U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(X)  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the quarterly period ended September 30, 2002


( )  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the transition period from         to

     Commission File No.  0-32331

                              SURETY HOLDINGS CORP.
          -----------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)

              Delaware                                    52-2229054
     ----------------------------------          -----------------------------
     State of other jurisdiction of              (IRS Employer
     incorporation or organization               Identification No.)

                             850 Fort Plains Road
                            Howell, New Jersey 07731
                 -----------------------------------------------
                    (Address of Principal Executive Offices)

     Registrant's telephone number including area code          732-886-0706
                                                                ------------

     Check whether the issuer (1) 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.

     (1)  YES   X     NO                       (1)  YES   X     NO
               ----     ----                             ----     ----

     State the number of shares outstanding of each of the Registrant's classes
     of common equity, as of the latest applicable date:

                         6,738,000 - - November 14, 2002

<PAGE>

                      SURETY HOLDINGS CORP. AND SUBSIDIARY


                                      INDEX
<TABLE>
<CAPTION>
                                                                               PAGE
                                                                               ----
<S>       <C>                                                                   <C>
Part I - Financial Information

          Item 1 - Condensed Consolidated Financial Statements (unaudited)

               Balance Sheet as of September 30, 2002                             1

               Statements of Income for the nine and three months
                 ended September 30, 2002 and 2001                                2

               Statements of Cash Flows for the nine months ended September
               30, 2002 and 2001                                                  3

               Notes to Financial Statements                                    4-8


          Item 2 - Management's Discussion and Analysis or Plan of Operation   9-16

          Item 3 - Evaluation of Disclosure Controls and Procedures              17



Part II - Other Information

          Item 1 - Legal Proceedings                                             17

          Item 2 - Change in Securities                                          17

          Item 3 - Defaults Upon Senior Securities                               17

          Item 4 - Submission of Matters to a Vote of Security Holders           17

          Item 5 - Other Information                                             17

          Item 6 - Exhibits and Reports on Form 8-K                              17

          SIGNATURE                                                              18

          CERTIFICATIONS                                                       19-22


</TABLE>

<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2002
                                   (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
  Cash                                                           $   10,046,000
  Real estate held for sale, current                                  2,950,000
  Other current assets                                                  164,000
                                                                 --------------
     Total current assets                                            13,160,000

NOTES RECEIVABLE, less current maturities                             1,487,000

NOTE RECEIVABLE, officer                                                570,000

REAL ESTATE HELD FOR SALE                                            35,768,000

NOTES RECEIVABLE AND ACCRUED INTEREST,
  MARINE FOREST RESORT, INC., net of a $7.2
  million allowance for loan losses                                   3,814,000

REAL ESTATE DEVELOPMENT COSTS                                        37,721,000

PROPERTY AND EQUIPMENT, net of accumulated depreciation
  and amortization of $1,908,000                                      2,612,000

DEFERRED TAX ASSET                                                    3,512,000
                                                                 --------------
                                                                 $   98,644,000
                                                                 ==============



                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Notes payable, current maturity                                $       30,000
  Notes payable, president                                                7,000
  Accounts payable                                                      419,000
  Accrued expenses and other current liabilities                        140,000
  Income taxes payable                                                  400,000
                                                                 --------------
     Total current liabilities                                          996,000
                                                                 --------------

 LONG-TERM LIABILITIES,
  Notes payable, less current maturity                                  413,000
                                                                 --------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Common stock, $.001 par value,
  200,000,000 shares authorized,
  6,738,000 shares issued and
  outstanding                                                             7,000
Capital in excess of par value                                      101,678,000
Accumulated deficit                                                  (4,450,000)
                                                                 --------------
     Total stockholders' equity                                      97,235,000
                                                                 --------------

                                                                 $   98,644,000
                                                                 ==============

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       1
<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                NINE MONTHS ENDED SEPTEMBER 30,  THREE MONTHS ENDED SEPTEMBER 30,
                                      2002           2001               2002           2001
                                  -----------    -----------         -----------    -----------
<S>                              <C>            <C>                 <C>            <C>
REVENUES                         $ 3,386,000    $ 2,470,000         $ 1,593,000    $ 1,131,000


COST OF REVENUES                   1,254,000        986,000             605,000        438,000
                                 -----------    -----------         -----------    -----------

GROSS PROFIT                       2,132,000      1,484,000             988,000        693,000

GENERAL AND ADMINISTRATIVE
 EXPENSES                          1,215,000        997,000             440,000        256,000
                                 -----------    -----------         -----------    -----------

INCOME FROM OPERATIONS               917,000        487,000             548,000        437,000
                                 -----------    -----------         -----------    -----------
OTHER INCOME (EXPENSE)
Interest income                      240,000        979,000             103,000        325,000
Interest expense                    (106,000)       (47,000)             (8,000)       (19,000)
                                 -----------    -----------         -----------    -----------
                                     134,000        932,000              95,000        306,000
                                 -----------    -----------         -----------    -----------

INCOME BEFORE INCOME TAXES         1,051,000      1,419,000             643,000        743,000

INCOME TAXES                        (411,000)      (562,000)           (246,000)      (168,000)
                                 -----------    -----------         -----------    -----------

NET INCOME                       $   640,000    $   857,000         $   397,000    $   575,000
                                 ===========    ===========         ===========    ===========


NET INCOME PER COMMON
 SHARE, basic and diluted        $      0.09    $      0.13         $      0.06    $      0.09
                                 ===========    ===========         ===========    ===========


WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING, basic and diluted    6,738,000      6,738,000           6,738,000      6,738,000
                                 ===========    ===========         ===========    ===========
</TABLE>




SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       2
<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     2002            2001
                                                                 ------------    ------------
<S>                                                              <C>             <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                                     $    640,000    $    857,000
  Adjustments to reconcile net income
    to net cash used in operating activities:
      Depreciation and amortization                                   112,000         121,000
      Deferred income taxes                                             8,000         540,000
      Accrued interest receivable, Marine Forest Resorts, Inc.                       (730,000)
      Gain on sales of property                                    (2,148,000)     (1,403,000)
      Loss (gain) on disposition of property                           12,000          (7,000)
      Loss on sale of notes receivable                                 75,000
      Increase (decrease) in cash
       attributable to changes in operating
       assets and liabilities:
        Other current assets                                          (22,000)       (188,000)
        Accounts payable                                              (19,000)        101,000
        Accrued expenses and other
         current liabilities                                           16,000        (161,000)
        Income taxes payable                                          400,000          28,000
                                                                 ------------    ------------

NET CASH USED IN OPERATING ACTIVITIES                                (926,000)       (842,000)
                                                                 ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment                                (105,000)       (219,000)
  Proceeds from sales of property                                   2,686,000       1,144,000
  Real estate development expenditures                             (1,944,000)     (2,160,000)
  Proceeds from repayments of notes receivable                        819,000         963,000
  Proceeds from repayments of note receivable, officer                  5,000
  Advances to Marine Forest Resort, Inc.                                           (1,950,000)
                                                                 ------------    ------------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                 1,461,000      (2,222,000)
                                                                 ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Principal payments on notes payable                                 (22,000)       (509,000)
  Proceeds from bank line of credit                                                 1,000,000
  Proceeds from notes payable, president                                              165,000
  Repayments of notes payable, president                             (375,000)
                                                                 ------------    ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                  (397,000)        656,000
                                                                 ------------    ------------

NET INCREASE (DECREASE) IN CASH                                       138,000      (2,408,000)

CASH
  Beginning of period                                               9,908,000      10,147,000
                                                                 ------------    ------------
  End of period                                                  $ 10,046,000    $  7,739,000

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
 FINANCING ACTIVITY, issuance of notes receivable to officer
 upon sale of property and leasehold improvements                $    575,000    $         --
                                                                 ============    ============
</TABLE>




SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3
<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY


         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  NATURE OF OPERATIONS

Surety Holdings Corp. ("Surety") and its wholly-owned subsidiary,  Surety Kohala
Corporation ("Kohala") (collectively, the "Company") is primarily engaged in the
development  of a property on 642 acres of land in the North Kohala  district of
Hawaii  Island in the state of  Hawaii.  This  development,  referred  to as the
Kohala Preserve (f/n/a Mahukona development project) (see Note 3), was initially
slated to be a hotel, 18-hole golf course and resort homes. However, the Company
is exploring  other avenues of  development  for the 642 acres most notably,  an
all-inclusive fractional interest club community.

The  current  operations  of the  Company  include  the  sale of its  non-Kohala
Preserve  project real estate and other ancillary  activities,  all of which are
not deemed to be the future of the Company's business.

2.  UNAUDITED STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

UNAUDITED STATEMENTS

The accompanying  condensed consolidated financial statements of Surety Holdings
Corp. and  Subsidiary as of September 30, 2002 and for the nine and  three-month
periods  ended  September  30,  2002 and  2001 are  unaudited  and  reflect  all
adjustments of a normal and recurring  nature to present fairly the consolidated
financial  position,  results  of  operations  and cash  flows  for the  interim
periods.  These unaudited condensed  consolidated financial statements have been
prepared by the Company  pursuant to  instructions  to Form 10-QSB.  Pursuant to
such  instructions,  certain  financial  information  and  footnote  disclosures
normally included in such financial statements have been omitted.

These unaudited condensed  consolidated  financial  statements should be read in
conjunction  with  the  consolidated  audited  financial  statements  and  notes
thereto,   together  with  management's  discussion  and  analysis  or  plan  of
operations,  contained in the Company's Annual Report on the Form 10-KSB for the
year  ended  December  31,  2001.  The  results of  operations  for the nine and
three-month  periods ended September 30, 2002 are not necessarily  indicative of
the results that may occur for the year ending December 31, 2002.

INCOME PER COMMON SHARE

The Company complies with Statement of Financial  Accounting  Standards ("SFAS")
No. 128,  "Earnings  Per Share" which  requires dual  presentation  of basic and
diluted  earnings per share.  Basic earnings per share excludes  dilution and is
computed  by  dividing   income   available  to  common   stockholders   by  the
weighted-average  common shares  outstanding for the year.  Diluted earnings per
share  reflects the  potential  dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity.  Since the Company has no securities or other  contracts to issue common
stock,  basic  and  diluted  net  income  per  common  share  for the  nine  and
three-month periods ended September 30, 2002 and 2001 were the same.

PRINCIPLES OF CONSOLIDATION

The condensed  consolidated  financial statements include the accounts of Surety
and Kohala.  All significant  intercompany  transactions  and balances have been
eliminated in consolidation.




                                       4
<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.  REAL ESTATE DEVELOPMENT COSTS

At September 30, 2002, real estate  development costs,  attributed  primarily to
the Company's Kohala Preserve, consist of the following:

 Land and land acquisition costs            $ 23,896,000
 Planning and studies                          2,670,000
 Engineering and architectural                   564,000
 Infrastructure                                6,473,000
 Professional and consulting fees              2,610,000
 Other                                         1,508,000
                                            ------------
                                            $ 37,721,000
                                            ============

4.  STOCKHOLDERS' EQUITY

In February 2002, the Company's  board of directors  authorized a  three-for-one
stock  split  effected  in the form of a 200 percent  stock  dividend  which was
distributed on February 15, 2002 to  stockholders of record on February 4, 2002.
Stockholders'  equity has been restated to give  retroactive  recognition to the
stock split for all periods presented by reclassifying from capital in excess of
par value to common stock the par value of the  additional  shares  arising from
the split. In addition,  all references in the condensed  consolidated financial
statements to number of shares and per share amounts have been restated.

5.  COMMITMENTS AND CONTINGENCIES

The prior approvals  obtained for the Kohala Preserve  project are  conditional;
that is, each approval is subject to various conditions of approval.  Certain of
these  conditions  of  approval  contain  time  limits or  financial  compliance
requirements,  which if not met, may  ultimately  result in  legislative  and/or
administrative actions to void or revoke the prior approvals. The effect of such
adverse  actions would be to return the land  entitlements to the former zoning,
or more  appropriate  zoning as determined by the County of Hawaii.  The Company
believes  that  it  has  continued  to  maintain  the  prior  approvals  through
compliance with all applicable conditions.  In the future,  however, the Company
may not be able to maintain compliance with all applicable conditions.

The  Company has entered  into  various  consulting  agreements  for  investment
banking, project development and other services.

The Company is involved in certain legal actions that arose in the normal course
of business. In the opinion of the Company's management, the resolution of these
matters will not have a material  adverse  effect on the condensed  consolidated
financial position, results of operations or cash flows of the Company.

6.  RELATED PARTY TRANSACTIONS

NOTES PAYABLE, PRESIDENT

From time to time, the Company's  President advances the Company monies pursuant
to one-year 5% promissory  notes.  At September 30, 2002, the amount owed to the
Company's  President  pursuant to such notes was approximately  $7,000.  Related
interest  expense  for the nine  months  ended  September  30,  2002 and 2001 is
approximately  $7,000 and $16,000,  respectively and $1,000 and $16,000, for the
three months ended September 30, 2002 and 2001, respectively.



                                       5
<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.  RELATED PARTY TRANSACTIONS (CONTINUED)

MARINE FOREST RESORT, INC. ("MARINE FOREST")

Pursuant to  uncollateralized  promissory  notes,  the Company  advanced  Marine
Forest, a related Japanese corporation that owns approximately 400 acres of land
in Okinawa,  Japan,  $9.75  million.  The notes bear interest at the U.S.  prime
rate, at date of issuance,  plus one percent.  Under their original  terms,  the
notes were due nine  months  after  date of  issuance.  However,  the notes were
extended an  additional  nine months and  subsequently  extended to December 31,
2002, as a concession to Marine Forest to advance  Marine  Forest's  development
projects.  In  connection  therewith,  the  Company  continues  to  discuss  the
possibility of a strategic arrangement with Marine Forest, including the Company
acquiring Marine Forest. Current discussions,  which are ongoing, are based upon
a recently completed study (Concept Development and Economic Projections Report)
prepared by a consultant for the Kohala Preserve plan.  Related  interest income
for the nine months ended September 30, 2002 and 2001 is  approximately  nil and
$730,000,  respectively.  Related  interest  income for the three  months  ended
September 30, 2002 and 2001 is approximately nil and $255,000,  respectively. In
2002, the Company discontinued  accruing interest income on the promissory notes
in light of its 2001 impairment  charge (see next paragraph).  Through September
30, 2002, no interest has been paid,  however  management  anticipates  that all
accrued  interest  receivable  will be  reclassified to principal and settled in
connection with the parties' contemplated strategic arrangement.

At December  31, 2001,  in light of the  speculative  nature of Marine  Forest's
contemplated development projects among other reasons and in accordance with its
compliance  with the  requirements  of SFAS No.  114,  the  Company  recorded an
impairment charge of approximately $7.2 million.

NOTE RECEIVABLE, OFFICER

In April 2002,  an officer of the Company  purchased  property and  improvements
thereon for  $575,000.  The officer  entered into 30-year note  agreement  which
requires  monthly  payments of principal  and interest  through  2032.  The note
receivable  bears  interest at the rate of 2.66%.  The sale of the  property and
improvements to the officer resulted in a loss of approximately $15,000.

OTHER

During the nine months ended  September  30, 2002 and 2001,  the Company  rented
properties to related  individuals for approximate  aggregate rentals of $10,000
and $40,000,  respectively. The aggregate rentals to related individuals for the
three  months  ended   September   30,  2002  and  2001  was  nil  and  $10,000,
respectively.

7.  SEGMENT REPORTING

As  discussed  in Note 1, the  Company's  primary  business  focus is the Kohala
Preserve  project.   Nonetheless,   the  Company  complies  with  SFAS  No.  131
"Disclosures  about  Segments of an Enterprise and Related  Information",  which
provides information about the Company's current business activities. Management
has divided the Company into the following segments:  real estate sales, rental,
cattle sales and other. Transactions between segments are not common and are not
material to the segment  information.  Some business  activities  that cannot be
classified in the aforementioned segments are shown under "corporate".

Operating results, by segment, for the nine and three months ended September 30,
2002 and 2001 are as follows (in thousands):



                                       6
<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


7.  Segment reporting (continued)

<TABLE>
<CAPTION>
                                             NINE MONTHS ENDED SEPTEMBER 30, 2002

                                       Real Estate      Rental          Cattle
                                          Sales        Activity          Sales          Other       Corporate        Total
                                      --------------------------------------------------------------------------------------
<S>                                   <C>               <C>            <C>            <C>            <C>           <C>
Total revenues                        $     2,686       $    221       $     259      $     220      $   --        $   3,386
Total cost of revenues                        849             86             156            163                        1,254
                                      --------------------------------------------------------------------------------------

Segment profit                              1,837            135             103             57                        2,132
General and administrative expenses                                                                     (1,215)       (1,215)
Interest income, net                                                                                       134           134
Income taxes                                                                                              (411)         (411)
                                      --------------------------------------------------------------------------------------

Net income (loss)                     $     1,837       $    135       $     103      $      57      $  (1,492)    $     640
                                      ======================================================================================

Total assets                          $    40,219       $     63       $     101      $     585      $  57,676     $  98,644
                                      ======================================================================================

Capital expenditures                  $    --           $  --          $       9      $      63      $   1,977     $   2,049
                                      ======================================================================================

Depreciation and amortization         $    --           $      3       $      13      $      50      $      46     $     112
                                      ======================================================================================

                                             NINE MONTHS ENDED SEPTEMBER 30, 2001

<CAPTION>
                                      Real Estate        Rental          Cattle
                                         Sales          Activity          Sales          Other       Corporate      Total
                                      ------------------------------------------------------------------------------------
<S>                                   <C>               <C>            <C>            <C>            <C>         <C>
Total revenues                        $   1,683           $    273       $     309      $    205       $   --      $   2,470
Total cost of revenues                      531                103             181           171                         986
                                      --------------------------------------------------------------------------------------
Segment profit                            1,152                170             128            34                       1,484
General and administrative expenses                                                                         (997)       (997)
Interest income, net                                                                                         932         932
Income taxes                                                                                                (562)       (562)
                                      --------------------------------------------------------------------------------------
Net income (loss)                     $   1,152           $    170       $     128      $     34       $    (627)  $     857
                                      ======================================================================================

Total assets                          $  42,225           $  2,006       $      37      $    138       $  57,200   $ 101,606
                                      ======================================================================================

Capital expenditures                  $     --            $      7       $      87      $    120       $   2,165   $   2,379
                                      ======================================================================================

Depreciation and amortization         $     --            $      5       $      10      $     51       $      55   $     121
                                      ======================================================================================
</TABLE>



                                       7
<PAGE>


                      SURETY HOLDINGS CORP. AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


7.    SEGMENT REPORTING (CONTINUED)

<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED SEPTEMBER 30, 2002

                                      Real Estate    Rental       Cattle
                                         Sales      Activity       Sales        Other       Corporate     Total
                                      ---------------------------------------------------------------------------
<S>                                   <C>          <C>           <C>          <C>          <C>          <C>
Total revenues                        $   1,368    $      61     $      69    $      95    $   --       $   1,593
Total cost of revenues                      465           29            67           44                       605
                                      ---------------------------------------------------------------------------
Segment profit                              903           32             2           51                       988
General and administrative expenses                                                             (440)        (440)
Interest income, net                                                                              95           95
Income taxes                                                                                    (246)        (246)
                                      ---------------------------------------------------------------------------

Net income (loss)                     $     903    $      32     $       2    $      51    $    (591)   $     397
                                      ===========================================================================

Capital expenditures                  $   --       $   --        $       5    $      12    $     982    $     999
                                      ===========================================================================

Depreciation and amortization         $   --       $       1     $       5    $      19    $      14    $      39
                                      ===========================================================================


                                       THREE MONTHS ENDED SEPTEMBER 30, 2001
<CAPTION>
                                      Real Estate    Rental       Cattle
                                         Sales      Activity       Sales        Other       Corporate     Total
                                      ---------------------------------------------------------------------------
<S>                                   <C>          <C>           <C>          <C>          <C>          <C>
Total revenues                        $     894    $      71     $      75    $      91    $    --      $   1,131
Total cost of revenues                      273           26            75           64                       438
                                      ---------------------------------------------------------------------------
Segment profit                              621           45          --             27                       693
General and administrative expenses                                                             (256)        (256)
Interest income, net                                                                             306          306
Income taxes                                                                                    (168)        (168)
                                      ---------------------------------------------------------------------------

Net income (loss)                     $     621    $      45     $    --      $      27    $    (118)   $     575
                                      ===========================================================================

Capital expenditures                  $    --      $    --       $      11    $      46    $     763    $     820
                                      ===========================================================================

Depreciation and amortization         $    --      $       1     $       4    $      18    $      25    $      48
                                      ===========================================================================
</TABLE>







                                       8
<PAGE>


Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

NOTE ON FORWARD-LOOKING INFORMATION

This Form 10-QSB contains certain forward-looking  statements. For this purpose,
any  statements  contained  in this  Form  10-QSB  that  are not  statements  of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing,  words such as "may," "will," "expect," "believe," "anticipates,"
"estimates," or "continue" or comparable terminology or the negative thereof are
intended to identify  certain  forward-looking  statements.  These statements by
their  nature  involve  substantial  risks  and  uncertainties,  both  known and
unknown,  and actual  results  may  differ  materially  from any future  results
expressed or implied by such forward-looking  statements. The Company undertakes
no  obligation  to  publicly  update or revise  any  forward-looking  statements
whether as a result of new information, future events or otherwise.

OVERVIEW

Surety  Holdings Corp. (the  "Company"),  through its  wholly-owned  subsidiary,
Surety Kohala Corporation  ("Surety Kohala")  (formerly Chalon  International of
Hawaii,  Inc.), is engaged in the development of a property on 642 acres of land
in the North  Kohala  district  of Hawaii  Island in the state of  Hawaii.  This
development,  referred  to  as  the  Kohala  Preserve  project  (f/n/a  Mahukona
development  project),  was initially slated to be a hotel,  18-hole golf course
and resort homes. However, the Company is exploring other avenues of development
for the 642 acres  most  notably,  an  all-inclusive  fractional  interest  club
community (see KOHALA PRESERVE in Liquidity and Capital Resources).

The current  operations of the Company (discussed below) include the sale of its
non-Kohala Preserve project real estate and other ancillary activities,  many of
which are not deemed to be the future of the Company's business.







                                       9
<PAGE>


RESULTS OF OPERATIONS

The following  table sets forth the  statements of income of the Company for the
nine months ended September 30, 2002 and 2001:

                                              2002                2001
                                          -------------      --------------

Real estate sales                         $   2,686,000      $    1,683,000
Rentals                                         221,000             273,000
Cattle sales                                    259,000             309,000
Other                                           220,000             205,000
                                          -------------      --------------
    Total revenues                            3,386,000           2,470,000
                                          -------------      --------------

Cost of real estate sales                       849,000             531,000
Cost of rentals                                  86,000             103,000
Cost of cattle sales                            156,000             181,000
Cost of other                                   163,000             171,000
                                          -------------      --------------

    Total cost of revenues                    1,254,000             986,000
                                          -------------      --------------

Gross profit                                  2,132,000           1,484,000

General and administrative expenses           1,215,000             997,000
                                          -------------      --------------

Income from operations                          917,000             487,000
                                          -------------      --------------
Interest income                                 240,000             979,000
Interest expense                               (106,000)            (47,000)
Income taxes                                   (411,000)           (562,000)
                                          -------------      --------------
                                               (277,000)            370,000
                                          -------------      --------------

Net income                                $     640,000      $      857,000
                                          =============      ==============

REAL ESTATE SALES -

During the nine months ended  September 30, 2002, the Company sold eight parcels
for proceeds of $2,686,000. During the same period of the prior year, there were
sales of only four  parcels due to survey  delays.  Real  estate  sales for both
periods have been impacted due to delays caused by the Company's survey company,
the largest  survey  company on the Big Island of Hawaii and  probably  the only
survey company large enough to handle the Company's  PCRS (Parcel  Consolidation
Re-Subdivision)  parcels and  subdivisions,  being  backlogged  with work.  This
surveying backlog is a result of increasing demand of the Company's North Kohala
property in a favorable  economic  time.  Further,  many of the  properties  the
Company is selling have never been surveyed and the  topography  and terrain are
very  difficult  for  surveyors.  To address the backlog,  the Company  recently
switched  surveyors  on several  projects  and survey  work is  beginning  to be
completed  in a timely  manner.  The  Company  is  expecting  between  10 and 20
closings in the fourth quarter of 2002, which will bring additional  proceeds of
approximately $10 million.  However, in light of the aforementioned  among other
unanticipated  circumstances,  no  assurances  can be made that the Company will
meet its expectations in this regard.



                                       10
<PAGE>


Real estate sales margin remained  consistent when compared to the prior period.
Included in 2002 real estate costs is a $15,000 loss brought about as the result
of the sale of the Sandalwood house and property to Surety Kohala's president.

RENTAL REVENUES -

The approximate 19% decrease in rental revenue is primarily  attributable to the
sale of real estate  formerly  leased by the Company.  The Company  expects this
trend to continue in the fourth quarter of 2002 and into 2003.

CATTLE SALES -

The   approximate   16%   decrease  in  cattle  sales  is   attributable   to  a
difficult-to-predict  beef  market.  The Company  experienced  an increase of 64
heads in the sale of cattle  from the same period of the prior year but this was
offset by a 11%  decrease in the price per head.  During the nine  months  ended
September 30, 2002, cattle expenditures decreased approximately 14%, as a result
of the sale of land previously used for pastures.  The Company  anticipates that
future  cattle  revenues  and costs will  continue  to  decrease  as the Company
continues its sale of pasture lands.

OTHER REVENUES -

Other revenues  increased  approximately 7% during the first nine months of 2002
as  Eco-tourism  activity  rebounded  strongly from the  September  11th induced
downturn. Margins also increased in 2002 as stronger Eco-tourism revenues offset
an increase in repairs and  maintenance  of buildings  and grounds.  The Company
anticipates that other revenues will continue to increase over the next year.

GENERAL AND ADMINISTRATIVE EXPENSES -
General and administrative expenses for the nine months ended September 30, 2002
increased  approximately  22% as  compared  with the same  period  of 2001.  The
components of general and administrative  expenses for 2002 include salaries and
related costs of approximately $373,000;  professional fees (legal, auditing and
consulting)   of   approximately   $289,000;   franchise   and  other  taxes  of
approximately  $142,000;  depreciation of  approximately  $47,000;  insurance of
approximately $89,000; rent expense of approximately $69,000;  travel, meals and
entertainment   of  approximately   $122,000  and  other  expenses   aggregating
approximately $84,000. The components of general and administrative expenses for
the same period of 2001  include  salaries  and related  costs of  approximately
$409,000;  professional  fees (legal,  auditing and consulting) of approximately
$199,000;  franchise and other taxes of approximately $158,000;  depreciation of
approximately  $45,000  insurance  of  approximately  $40,000;  rent  expense of
approximately $31,000;  travel, meals and entertainment of approximately $13,000
and other expenses aggregating approximately $102,000.

OTHER INCOME AND EXPENSE -
Decreased  interest  income  during the nine months ended  September 30, 2002 is
directly  attributable  to the  Company  discontinuing  its  accrual of interest
income on the Marine  Forest  notes in light of its 2001  impairment  charge and
compliance with the requirements of Statements of Financial Accounting Standards
("SFAS")  No 114.  Included  in  interest  expense  for the  nine  months  ended
September 30, 2002 is an  approximate  $75,000 loss (a finance  cost)  resulting
from the sale of 5 mortgage notes to financial  institutions at a discount which
provided cash of approximately $759,000.




                                       11
<PAGE>


RESULTS OF OPERATIONS

The following  table sets forth the  statements of income of the Company for the
three months ended September 30, 2002 and 2001:

                                            2002              2001

Real estate sales                       $  1,368,000      $    894,000
Rentals                                       61,000            71,000
Cattle sales                                  69,000            75,000
Other                                         95,000            91,000
                                        ------------      ------------
   Total revenues                          1,593,000         1,131,000
                                        ------------      ------------

Cost of real estate sales                    465,000           273,000
Cost of rentals                               29,000            26,000
Cost of cattle sales                          67,000            75,000
Cost of other                                 44,000            64,000
                                        ------------      ------------
   Total cost of revenues                    605,000           438,000
                                        ------------      ------------

Gross profit                                 988,000           693,000

General and administrative expenses          440,000           256,000
                                        ------------      ------------

Income from operations                       548,000           437,000
                                        ------------      ------------
Interest income                              103,000           325,000
Interest expense                              (8,000)          (19,000)
Income taxes                                (246,000)         (168,000)
                                        ------------      ------------
                                            (151,000)          138,000
                                        ------------      ------------

Net income                              $    397,000      $    575,000
                                        ============      ============


REAL ESTATE SALES -

During the three months ended  September 30, 2002,  the Company sold two parcels
for proceeds of $1,368,000. During the same period of the prior year, there were
also two sales of parcels for proceeds of $894,000. See management's  discussion
and  analysis  for the  nine  months  ended  September  30,  2002  and  2001 for
discussion of delays and future expectations.

RENTAL REVENUES -

As previously  discussed,  the decrease in rental revenue and related margins is
attributable  to the sale of real estate  formerly  leased by the  Company.  The
Company  expects  this trend to continue in the fourth  quarter of 2002 and into
2003.

 CATTLE SALES -

Cattle sales declined  approximately 8% for the three months ended September 30,
2002, as compared to the same period in the prior year, as the average price per
head of cattle decreased 10% from the same period of the prior year. The Company
believes that cattle sales will continue to decrease for the foreseeable  future
due to the continuing sale of pasture lands.

                                       12
<PAGE>


OTHER REVENUES -

Other  revenues  remained  relatively  unchanged  during the three  months ended
September 30, 2002 as compared to the same period of the prior year.

GENERAL AND ADMINISTRATIVE EXPENSES -

General and  administrative  expenses for the three months ended  September  30,
2002  increased 72% with the same period of 2001.  The components of general and
administrative  expenses for the three months ended  September  30, 2002 include
salaries and related costs of approximately $111,000;  professional fees (legal,
auditing and consulting) of approximately $147,000; franchise and other taxes of
approximately  $40,000;  depreciation  of  approximately  $16,000;  insurance of
approximately $29,000; rent expense of approximately $21,000;  travel, meals and
entertainment   of   approximately   $50,000  and  other  expenses   aggregating
approximately $26,000. The components of general and administrative expenses for
the same  period  of the  prior  year  include  salaries  and  related  costs of
approximately  $101,000;  professional fees (legal,  auditing and consulting) of
approximately  $38,000;  franchise  and other  taxes of  approximately  $44,000;
depreciation of approximately $13,000;  insurance of approximately $12,000; rent
expense  of  approximately   $10,000;   travel,   meals  and   entertainment  of
approximately $3,000 and other expenses aggregating approximately $35,000.

OTHER INCOME AND EXPENSE -

Decreased  interest  income during the three months ended  September 30, 2002 is
directly  attributable  to the  Company  discontinuing  its  accrual of interest
income on the  Marine  Forest  note in light of its 2001  impairment  charge and
compliance with the requirements of SFAS No. 114.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows

For the nine months ended  September  30, 2002 and 2001,  the Company's net cash
used  in  operating   activities   of   approximately   $926,000  and  $842,000,
respectively, is comprised of the following:

                                          2002               2001

Net income                           $     640,000      $     857,000

Depreciation and amortization              112,000            121,000

Deferred income taxes                        8,000            540,000

Net gain on sales of property
  and notes receivable                  (2,061,000)        (1,410,000)

Changes in operating assets
 and liabilities                           375,000           (950,000)
                                     -------------      -------------
                                     $    (926,000)     $    (842,000)
                                     =============      =============





                                       13
<PAGE>


For the nine months ended  September  30, 2002 and 2001,  the Company's net cash
provided by (used in)  investing  activities  of  approximately  $1,461,000  and
($2,222,000), respectively, is comprised of the following:

                                                  2002                2001

Capital expenditures including
  real estate development                     $  (2,049,000)     $  (2,379,000)

Proceeds from sales of property                   2,686,000          1,144,000

Proceeds from notes receivable                      819,000            963,000

Proceeds from note receivable, officer                5,000

Advances to Marine Forest                                           (1,950,000)
                                              -------------      -------------
                                              $   1,461,000      $  (2,222,000)
                                              =============      =============

Approximately  $956,000 of the $2,049,000 2002 capital  expenditures was made to
progress the Company's Kohala Preserve  endeavors.  These  expenditures  include
approximately  $134,000 for land-clearing,  leveling and grading,  approximately
$71,000 of professional fees including  consulting,  approximately  $679,000 for
design,   engineering  and  surveying  and  $72,000  for  other.  As  previously
discussed,  in 2002,  the Company sold eight  properties  for total  proceeds of
$2,686,000,  whereas in 2001 there were only four sales of real estate for total
proceeds of  $1,682,000.  During the nine months ended  September 30, 2001,  the
Company advanced Marine Forest monies pursuant to short-term  promissory  notes.
No monies were advanced to Marine Forest during the nine months ended  September
30, 2002 (see separate liquidity discussion on page 16).

For the nine months ended  September  30, 2002 and 2001,  the Company's net cash
provided by (used in)  financing  activities  of  approximately  ($397,000)  and
$656,000, respectively, is comprised of the following:

                                                  2002               2001

Debt proceeds (from President)                $         --       $     165,000

Proceeds from notes and bank line of credit                          1,000,000

Repayment of debt (to President)                   (375,000)

Debt repayments                                     (22,000)          (509,000)
                                              -------------      -------------
                                              $    (397,000)     $     656,000
                                              =============      =============






                                       14
<PAGE>


As of September 30, 2002, the Company has total current assets of  approximately
$13.2 million and total current  liabilities  of  approximately  $1 million or a
working capital of approximately  $12.2 million.  As previously  discussed,  the
Company  anticipates  2002 revenue  levels to be higher than levels  experienced
during 2001.  However,  given the Company's  anticipated  cash  requirements  to
complete the revised  Kohala  Preserve  project and plans to execute a strategic
arrangement with Marine Forest (both discussed below), future capital raising or
debt financing activities may be required.

In an effort to increase the marketability of the Company's common stock,  among
other reasons,  in February 2002, the Company's board of directors  authorized a
three-for-one  stock split  effected in the form of a two hundred  percent stock
dividend.

KOHALA PRESERVE (F/N/A MAHUKONA DEVELOPMENT)

As previously  discussed,  the events of September 11th had an impact on tourism
and hence, temporarily curtailed the Company's development activities.  However,
the Company believes that the tourist market and the high-end second home market
are  gradually  recovering.   In  this  regard,  the  Company  has  resumed  its
development  strategies  however it has  focused  on a revised  plan for the 642
acres of land in the North  Kohala  district  of  Hawaii  Island in the state of
Hawaii (known as the Kohala Preserve project). As previously reported,  the plan
for this valuable  parcel of land was the  development of a hotel,  18-hole golf
course  and  resort  homes.   However,   the  Company   recently  hired  several
consultants,  with  extensive  experience  in high-end  resort  development  and
marketing,  to  reassess  its  development  strategy  with  respect to  Mahukona
property, the goal of which is to provide the Company guidance in determining an
effective  development  strategy  that will  optimize  the  property's  economic
potential.

The preliminary  assessment of the consultants for the Kohala Preserve  property
is the  development  of an  all-inclusive  fractional  interest  club  community
structured as an undivided  interest ("UDI").  A UDI would allow the prospective
buyer to use the Kohala  Preserve  facility plus the  eco-ranch  lands and would
provide an  ownership  interest in both.  A UDI would not allow the  prospective
buyer to own a specific  parcel of land, but only a fraction of each square foot
of property.  During the quarter ended June 30, 2002, the consultants  completed
their review and analysis of the Kohala  Preserve  property and issued a Concept
Development  and  Economic  Projections  Report.  The  "theme  book"  (a  large,
multi-page book, which incorporates  representative  images of the components of
the project incorporating the written positioning  statement) has been completed
by  InterCommunications,  Inc.,  a marketing  consulting  firm,  for purposes of
presentations  to  prospective  development  partners,  government  agencies and
research  groups;  the Company is in the process of choosing a project logo. The
final site plan and  development  program is underway by EDSA, a consulting firm
hired by the  Company  to  perform  a  master  plan  audit,  which  will  convey
recommendations  with regards to the  modification  of the existing master plan.
The  Company  is  continuing   discussions  with  its  consultants  and  hopeful
formalized plans will be completed before the end of the year.

Based on the  preliminary  assessment  of its  consultants,  the revised  Kohala
Preserve  project  cost  (excluding  ongoing  costs  and  maintenance)  would be
approximately $93 million and completed  substantially over a three-year period.
Based on information  provided by its consultants,  the Company  anticipates the
timing and details of the $93 million to be as follows (in thousands):




                                       15
<PAGE>


<TABLE>
<CAPTION>
                                                        YEAR 1           YEAR 2         YEAR 3
<S>                                                   <C>             <C>             <C>
INITIAL INFRASTRUCTURE AND DEVELOPMENT COSTS
Infrastructure (roads, water, sewer, etc.)            $    10,000     $    10,000     $    10,000
Golf course, range, clubhouse, etc.                        10,000          10,000
Tennis complex                                                              1,000
Central lodge facility (lobby, restaurants, etc.)                          10,500
Beach club                                                                 10,000
Recreational trails/improvements                                              500             500
Ranch Improvements/amenities                                  500           2,000           1,000
Club boats / marina improvements                                            1,500           1,000
Other amenities/improvements                                                2,000
Entrance/gatehouse                                                            500
Design, permits, engineering
 contingency                                                3,075           7,200           2,012
                                                      -----------     -----------     -----------
                                                      $    23,575     $    55,200     $    14,512
                                                      ===========     ===========     ===========
</TABLE>


The Company  recognizes  that its current  operations  will not be sufficient to
fund the cost of Kohala Preserve  project and it may not be successful in future
capital  raising  or debt  financing  activities.  Accordingly,  the  Company is
exploring other financing strategies including,  but not limited to, a 50% joint
venture  with  development  partners,  including,  but not limited  to,  another
property  development  company,  a  fractional  facility  management  company or
private  investors.  No assurances  can be made that the Company will be able to
finance or complete the Kohala Preserve as outlined above.

MARINE FOREST

As disclosed in the  Company's  prior public  filings,  the Company has advanced
funds to Marine Forest, a related Japanese  corporation that owns  approximately
400 acres of land in Okinawa,  Japan,  in which it is  developing  pursuant to a
"golf  resort"  theme.  Funding  of  $9.75  million  was used by  Marine  Forest
primarily  in the  construction  of a golf  course and  related  amenities.  The
Company anticipated interest payments to commence on or about December 31, 2001.
However,  such interest payments were contingent upon Marine Forest's ability to
start  the  sales  of its golf  memberships.  These  sales  were  postponed  and
development (construction) activity was temporarily suspended as a result of the
events of September 11th.

The Company continues to discuss the possibility of a strategic arrangement with
Marine  Forest  including,  but not  limited to, the  Company  acquiring  Marine
Forest, which Marine Forest has orally agreed to. Current discussions, which are
ongoing,  are based upon a completed  study  (Concept  Development  and Economic
Projections Report) prepared by a consultant for the Kohala Preserve plan.

Through  September 30, 2002,  no interest has been paid to the Company,  however
management anticipates that all accrued interest receivable will be reclassified
to principal and settled in connection with the parties' contemplated  strategic
arrangement previously discussed.

At December  31, 2001,  in light of the  speculative  nature of Marine  Forest's
contemplated development projects among other reasons and in accordance with its
compliance  with the  requirements  of SFAS No. 114, the Company has recorded an
impairment  charge of approximately  $7.2 million.  The Company will continue to
review  impairment  by  applying  the  procedures  set forth in SFAS No. 114. If
there's a  significant  change in the  amount or timing of the  impaired  loan's
expected  future cash flow,  the Company will adjust  (upward or  downward)  the
valuation allowance.



                                       16
<PAGE>


Item 3.   Evaluation of Disclosure Controls and Procedures

(a) Evaluation of disclosure  controls and  procedures.  Our president and chief
financial   officer,   after  evaluating  the  effectiveness  of  the  Company's
"disclosure  controls and procedures" (as defined in the Securities Exchange Act
of 1934 Rules  13a-14(c) and  15-d-14(c)) as of a date (the  "Evaluation  Date")
within 90 days before the filing date of this quarterly  report,  have concluded
that as of the  Evaluation  Date, our  disclosure  controls and procedures  were
adequate and designed to ensure that material information relating to us and our
consolidated  subsidiaries  would be made known to them by others  within  those
entities.

(b)  Changes in  internal  controls.  There were no  significant  changes in our
internal controls or to our knowledge, in other factors that could significantly
affect our disclosure controls and procedures subsequent to the Evaluation Date.

PART II - OTHER INFORMATION

Item 1.       Legal Proceedings:

There have been no  material  changes in legal  proceedings  as  required  to be
reported on Form 10-QSB from as previously  reported in the Company's 10-KSB for
the fiscal year ended December 31, 2001.

Item 2.       Change in Securities:

In February 2002, the Company's  board of directors  authorized a  three-for-one
stock  split  effected  in the form of a 200 percent  stock  dividend  which was
distributed on February 15, 2002 to stockholders of record on February 4, 2002.

Item 3.       Defaults Upon Senior Securities:

              None

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

              None

Item 5.       Other information:

              None

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

              None








                                       17
<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.


                              SURETY HOLDINGS CORP.
                                  (Registrant)



                              By: /s/ Howard R. Knapp
                              -----------------------
                              Howard R. Knapp
                              Chief Financial Officer

Dated:  November 14, 2002












                                       18
<PAGE>


                                 CERTIFICATIONS

I, Yoshihiro Kamon, certify that:

1.  I have  reviewed  this  quarterly  report on Form 10-QSB of Surety  Holdings
    Corp. and Subsidiary;

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

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

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

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

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

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

5.  The registrant's  other certifying  officers and I have disclosed,  based on
    our most recent evaluation, to the registrant's auditors:

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

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

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

Dated: November 14, 2002





                             By: /s/ Yoshihiro Kamon
                              --------------------------------------
                              Yoshihiro Kamon
                              President and sole Director of Surety



                                       19
<PAGE>


                                 CERTIFICATIONS

I, Howard R. Knapp, certify that:

1.  I have  reviewed  this  quarterly  report on Form 10-QSB of Surety  Holdings
    Corp. and Subsidiary;

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

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

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

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

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

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

5.  The registrant's  other certifying  officers and I have disclosed,  based on
    our most recent evaluation, to the registrant's auditors:

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

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

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

Dated: November 14, 2002
                             By: /s/ Howard R. Knapp
                                 ---------------------------------
                                 Howard R. Knapp
                                 Chief Financial Officer of Surety



                                       20


<PAGE>


CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350

     In  connection  with the  accompanying  Quarterly  Report on Form 10-QSB of
Surety  Holdings Corp. and Subsidiary for the quarter ended  September 30, 2002,
the undersigned hereby certifies pursuant to 18 U.S.C.  Section 1350, as adopted
pursuant to Section  906 of the  Sarbanes-Oxley  Act of 2002,  to the best of my
knowledge and belief, that:

     (1)  such Quarterly  Report on Form 10-QSB for the quarter ended  September
          30, 2002 fully  complies  with the  requirements  of Section  13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the information  contained in such Quarterly Report on Form 10-QSB for
          the quarter ended September 30, 2002 fairly presents,  in all material
          respects,  the financial condition and results of operations of Surety
          Holdings Corp. and Subsidiary.

Nov. 14, 2002                      /s/ Yoshihiro Kamon
                                   -------------------
                                   Name: Yoshihiro Kamon
                                   Title: President and Sole Director of Surety



                                       21
<PAGE>


CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350

In connection with the accompanying Quarterly Report on Form 10-QSB of Surety
Holdings Corp. and Subsidiary for the quarter ended September 30, 2002, the
undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my
knowledge and belief, that:

     (1)  such Quarterly Report on Form 10-QSB for the quarter ended September
          30, 2002 fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the information contained in such Quarterly Report on Form 10-QSB for
          the quarter ended September 30, 2002 fairly presents, in all material
          respects, the financial condition and results of operations of Surety
          Holdings Corp. and Subsidiary.

Nov. 14, 2002                           /s/ Howard R. Knapp
                                        -------------------
                                        Name: Howard R. Knapp
                                        Title: Chief Financial Officer of Surety



                                       22