##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-QSB

(Mark One)

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|x |  | Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934

For the quarterly period ended June 30, 2003

|  |  |                                                                                   
|- |  | ----------------------------------------------------------------------------------
|o |  | Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _______________ to ______________.

Commission file number 0-18808

Great Western Land and Recreation, Inc.

(Name of small business issuer as specified in its charter)


|                                                                      |  |                                             
|--------------------------------------------------------------------- |  | --------------------------------------------
|Nevada
(State or other jurisdiction
of incorporation or organization) |  | 13-3530765
(IRS Employer
Identification No.)

5115 N. Scottsdale Road, Suite 101
Scottsdale, AZ 85250
(480) 949-6007
(Address and telephone number of
principal executive offices)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.

Yes  x  No  o

The number of shares of the registrants Common Stock outstanding at July 31,
2003 was 20,779,508.

1



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TABLE OF CONTENTS



|                             |                                                             |                                            |  |  |  |  |  | 
|---------------------------- | ----------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item 1. Financial Statements                               
|                             |                                                             | CONSOLIDATED BALANCE SHEETS               
|                             |                                                             | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                             |                                                             | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                             | Item 2. Managements Discussion and Analysis               
|                             | Item 3. Controls and Procedures                            
|PART II: OTHER INFORMATION  
|                             | Item 1. Legal Proceedings                                  
|                             | Item 2. Changes in Securities and Use of Proceeds          
|                             | 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                  
|Index to Exhibits           
|EX-31.1                     
|EX-31.2                     
|EX-32.1                     
|EX-32.2                     



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##### Table of Contents



GREAT WESTERN LAND AND RECREATION, INC.

CONTENTS

|           |                                                             |  |      |    | 
|---------- | ----------------------------------------------------------- |  | ---- | -- | 
|           |                                                             |  | PAGE
|           |                                                             |  |     
|Part I     |                                                             |  |      |   
|           | Financial Information
Item 1. Financial Statements          |  |      | 3  | 
|           | Item 2. Managements Discussion and Analysis                |  |      | 10 | 
|           | Item 3. Controls and Procedures                             |  |      | 15 | 
|Part II    |                                                             |  |      |   
|           | Other Information
Item 1. Legal Proceedings                 |  |      | 16 | 
|           | Item 2. Changes in Securities and Use of Proceeds           |  |      | 16 | 
|           | Item 3. Defaults Upon Senior Securities                     |  |      | 16 | 
|           | Item 4. Submission of Matters to a Vote of Security Holders |  |      | 16 | 
|           | Item 5. Other Information                                   |  |      | 16 | 
|           | Item 6. Exhibits and Reports on Form 8-K                    |  |      | 16 | 
|Signatures |                                                             |  | 17   |   

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##### Table of Contents






PART I FINANCIAL INFORMATION




Item 1.Financial Statements




GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |           |           |           | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------- | --------- | ----------- | --------- | ------------ | --------- | --------- | --------- | 
|                                     |                                                                                                                                                   |                                                                                             |                            |           | June 30,    |           | December 31,
|                                     |                                                                                                                                                   |                                                                                             |                            |           | 2003        |           | 2002        
|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |             
|                                     |                                                                                                                                                   |                                                                                             |                            |           | (unaudited) |           |              |           |          
|ASSETS                               |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |          
|                                     | Cash and cash equivalents                                                                                                                         |                                                                                             | $                          | 167,845   |             |           | $            | 654,369   |          
|                                     | Notes receivable                                                                                                                                  |                                                                                             |                            | 1,568,394 |             |           |              | 1,574,569 |          
|                                     | Land held for development and sale                                                                                                                |                                                                                             |                            | 9,058,824 |             |           |              | 8,648,204 |          
|                                     | Receivable from related entities                                                                                                                  |                                                                                             |                            | 70,622    |             |           |              | 66,370    |          
|                                     | Property and equipment, net of accumulated
depreciation of $55,507 and $40,356
in 2003 and 2002, respectively                                     |                                                                                             |                            | 178,424   |             |           |              | 192,905   |          
|                                     | Other                                                                                                                                             |                                                                                             |                            | 296,538   |             |           |              | 268,921   |          
|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |           |          
|                                     |                                                                                                                                                   | $                                                                                           | 11,340,647                 |           |             | $         | 11,405,338   |          
|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |          
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |          
|                                     | Liabilities
Notes payable                                                                                                                         |                                                                                             | $                          | 4,001,864 |             |           | $            | 4,028,170 |          
|                                     |                                                                                                                                                   | Subordinated debt                                                                           |                            |           | 3,624,867   |           |              |           | 3,457,520 |          
|                                     |                                                                                                                                                   | Payable to related entities                                                                 |                            |           | 766,652     |           |              |           | 869,400   |          
|                                     |                                                                                                                                                   | Accounts payable and other accrued liabilities                                              |                            |           | 545,926     |           |              |           | 324,298   |          
|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |          
|                                     |                                                                                                                                                   |                                                                                             | Total liabilities          |           |             | 8,939,309 |              |           |           | 8,679,388 | 
|                                     | Minority interest                                                                                                                                 |                                                                                             |                            | 47,881    |             |           |              | 46,009    |          
|                                     | Stockholders
equity
Preferred stock, $0.001 par value; 10,000,000 shares
authorized; 14,380 issued and outstanding;
liquidation value  $719,000 |                                                                                             |                            | 652,189   |             |           |              | 628,559   |          
|                                     |                                                                                                                                                   | Common stock, $0.001 par value; 30,000,000 shares
authorized; 20,779,508 shares outstanding |                            |           | 20,779      |           |              |           | 20,779    |          
|                                     |                                                                                                                                                   | Additional paid-in capital                                                                  |                            |           | 2,310,105   |           |              |           | 2,333,735 |          
|                                     |                                                                                                                                                   | Accumulated other comprehensive loss                                                        |                            |           | (733        | )         |              |           | (703      | )        
|                                     |                                                                                                                                                   | Accumulated deficit                                                                         |                            |           | (629,196    | )         |              |           | (302,742  | )        
|                                     |                                                                                                                                                   | Treasury stock                                                                              |                            |           | 313         |           |              |           | 313       |          
|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |           |          
|                                     |                                                                                                                                                   |                                                                                             | Total stockholders equity |           |             | 2,353,457 |              |           |           | 2,679,941 | 
|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |           |          
|                                     |                                                                                                                                                   | $                                                                                           | 11,340,647                 |           |             | $         | 11,405,338   |          
|                                     |                                                                                                                                                   |                                                                                             |                            |           |             |           |              |          

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

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GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |         | 
|---------------------------------------------------------------------------------- | ------------------------------------------ | - | --------------------------- | ------- | ------------------------- | - | ---------- | ------- | ---- | - | ---------- | ------- | - | - | ---------- | ------- | 
|                                                                                   |                                            |   | Three months ended June 30, |         | Six months ended June 30,
|                                                                                   |                                            |   |                             |         |                          
|                                                                                   |                                            |   | 2003                        |         | 2002                      |   | 2003       |         | 2002
|                                                                                   |                                            |   |                             |         |                           |   |            |         |     
|Land and lot sales                                                                 |                                            | $ | 879,587                     |         |                           | $ | 1,081,091  |         |      | $ | 1,574,177  |         |   | $ | 1,897,159  |        
|Cost of land and lot sales                                                         |                                            |   | 450,217                     |         |                           |   | 471,673    |         |      |   | 825,574    |         |   |   | 901,626    |        
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        
|                                                                                   | Gross profit on sales                      |   |                             | 429,370 |                           |   |            | 609,418 |      |   |            | 748,603 |   |   |            | 995,533 | 
|Operating, selling, general and
administrative expense                             |                                            |   | 307,949                     |         |                           |   | 559,470    |         |      |   | 824,293    |         |   |   | 1,177,812  |        
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        
|                                                                                   |                                            |   | 121,421                     |         |                           |   | 49,948     |         |      |   | (75,690    | )       |   |   | (182,279   | )      
|Other
income (expense)
Interest expense                                            |                                            |   | (163,784                    | )       |                           |   | (172,244   | )       |      |   | (342,017   | )       |   |   | (421,900   | )      
|                                                                                   | Interest income                            |   |                             | 34,782  |                           |   |            | 66,413  |      |   |            | 69,884  |   |   |            | 110,487 | 
|                                                                                   | Equity in losses of unconsolidated company |   |                             |        |                           |   |            |        |      |   |            | (53,530 | ) |   |            |        | 
|                                                                                   | Gain on settlement of note receivable      |   |                             |        |                           |   |            |        |      |   |            |        |   |   |            | 118,000 | 
|                                                                                   | Other income                               |   |                             | 84,134  |                           |   |            | 47,181  |      |   |            | 76,771  |   |   |            | 72,378  | 
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        
|                                                                                   |                                            |   | (44,868                     | )       |                           |   | (58,650    | )       |      |   | (248,892   | )       |   |   | (121,035   | )      
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        
|Income (loss) before minority interest                                             |                                            |   | 76,553                      |         |                           |   | (8,702     | )       |      |   | (324,582   | )       |   |   | (303,314   | )      
|Minority interest                                                                  |                                            |   |                            |         |                           |   |           |         |      |   | (1,872     | )       |   |   |           |        
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        
|Net income (loss)                                                                  |                                            | $ | 76,553                      |         |                           | $ | (8,702     | )       |      | $ | (326,454   | )       |   | $ | (303,314   | )      
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        
|Net income (loss) per common and common
equivalent share
Basic and diluted         |                                            | $ |                            |         |                           | $ |           |         |      | $ | (0.02      | )       |   | $ | (0.01      | )      
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        
|Weighted average common and common
equivalent shares outstanding
Basic and diluted |                                            |   | 20,779,508                  |         |                           |   | 20,779,508 |         |      |   | 20,779,508 |         |   |   | 20,779,508 |        
|                                                                                   |                                            |   |                             |         |                           |   |            |         |      |   |            |         |   |   |            |        

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

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GREAT WESTERN LAND AND RECREATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |           |            |         |          |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ------------------------------------------------------------- | --------------------------------------------------- | -------- | ------------------------- | -------- | --------- | ---------- | ------- | -------- | -
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          | Six months ended June 30,
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                          
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          | 2003                      |          | 2002     
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |          
|Cash
flows from operating activities
 Net loss                                                                                                                                                  |                                                                                            | $                                                             | (326,454                                            | )        |                           | $        | (303,314  | )         
|                                                                                                                                                                                                | Adjustments to reconcile net loss to net cash provided
by (used in ) operating activities: |                                                               |                                                     |          |                           |          |           |            |        
|                                                                                                                                                                                                |                                                                                            | Depreciation and amortization                                 |                                                     |          | 17,830                    |          |           |            | 6,361   |         
|                                                                                                                                                                                                |                                                                                            | Bad debt expense                                              |                                                     |          | (533                      | )        |           |            |        |         
|                                                                                                                                                                                                |                                                                                            | Accrued interest expense included in debt                     |                                                     |          | 304,341                   |          |           |            | 113,307 |         
|                                                                                                                                                                                                |                                                                                            | Accretion of interest income                                  |                                                     |          | (2,600                    | )        |           |            |        |         
|                                                                                                                                                                                                |                                                                                            | Collection of notes receivable relating to prior years sales |                                                     |          | 56,981                    |          |           |            | 698,820 |         
|                                                                                                                                                                                                |                                                                                            | Uncollected notes receivable from current year sales          |                                                     |          | (47,673                   | )        |           |            | (53,009 | )       
|                                                                                                                                                                                                |                                                                                            | Loss on disposal of property, plant and equipment             |                                                     |          | 9,756                     |          |           |            |        |         
|                                                                                                                                                                                                |                                                                                            | Equity in losses of unconsolidated company                    |                                                     |          | 53,530                    |          |           |            |        |         
|                                                                                                                                                                                                |                                                                                            | Minority interests in earnings of consolidated subsidiaries   |                                                     |          | 1,872                     |          |           |            |        |         
|                                                                                                                                                                                                |                                                                                            | Change in operating assets and liabilities:                   |                                                     |          |                           |          |           |            |         |         
|                                                                                                                                                                                                |                                                                                            |                                                               | Land held for development and sale                  |          |                           | (545,582 | )         |            |         | 826,884  |  
|                                                                                                                                                                                                |                                                                                            |                                                               | Other assets                                        |          |                           | (36,581  | )         |            |         | (10,015  | )
|                                                                                                                                                                                                |                                                                                            |                                                               | Accounts payable and other accrued liabilities      |          |                           | 221,628  |           |            |         | (164,247 | )
|                                                                                                                                                                                                |                                                                                            |                                                               | Deferred income                                     |          |                           |         |           |            |         | (235,455 | )
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |           |           
|                                                                                                                                                                                                |                                                                                            |                                                               | Net cash provided by (used in) operating activities |          |                           | (293,485 | )         |            |         | 879,332  |  
|Cash
flows from investing activities
 Increase (decrease) in advances to related parties                                                                                                        |                                                                                            |                                                               | 27,962                                              |          |                           |          | (137,068  | )         
|                                                                                                                                                                                                | Investment in unconsolidated company                                                       |                                                               |                                                     | (53,530  | )                         |          |           |           |        
|                                                                                                                                                                                                | Purchase of property and equipment                                                         |                                                               |                                                     | (4,171   | )                         |          |           | (16,594    | )      
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |           |           
|                                                                                                                                                                                                |                                                                                            |                                                               | Net cash used in investing activities               |          |                           | (29,739  | )         |            |         | (153,662 | )
|Cash
flows from financing activities
 Issuance of notes payable                                                                                                                                 |                                                                                            |                                                               | 539,418                                             |          |                           |          | 1,752,056 |           
|                                                                                                                                                                                                | Payments on notes payable                                                                  |                                                               |                                                     | (702,718 | )                         |          |           | (2,056,117 | )      
|                                                                                                                                                                                                | Decrease in subordinated debt                                                              |                                                               |                                                     |         |                           |          |           | (431,747   | )      
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |           |           
|                                                                                                                                                                                                |                                                                                            |                                                               | Net cash used in financing activities               |          |                           | (163,300 | )         |            |         | (735,808 | )
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |           |           
|Net decrease in cash and cash equivalents                                                                                                                                                       |                                                                                            |                                                               | (486,524                                            | )        |                           |          | (10,138   | )         
|Cash and cash equivalents at beginning of period                                                                                                                                                |                                                                                            |                                                               | 654,369                                             |          |                           |          | 317,969   |           
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |           |           
|Cash and cash equivalents at end of period                                                                                                                                                      |                                                                                            | $                                                             | 167,845                                             |          |                           | $        | 307,831   |           
|                                                                                                                                                                                                |                                                                                            |                                                               |                                                     |          |                           |          |           |           
|Supplemental disclosure of cash flow information:                                                                                                                                               |                                                                                            |                                                               |                                                     |          |                           |          |           |           
|Cash paid during the period for interest, net of amount capitalized                                                                                                                             |                                                                                            | $                                                             | 51,598                                              |          |                           | $        | 80,745    |           
|Noncash
investing and financing activities
Transfer of Wagon Bow Ranch land in exchange for minority interest in Willow
Springs Ranch, LLC and a reduction in the payable to minority investors |                                                                                            |                                                               | 134,962                                             |          |                           |          |          |           
|                                                                                                                                                                                                | Subordinated debt converted into preferred stock                                           |                                                               |                                                     |         |                           |          |           | 604,929    |        
|                                                                                                                                                                                                | Subordinated debt converted to capital                                                     |                                                               |                                                     |         |                           |          |           | 204,266    |        

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

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GREAT WESTERN LAND AND RECREATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE A  BACKGROUND AND BASIS OF PRESENTATION

The accompanying consolidated financial statements as of June 30, 2003 and
December 31, 2002 and for the three month and six month periods ended June 30,
2003 and 2002 include the accounts of Great Western Land and Recreation, Inc.
(formerly 1st Realty Investments, Inc.) and its wholly- and majority-owned
subsidiaries (collectively, the Company). Investments in companies that
represent 20% to 50% of the ownership interest are accounted for on the equity
method. Investments in companies that represent less than a 20% ownership
interest are accounted for on the cost basis. All material intercompany
accounts and transactions have been eliminated.

The accompanying unaudited financial information reflects all adjustments,
consisting only of normal recurring adjustments, that are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods presented. Such financial information should be read in conjunction
with the consolidated financial statements and related notes as of December 31,
2002 included in Form 8-K/A filed with the SEC on May 5, 2003.

The Company maintains its records and prepares its financial statements in
accordance with accounting principles generally accepted in the United States
of America for real estate operations. In preparing financial statements in
conformity with accounting principles generally accepted in the United States
of America, management is responsible for making estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.

On July 23, 2002, the Company entered into an Agreement and Plan of Merger (the
Merger Agreement or the Agreement) with Great Western Land and Recreation,
Inc., a Delaware corporation (Great Western Delaware). Under the Merger
Agreement, the Company agreed to undertake a series of transactions the result
of which would be the transfer of control of the Company to Amortibanc
Investments, LC, (Amortibanc), the stockholder of Great Western Delaware, and
the merger of Great Western Delaware into the Company. The Company would be
the surviving entity. The transaction also involved the election of new
directors of the Company and the amendment of the Companys Articles of
Incorporation to change its name to Great Western Land and Recreation, Inc. The
Board of Directors of the Company unanimously approved the Merger Agreement and
the other transactions to be undertaken and the holders of a majority of the
outstanding stock of the Company approved the transactions in writing on July
25, 2002. On July 23, 2002 the stockholder of Great Western Delaware consented
in writing to the Merger Agreement transactions. Under applicable Nevada law,
written consent by the holders of a majority of the outstanding stock of the
Company to the transactions outlined in the Agreement was sufficient to approve
the transactions, without a meeting or vote of all of the stockholders. This
transaction became effective on February 20, 2003. Immediately following the
merger, former 1st Realty stockholders owned approximately 9% of the Company
and Amortibanc owned approximately 91% of the Company (94% assuming the
conversion of the preferred stock into common stock).

The Company expects that the Merger will be treated as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended. If the Merger qualifies as a tax-free reorganization, no gain or
loss will be recognized for income tax purposes by either the Company or Great
Western Delaware as a result of the acquisition. There also should not be any
material tax effects to the existing stockholders of the Company as a result of
the transaction. However, neither the Company nor Great Western Delaware
requested a tax ruling from the Internal Revenue Service with respect to the
transaction. Accordingly, the Company can give no assurance that the
transaction will qualify as a tax-free reorganization. The Company has
accounted for its acquisition of Great Western Delaware as a reverse
acquisition, with Great Western Delaware the acquirer and the Company the
acquiree for reporting purposes. Prior to September 2000, 1st Realty was a
dormant non-operating company. Its operations up to the date of the Merger are
solely the result of the series of transactions it entered into with Great
Western Delaware. As a result, the assets and liabilities of both companies
have been combined at their historical cost. The accompanying financial
statements and notes are presented as if the Merger were consummated on January
1, 2002.

On June 4, 2003 the Company changed its year end from December 31 to September
30. As a result of this change, fiscal 2003 will be a short year, which will
end on September 30, 2003 and consist of only nine months.

NOTE B  NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net loss less
preferred stock dividends applicable to the period by 20,779,508 common shares.
The 20,779,508 common shares issued and outstanding upon the completion of the
Merger are assumed

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to be outstanding for all periods presented. Diluted net income (loss) per
share is the same as basic loss per share because the convertible preferred
stock and the stock options are anti-dilutive and therefore excluded from the
computation.

NOTE C  INVESTMENT IN UNCONSOLIDATED COMPANY

On September 19, 1997, Laguna Investments L.L.C., a subsidiary of the Company,
acquired a 25.52% ownership in Laguna at Arrowhead Apartments L.L.C.
(Laguna), which owns an apartment complex in Phoenix, Arizona. This
investment is accounted for using the equity method. Under the equity method,
the Companys investment balance approximates the Companys original cost
adjusted for its equity interest in the earnings and losses of Laguna since
September 19, 1997, the date of acquisition. At June 30, 2003 and December 31,
2002, the Companys investment balance was $-0-. Under the terms of the Laguna
at Arrowhead Apartments L.L.C. operating agreement, Laguna Investments L.L.C.
is subject to additional capital calls in connection with its ownership
interest in Laguna. Laguna Investments L.L.C. was notified of a capital call
for $53,530, which was paid in 2003. As a result of this payment, unrecognized
equity losses from prior periods were recorded in the first six months of 2003
to the extent of the capital call. Unrecognized losses as of June 30, 2003
total $163,709. Had Laguna Investments L.L.C. failed to make the required
payment, its ownership interest would have been reduced from 25.52% to 24.14%.
Summarized unaudited financial information for Laguna is as follows:

|                       |              |   |           |           | 
|---------------------- | ------------ | - | --------- | --------- | 
|                       |              |   | June 30, 
|                       |              |   | 2003     
|                       |              |   |          
|Current assets         |              | $ | 156,565   |          
|Noncurrent assets      |              |   | 8,535,232 |          
|                       |              |   |           |          
|                       | Total assets |   | $         | 8,691,797 | 
|                       |              |   |           |          
|Current liabilities    |              | $ | 187,870   |          
|Noncurrent liabilities |              |   | 9,267,605 |          
|Members capital       |              |   | (763,678  | )        
|                       |              |   |           |          
|                       |              | $ | 8,691,797 |          
|                       |              |   |           |          

|                                                 |  |                            |          |                          |  |      |          |      |  |   |          |   |  |   |          |  
|------------------------------------------------ |  | -------------------------- | -------- | ------------------------ |  | ---- | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                 |  | For the three months ended |          | For the six months ended
|                                                 |  | June 30,                   |          | June 30,                
|                                                 |  |                            |          |                         
|                                                 |  | 2003                       |          | 2002                     |  | 2003 |          | 2002
|                                                 |  |                            |          |                          |  |      |          |     
|Revenues                                         |  | $                          | 376,742  |                          |  | $    | 343,889  |      |  | $ | 774,595  |   |  | $ | 724,098  |  
|Net loss from continuing operations
and net loss |  |                            | (107,783 | )                        |  |      | (115,091 | )    |  |   | (268,695 | ) |  |   | (217,357 | )

NOTE D  RELATED ENTITIES

Related entity receivables/payables are as follows:

|                                 |                                                             |   |          |         |              |   |         |         | 
|-------------------------------- | ----------------------------------------------------------- | - | -------- | ------- | ------------ | - | ------- | ------- | 
|                                 |                                                             |   | June 30, |         | December 31,
|                                 |                                                             |   | 2003     |         | 2002        
|                                 |                                                             |   |          |         |             
|Receivable from related entities |                                                             |   |          |         |              |   |         |        
|                                 | Management Pool, LLC                                        |   | $        | 37,452  |              |   | $       | 37,302  | 
|                                 | Minority investor in Houston Warren Ranch
Partners, LLC (4) |   |          | 16,250  |              |   |         | 15,500  | 
|                                 | Other                                                       |   |          | 16,920  |              |   |         | 13,568  | 
|                                 |                                                             |   |          |         |              |   |         |         | 
|                                 |                                                             | $ | 70,622   |         |              | $ | 66,370  |        
|                                 |                                                             |   |          |         |              |   |         |        
|Payable to related entities      |                                                             |   |          |         |              |   |         |        
|                                 | Minority investors in Willow Springs Ranch, LLC (3)         |   | $        |        |              |   | $       | 134,962 | 
|                                 | Minority investors in Glendale Condominiums, LLC
(2)        |   |          | 695,885 |              |   |         | 665,885 | 
|                                 | Lafayette Financial Services (1)                            |   |          | 65,289  |              |   |         | 63,075  | 
|                                 | Other                                                       |   |          | 5,478   |              |   |         | 5,478   | 
|                                 |                                                             |   |          |         |              |   |         |         | 
|                                 |                                                             | $ | 766,652  |         |              | $ | 869,400 |        
|                                 |                                                             |   |          |         |              |   |         |        

7



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---

|(1) |  | Lafayette Financial Services is 50% owned by the Chairman of the
Companys Board of Directors. This note resulted from the purchase of
certain real estate options by the Company in 1999. The note bears
interest at prime and is payable in semi-annual installments of $15,760
plus interest.                                                                                                                                                                                                                                                                                                  
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The Company has a 70% interest in Glendale Condominiums, LLC. The
land for the project was purchased from an individual and a trust who
own the other 30% of the project. The payable represents the balance
due, including interest at 8% per annum, for this purchase. Principal
and interest are due quarterly from September 2008 through September
2018. The land cost and preliminary development costs for this project
total $2,009,112 and $1,219,198 at June 30, 2003 and December 31, 2002,
respectively, and are included in land held for development and sale in
Arizona properties.
|   
|(3) |  | The Company had an 85% interest in Willow Springs Ranch, LLC, with
several minority investors, including the Chairman of the Companys
Board of Directors, owning the remaining 15%. The payable to the
minority investors had no specific repayment terms, and was to be repaid
through distributions made by Willow Springs Ranch, LLC to its members.
On March 1, 2003, the Company bought out the minority investors in
exchange for 640 acres of Arizona ranch land.                                                                                                                         
|   
|(4) |  | The Company has a 55% interest in Houston Warren Ranch Partners, LLC,
with Jessica Star Partners, LLC owning the remaining 45%. Jessica Star
Partners, LLC is 33% owned by the Chairman of the Companys Board of
Directors. The note receivable bears interest at 10%, with principal
and interest due on September 24, 2004.                                                                                                                                                                                                                                                                    

NOTE E  SUBORDINATED DEBT

The Companys operations have been partially financed with periodic advances in
prior years from Amortibanc. The advances are subordinate to the Companys bank
financing and bear interest at 8% to 10%. The interest accrued on these
advances has primarily been added to the subordinated debt. Payments on the
debt are made only when cash flow from a land sale, after payment of bank debt,
exceeds the Companys operating cash requirements. This determination is made
by the Companys management. The total advances and accrued interest due are
$3,624,867 and $3,457,520 at June 30, 2003 and December 31, 2002 respectively.

NOTE F  COMMITMENTS AND CONTINGENCIES

The Company sold notes receivable with repayment terms of up to 15 years, with
recourse upon nonpayment by the debtor of $224,159 and $217,600 during the six
months ended June 30, 2003 and 2002, respectively. The remaining balances due,
with recourse, of all notes sold are $1,067,791 and $1,106,426 as of June 30,
2003 and December 31, 2002 respectively.

In certain instances, 15% of the note sales proceeds are retained by the
purchaser of the notes as a nonpayment reserve and returned to the Company when
the original land purchasers pay off the note balances. The reserve balance is
$185,048 and $176,902 at June 30, 2003 and December 31, 2002, respectively and
is included in other assets, net of an allowance established for recourse
chargeback of $27,687 and $55,652 at June 30, 2003 and December 31, 2002,
respectively. When the Company incurs a chargeback, ownership of the original
land sold reverts to the Company and can be resold to help recover any losses
incurred by the Company as a result of the chargeback. During the six months
ended June 30, 2003, the Company received two chargebacks, totaling $61,600.

From time to time the Company is involved in a variety of legal matters that
arise in the normal course of business. Based on information currently
available, management does not believe that the ultimate resolution of any such
matters will have a material adverse effect on the Companys financial
condition, results of operations or cash flow.

The Company entered into a five-year employment agreement with its president
during 2001. In the event the Company consummates an acquisition (as defined in
the agreement) during the terms of the agreement, the contract provides for
salary increases and issuance of options to acquire a total of 600,000 common
shares of the surviving corporation at a price not to exceed the fair market
value of such shares on the closing date of the acquisition. The agreement also
provides for severance payments upon termination in the amount of the total
compensation for the remainder of the contract terms and a consulting
arrangement upon retirement of the president.

NOTE G  PREFERRED STOCK

The Company has outstanding 14,380 shares of Series A Cumulative Convertible
Preferred Stock, with a liquidation value of $719,000. The preferred stock is
not redeemable at a fixed or determinable price on a fixed or determinable date
or upon the

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occurrence of any event that is not solely within the Companys control. The
preferred stock is convertible by the holder at any time into shares of the
Companys common stock at a price equal to the average market price of the
Companys common stock for the thirty business days immediately preceding the
conversion, and is redeemable by the Company at any time after one year from
the date of issuance. Since no public market currently exists for the
Companys common stock, market price is determined by the Board of Directors.
The preferred stock has a cumulative dividend, payable semi-annually at the
following rates:

|                                      |  |              |  | 
|------------------------------------- |  | ------------ |  | 
|First year from the date of issuance  |  | 0% per annum
|Second year from the date of issuance |  | 2% per annum
|Third year from the date of issuance  |  | 4% per annum
|Fourth year from the date of issuance |  | 5% per annum
|Fifth year from the date of issuance  |  | 6% per annum
|Thereafter                            |  | 7% per annum

As the preferred stock has an increasing dividend rate, the preferred stock was
initially recorded at its fair value at the date of its issuance by discounting
the preferred stock using managements estimate of the current market rate for
dividend yields and comparing it to the actual dividend rate of the preferred
stock. This resulted in a discount of $114,071, which is being amortized to
additional paid-in capital over the period of increasing dividend rates of the
preferred stock. Amortization for the three and six month periods ended June
30, 2003 was $11,815 and $23,630, respectively.

NOTE H  RELATED PARTY TRANSACTIONS

Prior to March 1, 2003, the Company owned an 85% interest in Willow Springs
Ranch, LLC, with several minority investors owning the remaining 15%. The
minority investors included, among others, Lafayette Financial Services (a
company that is 50% owned by the Chairman of the Companys board of directors)
and another partnership controlled by the Chairman. On March 1, 2003, the
Company bought out the minority investors interest in exchange for 640 acres
of Arizona ranch land and cancellation of a $134,962 payable.

9



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Item 2.Managements Discussion and Analysis

The following discussion includes forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from the results
contemplated by these forward-looking statements due to certain factors,
including those discussed below, elsewhere in this Form 10-QSB and in the
Companys other filings with the SEC.

Overview

On July 23, 2002, we entered into an Agreement and Plan of Merger (the Merger
Agreement or the Agreement) with Great Western Land and Recreation, Inc. a
Delaware corporation (Great Western Delaware). Under the Merger Agreement, we
agreed to undertake a series of transactions the result of which was the
transfer of control of the Company to Amortibanc Investments, LC
(Amortibanc), the stockholder of Great Western Delaware, and the merger of
Great Western Delaware into the Company. We were the surviving entity. The
transaction also involved the election of new directors and the amendment of
our Articles of Incorporation to change our name to Great Western Land and
Recreation, Inc. Our Board of Directors unanimously approved the Merger
Agreement and the other transactions to be undertaken and the holders of a
majority of our outstanding stock approved the transactions in writing on July
25, 2002. On July 23, 2002 the stockholder of Great Western Delaware consented
in writing to the Merger Agreement transactions. Under applicable Nevada law,
written consent by the holders of a majority of our outstanding stock to the
transactions outlined in the Agreement was sufficient to approve the
transactions, without a meeting or vote of all of the stockholders. The
transaction became effective on February 20, 2003. Immediately following the
merger, former 1st Realty stockholders owned approximately 9% of the Company
and Amortibanc owned approximately 91% of the Company (94% assuming the
conversion of the preferred stock into common stock).

We expect that the Merger will be treated as a tax-free reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. If the
Merger qualifies as a tax-free reorganization, no gain or loss will be
recognized for income tax purposes by either 1st Realty or Great Western
Delaware as a result of the acquisition. There also should not be any material
tax effects to our existing stockholders as a result of the transaction.
However, neither 1st Realty nor Great Western Delaware requested a tax ruling
from the Internal Revenue Service with respect to the transaction. Accordingly,
we can give no assurance that the transaction will qualify as a tax-free
reorganization. We have accounted for our acquisition of Great Western Delaware
as a reverse acquisition, with Great Western Delaware the acquirer and 1st
Realty the acquiree for reporting purposes. Prior to September 2000, we were a
dormant non-operating company. Our current operations are solely the result of
the series of transactions we entered into with Great Western Delaware. As a
result, the assets and liabilities of both companies have been combined at
their historical cost. The accompanying discussion and analysis is presented
as if the Merger was consummated on January 1, 2002.

On June 4, 2003, we changed our year end from December 31 to September 30. As
a result of this change, fiscal 2003 will be a short year, which will end on
September 30, 2003 and consist of only nine months.

Results of Operations

Three months ended June 30, 2003 (second quarter of 2003) compared to the three
months ended June 30, 2002 (second quarter of 2002)

Land and lot sales.Land and lot sales decreased $201,504 or 19% to $879,587 in
the second quarter of 2003 from $1,081,091 in the second quarter of 2002. This
decrease was the result of decreases in residential lot sales of $294,783
partially offset by an increase in ranch land sales of $93,279. The decline in
residential lot sales reflects the current economic slowdown, and the fact that
our current projects in Houston are nearing completion. We anticipate that
these projects will be sold out in early 2004. However, we expect Warren
Ranch, a new residential development in the Houston metro area, to begin
generating revenue in mid 2004. The increase in ranch land sales is the result
of our focus on improving the quality of the sales force at our ranches. We
believe that these efforts, along with an improvement in the economy, will lead
to increased ranch land sales.

Our land and lot sales are affected by numerous factors including mortgage
interest rates, demand for new housing starts and the availability of finished
lots within a particular area. Generally, the pace of sales and the price per
lot increase over the life of a project as developments gain popularity and as
contract price escalators become effective.

Cost of land and lot sales.Cost of land and lot sales decreased $21,456, or
5%, to $450,217 in the second quarter of 2003 from $471,673 in the second
quarter of 2002. As a percentage of land and lot sales, the cost of land and
lot sales increased to 51% in the second quarter of 2003 from 44% in the second
quarter of 2002. This was primarily due to a decrease in the gross margins on
residential lot sales in Houston.

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Operating, selling, general and administrative expenses.Operating, selling,
general and administrative expenses decreased $251,521, or 45%, to $307,949 in
the second quarter of 2003 from $559,470 in the second quarter of 2002. The
decrease was primarily due to decreases in professional fees of $194,668,
salaries of $70,778, advertising and promotion of $18,554, and auto expense of
$15,147, partially offset by an $18,423 increase in filing fees, primarily
associated with the Merger. Professional fees were unusually high in 2002 due
to activity related to Great Western Delawares proposed merger with
quepasa.com. Salaries were lower in 2003 due to lower staffing levels.
Advertising costs were higher in 2002 because at that time our advertising
program included television. Our current advertising program focuses on print
and other types of advertising. We believe this is a more effective way to
reach our target audience.

Interest expense.Interest expense decreased $8,460 or 5% to $163,784 in the
second quarter of 2003 from $172,244 in the second quarter of 2002. The
decrease is due to declining interest rates on the variable rate loans
associated with the residential lot sales business, and to lower average
outstanding balances on our loans due to the repayment of principal as lots are
sold.

Interest income.Interest income decreased $31,631 to $34,782 in the second
quarter of 2003 from $66,413 in the second quarter of 2002 due to lower
outstanding balances on notes receivable.

Other income.Other income was $84,134 in the second quarter of 2003 compared
to $47,181 in the second quarter of 2002. Other income in the first six months
of 2003 included $50,192 in life insurance proceeds.

Net income (loss).Net income was $76,553 in the second quarter of 2003
compared to a net loss of $8,702 the second quarter of 2002. This improvement
is primarily due to a $251,521 decrease in operating expenses, partially offset
by a $180,048 decrease in gross profit due to lower sales.

Six months ended June 30, 2003 (first six months of 2003) compared to the six
months ended June 30, 2002 (first six months of 2002)

Land and lot sales.Land and lot sales decreased $322,982 or 17% to $1,574,177
in the first six months of 2003 from $1,897,159 in the first six months of
2002. This decrease was the result of decreases in bulk land sales of $51,351
and residential lot sales of $410,605 partially offset by an increase in ranch
land sales of $138,974. The bulk sale in the first six months of 2002
consisted of the sale of a parcel of land in Houston, Texas to another
developer who owned the adjacent property. There were no such bulk sales in
the first six months of 2003. The decline in residential lot sales reflects the
current economic slowdown, and the fact that our current projects in Houston
are nearing completion. We anticipate that these projects will be sold out
early in 2004. However, we expect Warren Ranch, a new residential development
in the Houston metro area, to begin generating revenue in mid 2004. The
increase in ranch land sales is the result of our focus on improving the
quality of the sales force at our ranches. We believe that these efforts,
along with an improvement in the economy, will lead to increased ranch land
sales.

Our land and lot sales are affected by numerous factors including mortgage
interest rates, demand for new housing starts and the availability of finished
lots within a particular area. Generally, the pace of sales and the price per
lot increase over the life of a project as developments gain popularity and as
contract price escalators become effective.

Cost of land and lot sales.Cost of land and lot sales decreased $76,052, or
8%, to $825,574 in the first six months of 2003 from $901,626 in the first six
months of 2002. As a percentage of land and lot sales, the cost of land and lot
sales increased to 52% in the first six months of 2003 from 48% in the first
six months of 2002. This was due to the $51,000 bulk sale discussed above and
a decrease in the gross margins on residential lot sales in Houston. The bulk
sale land had been carried at zero value due to its location in a flood way,
which severely limited its ability to be developed. However, changes in
circumstances increased the development potential of the land when combined
with the adjacent property.

Operating, selling, general and administrative expenses.Operating, selling,
general and administrative expenses decreased $353,519, or 30%, to $824,293 in
the first six months of 2003 from $1,177,812 in the first six months of 2002.
The decrease was primarily due to decreases in professional fees of $249,161,
salaries of $77,770, advertising and promotion of $67,488 and auto expense of
$26,310, partially offset by a increases in printing of $31,876 and filing fees
of $20,301 primarily associated with the Merger. Professional fees in 2002
were unusually high due to activity related to Great Western Delawares
proposed merger with quepasa.com. Salaries were lower in 2003 due to lower
staffing levels. Advertising costs were higher in 2002 because at that time our
advertising program included television. Our current advertising program
focuses on print and other types of advertising. We believe this is a more
effective way to reach our target audience.

Interest expense.Interest expense decreased $79,883 or 19% to $342,017 in the
first six months of 2003 from $421,900 in the first six months of 2002. The
decrease is due to declining interest rates on the variable rate loans
associated with the residential lot sales

11



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business, and to lower average outstanding balances on our loans due to the
repayment of principal as lots are sold.

Interest income.Interest income decreased $40,603 to $69,884 in the first six
months of 2003 from $110,487 in the first six months of 2002 due to lower
outstanding balances on notes receivable.

Equity in losses of unconsolidated company.Equity in losses of unconsolidated
company (Laguna) was $53,530 in the first six months of 2003 compared to $0 in
the first six months of 2002. Due to losses experienced by Laguna in prior
years, our investment in Laguna had been written down to $0. However, under
the terms of the Laguna at Arrowhead Apartments L.L.C. operating agreement,
Laguna Investments L.L.C. is subject to additional capital calls in connection
with its ownership interest in Laguna at Arrowhead Apartments L.L.C. An
additional capital call, for $53,530, was paid during the first six months of
2003. As a result of this payment, unrecognized equity losses from prior
periods were recorded to the extent of the capital call.

Gain on settlement of note receivable.Gain on settlement of note receivable
was $0 in the first six months of 2003 compared to a nonrecurring gain of
$118,000 in the first six months of 2002.

Other income.Other income was $76,771 in the first six months of 2003
compared to $72,378 in the first six months of 2002. Other income in the first
six months of 2003 included $50,192 in life insurance proceeds. Other income
in the first six months of 2002 included $35,000 in grazing lease income
related to the Wagon Bow Ranch. In the fourth quarter of 2002, these grazing
rights were sold.

Net loss.Net loss increased $23,140, from $303,314 in the first six months of
2002 to $326,454 for the first six months of 2003. This increase is primarily
due to a $246,930 decrease in gross profit due to lower sales, equity in losses
of unconsolidated company of $53,530 and a decrease of $118,000 in gain on
settlement of note receivable, partially offset by decreases in operating
expenses of $353,519 and interest expense of $79,883.

Liquidity and Capital Resources

In this section of the management discussion and analysis segment, we are going to discuss:



| |  |  | sources and uses of cash, and significant factors that influence both;
| | - |  | ----------------------------------------------------------------------
|
| |  |  | our analysis of our cash flows for the six months of 2003; and        
|
| |  |  | our commitments and contractual obligations.                          

All of these factors are important to obtain an understanding of our ability to
meet our current obligations, to fund working capital, to finance the
acquisition and development of new projects, or to pay down existing debt.

Sources and uses of cash. We require cash to fund our operating expenses, to
finance the acquisition and development of new projects and to pay debt
service. Our principal sources of liquidity are cash on hand, cash generated
from land and lot sales, cash generated from bulk land sales, collections on
notes receivable, refinancings and funds from external borrowings. We may also
raise additional funding through future equity offerings, subject to market
conditions.

We believe that the key factors that could affect sources of cash include:



| |  |  | factors that affect our results of operations and cash flows,
including reduced demand for land resulting from the recent economic
slowdown, competitive pricing pressures; and          
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | factors that affect our access to bank financing that could impair
our ability to obtain needed financing on acceptable terms to finance
the acquisition and development of new projects.

12



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##### Table of Contents



Analysis of cash flows.Cash flow information for the six months ended June 30,
2003 and 2002 follows:

|                                                 |                                                                                           |                                                     |         |                           |          |      |         |            |          |  
|------------------------------------------------ | ----------------------------------------------------------------------------------------- | --------------------------------------------------- | ------- | ------------------------- | -------- | ---- | ------- | ---------- | -------- | -
|                                                 |                                                                                           |                                                     |         | Six months ended June 30,
|                                                 |                                                                                           |                                                     |         |                          
|                                                 |                                                                                           |                                                     |         | 2003                      |          | 2002
|                                                 |                                                                                           |                                                     |         |                           |          |     
|Cash flows from operating activities             |                                                                                           |                                                     |         |                           |          |      |         |           
|                                                 | Net loss                                                                                  |                                                     | $       | (326,454                  | )        |      | $       | (303,314   | )       
|                                                 | Adjustments to reconcile net loss to net cash provided
by (used in ) operating activities |                                                     |         | 393,504                   |          |      |         | 765,479    |         
|                                                 | Change in assets and liabilities                                                          |                                                     |         | (360,535                  | )        |      |         | 417,167    |         
|                                                 |                                                                                           |                                                     |         |                           |          |      |         |           
|                                                 |                                                                                           | Net cash provided by (used in) operating activities |         |                           | (293,485 | )    |         |            | 879,332  |  
|Cash flows from investing activities             |                                                                                           |                                                     |         |                           |          |      |         |           
|                                                 | Increase (decrease) in advances to related parties                                        |                                                     |         | 27,962                    |          |      |         | (137,068   | )       
|                                                 | Investment in unconsolidated company                                                      |                                                     |         | (53,530                   | )        |      |         |           |         
|                                                 | Purchase of property and equipment                                                        |                                                     |         | (4,171                    | )        |      |         | (16,594    | )       
|                                                 |                                                                                           |                                                     |         |                           |          |      |         |           
|                                                 |                                                                                           | Net cash used in investing activities               |         |                           | (29,739  | )    |         |            | (153,662 | )
|Cash flows from financing activities             |                                                                                           |                                                     |         |                           |          |      |         |           
|                                                 | Issuance of notes payable                                                                 |                                                     |         | 539,418                   |          |      |         | 1,752,056  |         
|                                                 | Payments on notes payable                                                                 |                                                     |         | (702,718                  | )        |      |         | (2,056,117 | )       
|                                                 | Decrease in subordinated debt                                                             |                                                     |         |                          |          |      |         | (431,747   | )       
|                                                 |                                                                                           |                                                     |         |                           |          |      |         |            |         
|                                                 |                                                                                           | Net cash used in financing activities               |         |                           | (163,300 | )    |         |            | (735,808 | )
|                                                 |                                                                                           |                                                     |         |                           |          |      |         |           
|                                                 | Net decrease in cash and cash equivalents                                                 |                                                     |         | (486,524                  | )        |      |         | (10,138    | )       
|Cash and cash equivalents at beginning of period |                                                                                           |                                                     | 654,369 |                           |          |      | 317,969 |           
|                                                 |                                                                                           |                                                     |         |                           |          |      |         |           
|Cash and cash equivalents at end of period       |                                                                                           | $                                                   | 167,845 |                           |          | $    | 307,831 |           
|                                                 |                                                                                           |                                                     |         |                           |          |      |         |           

Cash flow activity for the six months ended June 30, 2003.As of June 30,
2003, we had cash and cash equivalents of $167,845, a decrease of $486,524 from
the December 31, 2002 balance. This compares to a decrease in cash and cash
equivalents of $10,138 in the first six months of 2002.

Cash flow used in operating activities was $293,485 for the first six months of
2003 compared to cash provided by operating activities of $879,332 in the first
six months of 2002, a decrease of $1,172,817. Factors causing decreased cash
flows from operating activities in the first six months of 2003 as compared to
the first six months of 2002 include:



| |  |  | A decrease in land and lot sales to $1,574,177 in the first six
months of 2003 from $1,897,159 in the first six months of 2002;                                                                                                                                                                                                                                                      
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Collections of notes receivable of $56,981 in the first six months of
2003 compared to $698,820 in the first six months of 2002. The 2002
collections were primarily due to the payoff of a $633,000 note related
to a bulk sale of land in Houston, Texas; and                                                                                                                      
|
| |  |  | Land held for development and sale increased $545,582 in the first
six months of 2003 compared to a decrease of $826,884 in the first six
months of 2002. The increase in 2003 is primarily due to the
capitalization of development costs related to a condominium project in
Glendale, Arizona. Construction costs for this project are being funded
primarily through a bank loan.

These were partially offset by the following factors causing increased cash
flows:



| |  |  | Accounts payable and other accrued liabilities increased $221,628
during the first six months of 2003, compared to a decrease of $164,247
in the first six months of 2002; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The change in deferred income was $0 during the first six months of
2003 compared to a decrease of $235,455 in the first six months of 2002.                                  

Looking forward, we expect cash flow from operations to remain stable in the
remainder of fiscal of 2003 as compared to the first six months of 2003.

13



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Net cash used in investing activities was $29,739 in the first six months of
2003 compared to $153,662 in the first six months of 2002. Advances to related
parties increased $27,962 in the first six months of 2003 compared to a
decrease of $137,068 in the first six months of 2002. During the first six
months of 2003, we paid $53,530 as an additional capital call in connection
with our ownership interest in Laguna at Arrowhead Apartments L.L.C. This was
the first cash call since we made an investment in Laguna in 1997, and we do
not anticipate any additional capital calls for the remainder of the fiscal
year. We also purchased $4,171 of property and equipment in the first six
months of 2003 compared to $16,594 in the first six months of 2002. We are not
planning any significant purchases of property and equipment for the remainder
of the fiscal year.

Net cash used in financing activities was $163,300 in the first six months of
2003 compared to $735,808 in the first six months of 2002. During the first
six months of 2003, additional borrowings totaled $539,418 compared to
$1,752,056 in the first six months of 2002. The borrowings in 2003 consisted
primarily of draws on a construction loan for the development of a condominium
project in Glendale, Arizona. Construction on this phase of the project is
expected to continue through the end of 2003, with sales beginning in
September. Payments on notes payable totaled $702,718 in the first six months
of 2003 compared to $2,056,117 in the first six months of 2002. Principal
payments on our notes are made primarily through the payment of release prices
as lots are sold.

Contractual obligations. Our long term debt includes notes payable of
$4,001,864 and subordinated debt of $3,624,867. Other than two vehicle loans,
all of the notes payable were incurred to finance the development of our real
estate projects. Principal payments on those notes payable are primarily made
as lots are sold, although minimum principal payments are also required on
certain loans. Included in notes payable is a $509,000 loan used to purchase
480 acres of land in the Houston metro area for a new subdivision. This loan
is due in October 2003. It is our intent to refinance this loan with a
development loan for the project, however this financing has not yet been
obtained. In addition, our construction loan for a condominium project in
Glendale, Arizona requires cash contributions by the Company each time
construction on a new building is started. As of June 30, 2003, construction
on one 8-unit building has been started. The remaining five buildings in this
phase of the project are expected to begin construction at various dates
through the rest of 2003. Payments on the subordinated debt are made only when
cash flow from a land sale, after payment of bank debt, exceeds our operating
cash requirements. This determination is made by our management. On June 28,
2002, our majority stockholder contributed an additional $719,000 of capital to
the Company through the conversion of subordinated debt to preferred stock.
The preferred stock is convertible into shares of our common stock, and has a
cumulative dividend, payable semi-annually. The dividend rate is 0% for the
first year from the date of issuance, and escalates each year until it reaches
7% in the sixth year from the date of issuance.

In the normal course of our business, we have also entered into various
operating leases for equipment and vehicles.

Our primary future cash needs, both in the short term and in the long term will
focus on funding operating expenses, financing the acquisition and development
of new projects and paying debt service. During the first six months of 2003,
cash generated by land and lot sales was not sufficient to pay our operating
expenses. To meet our cash flow needs during the remainder of fiscal 2003 it
will be necessary to supplement the land and lot sales with bulk sales of ranch
property, additional borrowings, or sales of one or more of our notes
receivable. Although there can be no assurances, management believes that cash
flow from operations coupled with existing cash and cash equivalent balances,
proceeds from bulk sales of property or the sale of one or more notes
receivable, along with borrowings from banks and other financial institutions
will generate sufficient cash to fund our operating and cash flow needs for the
next twelve months. To the extent that actual results or events differ from
our financial projections, our liquidity may be adversely affected.

We project that our capital expenditures for property and development will be
approximately $5.5 million over the next twelve months, but that only a portion
of that amount will need to be funded internally. The remainder will be
borrowed from banks and other financial institutions. As part of our business
strategy, we continuously review acquisition opportunities and proposals. We
expect to finance any future acquisitions with additional equity and debt
financing, to the extent available on attractive terms.

We hold approximately $1.6 million of third party notes receivable from the
sale of property. These notes are generally secured by the property sold and
bear interest at rates ranging between 9% and 12% per year. We evaluate the
collectibility of these notes based on the payment history and the value of the
collateral, and charge off any uncollectible balances. As of June 30, 2003,
there were no delinquencies on any of these notes receivable.

Business Risks and Forward-Looking Statements

This Quarterly Report on Form 10-QSB includes forward-looking statements.
Forward-looking statements are often characterized by the use of words such as
may, believes, plans, will, anticipates, estimates, expects, or
intends or by discussions of strategy, plans or intentions. All
forward-looking statements in this Form 10-QSB are made based on our current
expectations and estimates, which involve risks, uncertainties and other
factors that could cause results to differ materially from those expressed in
forward-looking statements. You are cautioned not to place undue reliance on
any such forward-looking statements. We have no

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obligation to publicly release the result of any revisions that may be made to
any forward-looking statements to reflect anticipated or unanticipated events
or circumstances occurring after the date of such statements. Forward-looking
statements involve a number of risks and uncertainties including, but not
limited to, general economic conditions, competitive factors, our ability
locate new projects and to finance the acquisition and development of these
projects, our exposure to changes in interest rates, and the cost of compliance
with government regulations.




Item 3. Controls and Procedures



|(a) |  | We maintain disclosure controls and procedures (as defined in Securities
Exchange Act 1934 Rules 13a-14(c) and 15d-14(c)) that are designed to
ensure that information required to be disclosed in our Exchange Act
reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Principal Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Within 90 days prior to the date of this quarterly report, we carried out an
evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our Chief Executive Officer and Principal
Financial Officer concluded that our disclosure controls and procedures were
effective.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(b) |  | There have not been any significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent
to the date of their evaluation. There were no significant deficiencies or
material weaknesses, and therefore no corrective actions were taken.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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PART II: OTHER INFORMATION




Item 1.Legal Proceedings

We are not a party to any pending legal proceedings and, to the best of
our knowledge, no litigation against us has been threatened.




Item 2.Changes in Securities and Use of Proceeds

Not Applicable.




Item 3.Defaults Upon Senior Securities

Not Applicable.




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

Not Applicable




Item 5.Other Information

Not Applicable




Item 6.Exhibits and Reports on Form 8-K

(a) Exhibits

|        |  |                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                      
|No.     |  |                                                                                                                                      
|        |  |                                                                                                                                      
|31.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|31.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|32.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|32.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

(b)  Reports on Form 8-K



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | On June 4, 2003 a Form 8-K was filed to report the change in the Companys
year end to September 30.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

|                      |  |                                                      |  |                                                                                                                          
|--------------------- |  | ---------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------
|                      |  | GREAT WESTERN LAND AND RECREATION, INC.
(Registrant)
|Date: August 14, 2003 |  | By                                                   |  | /s/ Ron OConnor                                                                                                         
|                      |  |                                                      |  |                                                                                                                          
|                      |  |                                                      |  | Ron OConnor, Senior Vice
President and Chief
Financial Officer (Duly
Authorized Officer and
Principal Financial Officer)

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Index to Exhibits

|        |  |                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                      
|No.     |  |                                                                                                                                      
|        |  |                                                                                                                                      
|31.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|31.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|32.1    |  | Certification of Jay N. Torok pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|32.2    |  | Certification of Ron OConnor pursuant to 18 U.S.C. Section 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

18