UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549-1004

                                    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 December 31, 2001

                                       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  0-13084

                             WARRANTECH CORPORATION
             (Exact name of registrant as specified in its charter)

                  Delaware                                  13-3178732
      (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                    Identification No.)

             150 Westpark Way, Euless TX                       76040
       (Address of principal executive offices)             (Zip Code)

      Registrant's telephone number, including area code  (800) 544-9510


              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last year)

     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.
Yes [X]  No [_]

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date.

Common stock, par value $.007 per share               15,245,288 shares
---------------------------------------        -------------------------------
               Class                           Outstanding at January 31, 2002


                                       1
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES


                                    I N D E X


                                                                        Page No.
                                                                        --------

                         PART I - Financial Information

Item 1:  Financial Statements

    Condensed Consolidated Statements of Operations -
           For the Three Months and Nine Months Ended December 31, 2001
           and 2000 (Unaudited)..............................................  3

    Condensed Consolidated Balance Sheets at December 31, 2001
           (Unaudited) and March 31, 2001....................................  4

    Condensed Consolidated Statements of Cash Flows
           For the Three Months and Nine Months Ended December 31, 2001
           and 2000 (Unaudited)..............................................  6

    Notes to Condensed Consolidated Financial Statements.....................  7

Item 2:  Management's Discussion and Analysis of
           Financial Condition and Results of Operations .................... 13


                           PART II - Other Information

Item 1:  Legal Proceedings................................................... 18

Item 5:  Other Information................................................... 18

Item 6:  Exhibits and Reports on Form 8-K.................................... 18

Signature ................................................................... 19


                                       2
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     For the Three Months Ended        For the Nine Months Ended
                                                                             December 31,                     December 31,
                                                                   -------------------------------   -------------------------------
                                                                         2001             2000             2001             2000
                                                                   --------------   --------------   --------------   --------------
<S>                                                                    <C>             <C>              <C>              <C>
Earned Administrative Fees (net of amortization of deferred costs)     $8,549,955      $11,724,995      $27,043,540      $37,022,003
                                                                   --------------   --------------   --------------   --------------
Costs and expenses
   Service, selling, and general and administrative                     7,394,418        9,177,970       23,242,498       29,014,602
   Legal settlement                                                            --               --         (824,332)              --
   Depreciation and amortization                                          737,360        1,476,477        3,439,123        4,858,697
   Loss on abandonment of assets                                               --               --               --        1,049,552
                                                                   --------------   --------------   --------------   --------------
Total costs and expenses                                                8,131,778       10,654,447       25,857,289       34,922,851
                                                                   --------------   --------------   --------------   --------------

Income from operations                                                    418,177        1,070,548        1,186,251        2,099,152
Other income (expense)                                                    357,627          238,966          698,623          643,751
                                                                   --------------   --------------   --------------   --------------

Income before provision for income taxes                                  775,804        1,309,514        1,884,874        2,742,903
Provision for income taxes                                                284,600          399,587          714,200          899,993
                                                                   --------------   --------------   --------------   --------------

Net income                                                               $491,204         $909,927       $1,170,674       $1,842,910
                                                                   ==============   ==============   ==============   ==============

Earnings per share:
Basic                                                                       $0.03            $0.06            $0.08            $0.12
                                                                   ==============   ==============   ==============   ==============
Diluted                                                                     $0.03            $0.06            $0.08            $0.12
                                                                   ==============   ==============   ==============   ==============

Weighted average number of shares outstanding:
Basic                                                                  15,243,095       15,280,549       15,221,757       15,318,259
                                                                   ==============   ==============   ==============   ==============
Diluted                                                                15,243,095       15,280,549       15,221,757       15,318,259
                                                                   ==============   ==============   ==============   ==============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                       (Unaudited)
                                                       December 31,   March 31,
                                                           2001         2001
                                                       -----------   -----------

ASSETS

Current assets:
Cash and cash equivalents                               $6,655,955    $3,001,924
Investments in marketable securities                       960,821       196,154
Accounts receivable, (net of allowances of
   $848,881 and $1,079,946, respectively)               12,627,581    12,152,515
Other receivables, net                                   5,353,918     7,065,531
Income tax receivable                                      211,014     5,378,648
Deferred income taxes                                    1,711,882       571,182
Prepaid expenses and other current assets                  691,396       964,929
                                                       -----------   -----------
   Total current assets                                 28,212,567    29,330,883
                                                       -----------   -----------

Property and equipment, net                             10,024,243    11,898,890

Other assets:
Excess of cost over fair value of assets acquired
   (net of accumulated amortization of $5,825,405)       1,637,060     1,637,290
Deferred income taxes                                    5,201,968     2,724,096
Deferred direct costs                                   27,402,744    46,258,971
Investments in marketable securities                     1,408,250     3,094,176
Restricted cash                                            800,000       800,000
Split dollar life insurance policies                       799,262       708,262
Notes receivable                                         1,982,121       599,796
Other assets                                                64,809        64,809
                                                       -----------   -----------
          Total other assets                            39,926,214    55,887,400

                                                       -----------   -----------
                    Total Assets                       $77,533,024   $97,117,173
                                                       ===========   ===========


      See accompanying notes to condensed consolidated financial statements


                                       4
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                (Unaudited)
                                                                                December 31,         March 31,
                                                                                    2001               2001
                                                                               --------------     --------------
<S>                                                                               <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt and capital lease obligations                   $866,970           $801,265
Insurance premiums payable                                                         21,663,515         19,100,164
Accounts and commissions payable                                                    6,106,949          6,346,872
Accrued expenses and other current liabilities                                      4,083,197          5,890,078
                                                                               --------------     --------------
   Total current liabilities                                                       32,720,631         32,138,379
                                                                               --------------     --------------

Deferred revenues                                                                  39,145,878         60,057,704

Long-term debt and capital lease obligations                                        1,026,292          1,209,853

Deferred rent payable                                                                 216,550            293,293
                                                                               --------------     --------------
   Total liabilities                                                               73,109,351         93,699,229
                                                                               --------------     --------------

Commitments and contingencies

Stockholders' equity:
   Preferred stock - $.0007 par value authorized - 15,000,000 shares
     issued  - none at December 31, 2001 and March 31, 2001                              --                 --
   Common stock - $.007 par value authorized - 30,000,000 shares
     issued  - 16,525,324 shares at December 31, 2001 and
     16,514,228 shares at March 31, 2001                                              115,609            115,580
   Additional paid-in capital                                                      23,745,113         23,742,868
   Loans to directors and officers                                                (10,083,038)        (9,833,244)
   Accumulated other comprehensive income, net of taxes                               (25,301)           (31,949)
   Retained earnings (deficit)                                                     (5,063,431)        (6,234,105)
                                                                               --------------     --------------
                                                                                    8,688,952          7,759,150
Treasury stock - at cost, 1,274,443 shares at December 31, 2001
 and 1,415,171 shares  at March 31, 2001                                           (4,265,279)        (4,341,206)
                                                                               --------------     --------------
        Total Stockholders' Equity                                                  4,423,673          3,417,944
                                                                               --------------     --------------

                                                                               --------------     --------------
        Total Liabilities and Stockholders' Equity                                $77,533,024        $97,117,173
                                                                               ==============     ==============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                             For the Nine Months Ended
                                                                                    December 31,
                                                                         ----------------------------------
                                                                              2001                2000
                                                                         --------------      --------------
<S>                                                                          <C>                <C>
Cash flows from operating activities:
  Net income                                                                 $1,170,674          $1,842,910
  Total Adjustments to reconcile net income to net cash
     provided by operating activities:                                        4,621,385            (711,679)
                                                                         --------------      --------------
Net cash flows provided by operating activities                               5,792,059           1,131,231
                                                                         --------------      --------------

Cash flows from investing activities:
  Property and equipment purchased-net of retirements                        (1,179,920)         (1,302,880)
  Purchase of marketable securities                                            (330,000)           (475,000)
  Decrease in notes receivable                                                  366,037             527,053
  Proceeds from sales of marketable securities                                1,315,304           1,300,000
                                                                         --------------      --------------
Net cash provided  by investing activities                                      171,421              49,173
                                                                         --------------      --------------

Cash flows from financing activities:
  Purchase treasury stock                                                            --            (308,920)
  Issuance of treasury stock                                                         --             191,881
  Increase in notes receivable                                               (1,748,362)                 --
  Repayments, notes and capital leases                                         (561,087)         (1,019,201)
                                                                         --------------      --------------
Net cash used in financing activities                                        (2,309,449)         (1,136,240)
                                                                         --------------      --------------

Net increase in cash and cash equivalents                          3,654,031              44,164

Cash and cash equivalents at beginning of period                              3,001,924          10,035,003
                                                                         --------------      --------------
Cash and cash equivalents at end of period                                   $6,655,955         $10,079,167
                                                                         --------------      --------------

Supplemental Cash Flow Information:
Cash payments for:
   Interest                                                                    $163,925            $188,021
                                                                         --------------      --------------
   Income taxes                                                                     $--            $265,599
                                                                         --------------      --------------

Non-Cash Investing and financing activities:
    Property and equipment financed through capital leases                     $443,232            $399,195
    Capital leases refinanced                                                  $151,727                  --
    Increase in loans to officers and directors                               ($249,794)          ($233,224)
    Issuance of treasury stock                                                  $75,927                  --
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 2001
                                   (Unaudited)

1.   THE COMPANY

Warrantech,  through its wholly  owned  subsidiaries,  markets  and  administers
service  contracts  and  extended  warranties.  The  Company  is a  third  party
administrator for a variety of dealer/clients in selected  industries and offers
call center and technical computer services.  The Company assists dealer/clients
in  obtaining  insurance  policies  from  highly  rated  independent   insurance
companies for all contracts and programs offered.  The insurance company is then
responsible  for  the  cost  of  repairs  or  replacements   for  the  contracts
administered by Warrantech.

The Company  operates in three major  business  segments:  Automotive,  Consumer
Products and  International.  The  Automotive  segment  markets and  administers
extended  warranties  on  automobiles,   light  trucks,  recreational  vehicles,
motorcycles and automotive  components.  Franchised and  independent  automobile
dealers,  leasing  companies,  repair  facilities,  retail  stores and financial
institutions,  principally  sell these products.  The Consumer  Products segment
markets and administers extended warranties on household appliances, electronics
and  homes.  These  products  include  home  appliances,  consumer  electronics,
televisions,   computers,   home   office   equipment   and  homes.   Retailers,
distributors,  manufacturers,  utility  companies,  mortgage  brokers,  managing
general  agencies and financial  institutions  principally  sell these products.
Warrantech also direct markets these products to the ultimate  consumer  through
telemarketing and direct mail campaigns.  The International  segment markets and
administers  outside  the United  States  predominately  the same  products  and
services of the other business segments.  The International segment is currently
operating in Central and South America, Puerto Rico and the Caribbean.

The  terms  of  the  service  contracts,  extended  warranties  and  replacement
contracts  generally  range from twelve (12) to  eighty-four  (84)  months.  The
Company acts as a third party  administrator on behalf of the dealer/clients and
insurance  companies.  Authorized  independent  third party repair facilities or
dealers  perform  the actual  repairs  and/or  replacements  required  under the
agreements. The cost of these repairs is borne by the insurance companies, which
have  the  ultimate   responsibility   for  the  claims.  The  insurance  policy
indemnifies the  dealer/clients  against losses  resulting from service contract
claims and protects the consumer by ensuring their claims will be paid.

Authorities in a limited number of jurisdictions in which the service  contracts
are sold and in which the Company  administers  the contracts may seek to impose
the  obligation  to pay on the  Company, even  where  it  has  acted  solely  as
administrator  and was not the  "obligor"  under such service  contracts.  These
contracts are covered by insurance as well.

Although the Company's  obligations were insured by various insurance companies,
it marketed and  administered  some service  contracts  which were sold prior to
April 1, 2000, in which it was the obligor. Some of those service contracts have
not expired and are still in effect.

The Company's  service contract  programs benefit consumers with expanded and/or
extensions of product coverage for a specified period of time (and/or mileage in
the case of automobiles and recreational vehicles),  similar to that provided by
manufacturers  under  the  terms  of  their  product  warranties.  The  coverage
generally provides for the repair or replacement of the product,  or a component
thereof,  in the event of its failure.  The Company's  service contract programs
benefit the dealer/clients by providing enhanced value to the goods and services
they offer.  They also provide the opportunity for increased  revenue and income
while  outsourcing  the costs and  responsibilities  of  operating  an  extended
warranty program.


                                       7
<PAGE>

2.   BASIS OF PRESENTATION

The  accompanying  consolidated  financial  statements  have  been  prepared  by
management  and are  unaudited.  These interim  financial  statements  have been
prepared on the basis of accounting  principles generally accepted in the United
States of  America  ("GAAP")  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  information  and footnotes  required by  accounting  principles
generally  accepted  in the United  States of  America  for  complete  financial
statements. In the opinion of management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for  a  fair  presentation  of  the
financial  position and operating  results of the Company for the interim period
have been  included.  Operating  results  for the three  and nine  months  ended
December  31, 2001 are not  necessarily  indicative  of the results  that may be
expected  for the fiscal year ending March 31,  2002.  For further  information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10K for the year ended March 31, 2001.

3.   NEW ACCOUNTING STANDARD

On June 29, 2001, the Financial  Accounting  Standards Board (FASB) approved for
issuance Statement of Financial Accounting Standards ("SFAS") 142, "Goodwill and
Intangible Assets," which is effective for fiscal years beginning after December
15, 2001. SFAS 142 provides that goodwill and intangible  assets with indefinite
lives not be  amortized,  and  instead,  be tested for  impairment  annually and
whenever  there  is an  impairment  indicator.  Early  adoption  of SFAS  142 is
permitted for  companies  with fiscal years  beginning  after March 15, 2001 but
only if they have not issued their first quarter  financial  statements prior to
adoption.  The  Company  adopted  SFAS 142  effective  April 1, 2001 and  ceased
amortization  of its goodwill.  The following table presents pro forma condensed
consolidated  statements  of  operations of the Company for the three months and
nine months ended  December  31, 2001 and 2000,  as though SFAS 142 had not been
adopted. The pro forma condensed consolidated  statements of operations reflects
$149,817 and $449,451 of  amortization  of goodwill in the three months and nine
months ended  December 31, 2001,  respectively.  This  goodwill  would have been
reflected in the statements of operations prior to the adoption of SFAS 142.

<TABLE>
<CAPTION>
                                                                     For the Three Months Ended        For the Nine Months Ended
                                                                             December 31,                     December 31,
                                                                   -------------------------------   -------------------------------
                                                                        2001             2000             2001             2000
                                                                   --------------   --------------   --------------   --------------
<S>                                                                    <C>             <C>              <C>              <C>
Earned Administrative Fee (net of amortization of deferred costs)      $8,549,955      $11,724,995      $27,043,540      $37,022,003
                                                                   --------------   --------------   --------------   --------------
Costs and expenses
   Service, selling, and general and administrative                     7,394,418        9,177,970       23,242,498       29,014,602
   Legal settlement                                                            --               --         (824,332)              --
   Depreciation and amortization                                          887,177        1,476,477        3,888,574        4,858,697
   Loss on abandonment of assets                                               --               --               --        1,049,552
                                                                   --------------   --------------   --------------   --------------
Total costs and expenses                                                8,281,595       10,654,447       26,306,740       34,922,851
                                                                   --------------   --------------   --------------   --------------

Income from operations                                                    268,360        1,070,548          736,800        2,099,152

Other income (expense)                                                    357,627          238,966          698,623          643,751
                                                                   --------------   --------------   --------------   --------------

Income before provision for income taxes                                  625,987        1,309,514        1,435,423        2,742,903
Provision (benefit) for income taxes                                      284,600          399,587          714,200          899,993
                                                                   --------------   --------------   --------------   --------------

Net income                                                               $341,387         $909,927         $721,223       $1,842,910
                                                                   ==============   ==============   ==============   ==============

Earnings per share:
Basic & Diluted                                                             $0.02            $0.06            $0.05            $0.12
                                                                   ==============   ==============   ==============   ==============
</TABLE>


                                       8
<PAGE>

4.   OTHER COMPREHENSIVE INCOME

The components of other comprehensive income are as follows:

<TABLE>
<CAPTION>
                                                         For the Three Months Ended        For the Nine Months Ended
                                                                December 31,                     December 31,
                                                       ------------------------------    ------------------------------
                                                            2001             2000             2001             2000
                                                       -------------    -------------    -------------    -------------
<S>                                                         <C>              <C>            <C>              <C>
     Net income                                             $491,204         $909,927       $1,170,674       $1,842,910
     Other comprehensive income, net of tax
        Unrealized gain (loss) on investments                 36,054            6,626            8,700           13,393
        Foreign currency translation adjustments             (31,915)            (115)          (2,052)          78,919
                                                       -------------    -------------    -------------    -------------
     Comprehensive income                                   $495,343         $916,438       $1,177,322       $1,935,222
                                                       =============    =============    =============    =============

     Comprehensive income per share:
        Basic & Diluted                                        $0.03            $0.06            $0.08            $0.13
                                                       =============    =============    =============    =============
</TABLE>

     The components of accumulated comprehensive income, net of related tax, for
     the periods ended December 31, 2001 and March 31, 2001, are as follows:

                                                    December 31,     March 31,
                                                        2001           2001
                                                      --------       --------
     Unrealized gain/ (loss) on investments            $21,969        $13,269
     Accumulated translation adjustments               (47,270)       (45,218)
                                                      --------       --------
     Accumulated other comprehensive income           ($25,301)      ($31,949)
                                                      ========       ========

5.   EARNINGS PER SHARE

     The computations of earnings per share are as follows:

<TABLE>
<CAPTION>
                                                   For the Three Months Ended       For the Nine Months Ended
                                                          December 31,                    December 31,
                                                  -----------------------------   -----------------------------
                                                       2001            2000            2001           2000
                                                  -------------   -------------   -------------   -------------
<S>                                                  <C>             <C>             <C>             <C>
Numerator:
   Net income applicable to common stock               $491,204        $909,927      $1,170,674      $1,842,910
                                                  =============   =============   =============   =============
Denominator:
    Average outstanding shares used in the
    computation of per share earnings:
      Common Stock issued-Basic shares               15,243,095      15,280,549      15,221,757      15,318,259
      Stock Options (treasury method)                      --              --              --              --
                                                  -------------   -------------   -------------   -------------
      Diluted shares                                 15,243,095      15,280,549      15,221,757      15,318,259
                                                  =============   =============   =============   =============
Earnings per common share:
   Basic                                                  $0.03           $0.06           $0.08           $0.12
                                                  =============   =============   =============   =============
   Diluted                                                $0.03           $0.06           $0.08           $0.12
                                                  =============   =============   =============   =============
</TABLE>


                                       9
<PAGE>

6.   SEGMENTS

     The  Company   defines  its  operations   into  three  business   segments:
     Automotive,  Consumer  Products and  International.  The  category  "Other"
     includes  general  corporate income and expenses,  inter-segment  sales and
     expenses and other corporate assets not related to these business segments.

<TABLE>
<CAPTION>
                                                          Consumer                      Reportable
                                        Automotive        Products     International     Segments         Other          Total
                                        ----------        --------     -------------     --------         -----          -----
<S>                                    <C>             <C>              <C>            <C>              <C>           <C>
Three Months Ended
December 31, 2001
-----------------
Earned administrative fee               $4,085,973      $4,334,599        $252,948      $8,673,520      ($123,566)     $8,549,954
Profit (loss) from operations            2,371,997         384,187        (422,394)      2,333,790     (1,915,613)        418,177
Pretax Income (Loss)                     1,267,119        (221,108)       (374,944)        671,067        104,737         775,804
Net Interest Income                         15,298          38,119           6,981          60,397        136,703         197,100
Depreciation/Amortization                   84,768         376,195          18,059         479,022        258,338         737,360

December 31, 2000
-----------------
Earned administrative fee               $2,509,866      $9,023,575        $266,511     $11,799,952       ($74,957)    $11,724,995
Profit (loss) from operations              682,982       3,995,214        (462,276)      4,215,920     (3,145,372)      1,070,548
Pretax Income (Loss)                      (384,685)      1,988,289        (556,781)      1,046,823        262,692       1,309,515
Net Interest Income                         17,309          39,314               0          56,623        176,904         233,527
Depreciation/Amortization                  205,564         447,269          18,580         671,413        805,064       1,476,477

Nine Months Ended
December 31, 2001
-----------------
Earned administrative fee              $12,512,742     $12,767,819      $2,166,643     $27,447,204      ($403,664)    $27,043,540
Profit (loss) from operations            7,013,121        (839,925)       (236,419)      5,936,777     (4,750,526)      1,186,251
Pretax Income (Loss)                     4,510,382      (2,683,592)       (491,873)      1,334,917        549,957       1,884,874
Net Interest Income                         49,510          44,268          18,177         111,955        553,481         665,436
Depreciation/Amortization                  288,674       1,234,189          55,810       1,578,673      1,860,450       3,439,123
Total Assets                            32,988,790      36,384,644       3,693,341      73,066,775      4,466,249      77,533,024

December 31, 2000
-----------------
Earned administrative fee              $11,654,587     $24,395,660      $1,244,929     $37,295,176      ($273,173)    $37,022,003
Profit (loss) from operations            6,140,450       9,295,148        (384,381)     15,051,217    (12,952,065)      2,099,152
Pretax Income (Loss)                     3,202,205       3,690,129       7,546,446      14,438,780    (11,695,877)      2,742,903
Net Interest Income                         46,658          51,564         (15,853)         82,369        542,570         624,939
Depreciation/Amortization                  628,391       1,388,672         750,128       2,767,191      2,091,506       4,858,697
Total Assets                            49,260,611      52,312,487       2,786,255     104,359,353     13,253,282     117,612,635
</TABLE>

7.   LEGAL PROCEEDINGS

     American Home Assurance Co., et al, v. Warrantech Automotive, Inc., 99 Civ.
     12040 (BSG)

     Service Guard Insurance Agency,  Inc. v. Warrantech  Automotive,  Inc., New
     Hampshire  Insurance Company,  Ronald Glime and Christopher Ford, Cause No.
     99-12650, 126th Judicial District Court of Travis County, Texas

     National  Union Fire  Insurance  Company of  Pittsburgh,  PA v.  Warrantech
     Corporation and Warrantech  Automotive,  Inc., United States District Court
     (S.D.N.Y.)

     Each of the  matters  set forth  above was  settled  pursuant  to a certain
     Settlement  Agreement and Release of Claims,  effective as of July 25, 2001
     (the "Agreement").  As referenced in the title of the Agreement, each party
     released all other relevant  parties from all claims asserted in any of the
     litigations  and all claims  that could have been  asserted  in any of said
     litigations.  Furthermore,  releases  were  granted  with  respect  to  all
     potential  future  claims  arising out of the subject  matter of any of the
     litigations.  The financial  impact for this settlement is reflected in the
     Management's Discussion and Analysis beginning on page 14 in this quarterly
     report on Form 10Q.


                                       10
<PAGE>

     Staples the Office Superstore, Inc.

     Staples the Office Superstore,  Inc. v. ACE Property and Casualty Insurance
     Company,  Warrantech  Consumer Product  Services,  Inc. and Warrantech Help
     Desk,  Inc., No.  2001-02277,  District Court of Harris County,  Texas.  In
     accordance with a Service  Contract  Administration  Agreement,  Warrantech
     administered a service contract program for Staples.  For a period of time,
     that  program was  underwritten  by ACE  Property  and  Casualty  Insurance
     Company (f/k/a CIGNA Property and Casualty Insurance Company).  In December
     2000,  ACE  informed  Warrantech  that it was  implementing  changes in the
     process  pursuant to which claims  underwritten  by ACE were to be adjusted
     and paid.  Although  Warrantech  would  continue to take inbound  calls and
     validate coverage,  ACE would now confirm  diagnoses,  dispatch service and
     pay servicer  invoices.  Shortly  after  implementation  of these  changes,
     Staples  reported that it had  witnessed a material  increase in complaints
     from  customers  holding  service  contracts  underwritten  by  ACE.  These
     complaints were primarily focused on inordinate delays in service delivery.
     Although Staples discussed these problems with Warrantech, ACE continued to
     operate under the new claims handling  procedures.  In an effort to satisfy
     customer complaints,  Staples states that it has spent a substantial amount
     of its own funds to repair or replace covered products.

     This  action  has two  distinct  components.  Initially,  Staples  sought a
     Temporary  Injunction  against ACE and  Warrantech.  The motion,  as filed,
     asked that (i) Staples be given control of the toll free telephone lines on
     which  customers call for service and (ii) ACE be required to  re-institute
     those claims handling procedures that were in place prior to December 2000.
     That  motion has been denied but the parties  have  entered  into an Agreed
     Order that governs the  administration  of the Staples portfolio of service
     contracts.

     Staples  is also  pursuing  an  action  for  damages  against  both ACE and
     Warrantech.  It seeks to recover  the  amounts it has spent to satisfy  its
     customers and certain unspecified amounts representing loss of business and
     damage to its  reputation.  Its  entitlement to these amounts is based on a
     variety  of  theories  including  breach of  contract,  fraud and  tortuous
     interference  with  business.  Warrantech  believes  the claims as asserted
     against it are without merit.  Warrantech  also believes it has meritorious
     claims  against ACE arising out of these  allegations  which  claims may be
     asserted in this  litigation or in the arbitration  referred to below.  The
     document  production  phase of discovery has been completed and the parties
     are presently engaged in depositions. Settlement discussions have commenced
     and  are  continuing.  Although  no  resolution  of  the  issues  has  been
     finalized,  Warrantech  believes  that a negotiated  settlement is possible
     before the end of the year.

     ACE Property and Casualty Insurance Company

     In  the  Matter  of the  Arbitration  between  ACE  Property  and  Casualty
     Insurance  Company f/k/a CIGNA Property and Casualty  Insurance  Company v.
     Warrantech Corporation, Warrantech Consumer Product Services, Inc., WCPS of
     Florida, Inc. and Warrantech Help Desk, Inc.

     In accordance with that certain Administrative  Agreement,  effective as of
     August 1, 1997,  between the various named  Warrantech  entities and CIGNA,
     ACE has made demand for  arbitration  in  accordance  with the terms of the
     Agreement.  ACE asserts a variety of claims against the Warrantech entities
     that can be divided  into two general  categories.  The first arises out of
     Warrantech's  administration  of its service contract program with CompUSA,
     both prior to and immediately following the termination of the relationship
     between Warrantech and CompUSA. The remaining claims relate to Warrantech's
     general claims handling  procedures.  Although all claims have not been set
     forth  with  specificity,  it is  evident  that ACE is  seeking  to recover
     damages in an amount in excess of twenty million dollars ($20,000,000).

     ACE has provided Warrantech with its Preliminary Statement,  an arbitration
     panel has been  appointed and an  arbitration  schedule has been agreed to.
     Minimal  discovery  has been  commenced  and all parties  have  significant
     discovery work to complete.  Preliminary  settlement  discussions have been
     held,  but, at this stage of the  discussions,  it is impossible to predict
     whether or not such discussions will be successful.


                                       11
<PAGE>

     Michael A. Basone

     Mr.  Basone  was a former  Executive  Vice  President  and Chief  Operating
     Officer of  Warrantech  Corporation.  He resigned  his position in February
     2000.  Several  months after  resigning,  Mr. Basone  contacted the Company
     through  his  attorney  requesting  a  payment  equal in amount to what Mr.
     Basone  would have  received had he  completed  the term of his  employment
     agreement  on the theory  that the  Company's  conduct was such that he was
     forced to  resign,  thereby  resulting  in his  "constructive  termination"
     without cause.  The Company  believes this assertion is completely  without
     merit and has rejected Mr. Basone's demand for payment.  In accordance with
     the terms of his  employment  agreement,  Mr. Basone has filed a Demand for
     Arbitration with the American Arbitration Association that seeks damages in
     the amount of $300,000. The document production phase of discovery has been
     completed and the parties are presently engaged in depositions.


     Warrantech  is not able to estimate its  potential  liability in any of the
     above actions although  Warrantech  believes that these matters are without
     merit,  and  accordingly,  no reserves for potential  liabilities have been
     provided for any of these actions.

8.   STOCK OPTIONS

     On August 24, 2001,  simultaneously  with the  settlement of the litigation
     among Service Guard Insurance Agency,  Inc., American  International Group,
     Inc.  ("AIG") and related  entities which is described in Footnote 7 above,
     the  Company  granted AIG  options to  purchase  two (2) million  shares of
     Warrantech's  common  stock at a price of $2.00 per share.  The options are
     exercisable for a period of five years.  Warrantech has the right to redeem
     the  options at any time if its shares  trade at a price of $3.00 per share
     or more on any five consecutive trading days. The redemption price is $.001
     per option.  However, if Warrantech elects to redeem the options,  AIG will
     have the right to exercise the options immediately prior to the redemption.
     If AIG exercises all of the options,  it would own approximately 12% of the
     Company's outstanding common shares.



                                       12
<PAGE>

                     WARRANTECH CORPORATION AND SUBSIDIARIES

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


                            Forward Looking Statement

Except for the historical  information  contained herein,  the matters discussed
below  or  elsewhere  in  this  quarterly  report  may  contain  forward-looking
statements that involve risks and uncertainties  that could cause actual results
to differ materially from those contemplated by the forward-looking  statements.
The Company makes such  forward-looking  statements  under the provisions of the
"safe harbor" section of the Private  Securities  Litigation Reform Act of 1995.
Forward-looking statements reflect the Company's views and assumptions, based on
information  currently  available to management.  Such views and assumptions are
based on, among other things, the Company's operating and financial  performance
over recent  years and its  expectations  about its business for the current and
future  fiscal  years.  Although  the  Company  believes  that the  expectations
reflected in such  forward-looking  statements  are  reasonable,  it can give no
assurance that such expectations  will prove to be correct.  Such statements are
subject to certain risks,  uncertainties  and  assumptions,  including,  but not
limited  to,  (a)  prevailing   economic   conditions  which  may  significantly
deteriorate,  thereby  reducing  the  demand  for  the  Company's  products  and
services,  (b) availability of technical  support  personnel or increases in the
rate of turnover of such  personnel,  resulting from  increased  demand for such
qualified  personnel,  (c)  changes in the terms or  availability  of  insurance
coverage for the Company's  programs,  (d) regulatory or legal changes affecting
the  Company's  business,  (e) loss of business  from or  significant  change in
relationship  with,  any major  customer  of the  Company,  (f) the  ability  to
successfully identify and contract new business opportunities, both domestically
and  internationally,  (g)  ability  to secure  necessary  capital  for  general
operating or expansion  purposes,  (h) ability to secure an alternate  source of
payment of claims under the vehicle service  contracts,(i)  the amount of claims
required  to be paid by the Company  under the  service  contacts or (j) adverse
outcomes of litigation.  Additionally,  if any of the insurance  companies which
insure the service  contracts  marketed  and  administered  by the Company  were
unable to pay the claims under the service contracts, it could have a materially
adverse  effect on the  Company's  business.  Should one or more of these or any
other risks or  uncertainties  materialize or develop in a manner adverse to the
Company, or should the Company's underlying assumptions prove incorrect,  actual
results of operations,  cash flows or the Company's financial condition may vary
materially from those anticipated, estimated or expected.

Results of Operations

Three Months Ended December 31, 2001 Compared to the Three Months Ended December
31, 2000

Net earned  administrative  fees for the three month period  ended  December 31,
2001  decreased to $8,549,955 as compared with  $11,724,995  for the same period
last year, a decrease of  $3,175,040  or 27.1%.  The change was primarily due to
the loss of  Staples  as a  customer  and a lower  amount  of  deferred  revenue
recognized  in the  current  quarter,  partially  offset by an  increase  in the
Automotive segment's business.

The Automotive  segment net earned  administrative  fees increased to $4,085,973
for the quarter  ending  December 31, 2001 as compared to $2,509,866 in the same
quarter last year. The increase  resulted from the  recognition of more deferred
revenues from prior periods this quarter versus the same quarter last year, plus
greater  sales  amounts  during the current  quarter  compared to the prior year
quarter.

The  Consumer  Products  segment net earned  administrative  fees  decreased  to
$4,334,599 for the quarter ended December 31, 2001 from  $9,023,575,  a decrease
of  $4,688,976  or 52.0% for same  period  last year.  The change was  primarily
attributable to the loss of Staples as a customer, partially offset by increases
in business from other dealers within the segment.


                                       13
<PAGE>

The  International  segment  net earned  administrative  fees  remained  flat at
$252,948 for the three month period  ended  December 31, 2001 from  $266,511 for
the same period a year ago. The South American market contributed higher volumes
from new  customers  in Peru and Chile and  increased  market  penetration  from
existing  customers  in Chile,  offsetting  the loss of a large  South  American
customer.

Service,  selling and general and  administrative  expenses (SG&A) for the three
months ended December 31, 2001 were reduced by $1,783,552 or 19.4% to $7,394,418
as compared to  $9,177,970  for the three  months ended  December 31, 2000.  The
decrease  reflects  the  Company's  improved  call  center  technologies,   cost
containment  measures  and lower  legal  expenses.  Total  employee  and payroll
related costs were down 18.3% from $5,161,769 for the quarter ended December 31,
2000  to  $4,267,327  in  the  current  quarter.  Outside  services,   including
consulting  and legal fees,  were down $363,189 or 27.3% from  $1,330,368 in the
quarter ended December 31, 2000 to $967,179 in the current quarter.

Depreciation  and  amortization  expenses  were  reduced by $739,117 or 50.1% to
$737,360 for the three months ended  December 31, 2001 as compared to $1,476,477
for the same  period  last year.  Decreases  in  depreciation  and  amortization
resulted from a decrease in the depreciable asset base and the early adoption of
SFAS 142,  which  allowed  the Company to elect not to  amortize  its  remaining
goodwill.

Income from  operations  for the third  quarter  2002 was  $418,177  compared to
$1,070,548 for the third quarter 2001. Income decreases, as a result of the loss
of the Staples account,  were partially offset by the overall  reduction in SG&A
and depreciation and amortization.

The  provision for income taxes was $284,600 for the third quarter 2002 compared
to $399,587 for the same period last year.

Net income for the three  months  ended  December 31, 2001 was $491,204 or $0.03
per basic and  diluted  share  compared to a net income of $909,927 or $0.06 per
basic and diluted share for the comparable  period last year. This change is the
result of factors as described above.

Nine Months Ended  December 31, 2001 Compared to the Nine Months Ended  December
31, 2000

Net earned administrative fees for the nine month period ended December 31, 2001
decreased to $27,043,540 as compared with  $37,022,003  for the same period last
year, a decrease of  $9,978,463  or 27.0%.  The change was  primarily due to the
loss of  Staples as a  customer.  Excluding  the loss of  Staples,  the  Company
experienced  a  slight  increase  in net  earned  administrative  fees  from its
existing and new dealers.

The Automotive segment net earned administrative fees increased $858,155 or 7.4%
to $12,512,742 for the nine months ending December 31, 2001 from  $11,654,587 in
the same period last year,  resulting from an increase in deferred  revenue from
prior periods.

The  Consumer  Products  segment  net  earned   administrative   fees  decreased
$11,627,841 or 47.7% to $12,767,819  from $24,395,660 for same period last year.
The  change was  primarily  attributed  to the loss of  Staples  as a  customer,
partially offset by increases in business from other dealers within the segment.
Additionally,  lower net earned  administrative fee during the first nine months
compared  to the prior  year nine  months  were  partially  offset by  increased
deferred  revenues from prior periods,  which were recognized this period versus
the same period last year.

The International  segment net earned  administrative fees increased $921,714 or
74.0% to  $2,166,643  for the nine month  period  ended  December  31, 2001 from
$1,244,929 for the same period a year ago. The South American market contributed
higher  volumes  from new  customers  in Peru and  Chile  and  increased  market
penetration from existing  customers in Chile.  These increases more than offset
the loss of net earned  administrative  fees from the United Kingdom,  which was
closed September 30, 2000.

Service,  selling and general and  administrative  expenses  for the nine months
ended  December  31,  2001,  including  the legal  settlement  were  reduced  by
$6,596,436 or 22.7% to $22,418,166 as compared to


                                       14
<PAGE>

$29,014,602  for the nine months ended December 31, 2000. The decrease  reflects
the Company's improved call center  technologies,  cost containment measures and
the closing of the United Kingdom operations. Total employee and payroll related
costs were down  $3,029,801 or 18.0% from  $16,806,171 for the nine months ended
December 31, 2000 to  $13,776,370  for the nine months ended  December 31, 2001.
Additionally, the decrease in SG&A expenses reflects the reimbursement by AIG of
$824,332 in legal fees associated with its lawsuit against the Company.  Outside
services,  including  consulting and legal fees,  were down  $2,313,271 or 55.2%
from  $4,192,010 in the nine months ended December 31, 2000 to $1,878,739 in the
nine months ended December 31, 2001,  primarily due to the settlement  with AIG.
Rent costs for the nine months ended December 31, 2001  decreased  $705,382 from
the same  period  last year as a result of the  closing  of the  United  Kingdom
offices and relocation of the Company's headquarters to Texas.

Depreciation  and  amortization  expenses were reduced by $1,419,574 or 29.2% to
$3,439,123 for the nine months ended December 31, 2001 as compared to $4,858,697
for the same period last year, as a result of the closing of the United  Kingdom
operations  and the early  adoption  of SFAS 142,  which  allowed the Company to
elect not to amortize its  remaining  goodwill.  Additionally,  deprecation  was
lower in the current  nine  months  versus the prior year as the  Company's  net
property and equipment matured.

Loss on  abandonment of assets was $1,049,552 for the nine months ended December
31, 2000.  Effective  September 30, 2000, the Company  ceased  operations in the
United Kingdom as a result of unprofitable operations and recorded a loss on its
operations.

Income  from  operations  for the  nine  months  ended  December  31,  2001  was
$1,186,251  as compared to  $2,099,152  for the nine months  ended  December 31,
2000.  Income  decreases,  as a result of the loss of the Staples account,  were
partially offset by the reduction in losses from the United Kingdom  operations,
the benefit from the legal settlement with AIG and lower SG&A expenses and lower
depreciation and amortization.

Net income for the nine months ended  December 31, 2001 was  $1,170,674 or $0.08
per basic and diluted share  compared to a net income of $1,842,910 or $0.12 per
basic and diluted share for the comparable  period last year. This change is the
result of factors as described above.

                        Liquidity and Financial Resources

Recent Developments - Significant insurer in liquidation

A number of  uncertainties  exist at December 31, 2001 that could have an impact
on the Company's future financial  condition,  including but not limited to, the
effect  on  the  Company  of  the  liquidation  of  Reliance  Insurance  Company
("Reliance").  During  the  second  quarter  2001,  the  Pennsylvania  Insurance
Commissioner  informed the Company that Reliance  will be  liquidated  and cease
making payments on claims. The Pennsylvania  Insurance  Commissioner  determined
that Reliance is not likely to be able to satisfy all of the claims that will be
submitted to it due to the  circumstances  arising out of the September 11, 2001
terrorist attacks on the World Trade Center.  Reliance underwrote  approximately
48% of the  automotive  service  contracts  that  were  sold  during a period of
approximately one and one-half years ending in November 2000.  Approximately 52%
of the  automotive  service  contracts sold by Warrantech  Automotive,  a wholly
owned subsidiary of the Company, during that time period are not affected by the
Reliance  liquidation.  Service  contracts sold before and after that period are
not affected because they are underwritten by other carriers.

The  Company  is  attempting  to  ascertain  from  the  Pennsylvania   Insurance
Department,  the amount of  Reliance  assets that will be  available  to pay the
vehicle  service  contract  claims  and when such funds will  become  available.
Additionally,  the Company  must wait to  ascertain  the amount of  Pennsylvania
Insurance Department Insurance Funds and any other state guaranty funds, if any,
which are  available and if any Federal  subsidies to the insurance  industry in
general or Reliance specifically,  if any, will be made available as a result of
the  terrorist  attacks  to pay  vehicle  service  contract  claims.  The  above
situations  could take years before  resolution is obtained.  Additionally,  the
Company is considering  several  alternative  arrangements to cover claims under
the  vehicle  service  contracts,  including a  long-term  arrangement  with its
current underwriter (See


                                       15
<PAGE>

"Letter of  Understanding"  below).  The Company  anticipates  such  alternative
arrangements will be consummated before the fiscal year end.

If assets from Reliance are not  available to pay the claims and/or  alternative
arrangements are not made,  Warrantech  Automotive may ultimately be required to
honor claims on contracts in which it is named as obligor. Such potential claims
represent   approximately   48%  of  the  total  automotive   service  contracts
underwritten  by Reliance.  If required to honor claims,  the Company's  working
capital  and its  ability  to meet its  obligations  in a timely  manner  may be
severely restricted and could have a material adverse effect on the Company, its
results of operations, financial condition and cash flows.

Due to the  terrorist  attacks on the World Trade Center on September  11, 2001,
the Company is aware that  significant  financial  pressures have been placed on
insurance  companies;  however,  the Company is not aware that  either  American
International  Group, Inc. ("AIG") or Great American  Insurance  Company,  which
insure most of the obligations  under the other service  contracts  marketed and
administered by the Company, are under any such financial pressures. If, for any
reason, the insurance  companies were not able to cover claims under the service
contracts  marketed and administered by the Company due to financial  insolvency
or other  reasons,  there could be a material  adverse  effect on the  Company's
future business.

Letter of Understanding

The Letter of  Understanding,  which has been  executed  by  Warrantech  and its
insurer,  provides  for the payment of Reliance  claims from a fund  created for
that purpose.  Warrantech Automotive made an initial interest-bearing loan of $1
million to establish  the fund and  thereafter  the Company will make  specified
contributions   for  each  new  service  contract   administered  by  Warrantech
Automotive.   Under  the  proposed  arrangement  set  forth  in  the  Letter  of
Understanding,  the insurer will make loans available on an "as needed" basis in
the event the fund balance is inadequate to make the requisite  claims payments.
In addition to providing  financial  support for the claims fund,  the Letter of
Understanding  provides for the insurer to extend a separate  line of credit for
an amount up to $3 million to  Warrantech,  subject to certain  adjustments,  to
fund unanticipated working capital requirements. Interest will be paid on monies
made available for either purpose.

As part of the transaction proposed in the Letter of Understanding,  the insurer
will be  receiving  options to purchase up to 1,650,000  shares of  Warrantech's
common stock at a stock price of $2.00 per share subject to certain adjustments.
In the  event  that  the  insurer  exercises  all  the  options,  it  would  own
approximately 10.8% of the Company's outstanding shares.

Although the terms described in the Letter of Understanding  are non-binding and
subject to due  diligence  by the  insurer  and the  execution  of a  definitive
agreement, the parties have agreed to implement and fund the plan immediately on
an interim basis,  commencing on November 19, 2001,  prior to the execution of a
definitive  written  agreement.  During the quarter ended December 31, 2001, the
Company  and its  insurer  established  a  claims  payment  fund.  Approximately
$2,164,335  in claims has been paid during the quarter from the fund,  under the
terms of the Letter of Understanding.

During the last quarter of fiscal year 2002,  the Company  plans to continue its
expansion into Canada to better service Warrantech's  Canadian customer base and
increase the Company's Canadian market  penetration for consumer products,  home
and automotive service contracts and extended warranties.

Recent Developments - Other

During the final fiscal quarter,  the Company signed a three-year agreement with
BoatU.S., the nation's largest recreational boating Association, to offer to its
530,000 member base the Warrantech Xchange Product Replacement Program. BoatU.S.
is the Company's  first client in the boating  industry and represents the third
new market  Warrantech has penetrated  during the last twelve months in addition
to motorcycles and golf carts.

The  Company  continues  to improve  customer  service and  technology  with the
introduction  in the final  quarter of fiscal 2002 of its  innovative  web-based
platform from its Consumer Products  Services segment.  WCPS Online will provide
real-time  capabilities  that meet the needs of dealers,  service  providers and
consumers.  It is  designed  to reduce  paperwork  and cut the time and costs of
administering  warranties for dealers and service  providers  while  providing a
better experience and faster service for their customers.

The Company  also  announced  in the final fiscal 2002 quarter that an agreement
had been reached with Automotive Investment Group, to provide marketing services
for  reinsurance  programs for large  automobile  dealerships.  The terms of the
contract call for Warrantech  Automotive,  to begin  marketing a new reinsurance
program to the nation's larger automobile dealerships on January 1, 2002.

Financial Position

As  of  December  31,  2001,  total  cash  and  short-term  investments  totaled
$7,616,776, up from $3,198,078 at fiscal year end March 31, 2001. Cash generated
from operating  activities  increased from  $1,131,231 for the nine months ended
December 31, 2000 to $5,792,059 for the nine months ended December 31, 2001. The
Company's  primary  sources of cash  during the first nine months of fiscal year
2002 were cash provided by operating  activities of $5,792,059 and proceeds from
the sales of marketable  securities of  $1,315,304.  Increases in cash generated
from operating  activities primarily resulted from advances to the fund from the
insurer as described in the Letter of Understanding.

Working capital at December 31, 2001 was negative  $4,508,064,  an increase from
negative  $2,807,496 at March 31, 2001. The change in working capital  primarily
resulted from advances made by the Company to the claims  payment fund described
in the Letter of Understanding.  The Company believes that internally  generated
funds,  resulting  primarily  from a  continuation  of reducing its average days
outstanding  accounts  receivable  and the $3  million  line of credit  from the
insurer,  will be sufficient to finance its current  operations for at least the


                                       16
<PAGE>

next twelve  months.  The Company is  aggressively  pursuing new  business  both
domestically and  internationally  to fund future working  capital.  The Company
plans to  continue  to  contain  its SG&A  costs and  utilize  technologies  for
operational  efficiencies to further enhance both its operating  income and cash
flows from operating activities.

During the nine months ended December 31, 2001, the Company spent $1,179,920 for
property and  equipment  compared to  $1,302,880  for the same period last year.
These expenditures primarily result from software development costs and computer
equipment, as the Company continues to invest to enhance its technologies, adapt
its systems for Spanish to improve customer  service and to improve  operational
efficiencies.  The Company has ongoing  relationships  with equipment  financing
companies  and intends to continue  financing  certain  future  equipment  needs
through  lease/purchase  transactions.  The total amount financed  through these
transactions during the nine months ended December 31, 2001 amounted to $443,232
compared to $399,195 during the nine months ended December 31, 2000. The Company
repaid  $561,087 in notes and capital  leases in the first nine months of fiscal
year 2002.  Additionally,  the Company used $1,748,362 to fund the account to be
used for payment of claims related to the Reliance liquidation.

The effects of inflation have not been  significant  to the Company.  Management
does not  expect  inflation  to have a  significant  impact  on the  results  of
operations or financial condition in the foreseeable future.


                                       17
<PAGE>

                           PART II. Other Information

Item 1.        Legal Proceedings

               Litigation  - The  Company  from  time  to time  is  involved  in
               litigation  incidental to the conduct of its business.  Reference
               is  made  to  Footnote  7 to the  Financial  Statements  in  this
               Quarterly  Report  regarding  information  associated  with legal
               proceedings.

Item 2.        Changes in Securities

               Not applicable.

Item 3.        Defaults Upon Senior Securities

               Not applicable.

Item 4.        Submission of Matters to Vote of Security Holders

               Not applicable.

Item 5.        Other Information

               Not applicable.

Item 6 (a)    Exhibits

              10(u)  Insurance  policy  between   Warrantech   Consumer  Product
                     Services,  Inc.  and  Warrantech  Carribean  LTD and  Great
                     American  Insurance  Company  pertaining  to  Service  Plan
                     Agreement.

              10(v)  Schedule 10(v) identifying contracts that are substantially
                     similar to Exhibit  10(u),  the  Insurance  policy  between
                     Warrantech  Consumer Product Services,  Inc. and Warrantech
                     Carribean  LTD  and  Great   American   Insurance   Company
                     pertaining  to  Service  Plan  Agreement,  in all  material
                     respects  except as to the  parties  thereto,  the dates of
                     execution, or other details.

Item 6 (b)     Reports on 8-K

               On October 23, 2001,  the Company filed a Current  Report on Form
               8-K. In this Current Report, the Company reported,  under Item 5,
               that one of its subsidiaries,  Warrantech  Automotive,  Inc., was
               informed by the Insurance  Commissioner  of the  Commonwealth  of
               Pennsylvania  that Reliance  Insurance Company will be liquidated
               and cease  making  payments on claims.  See Item 2.  Management's
               Discussion  and  Analysis of Financial  Condition  and Results of
               Operations - Liquidity and Financial  Resources in this Quarterly
               Report.




                                       18
<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.


                          WARRANTECH CORPORATION
                       ---------------------------------------------------------
                       (Registrant)



                       S/N/S  Richard F. Gavino
                       ---------------------------------------------------------
                       Richard F. Gavino - Executive Vice President, Chief
                       Financial Officer, Chief Accounting Officer and Treasurer
                       (Chief Financial Officer and Duly Authorized Officer)


Date: February 14, 2002


                                       19
<PAGE>

                    WARRANTECH CORPORATION AND SUBSIDIARIES

                                 EXHIBIT INDEX


Exhibit #                        Description
---------                        -----------

10(u)          Insurance  policy  between   Warrantech   Consumer
               Product  Services,  Inc. and Warrantech  Carribean
               LTD   and   Great   American   Insurance   Company
               pertaining to Service Plan Agreement.

10(v)          Schedule  10(v)  identifying  contracts  that  are
               substantially   similar  to  Exhibit  10(u),   the
               Insurance  policy  between   Warrantech   Consumer
               Product  Services,  Inc. and Warrantech  Carribean
               LTD   and   Great   American   Insurance   Company
               pertaining  to  Service  Plan  Agreement,  in  all
               material   respects   except  as  to  the  parties
               thereto, the dates of execution, or other details.