other things, these agreements
require  LHC  to  meet certain minimum tangible net worth requirements, maintain
certain  liabilities  to tangible net worth ratios, maintain marketing and sales
and  general  and administrative expenses, as defined, relative to net processed
sales  for  each rolling 12-month period below a certain percentage and maintain
certain  interest  coverage ratios for each rolling 12-month period. The maximum
percentage  related to costs and expenses referred to above has been exceeded in
the last eight quarters. This does not constitute an Event of Default as defined
under  this loan agreement, or this line of credit; however, it gives the lender
the  option  to  suspend advances to LHC. The lender has not elected to exercise
this  option,  but  has  continued  to  make  regular  advances and has verbally
informed  LHC  that  it  intends  to  continue  such  advances.  The  maximum
loan-to-value  ratio referred to above was exceeded in the last six quarters. As
a  result,  the  lender  has the right to declare an Event of Default as defined
under  this loan agreement, or this line of credit. Default of the loan-to-value
ratio,  under  this  line,  can  only  cause the lender to cease advances to the
Company.  The  Company  has  agreed with the lender that it will, as part of its
financial  restructuring,  (1)  not  request additional advances pursuant to the
terms  of  the  line of credit; (2) effect a payment of the complete line on the
earlier  of  the completion of the Company's financial restructuring or December
31, 2002; and (3) maintain an agreement to loan-to-value ratio with the existing
line.  While  the Company believes that the financial restructuring initiated by
management  will  result  in  repayment  or  satisfactory  restructuring of this
indebtedness,  there  can  be  no assurance such financial restructuring will be
completed  to  the  satisfaction  of the lender. These covenants have been, from
time  to  time,  exceeded  in  the past with the various lenders forbearing from
exercising  any  of  these remedies. Management expects, but cannot assure, this
practice  to  continue.

          Scheduled  maturities of the Company's notes and contracts payable are
     as  follows:

YEARS  ENDING  DECEMBER  31,       (thousands  of  dollars)
----------------------------
                        2002             $   8,619
                        2003                 6,089
                        2004                14,058
                        2005                15,757
                        2006                28,995
                  Thereafter                58,012
                                        ----------
                                         $ 131,530
                                        ----------

Management  believes that its borrowings related to FINOVA will be paid prior to
December  31,  2002.

     The  components of the Company's debt, including lines of credit consist of
the  following:
<TABLE>
<CAPTION>
<S>                                                 <C>      <C>
(thousands of dollars)                             September 30,  December 31,
                                                      2002          2001
                                                      ----          ----


Notes collateralized by receivables                $ 98,165        $106,599
Notes related to inventory, working capital and
  personal property financing                        48,232          24,931
                                                    -------        --------
  Total                                            $146,397        $131,530
                                                    =======        ========
</TABLE>


     A  schedule  of the cash shortfall arising from recognized and unrecognized
sales  for  the  periods  indicated  is  set  forth  below:

<TABLE>
<CAPTION>
<S>                                          <C>       <C>
                                               Nine Months Ended
                                         ----------------------------
(thousands of dollars)                    September 30,    August 31,
                                               2002          2001
                                               ----          ----
Marketing and selling expenses attributable
  to recognized and unrecognized sales       $26,144       $ 37,545
Less:  Down payments                          (7,032)       (10,665)
                                             --------      ---------
Cash shortfall                               $19,112       $ 26,880
                                             ========      =========

</TABLE>

     The  Company  sells  notes  receivable  subject  to  recourse provisions as
contained in each agreement.  At September 30, 2002, total sold notes receivable
was  $47.0  million.  The Company is obligated under these agreements to replace
or  repurchase  accounts  that  become  over 90 days delinquent or are otherwise
subject  to replacement or repurchase in either cash or receivables generally at
the option of the purchaser.  The repurchase provisions provide for substitution
of  receivables  as recourse for $35.0 million of sold notes receivable and cash
payments  for  repurchases  relating to $2.7 million of sold notes receivable at
September  30, 2002.  The discounted amounts of the recourse obligations on such
notes  receivable  were $2.5 million and $3.6 million at September 30, 2002, and
December  31,  2001, respectively.  LHC continually reviews the adequacy of this
liability.  These  reviews  take  into  consideration  changes in the nature and
level  of the portfolio, current and future economic conditions which may affect
the  obligors'  ability to pay, changes in collateral values, estimated value of
inventory  that  may  be  reacquired  and  overall  portfolio  quality.

     FINANCIAL  CONDITION

     The  Company provides allowance for cancellations in amounts, which, in the
Company's  judgment,  will be adequate to absorb losses on notes receivable that
may become uncollectible.  The Company's judgment in determining the adequacy of
this allowance is based on its continual review of its portfolio, which utilizes
historical  experience  and  current  economic factors.  These reviews take into
consideration  changes  in  the  nature  and  level of the portfolio, historical
rates,  collateral  values,  current  and  future  economic conditions which may
affect  the  obligors'  ability  to pay, collateral values and overall portfolio
quality.
<PAGE>

Changes  in  the  aggregate  of  the  allowance for cancellations, including the
reserve  for  notes  receivable  sold  with  recourse  for the nine months ended
September  30,  2002,  consisted  of  the  following:


<TABLE>
<CAPTION>
<S>                                                    <C>
(thousands  of  dollars)
Balance at December 31, 2001                           $14,557
  Provision for cancellations                            4,440
  Amounts charged to allowance for cancellations, net   (7,516)
                                                       --------
                                                        11,481
  Reserve for notes sold with recourse                       -
                                                       --------
Allowance for cancellations                            $11,481
                                                       ========
</TABLE>

September  30,  2002,  Compared  to  December  31,  2001

     Cash  and cash equivalents increased to $8.1 million at September 30, 2002,
from  $8.0  million  at December 31, 2001.  Notes receivable, net, increased 3.9
percent  to $113.6 million at June 30, 2002, from $109.3 million at December 31,
2001.  Land  and improvements inventory and vacation ownership interest held for
sale  increased  to  $28.0  million at September 30, 2002, from $20.6 million at
December  31,  2001.


<TABLE>
<CAPTION>
<S>                                         <C>      <C>

(thousands of dollars)                  September 30,   December 31,
                                             2002           2001
                                         -----------    ------------

                                            $17,929      $13,771
Vacation ownership interests                  4,541        4,094
                                         -----------     -----------
Vacation ownership interest in development
                                            $22,470      $17,865
                                          ==========     ===========
Total
</TABLE>

     Notes  and  contracts  payable  increased  2.3 percent to $134.5 million at
September  30,  2002  from  $131.5  million at December 31, 2001.  Stockholders'
equity  decreased  14  percent to $15.9 million at September 30, 2002 from $21.4
million  at  December  31,  2001.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     There  was  no material change for the quarter ended September 30, 2002, in
the  information  about  the Company's "Quantitative and Qualitative Disclosures
About  Market  Risk" as disclosed in its Transition Report on Form 10-KT for the
transition  period  from  September  1,  2001,  to  December  31,  2001.

ITEM  4.  CONTROLS  AND  PROCEDURES

In  November  2002, the Company carried out an evaluation, under the supervision
and  with  the  participation  of  the Company's management, including its Chief
Executive  Officer  and  Chief  Accounting  Officer, of the effectiveness of the
design  and  operation  of  its  disclosure  controls and procedures pursuant to

<PAGE>


Exchange  Act  Rule  13a-14  and 15d-14(c) Based upon that evaluation, the Chief
Executive Officer and the Chief Accounting Officer concluded that our disclosure
controls  and  procedures  are  effective  to  assure  that the Company records,
processes,  summarizes  and  reports in a timely manner the material information
that  must be included in the Company's reports that are filed with or submitted
to  the  Securities  and  Exchange  Commission.

In  addition,  there  have been no significant changes in the Company's internal
controls  or  in  other  factors  that could significantly affect these controls
subsequent  to  the  date  of  their  evaluation.

PART  II  OTHER  INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS

     Reference  is  made  to  the  description  of  legal  proceedings  in  the
Contingencies  footnote  in  the  financial  statements  set  forth  in  Part  I
"Financial  Information."

     In  the  ordinary  course  of  its  business, the Company from time to time
becomes  subject to claims or proceedings relating to the purchase, subdivision,
sale  and/or  financing  of  real  estate.  Additionally, from time to time, the
Company  becomes  involved  in  disputes with existing and former employees. The
Company  believes  that  substantially  all  of  the  claims and proceedings are
incidental  to  its  business.

     In  addition  to its other ordinary course litigation, on February 9, 2000,
an  action was filed in Nevada District Court, County of Clark, No. A 414827, by
Robert  and  Jacqueline  Henry, husband and wife, and Kenneth and Janet Shosted,
individually  and  on  behalf of all others similarly situated and certain other
defendants.  The  plaintiffs'  complaint  asked for class action relief claiming
that  LHC  and  certain  other  defendants  were  guilty  of  collecting certain
betterment  fees  and  not  providing  associated  sewer  and  water  lines.

     The  complaint  asserts six claims for relief against defendants: breach of
deed  restrictions,  two  claims  for  breach  of  contract,  unjust enrichment,
consumer fraud in violation of NRS 41.600 and violation of NRS 119.220, with all
claims  arising  out of the alleged failure to provide water and sewer utilities
to purchasers of land in the subdivisions commonly known as Calvada Valley North
and  Calvada  Meadows  located  in  Nye  County,  Nevada.

<PAGE>

On  September  5,  2001, the Court refused to certify a class for the claims of:
breach of contract, unjust enrichment, consumer fraud in violation of NRS 41.600
and  violation of NRS 119.220. Accordingly, the defendants are no longer subject
to  class  claims for monetary damages. The defendants' only potential liability
to the certified class is for the construction of water and sewer facilities. In
July  of  2002,  the defendants filed a motion for Summary Judgment on which the
court  has not yet ruled. The case is scheduled for a jury trial on February 19,
2003.  The  Company  does  not believe that any likely outcome of this case will
have a materially adverse effect on the Company's financial condition or results
of  operations.

     At  various  times  in  the general course of business, the Company and LHC
have  each  been  named  in  other  lawsuits.  The  Company believes that it has
meritorious defenses to these lawsuits and that resolution of these matters will
not  have  a  material  adverse  effect on its financial condition or results of
operations.

ITEM  2.  CHANGES  IN  SECURITIES

     None.

ITEM  3.  DEFAULTS  UPON  SENIOR  SECURITIES

     None.

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

     None.

ITEM  5.  OTHER  INFORMATION

     None.



<PAGE>
ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  Exhibits

     10.255  -  Lease  between  American  Spectrum  Realty  Management, Inc., as
          Landlord,  and  Mego  Financial  Corp. as Tenant in 7700 Irvine Center
          Drive,  Irvine  California,  dated  July  2002.

     10.256 - Lease between Fashion Show Expansion LLC, as Landlord, and Leisure
          Homes  Corporation  as  Tenant in 3200 Las Vegas Boulevard, South, Las
          Vegas  Nevada,  dated  October  2002.

     10.257 - Asset and Warrant Agreement (FareQuest) between Eastern Air Lines,
          Inc.  and  Mego  Financial  Corp.  dated  August  2002.

     10.258  -  Atlantic  Development  Stock  Purchase  Agreement  between  Mego
          Financial  Corp.,  and  Susan R. Mardian, Lori A. Mardian and Atlantic
          Development  Corporation,  dated  April,  2002.

     10.259 - Purchase Agreement (Cimarron Golf) between OB Sports, LLC and Mego
          Financial  Corp.,  dated  April  2002.

     10.260  -  Promissory Note between OB Sports and Mego Financial Corp. dated
          August,  2002.

     10.261  -  Purchase  Agreement  among Raintree Resorts International, Inc.,
          Raintree  North America Resorts, Inc., and Mego Financial Corp., dated
          September  2002.

     10.262  -  Amendment  No.  4 to Loan and Security Agreement between Textron
          Financial  Corporation,  Royale  Mirage Partners, L.P., Raintree North
          America  Resorts, Inc., Raintree Resorts International, Inc., and Mego
          Financial  Corp.,  dated  September  2002.


(b)  Reports  on  Form  8-K

None.



<PAGE>

                                    SIGNATURE

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


                               MEGO  FINANCIAL  CORP.

                               By:/s/  Floyd  W.  Kephart
                                  -----------------------
                               Floyd  W.  Kephart
                               Chairman  and  CEO


                               By: /s/  Chris D. Whetman
                                  -----------------------
                                  Chris D. Whetman
                                  Chief Accounting Officer




Date:     November  19,  2002

<PAGE>
                                 CERTIFICATIONS

I,  Floyd  W.  Kephart,  Chief  Executive  Officer,  certify  that:

1.   I  have reviewed this quarterly report on Form 10-Q of Mego Financial Corp.
     ("Mego");

2.   Based  on  my  knowledge, this quarterly report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  quarterly  report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included  in  this  quarterly  report,  fairly  present in all
     material  respects  the financial condition, results of operations and cash
     flows of Mego Financial Corp. as of, and for, the periods presented in this
     quarterly  report;

4.   Mego's other certifying officers and I are responsible for establishing and
     maintaining  disclosure controls and procedures (as defined in Exchange Act
     Rules  13a-14  and  15d-14)  for  Mego  and  we  have:

     a)   Designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  Mego,  including its consolidated
          subsidiaries,  is  made  known  to us by others within those entities,
          particularly during the period in which this quarterly report is being
          prepared;

     b)   Evaluated  the  effectiveness  of  Mego's  disclosure  controls  and
          procedures  as  of  a  date within 90 days prior to the filing date of
          this  quarterly  report  (the  "Evaluation  Date");  and

     c)   Presented  in  this  quarterly  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   Mego's  other  certifying  officers and I have disclosed, based on our most
     recent evaluation, to Mego's auditors and the audit committee of it's board
     of  directors:

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  Mego's  ability  to record,
          process,  summarize  and report financial data and have identified for
          Mego's  auditors  any  material  weaknesses  in internal controls; and

     b)   Any  fraud, whether or not material, that involves management or other
          employees who have a significant role in Mego's internal controls; and

6.   Mego's  other  certifying  officers  and I have indicated in this quarterly
     report  whether  or not there were significant changes in internal controls
     or  in  other  factors  that  could  significantly affect internal controls
     subsequent  to  the  date  of  our  most  recent  evaluation, including any
     corrective  actions  with  regard  to significant deficiencies and material
     weaknesses.

Date:  November  19,  2002

                                          /s/  Floyd  W.  Kephart
                                          ---------------------------
                                          Floyd  W.  Kephart
                                          Chief  Executive  Officer



<PAGE>


                                 CERTIFICATIONS

I,  Chris D. Whetman,  Chief  Accounting  Officer,  certify  that:

1.   I  have  reviewed  this  quarterly  report on Form 10-Q of Mego Financial
     Corp.  ("Mego");

2.   Based  on  my  knowledge, this quarterly report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  quarterly  report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included  in  this  quarterly  report,  fairly  present in all
     material  respects  the financial condition, results of operations and cash
     flows  of  Mego  as  of,  and  for, the periods presented in this quarterly
     report;
4.   Mego's other certifying officers and I are responsible for establishing and
     maintaining  disclosure controls and procedures (as defined in Exchange Act
     Rules  13a-14  and  15d-14)  for  Mego  and  we  have:

     d)   Designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  Mego,  including its consolidated
          subsidiaries,  is  made  known  to us by others within those entities,
          particularly during the period in which this quarterly report is being
          prepared;

     e)   Evaluated  the  effectiveness  of  Mego's  disclosure  controls  and
          procedures  as  of  a  date within 90 days prior to the filing date of
          this  quarterly  report  (the  "Evaluation  Date");  and

     f)   Presented  in  this  quarterly  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   Mego's  other  certifying  officers and I have disclosed, based on our most
     recent evaluation, to Mego's auditors and the audit committee of it's board
     of  directors:

     c)   All  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  Mego's  ability  to record,
          process,  summarize  and report financial data and have identified for
          Mego's  auditors  any  material  weaknesses  in internal controls; and

     d)   Any  fraud, whether or not material, that involves management or other
          employees who have a significant role in Mego's internal controls; and

6.   Mego's  other  certifying  officers  and I have indicated in this quarterly
     report  whether  or not there were significant changes in internal controls
     or  in  other  factors  that  could  significantly affect internal controls
     subsequent  to  the  date  of  our  most  recent  evaluation, including any
     corrective  actions  with  regard  to significant deficiencies and material
     weaknesses.

Date:  November  19,  2002

                                          /s/  Chris D. Whetman
                                          ---------------------------
                                          Robert  J.  Kearns
                                          Chief Accounting Office



<PAGE>



                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER





     Pursuant  to  Section  906 of the Sarbanes-Oxley Act 2002 (18 U.S.C. 1350),
the  undersigned,  Floyd  W.  Kephart, Chief Executive Officer of Mego Financial
Corp.("the  Company")  has  executed  this  certification in connection with the
filing  with  the  Securities and Exchange Commission of the Company's Quarterly
Report  on  Form  10-Q  for the quarter ended September 30, 2002 (the "Report").

     The  undersigned  certifies  that:  (1)  the Report fully complies with the
requirements  of  Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and (2) the information contained in the Report fairly presents, in all material
respects,  the  financial  condition  and  results  of operation of the Company.

     IN  WITNESS  WHEREOF, the undersigned has executed this certification as of
the  19th  day  of  November  2002.


                                              /s/  Floyd W.  Kephart
                                              ________________________
                                              Name:  Floyd  W.  Kephart
                                              Title:  Chief  Executive  Officer















<PAGE>







                    CERTIFICATION OF CHIEF ACCOUNTING OFFICER





     Pursuant  to  Section  906 of the Sarbanes-Oxley Act 2002 (18 U.S.C. 1350),
the  undersigned,  Chris D. Whetman, Chief Accounting Officer of Mego Financial
Corp.  ("the  Company")  has  executed this certification in connection with the
filing  with  the  Securities and Exchange Commission of the Company's Quarterly
Report  on  Form  10-Q  for the quarter ended September 30, 2002 (the "Report").

     The  undersigned  certifies  that:  (1)  the Report fully complies with the
requirements  of  Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and (2) the information contained in the Report fairly presents, in all material
respects,  the  financial  condition  and  results  of operation of the Company.

     IN  WITNESS  WHEREOF, the undersigned has executed this certification as of
the  19th  day  of  November  2002.



                                             /s/  Chris D. Whetman
                                             ______________________
                                             Name:  Chris D. Whetman
                                             Title:  Chief  Accounting Officer

<PAGE>