UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

               For the thirteen week period ended December 2, 2000

                                       OR

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

              For the transition period from _________ to _________

                       Commission File Number 333-44969-01

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


             Delaware                                  61-1251518
    (State or other jurisdiction of         (IRS Employer Identification No.)
    incorporation or organization)

                 2701 Industrial Drive, Bowling Green, KY        42101
               (Address of principal executive offices)        (Zip Code)

                                 (270) 781-9600
              (Registrant's telephone number, including area code)

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

As of January  4, 2001,  there were  16,373,148  shares of  Registrant's  Common
Stock, $.01 par value per share, and 90,604 shares of the Registrant's Nonvoting
Common Stock, $.01 par value per share, outstanding.



<PAGE>
<TABLE>
<CAPTION>

                                             DESA HOLDINGS CORPORATION
                                                     FORM 10-Q
                                                 December 2, 2000

                                                       INDEX
                                                                                             Page
<S>         <C>                                                                              <C>

PART I       Financial Information

Item 1.      Consolidated Financial Statements (Unaudited)
             Consolidated Balance Sheets - December 2, 2000 and February 26, 2000               2
             Consolidated Statements of Operations - Thirteen and Forty Weeks
                 ended December 2, 2000 and Thirteen and Thirty-nine Weeks
                 ended November 27, 1999                                                        3
             Consolidated Statements of Stockholders' Equity (Deficit) - Forty
                 Weeks ended December 2, 2000                                                   4
             Consolidated Statements of Cash Flows - Forty Weeks
                  ended December 2, 2000 and Thirty-nine Weeks
                  ended November 27, 1999                                                       5
             Notes to Consolidated Financial Statements                                         6

Item 2.      Management's Discussion and Analysis of Financial Condition and
                  Results of Operations                                                        12

Item 3.      Quantitative and Qualitative Disclosures About Market Risk                        16

PART II  Other Information

Item 2.      Changes in Securities and Use of Proceeds                                         18

Item 3.      Defaults Upon Senior Securities                                                   18

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

             Signatures                                                                        19
</TABLE>

                                       1
<PAGE>
<TABLE>
<CAPTION>
                                            DESA HOLDINGS CORPORATION
                                           CONSOLIDATED BALANCE SHEETS

                                                                                December 2,       February 26,
                                                                                   2000               2000
                                                                              --------------     --------------
                                                                              (in thousands)     (in thousands)
                                                                                (Unaudited)
<S>                                                                              <C>             <C>
ASSETS
Current assets:
    Cash and cash equivalents                                                     $     728       $     173
    Accounts receivable, net of allowances of ($2,016) at                            88,019          32,921
       December 2, 2000 and ($907) at February 26, 2000
    Inventories:
       Raw materials                                                                    604             209
       Work-in-process                                                               13,082           9,756
       Finished goods                                                                48,375          50,192
                                                                                  ---------       ---------
                                                                                     62,061          60,157
    Deferred tax assets                                                               1,743           1,743
    Other current assets                                                              3,456           2,003
                                                                                  ---------       ---------
Total current assets                                                                156,007          96,997

Property, plant and equipment:
    Land                                                                                526             525
    Buildings and improvements                                                        6,414           6,294
    Machinery and equipment                                                          42,355          39,361
    Furniture and fixtures                                                            1,106           1,090
                                                                                  ---------       ---------
                                                                                     50,401          47,270
    Less accumulated depreciation                                                    34,494          30,574
                                                                                  ---------       ---------
                                                                                     15,907          16,696
Goodwill, net                                                                        95,261          93,818
Other assets                                                                         19,393          22,266
                                                                                  ---------       ---------
Total assets                                                                      $ 286,568       $ 229,777
                                                                                  =========       =========
Liabilities and stockholders' equity (deficit)
Current liabilities:
    Accounts payable                                                              $  42,013       $  37,040
    Accrued interest                                                                  6,880           5,233
    Other accrued liabilities                                                        25,621          13,225
    Current portion of long-term debt                                                64,975          23,500
                                                                                  ---------       ---------
Total current liabilities                                                           139,489          78,998

Long-term debt                                                                      255,235         265,846
Other liabilities                                                                    15,403          15,629
                                                                                  ---------       ---------
Total liabilities                                                                   410,127         360,473

Commitments and contingencies

Series C redeemable preferred stock, $.01 par value; authorized--
    40,000 shares; issued and outstanding--23,805 shares at December 2,
    2000 and 22,461 shares at February 26, 2000 (liquidation preference -
    $25,018,000 at December 2, 2000 and $22,882,000 at February 26, 2000)            21,475          19,937

Stockholders' equity (deficit):
    Common stock, $.01 par value; authorized-- 50,000,000 shares; issued and
    outstanding-- 16,373,149 shares at December 2, 2000 and 15,562,656 shares
    at February 26, 2000                                                                164             155

    Nonvoting  common stock, $.01 par value; authorized--3,000,000
    shares; issued and outstanding--90,604 shares at December 2, 2000
    and February 26, 2000                                                                 1               1

    Capital in excess of par value                                                  103,334          98,075
    Carryover predecessor basis adjustment                                          (32,309)        (32,309)
    Accumulated deficit                                                            (213,056)       (214,518)
    Accumulated other comprehensive income                                           (3,168)         (2,037)
                                                                                  ---------       ---------
Total stockholders' equity (deficit)                                               (145,034)       (150,633)
                                                                                  ---------       ---------
Total liabilities and stockholders' equity (deficit)                              $ 286,568       $ 229,777
                                                                                  =========       =========
</TABLE>
See accompanying notes
                                                      2
<PAGE>
<TABLE>
<CAPTION>
                                                 DESA HOLDINGS CORPORATION

                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                       (in thousands)

                                                        (Unaudited)




                                               Thirteen Weeks      Thirteen Weeks      Forty Weeks       Thirty-nine Weeks
                                                    Ended               Ended             Ended               Ended
                                               December 2, 2000   November 27, 1999  December 2, 2000   November 27, 1999
                                              -----------------   -----------------  ----------------   ------------------

<S>                                              <C>                  <C>               <C>                  <C>
Net sales                                         $144,317             $156,763          $325,558             $317,480
Cost of sales                                       92,690              100,983           214,664              210,783
                                                  --------             --------          --------             --------
Gross profit                                        51,627               55,780           110,894              106,697

Operating costs and expenses:
   Selling                                          24,146               25,363            59,549               54,557
   General and administrative                        5,176                4,252            14,213               11,300
   Other                                             1,724                1,613             5,185                4,677
                                                  --------             --------          --------             --------
                                                    31,046               31,228            78,947               70,534
                                                  --------             --------          --------             --------

Operating profit                                    20,581               24,552            31,947               36,163

Interest expense                                     8,313                7,589            24,925               21,551
                                                  --------             --------          --------             --------
Income before provision for income taxes            12,268               16,963             7,022               14,612

Provision for income taxes                           5,668                7,727             3,230                6,788
                                                  --------             --------          --------             --------

Net income                                           6,600                9,236             3,792                7,824

Less dividends and accretion on preferred stock        777                  699             2,330                2,047
                                                  --------             --------          --------             --------
Income applicable to common stockholders          $  5,823             $  8,537          $  1,462             $  5,777
                                                  ========             ========          ========             ========

</TABLE>

See accompanying notes

                                                             3
<PAGE>
<TABLE>
<CAPTION>

                                                      DESA HOLDINGS CORPORATION
                                      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                                           (in thousands)

                                                             (Unaudited)



                                                                     Carryover                         Accumulated
                                          Nonvoting    Capital in   Predecessor                          Other            Total
                               Common       Common     Excess of       Basis         Accumulated      Comprehensive   Stockholders'
                                Stock       Stock      Par Value    Adjustment         Deficit            Loss           Deficit
                             -------------------------------------------------------------------------------------------------------
<S>                             <C>          <C>       <C>          <C>              <C>               <C>             <C>

Balance at
February 26, 2000                $155         $1        $98,075      ($32,309)        ($214,518)        ($2,037)        ($150,633)

Comprehensive income:

  Net Income                                                                              3,792                             3,792

  Net change in
    foreign currency
    translation adjustment                                                                               (1,131)           (1,131)
                                                                                                                     ------------

Comprehensive income                                                                                                        2,661
                                                                                                                     ------------


Accretion of preferred stock                                                               (194)                             (194)

Dividends on preferred stock                                                             (2,136)                           (2,136)

Issuance of common stock            9                     5,259                                                             5,268


                            -----------------------------------------------------------------------------------      ------------
Balance at
December 2, 2000                 $164          $1      $103,334      ($32,309)        ($213,056)        ($3,168)        ($145,034)
                            ===================================================================================      ============



</TABLE>

See accompanying notes


                                                                 4

<PAGE>
<TABLE>
<CAPTION>

                                                 DESA HOLDINGS CORPORATION
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                       (in thousands)

                                                        (Unaudited)



                                                                                      Forty Weeks        Thirty-nine Weeks
                                                                                         Ended               Ended
                                                                                   December 2, 2000      November 27, 1999
                                                                                   ----------------      ------------------
<S>                                                                                  <C>                    <C>
Cash flows from operating activities
Net income                                                                             $  3,792              $  7,824
Adjustments to reconcile net income to net cash used in operating activities:
   Depreciation                                                                           3,920                 3,767
   Amortization                                                                           4,866                 4,478
   Equity in undistributed earnings of joint venture                                       (153)                 (158)
   Change in operating assets and liabilities, net of
        effects of acquisition:
      Accounts receivable, net                                                          (50,912)              (57,918)
      Inventories                                                                         3,457               (15,342)
      Other current assets                                                               (1,320)                 (598)
      Accounts payable                                                                    2,728                23,242
      Accrued interest                                                                    1,683                 5,417
      Other accrued liabilities                                                           6,434                11,990
      Income taxes payable                                                                3,413                 6,470
      Other liabilities                                                                    (309)                  161
                                                                                       --------              --------
Net cash used in operating activities                                                   (22,401)              (10,667)
                                                                                       --------              --------


Investing activities
Capital expenditures                                                                     (2,131)               (3,069)
Dividends received from joint venture                                                       179                   139
Net cash paid for acquisition of businesses                                             (11,196)                 --
Other                                                                                        16                  (825)
                                                                                       --------              --------
Net cash used in investing activities                                                   (13,132)               (3,755)
                                                                                       --------              --------


Financing activities

Net proceeds from working capital loan                                                   35,281                17,762
Net proceeds from Guaranteed Line of Credit                                              13,450                  --
Decrease in note payable                                                                 (1,878)                 (202)
Proceeds from term loans                                                                  6,000                  --
Principal payments of term loans                                                        (11,401)               (2,775)
Principal payments of acquisition loans                                                 (10,624)                 --
Issuance of common stock                                                                  5,268                    25
Payment of debt financing costs                                                             (23)                 (703)
                                                                                       --------              --------
Net cash provided by financing activities                                                36,073                14,107

Effect of exchange rate changes on cash                                                      15                  --
                                                                                       --------              --------
Increase (decrease) in cash and cash equivalents for the period                             555                  (315)

Cash and cash equivalents at beginning of period                                            173                   888
                                                                                       --------              --------
Cash and cash equivalents at end of period                                             $    728              $    573
                                                                                       ========              ========

</TABLE>

See accompanying notes


                                                             5

<PAGE>
                            DESA HOLDINGS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




1. Basis of Presentation

The interim  consolidated  financial statements for the periods presented herein
have not been audited by independent  auditors.  In the opinion of management of
DESA Holdings  Corporation  (with its  consolidated  subsidiaries,  "Company" or
"Holdings"),  all adjustments  (consisting  only of normal  recurring  accruals)
considered necessary to present fairly the results of operations for the periods
have been included.  Interim results are not  necessarily  indicative of results
for a full year.

Sales of the  Company's  zone heating  products  follow  seasonal  patterns that
affect the  Company's  results of  operations.  Demand  for the  Company's  zone
heating  products  has  been  historically  highest  in the  third  quarter,  as
consumers  prepare for winter.  Consequently,  the  Company's  net sales and the
Company's fiscal operating profit have also been historically highest during the
Company's fiscal third quarter.  Management  believes that the Company's results
of operations  will continue to follow this pattern;  there can be no assurance,
however,  that third quarter  results will always surpass those of the first and
second quarters, or that any improvement shown will be as great as that shown in
previous  years.  In  particular,  unusually warm weather in the fall may reduce
demand for zone heating products.

The  unaudited  consolidated  financial  statements  have been  prepared  by the
Company in  accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-Q and Article 10 of Regulation  S-X.  Certain  information  and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with  accounting  principles  generally  accepted in the United States have been
condensed or omitted pursuant to such rules and regulations.

The  consolidated  balance  sheet  presented as of February  26, 2000,  has been
derived from the consolidated financial statements that have been audited by the
Company's independent auditors.  The consolidated financial statements and notes
thereto  included  herein should be read in  conjunction  with the  consolidated
financial  statements and notes thereto  included in the Company's Annual Report
on Form 10-K.

2. Summary of Significant Accounting Policies

Consolidation

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly-owned subsidiary,  DESA International,  Inc. ("DESA") and
all of its wholly-owned subsidiaries, including DESA Industries of Canada, Inc.,
DESA Europe BV, DESA Industries of V.I., Inc., Heath Company Limited and Desico,
S.A. De C.V. All significant  intercompany  accounts and transactions  have been
eliminated.  DESA's 50% interest in a joint  venture is accounted  for using the
equity method.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements;  and the  reported  amounts  of  revenues  and  expenses  during the
reported period. Actual results can differ from those estimates.

                                       6
<PAGE>
                            DESA HOLDINGS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


Summarized Financial Information of DESA International, Inc.

DESA is the issuer of the 9 7/8% Senior  Subordinated Notes. The Company has not
presented  separate financial  statements and other disclosures  concerning DESA
because  management  has  determined  that such  information  is not material to
holders of the Senior Subordinated Notes.

The following summarized  consolidated  financial  information is being provided
for DESA as of December 2, 2000 and February 26, 2000,  and for the thirteen and
forty weeks ended  December 2, 2000 and  thirteen  and  thirty-nine  weeks ended
November 27, 1999.

Summarized consolidated balance sheet information (in thousands):

                                                    December 2,   February 26,
                                                       2000          2000
                                                  ----------------------------
Assets:
Current assets                                       $ 261,251    $ 205,265
Net fixed assets                                        15,907       16,696
Goodwill, net                                           94,180       92,713
Other assets                                            19,393       22,266
                                                     ---------    ---------
                                                     $ 390,731    $ 336,940
                                                     =========    =========

Liabilities and stockholders' deficit:
Current liabilities                                  $ 138,276    $  78,554
Long-term debt                                         125,600      134,004
9 7/8% Senior Subordinated Notes                       130,000      130,000
Other liabilities                                       15,403       15,629
Stockholders' deficit                                  (18,548)     (21,247)
                                                     ---------    ---------
                                                     $ 390,731    $ 336,940
                                                     =========    =========

Summarized consolidated statements of operations information (in thousands):

<TABLE>
<CAPTION>

                                  December 2,        November 27,          December 2,        November 27,
                                      2000               1999                  2000               1999
                                   (Thirteen          (Thirteen           (Forty Weeks)       (Thirty-nine
                                     Weeks)             Weeks)                                   Weeks)
                               -------------------------------------------------------- ------------------
<S>                               <C>                <C>                    <C>                <C>
Net Sales                          $144,317           $156,763               $325,558           $317,480
Income before
  income taxes                     $ 12,259           $ 16,963               $  6,983           $ 14,612
Income applicable
  to common stockholders           $  6,591           $  9,236               $  3,753           $  7,824

</TABLE>


                                                           7

<PAGE>
                            DESA HOLDINGS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


3. Financing Arrangements

Outstanding borrowings consist of the following (in thousands):
<TABLE>
<CAPTION>

                                                            December 2,          February 26,
                                                               2000                 2000
                                                           ----------------------------------
<S>                                                          <C>                 <C>

9 7/8% Senior Subordinated Notes due 2007 (A)                 $130,000            $130,000
Bank of America and various banks Term A Loan (B)               29,001              37,500
Bank of America and various banks Term B Loan (C)               45,435              47,750
Bank of America and various banks Term C Loan (D)                5,413                --
Bank of America and various banks Working Capital Loan
      Commitment (E)                                            60,660              25,379
Bank of America and various banks Acquisition Loan (F)          14,500              18,750
Bank of America and various banks Acquisition B Loan (G)        21,751              28,125
Note payable related to acquisition of Heath (H)                  --                 1,842
Guaranteed Line of Credit (I)                                   13,450                --
                                                              --------            --------
Total outstanding borrowings                                   320,210             289,346
Less current portion of long-term debt                          64,975              23,500
                                                              --------            --------
Total long-term debt                                          $255,235            $265,846
                                                              ========            ========

<FN>
(A)      The Senior  Subordinated  Notes are  payable on  December  15, 2007 and
         accrue  interest  at a rate of 9.875%  per annum.  Interest  is payable
         semi-annually on June 15 and December 15. The Senior Subordinated Notes
         can be redeemed prior to the mandatory  redemption  date based upon the
         occurrence  of certain  events,  as defined.  DESA is the issuer of the
         Senior   Subordinated   Notes,  which  are  fully  and  unconditionally
         guaranteed by Holdings.

(B)      The Term A Loan is payable in quarterly  installments  through November
         26,  2003,  and accrues  interest at the prime rate plus 2.00% or LIBOR
         plus 3.00% at the option of DESA.  Interest  is payable on a  quarterly
         basis under the prime rate  option or at the end of each LIBOR  period.
         The  weighted  average  interest  rate was 9.54% in year to date fiscal
         2001 and 8.03% in fiscal year 2000.  Once  repaid,  the Term A Loan may
         not be reborrowed.

(C)      The Term B Loan is payable in quarterly  installments  through November
         26,  2004,  and accrues  interest at the prime rate plus 2.25% or LIBOR
         plus 3.25% at the option of DESA.  Interest  is payable on a  quarterly
         basis under the prime rate  option or at the end of each LIBOR  period.
         The  weighted  average  interest  rate was 9.79% in year to date fiscal
         2001 and 8.52% in fiscal year 2000.  Once  repaid,  the Term B Loan may
         not be reborrowed.

(D)      The Term C Loan is payable in quarterly installments which commenced in
         May 2000 and extend through  November 26, 2003, and accrues interest at
         the prime  rate plus  2.25% or LIBOR  plus 3.25% at the option of DESA.
         Interest is payable on a quarterly basis under the prime rate option or
         at the end of each LIBOR period. The weighted average interest rate was
         9.68% in year to date fiscal 2001. Once repaid, the Term C Loan may not
         be reborrowed.

                                       8
<PAGE>

                            DESA HOLDINGS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


(E)      The  Working  Capital  Loan  Commitment  is  payable at any time at the
         option of DESA prior to November 26, 2003, and accrues  interest at the
         prime rate plus 2.00% or LIBOR plus 3.00%,  at the option of DESA.  The
         weighted  average  interest  rate was 9.51% in year to date fiscal 2001
         and 8.60% in fiscal year 2000. Interest is payable on a quarterly basis
         under the prime rate  option or at the end of each LIBOR  period.  DESA
         can utilize letters of credit under the Working Capital Loan Commitment
         up to $10  million.  As of  December  2, 2000 and  February  26,  2000,
         letters of credit of $3.0  million and $1.5  million  were  outstanding
         under the Working  Capital Loan  Commitment.  Borrowings  are generally
         limited to specific  percentages  of  eligible  trade  receivables  and
         inventory.  Holdings pays commitment fees of 1/2 of 1% per annum on the
         daily unutilized Working Capital Loan Commitment.

(F)      The  Acquisition  Loan  is  payable  in  quarterly  installments  which
         commenced in February 2000 and extend  through  November 26, 2003,  and
         accrues interest,  which is payable  quarterly,  at the prime rate plus
         2.25% or LIBOR plus 3.25% at the option of DESA.  The weighted  average
         interest rate was 9.78% in year to date fiscal 2001 and 8.22% in fiscal
         year 2000. Once repaid, the Acquisition Loan may not be reborrowed.

(G)      The  Acquisition  B Loan is payable  in  quarterly  installments  which
         commenced  in February  2000 and extend  through  November 26, 2003 and
         accrues interest,  which is payable  quarterly,  at the prime rate plus
         2.25% or LIBOR plus 3.25% at the option of DESA.  The weighted  average
         interest  rate was 9.82% in year to date 2001 and 8.05% in fiscal  year
         2000. Once repaid, the Acquisition B Loan may not be reborrowed.

(H)      The note  payable is due on December  31,  2008 and  accrues  interest,
         which is payable  semi-annually  at a rate of 7.5% per annum.  DESA may
         elect,  upon written notice, to defer any interest  payments,  in which
         event such interest payments shall effectively convert to principal and
         accrue  interest at a rate of 7.5% per annum.  In March 2000,  the loan
         was  fully  satisfied  through  reductions  of  principal  for  certain
         payments made under the terms of the note.

(I)      The Guaranteed Line of Credit loan, as extended, is payable at any time
         at the option of DESA prior to May 31,  2002,  and accrues  interest at
         the prime  rate plus .25% or LIBOR plus  1.75%,  at the option of DESA.
         Interest is payable on a quarterly basis under the prime rate option or
         at the end of each LIBOR period. The weighted average interest rate was
         8.54% in year to date fiscal 2001.
</FN>
</TABLE>

In accordance with the terms of the Credit Facility,  the ability of the Company
to incur additional  indebtedness is limited,  as defined.  At December 2, 2000,
the Company can incur additional indebtedness of $11.3 million.

                                       9
<PAGE>
                            DESA HOLDINGS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


4. Comprehensive Income

Comprehensive income consisted of the following (in thousands):
<TABLE>
<CAPTION>
                             December 2,          November 27,          December 2,           November 27,
                                2000                 1999                  2000                  1999
                              (Thirteen            (Thirteen           (Forty Weeks)         (Thirty-nine
                               Weeks)               Weeks)                                      Weeks)
                           -------------------------------------------------------------------------------
<S>                           <C>                   <C>                  <C>                  <C>
Net income                     $ 6,600               $9,236               $  3,792             $  7,824
Net change in foreign
   currency translation
   adjustment                     (591)                (425)                (1,131)                (727)
                           -------------------------------------------------------------------------------
Comprehensive
   Income                      $ 6,009               $8,811                $ 2,661              $ 7,097
                           ===============================================================================
</TABLE>

As of December 2, 2000 and November 27, 1999 the accumulated other comprehensive
loss consisted solely of the Company's foreign currency translation adjustment.

5. Segment Information

In March 2000, the Company  reorganized into three  divisions.  Each division is
comprised of dedicated  operational resources required to support their specific
product and  geographic  categories,  and shared  administrative  resources  for
certain corporate functions. The divisions are: (a) zone heating division, which
includes  indoor room heaters,  hearth  products and outdoor heaters sold in the
United States, (b) specialty  products division,  which includes specialty tools
and home  security  products  sold in the United States and all products sold in
Canada and (c) international division, which includes zone heating and specialty
products sold in all  geographic  areas other than the United States and Canada.
Zone heating division and specialty products division are reportable segments.

Identifiable assets are those assets of the Company that are identified with the
operations in each segment.  Prior amounts have been  reclassified to conform to
the current year's presentation.  Operating results and other financial data for
the business  segments for the periods  ended  December 2, 2000 and November 27,
1999 are presented below (in thousands):
<TABLE>
<CAPTION>
                                                               Specialty
                                            Zone Heating        Products
                                              Division          Division           Other             Total
                                         -------------------------------------------------------------------
<S>                                           <C>               <C>                <C>           <C>

Thirteen weeks ended December 2, 2000:
Net sales                                      $ 97,516          $ 41,954           $ 4,847        $ 144,317
Operating profit (loss)                          17,551             2,920               110           20,581
Depreciation and amortization                     2,302               860                58            3,220
Identifiable assets                             159,430           115,132            12,006          286,568
Capital expenditures                                322               553               192            1,067

Thirteen weeks ended November 27, 1999:
Net sales                                      $ 97,508          $ 51,933           $ 7,322        $ 156,763
Operating profit (loss)                          19,214             3,778             1,560           24,552
Depreciation and amortization                     2,259               654                47            2,960
Identifiable assets                             157,758           113,712            15,188          286,658
Capital expenditures                                  4               417                 0              421

</TABLE>


                                                                   10
<PAGE>
                            DESA HOLDINGS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                               Specialty
                                            Zone Heating        Products
                                              Division          Division           Other             Total
                                         -------------------------------------------------------------------
<S>                                           <C>               <C>                <C>           <C>
Forty weeks ended December 2, 2000:
Net sales                                     $ 185,111         $ 132,703           $ 7,744         $325,558
Operating profit (loss)                          22,581            10,738           (1,372)           31,947
Depreciation and amortization                     6,164             2,452               170            8,786
Identifiable assets                             159,430           115,132            12,006          286,568
Capital expenditures                              1,077               724               330            2,131

Thirty-nine weeks ended November 27, 1999:
Net sales                                     $ 166,678         $ 140,062          $ 10,740         $317,480
Operating profit (loss)                          20,752            14,866               545           36,163
Depreciation and amortization                     6,165             1,930               150            8,245
Identifiable assets                             157,758           113,712            15,188          286,658
Capital expenditures                              1,930             1,139                 0            3,069
</TABLE>

6. Acquisition

On April 3, 2000, DESA acquired the assets of Trine Products  Company  ("Trine")
located in Bronx, New York for consideration of approximately $11.0 million. The
Company financed the acquisition through borrowings of $6.0 million and the sale
of common stock for $5.0 million.  The Company  accounted  for such  acquisition
using the purchase method and has preliminarily  allocated the purchase price to
the net assets  acquired  based on estimated  fair values.  Pro forma results of
operations  as if the  acquisition  had occurred on the first day of fiscal 2001
and  fiscal  2000,  respectively,  would not  differ  materially  from  reported
results.  The results of operations  have been included in Holdings'  results of
operations from the acquisition date.


                                       11
<PAGE>

                            DESA HOLDINGS CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



This quarterly report on Form 10-Q of DESA Holdings Corporation (the "Company"),
which  includes  its  consolidated  subsidiaries  unless the  context  indicates
otherwise, contains statements that constitute forward looking statements within
the meaning of Section 21E of the  Securities  Exchange Act of 1934, as amended.
Those  statements  appear  in a number  of places  in this  report  and  include
statements  regarding the strategies,  plans, beliefs or current expectations of
the Company and its  management  and other  statements  that are not  historical
facts.  Readers are cautioned that any such forward  looking  statements are not
guarantees of future performance and involve risks and  uncertainties,  and that
actual  results  may  differ  materially  from  those set forth in such  forward
looking statements as a result of various factors. Such factors include, but are
not limited to, the  Company's  vulnerability  to adverse  general  economic and
industry  conditions  because of its leverage,  the Company's  ability to obtain
future  financing  on  acceptable  terms,  the  Company's  ability to  integrate
acquired  companies and to complete  acquisitions  on  satisfactory  terms,  the
demand and price for the Company's products relative to production costs and the
seasonality of the Company's  business.  The Company undertakes no obligation to
release  publicly  the  results  of  any  revisions  to  these  forward  looking
statements that may be made to reflect errors or circumstances  that occur after
the date hereof.

The following  discussion of the Company's  results of operations  and financial
condition for the thirteen and forty week period ended  December 2, 2000 and the
thirteen and thirty-nine week period ended November 27, 1999,  should be read in
conjunction  with the consolidated  financial  statements of the Company and the
notes thereto  contained  herein,  as well as for the fiscal year ended February
26, 2000, included in the Company's Annual Report on Form 10-K.

Overview

In March 2000, the Company  reorganized into three  divisions.  Each division is
comprised of dedicated  operational resources required to support their specific
product and  geographic  categories,  and shared  administrative  resources  for
certain corporate functions. The divisions are: (a) zone heating division, which
includes  indoor room heaters,  hearth  products and outdoor heaters sold in the
United States, (b) specialty  products division,  which includes specialty tools
and home  security  products  sold in the United States and all products sold in
Canada and (c) international division, which includes zone heating and specialty
products sold in all geographic areas other than the United States and Canada.

Sales of the  Company's  zone heating  products  follow  seasonal  patterns that
affect the  Company's  results of  operations.  Demand  for the  Company's  zone
heating products has been historically  highest in the fiscal third quarter,  as
consumers  prepare for winter.  Consequently,  the  Company's  net sales and the
Company's fiscal operating profit have also been historically highest during the
Company's fiscal third quarter.  Management  believes that the Company's results
of operations  will continue to follow this pattern;  there can be no assurance,
however,  that third quarter  results will always surpass those of the first and
second quarters, or that any improvement shown will be as great as that shown in
previous  years.  In  particular,  unusually warm weather in the fall may reduce
demand for zone heating products.

Sales of the Company's  specialty products do not follow a significant  seasonal
pattern and are not affected by weather patterns. Historically, these sales have
followed a relatively level quarterly pattern.

On April 3, 2000, DESA acquired the assets of Trine Products  Company  ("Trine")
located in Bronx, New York for consideration of approximately $11.0 million. The
Company  financed the  acquisition  through  borrowings  of $6.0 million and the
issuance of common stock for $5.0 million.  Trine's  annual sales for their most
recent year-end (June 30, 1999) were approximately $25 million. Trine produces a
complete line of door chimes,  and  accessories  for  residential and commercial
applications.  Trine  products are sold through mass  merchants,  home  centers,
retail chains and hardware cooperatives.


                                       12
<PAGE>
Results of Operations

Thirteen  Week Period  Ended  December 2, 2000,  Compared to the  Thirteen  Week
Period Ended November 27, 1999

Net sales.  Net sales in the  thirteen  weeks  ended  December  2, 2000  ("third
quarter 2001") were $144.3 million, a decrease of 7.9% or $12.4 million compared
to the  thirteen  weeks ended  November 27, 1999 ("third  quarter  2000").  Zone
heating  division  had net  sales  of  $97.5  million  in  third  quarter  2001,
approximately the same level as third quarter 2000.  Specialty products division
had net sales of $42.0 million in the third quarter 2001, a decrease of 19.2% or
$10.0 million from third quarter 2000, primarily due to a reduction in generator
sales from the prior year's  sales level that had been  inflated by consumer Y2K
concerns offset by the acquisition of Trine.

Cost of Sales.  Cost of sales  for  third  quarter  2001 was  $92.7  million,  a
decrease of $8.3  million or 8.2% from third  quarter  2000.  The  decrease  was
attributable to the lower unit sales for the period.  Cost of sales was 64.2% of
net sales in third quarter 2001 compared to 64.4% for third quarter 2000.

Selling,  General and Administrative  Expenses. For third quarter 2001, selling,
general  and  administrative  expenses  were $31.0  million,  a decrease  of $.2
million or 0.6% from third quarter 2000. As a percentage of net sales,  selling,
general and  administrative  expenses were 21.5% for third quarter 2001 compared
to 19.9% in third  quarter  2000.  The  increase  as a  percent  of net sales is
primarily  attributable  to a change in the product and  customer mix related to
sales program costs, redundant costs related to the planned integration of Trine
and start-up costs related to certain international operations.

Operating  Profit.  Operating  profit was $20.6  million for third  quarter 2001
compared to $24.6  million for third  quarter  2000, a decrease of $4.0 million.
Operating  profit  attributable  to zone heating  products was $17.6 million for
third  quarter 2001, a decrease of $1.7 million or 8.7% from third quarter 2000.
The decrease is primarily the result of increased sales program costs related to
a change in the  product  and  customer  mix  compared  to third  quarter  2000.
Specialty products operating profit was $2.9 million for the third quarter 2001,
a decrease of $.9 million or 22.7% from third  quarter  2000.  This  decrease is
primarily attributable to the decrease in net sales and related margins in third
quarter 2001.

EBITDA.  EBITDA for the third quarter 2001 was $23.8 million, a decrease of $3.7
million or 13.5% from third  quarter  2000.  EBITDA is defined as income  (loss)
before  income  taxes  plus  interest   expense  and  depreciation  as  well  as
amortization expense associated with intangibles and deferred charges. EBITDA is
presented  because it is a widely  accepted  financial  indicator of a leveraged
company's  ability to service and/or incur  indebtedness and because  management
believes that EBITDA is a relevant measure of the Company's  ability to generate
cash without regard to the Company's capital structure or working capital needs.
However,  EBITDA should not be considered as an  alternative  to net income as a
measure  of a  company's  operating  results  or to cash  flows  from  operating
activities  as a measure  of  liquidity  as  defined  by  accounting  principles
generally accepted in the United States.

Interest Expense.  Interest expense for third quarter 2001 was $8.3 million,  an
increase of $.7 million  from third  quarter  2000.  The  increase is  primarily
attributable  to market  interest  rate  increases  and higher levels of working
capital borrowing during the quarter.

Income Taxes. The effective income tax rate was 46.2% for third quarter 2001, an
increase of 0.6% compared to the third quarter 2000 rate of 45.6%.  The increase
is primarily due to a change in the mix of foreign and domestic  income compared
to fiscal year 2000.

Net Income.  Net income was $6.6 million for third  quarter 2001 compared to net
income of $9.2 million for third quarter  2000, a decrease of $2.6 million.  The
decrease is primarily  attributable to lower sales volumes and related  margins,
and interest.

                                       13
<PAGE>
Forty Week Period  Ended  December 2, 2000,  Compared  to the  Thirty-nine  Week
Period Ended November 27, 1999

Net sales.  Net sales in the forty weeks  ended  December 2, 2000 ("year to date
2001") were $325.6 million,  an increase of 2.5% or $8.1 million compared to the
thirty-nine  weeks ended  November 27, 1999 ("year to date 2000").  Zone heating
division  had net sales of $185.1  million in year to date 2001,  an increase of
11.1% or $18.4  million from the year to date 2000.  This  increase is primarily
due to increased  indoor  heating and hearth  product sales  volumes.  Specialty
products  division  had net sales of $132.7  million in the year to date 2001, a
decrease of 5.3% or $7.4  million  from year to date 2000,  primarily  due to an
increase in home security product sales and the acquisition of Trine offset by a
reduction in generator  sales from the prior year's sales that had been inflated
by consumer Y2K concerns.

Cost of  Sales.  Cost of sales  for year to date  2001 was  $214.7  million,  an
increase  of $3.9  million  or 1.8% from year to date  2000.  The  increase  was
attributable to the higher unit sales for the period. Cost of sales was 65.9% of
net sales in year to date 2001  compared  to 66.4%  for year to date  2000.  The
improvement in cost of sales as a percent of net sales is primarily attributable
to the  replacement  of generator  unit sales with  heating and other  specialty
product unit sales that are typically sold at higher margins.

Selling,  General and Administrative  Expenses.  For year to date 2001, selling,
general and  administrative  expenses  were $78.9  million,  an increase of $8.4
million or 11.9% from year to date 2000. The proportional  increase is primarily
attributable to direct selling costs associated with the net sales increase.  As
a percentage of net sales,  selling,  general and  administrative  expenses were
24.2% for year to date 2001 compared to 22.2% in year to date 2000. The increase
as a percent of net sales is primarily the result of a change in the product and
customer mix related to sales program costs compared to year to date 2000.

Operating  Profit.  The operating profit was $31.9 million for year to date 2001
compared  to $36.2  million for year to date 2000,  a decrease of $4.3  million.
Operating  profit  attributable  to zone heating  products was $22.6 million for
year to date 2001,  an increase of $1.8  million or 8.8% from year to date 2000.
The increase is primarily the result of increased sales and favorable changes in
product mix offset by the timing of sales  related  costs and costs related to a
change in customer mix.  Specialty  products  operating profit was $10.7 million
for year to date  2001,  a decrease  of $4.1  million or 27.8% from year to date
2000.  This  decrease  is  primarily  attributable  to the decline in net sales,
redundant costs related to the planned  integration of Trine and a change in the
product and customer mix related to sales program costs.

EBITDA. EBITDA for the year to date 2001 was $40.7 million, $3.7 million or 8.2%
lower than year to date 2000.  EBITDA is defined as income  (loss) before income
taxes plus interest  expense and  depreciation as well as  amortization  expense
associated with intangibles and deferred charges. EBITDA is presented because it
is a widely accepted  financial  indicator of a leveraged  company's  ability to
service and/or incur indebtedness and because management believes that EBITDA is
a relevant  measure of the Company's  ability to generate cash without regard to
the Company's capital structure or working capital needs. However, EBITDA should
not be  considered as an  alternative  to net income as a measure of a company's
operating  results or to cash flows from  operating  activities  as a measure of
liquidity as defined by accounting  principles  generally accepted in the United
States.

Interest Expense.  Interest expense for year to date 2001 was $24.9 million,  an
increase of $3.4  million  from year to date 2000.  The  increase  is  primarily
attributable  to higher  levels of  working  capital  borrowing  in  support  of
increased sales and market interest rate increases.

Income Taxes.  The effective  income tax rate was 46.0% for year to date 2001, a
decrease of 0.5%  compared to the year to date 2000 rate of 46.5%.  The decrease
is  primarily  due to a change in the mix of  foreign  and  domestic  income and
offset by an increase in non-deductible goodwill during fiscal year 2001.

Net Income.  Net income was $3.8 million for year to date 2001 compared to a net
income of $7.8  million for year to date 2000, a decrease of $4.0  million.  The
decrease is primarily attributable to higher selling, general and administrative
expenses and interest, offset by increased sales volumes and related margins.

                                       14
<PAGE>
Liquidity and Capital Resources

The  Company's  primary  cash  needs  have  been for  working  capital,  capital
expenditures and debt service  requirements.  The Company's sources of liquidity
have been cash flows from  operations,  borrowings  under its  revolving  credit
facilities and the Guaranteed Line of Credit.  The Company's business is subject
to a pattern of seasonal  fluctuation.  The Company's  needs for working capital
and the  corresponding  debt levels tend to peak in the second and third  fiscal
quarters.  The amount of sales  generated  during  the  second and third  fiscal
quarters  generally  depends  upon a number of factors,  including  the level of
retail sales for heating products during the prior winter,  current fall weather
conditions  affecting the level of sales of heating  products,  general economic
conditions, and other factors beyond the Company's control.

Net cash used in operating  activities  for year to date 2001 was $22.4  million
compared to net cash used of $10.7 million for year to date 2000. This increased
use of cash in year to date 2001 was  primarily  due to lower net  income and an
increased use of cash for working capital purposes.

Net cash used in investing  activities  was $13.1 million for year to date 2001,
compared  to $3.8  million  in year to date 2000.  The use of cash in  investing
activities  in year to date 2001  reflects  the  acquisition  of Trine for $11.2
million.  Net cash  provided by  financing  activities  in year to date 2001 was
$36.1 million, compared to $14.1 million for year to date 2000. Cash provided by
financing  activities  in year to date 2001 reflects the proceeds of a term loan
and sale of common stock related to the Trine  acquisition  and increases in the
working capital loan and the Guaranteed  Line of Credit  associated with the net
increase in working capital offset by required  principal payments on term loans
and acquisition loans.

The Credit  Facility  provides for  commitments in an aggregate  amount of up to
$191.1  million.  Borrowings  outstanding  under the Credit Facility were $176.8
million on December 2, 2000.  Outstanding letters of credit and foreign currency
contracts established to facilitate  merchandise purchases were $3.0 million and
$2.7 million,  respectively, at December 2, 2000. The Company had the ability to
incur  additional  indebtedness  of $11.3  million at December 2, 2000 under the
Credit Facility.  At December 2, 2000, DESA failed to meet the interest coverage
ratio covenant under the Credit Facility.  On January 16, 2001, Holdings entered
into  Amendment and Waiver No. 6 to the Loan  Documents  (the  "Amendment"),  an
amendment to their Credit  Facility,  which waives  Holdings'  failure to comply
with the  requirements  of the interest  coverage ratio at December 2, 2000. The
Amendment also modified the interest coverage ratio covenant for the measurement
period ended March 3, 2001 and extended the maturity of the  Guaranteed  Line of
Credit.

The Company  entered into an agreement  for a $15.0 million  Guaranteed  Line of
Credit on May 25, 1999.  The  Guaranteed  Line of Credit matures on May 31, 2002
and is guaranteed by UBS Capital LLC, a shareholder  of the Company.  Borrowings
under the  Guaranteed  Line of Credit  bear  interest at an annual rate equal to
either  (at the  Company's  option) a margin  over a base rate or a margin  over
LIBOR. The Guaranteed Line of Credit contains customary  covenants and events of
default.

The Company expects that capital expenditures during fiscal 2001 will not exceed
$4.0 million.  Capital  expenditures  are expected to be funded from  internally
generated cash flows and from borrowings under the Credit Facility.

Management  believes  that  cash flow from  operations,  availability  under the
Credit  Facility and the Guaranteed  Line of Credit will provide  adequate funds
for  the  Company's   foreseeable   working   capital  needs,   planned  capital
expenditures  and debt service  obligations.  Additionally,  the Company reviews
potential  acquisitions and relationships  from time to time and may be required
to seek additional debt to fund any acquisition.  The Credit Facility requires a
Clean-Up Period,  as defined,  under the Working Capital Loan Commitment,  for a
period of 30  consecutive  days occurring  between  January 1 and May 30 in each
calendar year. During the Clean-Up Period,  the sum of Working Capital advances,
Letter of Credit  advances and Swing Line loan  advances  outstanding  shall not
exceed $30  million.  As of December  2, 2000,  approximately  $30.7  million of
working  capital  borrowings  have been classified as current as a result of the
Clean-Up  requirement.  Such amount may be reborrowed  after compliance with the
Clean-Up  Period.  The Company's  ability to fund its  operations,  make planned
capital expenditures,  make scheduled debt payments,  make desired acquisitions,
refinance  indebtedness  and  remain  in  compliance  with all of the  financial
covenants under its debt agreements depends on its future operating  performance
and cash flow, which

                                       15
<PAGE>
in turn,  are  subject  to  prevailing  economic  conditions  and to  financial,
business and other factors, some of which are beyond its control.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risks relating to the Company's  operations result primarily from changes
in interest rates. The Company also has limited foreign currency risk associated
with its  Canadian,  European,  and  Hong  Kong  operations.  A  portion  of the
Company's  operations  consists of  purchasing  and sales  activities in foreign
jurisdictions.  The Company  manufactures  its products in the United States and
Hong Kong,  purchases  products in Europe,  China,  and Japan and sells products
primarily in the United States,  Canada,  and Europe. As a result, the Company's
financial  results  could be  affected  by  factors  such as  changes in foreign
currency  exchange rates or weak economic  conditions in the foreign  markets in
which the  Company  operates.  The  Company  employs  established  policies  and
procedures  to manage its  exposure to  fluctuations  in interest  rates and the
value of the foreign currencies. Interest rate and foreign currency transactions
are  used  only  to the  extent  considered  necessary  to  meet  the  Company's
objectives.  The Company does not utilize derivative  financial  instruments for
trading or other  speculative  purposes.  There have been no material changes in
the market risk to which the Company is exposed  since the end of the  Company's
preceding fiscal year.

Interest Rate Risk

The Company's interest rate risk management  objective is to limit the impact of
interest  rate  changes on its  earnings  and cash flow and to lower its overall
borrowing cost. To achieve its objectives,  the Company regularly  evaluates the
amount of its variable  rate debt as a percentage  of its  aggregate  debt.  The
Company manages its exposure to interest rate  fluctuations in its variable rate
debt through  periodic  review of the cost of interest rate swap  agreements and
interest rate cap  agreements  relative to the perceived  interest rate risk. At
December 2, 2000,  the  Company  did not have an interest  rate swap or interest
rate cap agreement in place.

The following table summarizes the carrying amounts and estimated fair values of
the Company's remaining  financial  instruments at December 2, 2000 and February
26, 2000 (bracketed amount represents an asset):
<TABLE>
<CAPTION>
                                                 December 2, 2000                     February 26, 2000
                                      Carrying Amount     Fair Value            Carrying Amount      Fair Value
                                   ----------------------------------------------------------------------------
                                                                (in thousands)
<S>                                    <C>                <C>                    <C>               <C>
Bank debt                               $176,760           $176,760               $157,504          $157,504
Senior subordinated notes                130,000             84,500                130,000            96,850
Guaranteed Line of Credit                 13,450             13,450                     --                --
Note payable                                  --                 --                  1,842             1,842
Foreign exchange contracts                    --                 77                     --               473

</TABLE>

Based on the average  outstanding  amount of variable rate  indebtedness  of the
Company in FY 2000, a one percentage  point change in the interest rates for the
Company's  variable  rate debt would have  impacted  the  Company's  fiscal 2000
interest expense by an aggregate of approximately $1.9 million.

Foreign Currency Exchange Rate Risk

The Company does not conduct a significant portion of its manufacturing or sales
activity in foreign markets.  The Company's  reported financial results could be
affected, however, by factors such as changes in foreign currency exchange rates
in the markets where it operates.  When the U.S. dollar strengthens against such
foreign  currencies,  the reported U.S. dollar value of local currency operating
profits generally  decreases;  when the U.S. dollar weakens against such foreign
currencies,  the reported U.S. dollar value of local currency  operating profits
generally increases.  The Company utilizes foreign exchange forward contracts to
mitigate the  short-term  effect of movements in currency  exchange rates on the
Company's  foreign  currency based inventory  purchases.  The Company  regularly
hedges by entering into foreign exchange forward contracts, approximately 85% to
95% of its budgeted (future) net foreign currency  purchase  transactions over a
period of four  quarters.  Gains and  losses  related  to  qualifying  hedges of
foreign  currency  risk  exposures  are recorded  when the related  inventory is
purchased. Because the Company does

                                       16
<PAGE>


not have  significant  foreign  operations,  the Company  does not believe it is
necessary to enter into any other derivative financial instruments to reduce its
exposure to foreign currency exchange rate risk.





                                       17


<PAGE>


PART II           Other Information


Item 2.  Changes in Securities and Use of Proceeds

During November 2000,  options  representing 583 shares were issued to employees
at an  aggregate  exercise  price  of  $3,790.  These  shares  are  exempt  from
registration under Section 4(2) of the Securities Act.


Item 3.  Defaults Upon Senior Securities

At December 2, 2000,  DESA failed to meet the interest  coverage  ratio covenant
under the Credit Facility.  On January 16, 2001, Holdings entered into Amendment
and Waiver No. 6 to the Loan Documents,  an amendment to their Credit  Facility,
which waives  Holdings'  failure to comply with the requirements of the interest
coverage  ratio at December 2, 2000.  The  Amendment  also modified the interest
coverage  ratio  covenant  for the  measurement  period  ended March 3, 2001 and
extended the maturity of the Guaranteed Line of Credit.


Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  10.1     Amendment  No.  6 to the Loan  Documents  dated as of
                           January 16, 2001 to the Credit  Agreement dated as of
                           November  26,  1997 by and  among the  Company,  DESA
                           International,   Inc.,   the  Lender   Parties  party
                           thereto,   UBS   Securities   LLC,  Banc  of  America
                           Securities  LLC  (formerly   NationsBanc   Montgomery
                           Securities LLC) and Bank of America,  N.A.  (formerly
                           NationsBank, N.A.).

                  10.2     Amendment No. 2 to the Credit  Agreement  dated as of
                           January 16, 2001 to the Credit  Agreement dated as of
                           May 26, 1999  between  DESA  International,  Inc. and
                           Bank of America N.A. (formerly NationsBank, N.A.).

         (b)      Reports on Form 8-K

The Company filed no reports on Form 8-K during the period for which this report
is made.


                                       18

<PAGE>



SIGNATURES

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


                           DESA HOLDINGS CORPORATION

                           By:

Dated:  January 16, 2001   /s/ Stephen L. Clanton
                           Stephen L. Clanton
                           Chief Financial Officer
                           (Principal Financial Officer and
                              Chief Accounting Officer)

                                       19