SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark one)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                       OR

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


                       Commission File Number: __________


                              BFA LIQUIDATION TRUST
             (Exact name of registrant as specified in its charter)


                   ARIZONA                                       86-1018485
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                       Identification No.)


1313 E. OSBORN RD., SUITE 250, PHOENIX, ARIZONA                  85014-5699
   (Address of principal executive offices)                      (Zip Code)


       Registrant's telephone number, including area code: (602) 279-3587


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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock,  as of the latest  practicable  date:  As of September  30, 2002,
448,213,228 units of Class A Beneficial Interests and 137,176,571 units of Class
B Beneficial Interests were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                     BFA LIQUIDATION TRUST AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION

<TABLE>
<CAPTION>
                                                                     SEPTEMBER 30,   DECEMBER 31,
                                                                         2002            2001
                                                                     ------------    ------------
                                                                      (UNAUDITED)
<S>                                                                  <C>             <C>
                  ASSETS IN LIQUIDATION AT ESTIMATED FAIR VALUE
Cash and cash equivalents                                            $  7,802,192    $  1,027,598
Receivables, net (note 2)                                              57,047,653      73,877,916
Other trust assets, net (notes 3 and 7)                                45,219,381      57,479,167
Restricted cash and cash equivalents                                    5,721,421       5,214,453
Fair value of expected cashflows from settlements (note 4)            202,982,967      19,800,000
                                                                     ------------    ------------

     TOTAL ASSETS                                                     318,773,614     157,399,134
                                                                     ------------    ------------

                           LIABILITIES IN LIQUIDATION:
Payables and accrued liabilities                                        4,158,439       9,017,702
Notes payable (note 5)                                                  4,138,705       6,995,339
Estimated costs to complete liquidation (note 6)                        6,918,067      12,405,130
Settlement liability (note 8)                                         182,962,866              --
                                                                     ------------    ------------
     TOTAL LIABILITIES                                                198,178,077      28,418,171
                                                                     ------------    ------------

Commitments and contingencies (note 9)

     NET ASSETS IN LIQUIDATION                                       $120,595,537    $128,980,963
                                                                     ============    ============

CLAIMS AGAINST NET ASSETS IN LIQUIDATION CONSIST OF THE FOLLOWING:
     Class "3A" Certificate, 448,213,228 units outstanding            105,396,825     111,823,670
     Class "3B" Certificate, 137,176,571 units outstanding             15,198,712      17,157,293
                                                                     ------------    ------------
     TOTAL NET ASSET VALUE                                           $120,595,537    $128,980,963
                                                                     ============    ============
</TABLE>

The  accompanying  notes are an integral  part of these  Consolidated  Financial
Statements.

                                       2
<PAGE>
                     BFA LIQUIDATION TRUST AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED
                                                                  ------------------------------
                                                                  SEPTEMBER 30,    SEPTEMBER 30,
                                                                      2002             2001
                                                                  -------------    -------------
<S>                                                               <C>              <C>
Net assets in liquidation, June 30, 2002 and June 30, 2001,
respectively                                                      $ 127,895,794    $ 137,888,441

Interest on notes receivable                                          1,597,445        2,146,222

Interest on notes payable                                              (143,203)        (121,963)

Changes in fair value of other trust assets (notes 3 and 7)           1,146,201           92,364

Changes in fair value of costs to complete liquidation (note 6)        (894,995)          75,270

Distributions to holders of Class 3A and 3B
beneficial interests                                                 (9,005,705)     (10,125,220)
                                                                  -------------    -------------
Net assets in liquidation, September 30, 2002 and September
30, 2001, respectively                                            $ 120,595,537    $ 129,955,114
                                                                  =============    =============
</TABLE>

The  accompanying  notes are an integral  part of these  Consolidated  Financial
Statements.

                                       3
<PAGE>
                     BFA LIQUIDATION TRUST AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        JANUARY 22, 2001
                                                                   JANUARY 1, 2002 -      (INCEPTION) -
                                                                  SEPTEMBER 30, 2002   SEPTEMBER 30, 2001
                                                                  ------------------   ------------------
<S>                                                                 <C>                   <C>
Net assets in liquidation, January 1, 2002 and January 22, 2001
(inception), respectively                                           $ 128,980,963         $ 171,414,559

Interest on notes receivable                                            4,920,869             5,844,754

Interest on notes payable                                                (526,858)             (728,959)

Changes in fair value of other trust assets (notes 3 and 7)             3,486,440            (5,097,020)

Changes in fair value of costs to complete liquidation (note 6)        (1,644,904)                   --

Distributions to holders of Class 3A and 3B
beneficial interests                                                  (14,620,973)          (41,478,220)
                                                                    -------------         -------------
Net assets in liquidation, September 30, 2002 and September 30,
2001, respectively                                                  $ 120,595,537         $ 129,955,114
                                                                    =============         =============
</TABLE>

The  accompanying  notes are an integral  part of these  Consolidated  Financial
Statements.

                                       4
<PAGE>
                     BFA LIQUIDATION TRUST AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

NATURE OF OPERATIONS

The BFA  Liquidation  Trust  (the  "TRUST")  was formed  pursuant  to the "First
Amended Joint Liquidating Plan of Reorganization of the Debtors Under Chapter 11
of the  Bankruptcy  Code"  proposed  by the  Baptist  Foundation  of Arizona and
related  subsidiaries  and affiliates (the "DEBTORS"),  Official  Collateralized
Investors'  Committee  and Official  Joint  Committee  of  Unsecured  Creditors,
relating to Case No.  99-13275 ECF GBN (the "PLAN"),  which was confirmed by the
Bankruptcy  Court for the District of Arizona,  by an order  entered on December
22, 2000 and became effective on January 22, 2001 ("EFFECTIVE DATE").

The primary purpose of the Trust is to (i) oversee and direct the liquidation of
the assets that were  transferred  to the Trust pursuant to the Plan (the "TRUST
ASSETS") for the benefit of the Trust's beneficiaries; (ii) prosecute all claims
and causes of action  that the Trust may have  against any person or entity (the
"LITIGATION  CLAIMS")  for the benefit of the Trust's  beneficiaries;  and (iii)
distribute any proceeds of the Litigation  Claims and the Trust Assets  received
by the Trust to the Trust's beneficiaries.

The Trust is not operated  with the  objective of  continuing or engaging in the
conduct of a trade or  business,  except to the extent  reasonably  necessary to
preserve or enhance the liquidation  value of the Trust Assets,  consistent with
the primary  purpose of the Trust. To facilitate the orderly  administration  of
the Trust and to maximize the value of the Trust Assets,  the Trust owns two (2)
subsidiaries. The assets will be grouped in a consistent and coherent manner and
held,  pending  sale,  by the  two  new  subsidiaries.  The  Trust  and  the two
subsidiaries  will be charged with the  responsibility of appraising the assets,
listing them for sale in an orderly manner,  and  distributing the proceeds from
the sale to its  beneficiaries  on a regular  basis.  The Trust is  expected  to
terminate  after five (5) years unless the Bankruptcy  Court  determines that an
extension of the Trust is necessary for the purposes of the Trust.

The Plan provides for the appointment of a liquidating trustee (the "LIQUIDATING
TRUSTEE") and a liquidating trust board  ("LIQUIDATING  TRUST BOARD") to oversee
the  liquidation  of the Trust  Assets and to ensure  that such  liquidation  is
conducted in a cost-effective manner and in a reasonable time. In addition,  the
Liquidating Trustee and Liquidating Trust Board are directing the prosecution of
the Litigation Claims in an attempt to maximize the Trust's recoveries from such
claims.  The  Liquidating  Trustee  and the  Liquidating  Trust Board are making
ongoing efforts to dispose of the Trust Assets, to make timely distributions and
to minimize the duration of the Trust.

The Trust has a wholly-owned subsidiary to assist in liquidating the assets, New
Asset Subsidiary,  LLC, an Arizona limited  liability  company ("NAS").  NAS was
formed on the Effective  Date, and the Trust is the sole member of that company.
The Trust is able to direct NAS to take any actions that the Liquidating Trustee
believes  will  maximize  the  value  of the  assets  held  by  NAS.  The  Trust
transferred  substantially  all of its  assets to NAS,  which  NAS is  currently
marketing  for sale.  NAS is not  permitted to sell any assets or take any other
action  unless so  directed  by the Trust.  Collectively,  the Trust and NAS are
referred to as the "Trust".

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements as of September 30,
2002 and for the three  months  ended  September  30,  2002 and 2001 and for the
period  from  January 1, 2002 to  September  30,  2002 and for the  period  from
January 22, 2001  (inception)  to September 30, 2001 include the accounts of the
Trust and NAS. All  intercompany  transactions  and accounts are  eliminated  in
consolidation.  The Trust's  investments  in certain  wholly-owned  entities are
included in these  financial  statements at their estimated fair value since the
Trust  expects to liquidate  the  investments  by selling the entire  individual
businesses as going concerns.

These unaudited  consolidated  financial  statements have been prepared based on
the liquidation  basis of accounting,  accordingly  assets and liabilities  have
been recorded at estimated fair values. In accordance with the liquidation basis
of  accounting,   the  financial  statements  reflect  the  estimated  costs  of
liquidating  the assets and  distributing  the proceeds to holders of beneficial
interests.

                                       5
<PAGE>
The  accompanying  unaudited  consolidated  financial  information  reflects all
adjustments,  consisting only of normal  recurring  adjustments that are, in the
opinion of  management,  necessary  for a fair  statement of the results for the
interim  period  presented.   Such  financial  information  should  be  read  in
conjunction with the consolidated financial statements and related notes thereto
as of December 31, 2001 and for the period from January 22, 2001  (inception) to
December 31, 2001  included in the Trust's Form 10 as filed with the  Securities
and Exchange Commission.

The Trust's  management has made certain  estimates and assumptions  relating to
the reporting of assets and liabilities and the disclosure of contingent  assets
and liabilities to prepare these consolidated financial statements in conformity
with accounting  principles  generally accepted in the United States of America.
Under the  liquidation  basis of accounting,  assets and  liabilities  have been
recorded  at  their  estimated  fair  values.   Given  that  there  is  inherent
uncertainty in the valuation  process,  the amounts actually realized or settled
could  be  materially   different  from  those  reflected  in  the  accompanying
consolidated financial statements.

TRUST ASSETS

The assets of the Trust are  carried at  estimated  fair  values  determined  by
discounting,  at appropriate  risk adjusted  discount rates, the Trust's current
best  estimate  of cash  flows  expected  to be  realized  from the  collection,
liquidation  and  disposition  of assets held by the Trust.  Such assets consist
principally of notes  receivable,  income producing real estate and interests in
real estate, interests in partnerships and operating companies and miscellaneous
other assets and receivables  transferred to the Trust upon the  consummation of
the Plan.  The estimates of the future cash flows from which the asset values of
the Trust were derived are made under the  direction  of the Trust's  management
based upon  information  available and believed to be reliable.  These estimates
reflect significant judgments regarding  assumptions,  discount rates, timing of
cash flows,  market risk and allowable disputed claims.  Because of the inherent
uncertainty  regarding  the  valuation  of these  assets  there  will  likely be
differences  between actual  results and the estimated fair values  reflected in
the  accompanying  consolidated  financial  statements and the difference may be
material.

In addition to the assets  described  above, the Trust also holds the Litigation
claims,  which  consist of claims  against the former  directors and officers of
BFA, claims against former professionals, and judgments and deficiencies related
to loans made to former  borrowers  of the Debtors.  Because of the  significant
uncertainties  associated  with  estimating the  probability  and timing of cash
flows related to these claims, it is not practical to estimate their fair value.
There  can be no  assurance  that  the  Trust  will  realize  any  value of such
Litigation  Claims.  However,  if  realized  these  Litigation  Claims  could be
material to the Trust.

The fair value of Trust Assets is reassessed at least  quarterly and adjustments
to estimated fair values are reflected in the period in which they become known.
For each asset,  estimates of income,  expenses and net cash flow on a quarterly
basis through the expected final  disposition date are prepared.  The individual
asset cash flow  estimates  are  developed  based  upon  factors  which  include
appraisals by independent  appraisers,  physical  inspection of the asset or the
collateral  underlying the related loans, local market  conditions,  contractual
payments and discussions with the relevant borrower.

CONTINGENT LIABILITIES

In  addition  to  the  contractual  liabilities  recorded  on  the  accompanying
consolidated  financial  statements,  the  Trust  also  has  certain  contingent
liability  claims,  such as claims against the Trust for  mismanagement of trust
assets, breach of fiduciary duty, disputed note obligations,  unpaid fees and or
other  obligations  and various other theories and claims.  Management  does not
believe  that there will be any future  material  cash  outflows  as a result of
these  claims,  thus no amount is  included in these  accompanying  consolidated
financial statements. Because of the significant uncertainty associated with the
valuation  of  these   contingent   liabilities,   it  is  possible  that  these
contingencies  could be settled at amounts that differ from the amounts that are
reflected in these financial statements and the differences could be material.

OTHER LIQUIDATION LIABILITIES

Accounts  payable and  accrued  liabilities  are  reflected  at their  estimated
settlement  amounts  which in the  opinion of the Trust  approximate  their fair
value.

Notes payable are reported in the accompanying consolidated financial statements
at their stated amounts.  In the opinion of the Trust these amounts  approximate
their estimated fair value since the respective  interest rates  approximate the
market rates of interest for similar instruments.

ESTIMATED COSTS TO COMPLETE LIQUIDATION AND LITIGATION

The estimated costs to complete  liquidation  represent the estimated cash costs
of operating  the Trust  through its expected  termination  on January 21, 2006,
discounted  using  an 8%  present  value  factor.  These  costs,  which  include
personnel,  facilities,  Trustee  and  Board  compensation,  professional  fees,

                                       6
<PAGE>
litigation  costs  and other  related  costs,  are  estimated  based on  various
assumptions regarding the number of employees,  the use of outside professionals
(including attorneys and accountants) and other costs.  Litigation costs contain
assumptions  based on what management  expects the likely course of actions will
be regarding  litigating and or settling certain  contingencies  (Note 8). Given
that there is inherent  uncertainty  in the estimation  process,  actual results
could be materially different.

2. RECEIVABLES, NET

Receivables  primarily  consist of a $53.1  million  note  receivable  from Shea
Homes, Inc.  collateralized by a 7,000 acre master planned community,  and other
receivables  relating to land  contracts,  notes  receivable  and various  other
commercial receivables.

The following is a summary of gross cash flows and related valuation at:

<TABLE>
<CAPTION>
                                                      September 30,    December 31,
                                                          2002             2001
                                                      -------------    -------------
                                                       (UNAUDITED)
<S>                                                   <C>              <C>
Total gross future cash flows from notes receivable   $ 140,525,971    $ 167,220,475
Collectibility discount                                 (72,502,740)     (77,161,296)
Present value discount (8-9%)                           (10,975,578)     (16,181,263)
                                                      -------------    -------------
Net receivables                                       $  57,047,653    $  73,877,916
                                                      =============    =============
</TABLE>

Some of the  debtors  are in default  on their  contractual  obligations  to the
Trust.  At this time  management  does not expect to receive  future  cash flows
related to  receivables  in default  and thus no amount is included in the above
stated receivable amount. The Trust is aggressively pursuing collection of these
debts by various means including, but not limited to, foreclosure and litigation
and recoveries from these actions, if any, could be material.

The Trust has a note  receivable  and a note  payable  with the same third party
legal  entity.  The note  payable  is  collateralized  by the  note  receivable.
Management believes the fair value of the notes receivable are equal to the fair
value of the notes payable, and such amounts are offset,  resulting in no amount
being recorded in the accompanying  consolidated  financial statements (see note
5).

3. OTHER TRUST ASSETS

The other trust assets are carried at estimated fair values which are the result
of  discounting,  at appropriate  discount rates,  the currently  estimated cash
flows projected to be realized from the collection, liquidation and disposition.
These valuations include appraisals by independent appraisers of the liquidation
value of some assets.  These values do not  represent  the full future cash flow
values  expected  from  the  sale  or  operations  of  these  assets  due to the
discounting of respective cash flows. Such assets consist  principally of income
producing  real estate and interests in real estate,  interests in  partnerships
and operating companies, and miscellaneous other assets transferred to the Trust
upon the consummation of the Plan.

Other trust assets consist of the following:

<TABLE>
<CAPTION>
                                                   September 30,   December 31,
                                                       2002            2001
                                                   ------------    ------------
                                                    (UNAUDITED)
<S>                                                <C>             <C>
Real estate assets and partnerships, net           $ 51,385,452    $ 58,368,035
Investments in other operating companies, net         3,956,404      11,494,171
Other assets, net                                       447,147         379,322
                                                   ------------    ------------

Future value of other trust assets                   55,789,003      70,241,528

Present value discount (15%)                        (10,569,622)    (12,762,361)
                                                   ------------    ------------

Other trust asset value                            $ 45,219,381    $ 57,479,167
                                                   ============    ============
</TABLE>

4. FAIR VALUE OF EXPECTED CASH FLOWS FROM SETTLEMENTS

Settlement proceeds at September 30, 2002 primarily consist of net proceeds from
Jennings,  Strouss and Salmon ("JSS") and from Arthur Andersen,  LLP ("AA"). The
JSS  settlement  consists of gross  proceeds of $21 million net of legal fees of

                                       7
<PAGE>
approximately $1.2 million for a net amount of $19.8 million.  The AA settlement
consists of gross  proceeds of $217  million net of legal fees of  approximately
$34.2 million and litigation expenses incurred for prosecuting the litigation of
approximately  $4  million  for a net  amount of  $178.8  million.  Interest  of
approximately  $220,000 has been earned on the cash  balances  held by the Trust
for these settlements at September 30, 2002 and are reflected in these unaudited
financial statements. All settlement funds are being held in an interest bearing
joint escrow  account.  As of September  13, 2002,  both the State Court and the
Bankruptcy  Court  had  approved  the AA and  JSS  settlements,  overruling  all
objections  (Notes 8 and 9). The courts have set a hearing date in November 2002
for a hearing on the  allocation of the  settlement  funds between the Trust and
the class action  cases.  The Trust has  proposed an  allocation  process,  with
approval by Verde Baptist Church, whereby the Trust is credited with the receipt
of 50% of the net proceeds and the Class Action is credited  with receipt of the
remaining 50% of the net proceeds.  At the November 25, 2002 court hearing,  the
court will decide  which of the proposed  allocation  processes,  including  the
Trust's, is the in the best interest of all parties.  The Trust's claims against
AA may be jeopardized if AA seeks bankruptcy protection.

In addition  to the JSS and AA  settlements,  the Trust has reached  settlements
with various  other  responsible  parties in the amount of $4.13  million net of
legal  expenses  and other  discount  factors.  These  settlements  also include
releases  of claims  against the Trust of  approximately  $18.0  million.  It is
expected that these settlements will be presented to the courts for approval and
a ruling on the allocation process as soon as reasonably possible.

Settlement  proceeds at December 31, 2001 consist of net proceeds from Jennings,
Strouss and Salmon ("JSS"). The JSS settlement consists of gross proceeds of $21
million  net of legal fees of  approximately  $1.2  million  for a net amount of
$19.8 million at December 31, 2001.  The  settlement  funds are being held in an
interest bearing joint escrow account.  As of September 13, 2002, both the State
Court and the Bankruptcy Court had approved the JSS settlements,  overruling all
objections.

5. NOTES PAYABLE

The following is a summary of notes payable to third parties:

Gross  note  payable  of  approximately  $3.2  million,  including  interest  of
approximately  $50,000  to one  creditor  collateralized  by the Shea Homes note
receivable,  with payment terms of annual principal and interest payments,  with
an interest rate of 6.75%. Due June 26, 2005.

Gross  notes   payable  of   approximately   $900,000   including   interest  of
approximately $100,000, to various creditors collateralized by real estate, with
payment terms including monthly interest only payments and monthly principal and
interest  payments,  with interest  rates ranging from 7% to 12%. Due at various
dates ranging from June 1, 2002 to October 31, 2008.

Gross notes  payable of  approximately  $19,000,  including  interest to various
creditors collateralized by various notes receivable, with monthly principal and
interest  payments and interest rates ranging from 7.5% to 8.75%. Due at various
dates ranging from June 1, 2006 to July 25, 2007.

At September 30, 2002,  aggregate  debt  maturities  including  interest were as
follows:

                                 2002                $   326,937
                                 2003                  1,264,528
                                 2004                  1,264,528
                                 2005                  1,383,979
                                 2006                     51,877
                           Thereafter                    733,002
                                                     -----------

                                                       5,024,851
          Less present value discount                   (886,146)
                                                     -----------
          Notes payable                              $ 4,138,705
                                                     ===========

The Trust has a note  receivable  and a note  payable  with the same third party
legal  entity.  The note  payable  is  collateralized  by the  note  receivable.
Management believes the fair value of the notes receivable are equal to the fair
value of the notes payable, and such amounts are offset,  resulting in no amount
being recorded in the accompanying consolidated financial statements (Note 2).

6. ESTIMATED COSTS TO COMPLETE LIQUIDATION AND LITIGATION

The  estimated  costs to  complete  liquidation  and  litigation  of  $6,918,067
represent  the  estimated  costs of  operating  the Trust  through its  expected
termination  on January 21, 2006,  discounted  using an 8% present value factor.
These  costs,   which   include   personnel,   facilities,   Trustee  and  Board

                                       8
<PAGE>
compensation,  professional  fees and litigation  costs,  are estimated based on
various  assumptions  regarding  the  number of  employees,  the use of  outside
professionals   (including   attorneys  and   accountants)  and  other  matters.
Litigation costs contain assumptions based on what management expects the likely
course  of  actions  will  be  regarding  litigating  and  or  settling  certain
contingencies  (Note  8).  Given  that  there  is  inherent  uncertainty  in the
estimation process, actual results could be materially different.  Approximately
$1.7 million of costs were paid or accrued during the third quarter of 2002.

The  following is a break out of  estimated  costs to complete  liquidation  and
litigation:

          Estimated cost to complete liquidation            $5,756,176
          Estimated cost to complete litigation              1,161,891
                                                            ----------
          Total                                             $6,918,067
                                                            ==========

7. CHANGES IN OTHER TRUST ASSETS

During the three months ended  September 30, 2002,  the Trust sold the following
assets:

     *    The assets of Document  Technologies were sold for approximately  $5.0
          million.

     *    Sale of Bonds Alarm, Inc. for approximately $0.9 million.

     *    The Trust sold various other assets for a total of approximately  $0.6
          million.

During the three months ended  September 30, 2001,  the Trust sold the following
assets:

     *    Kilohana  Waikoloa,  a master-planned  community located in Hawaii was
          sold for  approximately  $3.8  million  including a carryback  note of
          $1.25  million.  Approximately  $2.0 million of the cash  received was
          used to pay off secured creditors.

     *    Saddle  Mountain  RV Park,  located in  Tonopah,  Arizona was sold for
          approximately $1.2 million. Approximately $80,000 of the cash received
          was used to pay off secured creditors.

     *    As of January 22, 2001,  the Trust owned 881,269 shares of New Century
          stock,  which was sold at various  times  during the third  quarter of
          2001 on the NASDAQ resulting in gross proceeds of  approximately  $2.3
          million.

     *    Rancho Vistoso, a master-planned  residential community in Oro Valley,
          Arizona,  sold lots resulting in gross proceeds of approximately  $0.5
          million.

     *    The  Trust  sold  various  parcels,  buildings  and  lots  of  several
          developments  during the third quarter of 2001.  Lots were sold at ASC
          San  Antonio,  Walnut  Ridge  and  various  Westside  properties.   In
          addition,   various   individual  parcels  and  buildings  were  sold,
          including  church sites,  and other assets.  The Trust  received gross
          proceeds from these sales of approximately $.6 million.

During the period from January 1, 2002 to September 30, 2002, the Trust sold the
following assets:

     *    Westside  property and land contracts  consist of actual  ownership of
          and/or land contracts secured by land west of Phoenix, Arizona. During
          2002 a portion of the lots  owned were sold for cash of  approximately
          $2.1 million.

     *    Coyote Lakes Joint Venture, in which BFALT is a majority partner, sold
          its last  piece of  commercial  real  estate  for  approximately  $1.1
          million in 2002.

     *    Rancho Vistoso, a master-planned  residential community in Oro Valley,
          Arizona,  sold its remaining  lots in 2002 resulting in gross proceeds
          of approximately $0.2 million.

     *    The assets of Document  Technologies were sold for approximately  $5.0
          million.

     *    Sale of Bonds Alarm, Inc. for approximately $0.9 million.

     *    The Trust sold various other assets for a total of approximately  $0.7
          million.

                                       9
<PAGE>
During the period from January 22, 2001 (inception)  through September 30, 2001,
the Trust sold the following assets:

     *    On  January  22,   2001  the  Trust  sold  the  stock  of   Foundation
          Administrative  Services  ("FAS") to Shea  Homes.  FAS is the owner of
          7,000  acres of  property in  Maricopa  County  located  south of Lake
          Pleasant and commonly referred to as the Pleasant Point property.  The
          stock of FAS was sold for $85 million,  including  $17 million in cash
          and a note in the amount of $68 million. The terms of the note include
          a 4 year maturity with an interest rate equal to prime + 2% annual, in
          no  event  less  than  9.0%,  with  quarterly  interest  payments  and
          principal payments as specified in the note.

     *    As of January 22, 2001,  the Trust owned 881,269 shares of New Century
          stock,  which was sold at various  times from January 22, 2001 through
          September  30,  2001 on the  NASDAQ  resulting  in gross  proceeds  of
          approximately $8.6 million.

     *    Sunrise  Business  Park lot was sold in April 2001 for $1.9 million in
          cash.  Cash  proceeds  of  $135,000  from the sale were used to payoff
          secured debtors.

     *    Rancho Vistoso, a master-planned  residential community in Oro Valley,
          Arizona,  sold lots resulting in gross proceeds of approximately  $0.6
          million.

     *    Westside  property and land contracts  consist of actual  ownership of
          and/or land contracts secured by land west of Phoenix,  Arizona.  Lots
          owned were sold for cash of approximately $1.5 million.

     *    Kilohana  Waikoloa,  a master-planned  community located in Hawaii was
          sold for  approximately  $3.8  million  including a carryback  note of
          $1.25  million.  Approximately  $2.0 million of the cash  received was
          used to pay off secured creditors.

     *    Saddle  Mountain  RV Park,  located in  Tonopah,  Arizona was sold for
          approximately $1.2 million. Approximately $80,000 of the cash received
          was used to pay off secured creditors.

     *    The  Trust  sold  various  parcels,  buildings  and  lots  of  several
          developments  from January 22, 2001 through  September 30, 2001.  Lots
          were sold at Chandler Commerce Center,  Park at Juniper Ridge, ASC San
          Antonio, Show Low Country Club, Walnut Ridge and Westside property. In
          addition,   various   individual  parcels  and  buildings  were  sold,
          including church sites,  Tres Realty Building,  and other assets.  The
          Trust received gross proceeds from these sales of  approximately  $3.1
          million.

8. SETTLEMENT LIABILITY

The Trust engaged in litigation with Arthur Andersen,  LLP ("AA") regarding AA's
audits of some of the  Debtor  entities  prior to  bankruptcy,  and was the lead
plaintiff in a lawsuit  against Arthur  Andersen LLP ("AA"),  which consisted of
three actions.  The actions  consisted of a lawsuit filed by BFA alleging claims
of  negligence,  breach of  contract  and breach of  fiduciary  duty,  which was
transferred  to the Trust on January 22, 2001, a Class Action Lawsuit filed by a
group of investors,  and the State of Arizona. All of the class action investors
are beneficial  holders of the Trust,  however not all beneficial holders of the
Trust are class action investors.

After the trial  against AA began in May 2002,  a joint  settlement  was reached
with AA for $217 million.  The AA settlement of $217 million,  net of legal fees
of approximately  $34.2 million and litigation expenses incurred for prosecuting
the litigation of approximately $4 million,  has been recognized and recorded as
an asset of the Trust in these unaudited consolidated financial statements (Note
4). As discussed in Notes 4 and 9, both the State Court and Bankruptcy Court had
approved the  settlement as of September 13, 2002. The courts have set a hearing
date in November 2002 for a hearing on the  allocation of the  settlement  funds
between  the Trust and the  class  action  cases.  The  Trust  has  proposed  an
allocation process, with approval by Verde Baptist Church,  whereby the Trust is
credited  with the  receipt  50% of the net  proceeds  and the  class  action is
credited with the receipt the remaining 50% of the net proceeds. At the November
25, 2002 court hearing,  the court will decide which of the proposed  allocation
processes, including the Trust's, is the in the best interest of all parties.

The Trust engaged in mediation  with JSS regarding  JSS'  liability as attorneys
for the Debtors prior to bankruptcy. A settlement fund of $21.0 million has been
deposited into an interest bearing account held for the benefit of the Trust. As
of September 13, 2002,  the Trust had received the requisite  approvals from the
Trust Board of Directors,  the Maricopa County Superior Court and the Bankruptcy
Court for distribution of the settlement funds. This amount has been included in
the  accompanying  consolidated  financial  statements,  net of  legal  fees  of
approximately $1.2 million.  Because of the significant  uncertainty  associated
with  the  valuation  of this  Trust  Asset,  it is  possible  that  the  amount
ultimately  realized could be materially  less than the amount  reflected in the
accompanying unaudited consolidated financial statements.

                                       10
<PAGE>
In addition  the Trust and class action have  reached  settlements  with various
other responsible parties in the amount of $4.13 million net (see note 4). These
settlements  also include  releases of claims against the Trust of approximately
$18.0 million.  It is expected that these  settlements  will be presented to the
courts for approval and a ruling on the allocation process as soon as reasonably
possible.  These  amounts have been  included in the  accompanying  consolidated
financial statements,  net of legal fees and other discount factors.  Because of
the significant uncertainty associated with the valuation of these Trust Assets,
it is possible that the amounts  ultimately  realized  could be materially  less
than the amounts reflected in the accompanying  unaudited consolidated financial
statements.

From all Litigation  Claims the Trust will distribute its allocated share of the
proceeds to the  beneficial  holders on a pro rata basis in accordance  with the
Plan. The class action  proceeds will be distributed to its investors based on a
formula as agreed by its  investors.  Regardless  of the  allocation,  the Trust
believes it will be responsible for the physical distribution of the proceeds to
both the beneficial  holders and the class action investors,  because it already
has a system in place that would facilitate the distribution. As such, the Trust
believes it will be acting in an agency  capacity as it relates to the  proceeds
allocated to the class action investors. Since the allocation will be determined
by the courts,  and the Trust  cannot  estimate  the  allocation,  the Trust has
recorded a settlement liability for the settlement proceeds,  net of legal fees,
until  such time as the  allocation  between  the  Trust  and the  class  action
investors  is known.  When the  allocation  is known,  the Trust will record the
amount  allocated  to the Trust on the  statement  of  changes  in net assets in
liquidation,  and reduce the settlement  liability.  The amount allocated to the
class  action  investors  has  been  classified  as  a  liability  until  it  is
distributed to the class action investors by the Trust.

9. COMMITMENTS, CONTINGENCIES AND SETTLEMENTS

CONTINGENT LIABILITIES

The Trust is involved in various legal proceedings.  A number of creditors filed
proofs of  claims  in the  Debtors'  bankruptcy  proceedings.  A number of these
claims remain outstanding and in aggregate total  approximately  $44.15 million.
The  Debtors  have  objected  to these  outstanding  claims on  various  grounds
including,  but not  limited  to,  counterclaims  the  Trust has  against  these
creditors.  On the  Effective  Date,  the Trust  assumed the Debtors'  rights to
pursue the objections  against such claims. All of these disputes are pending in
the  Bankruptcy  Court.  In the  opinion of the  management  of the  Trust,  the
allowance of any of the following  disputed  claims may have a material  adverse
impact on the financial condition, resulting in higher than recorded liabilities
and  decreased  net  assets  in  liquidation.  These  claims  consisted  of  the
following:

     (a)  CLAIM OF COOK  CHARITABLE  TRUST.  On June 30, 2000,  Cook  Charitable
          Trust,  through its current trustee,  Mitchell C. Laird, filed a proof
          of claim  alleging  that BFA abused its  discretion  and  breached its
          fiduciary duty when it served as trustee of the Cook Charitable  Trust
          and  claiming  damages of $2 million.  The Trust has  objected to this
          claim and has  potential  counterclaims  against  the Cook  Charitable
          Trust.  Management  does not believe that it is likely that any future
          cash outflows will result from this claim,  therefore no liability has
          been accrued.

     (b)  CLAIMS OF HOOVER PARTIES. On March 19, 2000, March 29-31, 2000 and May
          22, 2000, Dwain Hoover and Beva Hoover, together with certain of their
          relatives  and  entities  controlled  by them,  including  D. Hoover &
          Associates Investments,  Inc., The Hoover Family Charitable Trust, The
          Dwain & Beva Hoover Charitable Trust II, SLS Trust, CRM Holdings,  and
          United  Development  Inc., filed fourteen proofs of claim  aggregating
          over $16 million based on a number of theories.  The most  significant
          claims are (i) a claim in the approximate  amount of $278,000 alleging
          that officers of BFA made an oral promise to  repurchase  certain real
          property;  (ii) a claim in the  approximate  amount  of $14.2  million
          alleging  note   obligations   between  New  Church   Ventures  Credit
          Corporation and D. Hoover & Associates Investments,  Inc; (iii) claims
          in  the   approximate   amount  of  $328,000   based  on  IRA  account
          investments; (iv) a claim by The Hoover Family Charitable Trust in the
          approximate  amount of  $580,000  based on the alleged  conversion  of
          trust property;  and (v) a claim by The Dwain & Beva Hoover Charitable
          Trust II in the  approximate  amount of $680,000  based on the alleged
          conversion of trust  property.  The Trust has objected to these claims
          on various grounds and has  counterclaims  against Hoover for his role
          at Baptist Foundation of Arizona.  Currently,  the Trust has two cases
          pending against Hoover.  No court date has been set for trial,  but in
          one of the cases the  Trust was able to get a  preliminary  injunction
          freezing  $9.0  million  that  Hoover  was  to  receive  by way of his
          settlement  with a third  party.  The Trust and  Hoover  entered  into
          mediation  in 2002 that has not  resulted in any  settlement  to date.
          Management  does not  believe  that it is likely  that any future cash
          outflows will result from Hoover's claims,  therefore no liability has
          been accrued.

     (c)  CLAIM OF ARIZONA  SOUTHERN  BAPTIST  CONVENTION.  On June 30, 2000 the
          Arizona Southern Baptist Convention ("ASBC") filed a proof of claim in
          the  approximate  amount of $1 million plus an unknown amount based on
          its alleged  beneficial  interest in various  trusts or endowments for
          which BFA or one of its  affiliates  served as trustee.  Further,  the
          proof of  claim  seeks to have the  court  transfer  BFA's  beneficial
          interest in the trusts to ASBC.  The Trust has  objected to this claim
          on various grounds and may have  counterclaims  against ASBC. No trial

                                       11
<PAGE>
          has been commenced. Management does not believe that it is likely that
          any future cash outflows  will result from these claims,  therefore no
          liability has been accrued.

     (d)  CLAIM OF ARIZONA STATE MISSION BOARD,  INC. On June 30, 2000,  Arizona
          State  Mission  Board,  Inc.  ("ASMB")  filed a proof  of claim in the
          approximate  amount of $1.45  million plus an unknown  amount based on
          its alleged  beneficial  interest in various  trusts or endowments for
          which BFA or one of its affiliates served as trustee.  ASMB also seeks
          to have the court  transfer BFA's  beneficial  interest in the trusts,
          which is now held by the Trust,  to ASMB.  The Trust has  objected  to
          this claim on various grounds. No trial has been commenced. Management
          does not believe that it is likely that any future cash  outflows will
          result from these claims, therefore no liability has been accrued.

     (e)  CLAIM OF ARIZONA BAPTIST CHILDREN'S  SERVICES,  INC. On June 30, 2000,
          Arizona Baptist  Children's  Services,  Inc. ("ABCS") filed a proof of
          claim in the approximate amount of $2.3 million plus an unknown amount
          based  on  its  alleged  beneficial   interest  in  various  trust  or
          endowments for which BFA or one of its  affiliates  served as trustee.
          ABCS also seeks to have the court transfer BFA's  beneficial  interest
          in the trusts,  which is now held by the Trust,  transferred  to ABCS.
          The Trust has objected to this claim on various grounds. No settlement
          discussions have started nor has any trial been commenced.  Management
          does not believe that it is likely that any future cash  outflows will
          result from these claims, therefore no liability has been accrued.

     (f)  CLAIM OF HAROLD FRIEND AND RELATED  PARTIES  ("FRIEND").  On March 31,
          2000 Harold  Friend and several  entities  controlled by him including
          Export Tyre Holding Company,  Stockbridge holding Company, Stockbridge
          Realty Investors--Arizona,  Inc., Property Consultants,  Inc. and HMR,
          Inc. filed a proof of claim in the approximate amount of $18.0 million
          based on a number of theories.  The most significant  claim is one for
          unpaid fees and  commissions;  both earned and projected to be earned,
          in the approximate amount of $14.88 million. The Trust has objected to
          these claims on various  grounds and has  potential  counterclaims  of
          action against  Friend for his role at Baptist  Foundation of Arizona.
          The parties have reached a non-binding settlement in principle,  which
          would result in the withdrawal of all of these proof of claims.  It is
          expected  that the  settlement  will be finalized  and  submitted  for
          approval as soon as reasonably  possible.  Management does not believe
          that it is likely that any future cash outflows will result from these
          claims  based on this  settlement,  therefore  no  liability  has been
          accrued.

     (g)  CLAIM OF GRAND  CANYON  UNIVERSITY.  On June 30,  2000,  Grand  Canyon
          University   ("GCU")  filed  a  proof  of  claim  seeking  payment  of
          approximately  $3.2 million for various unsecured  investments held by
          BFA,  approximately $3.67 million for the balance due under a note and
          deed of trust executed by Cora Properties,  Inc. (the "CORA NOTE") and
          a  quarterly  $24,425  annuity  payment  for  which  BFA is  primarily
          obligated and GCU is the guarantor. The Trust has objected to the $3.2
          million  claim and the  $24,425  quarterly  annuity  claim on  various
          grounds and is pursuing  discussions with GCU in regards to settlement
          of these  claims.  The claim  related  to the Cora Note has since been
          resolved  and the  liability  of  approximately  $3.4 million has been
          included in notes payable in the accompanying  consolidated  financial
          statements at December 31, 2001.  Management  does not believe that it
          is likely  that any future  cash  outflows  will  result from the $3.2
          million claim and the $24,425  quarterly  annuity claim,  therefore no
          liability has been accrued.

     (h)  Various  other  claims  were  filed  by  unsecured  creditors  seeking
          compensation.  These  claims  in  the  aggregate  total  approximately
          $200,000.  The Trust has objected to these claims on various  grounds.
          Management  does not  believe  that it is likely  that any future cash
          outflows  will result from these  claims,  therefore no liability  has
          been accrued.

SETTLEMENTS

The Trust  engaged in  litigation  with AA regarding  AA's audits of some of the
Debtor entities prior to bankruptcy. The majority,  approximately $4 million, of
litigation costs incurred by the Trust relate specifically to the prosecution of
the  Trust's  case  against  AA.  After  the trial  began in May  2002,  a joint
settlement  was reached with AA for $217 million.  At the time of the settlement
AA paid $10.68 million net of costs charged by the State of Arizona to the Trust
in a  non-refundable  initial  payment.  The  balance of  approximately  $205.68
million was paid by AA's insurance  carrier to the Trust in June 2002 to be held
in an interest  bearing joint escrow account pending state and bankruptcy  court
approval of the settlement  and  allocation of funds.  As of September 13, 2002,
both courts had approved the AA  settlement.  The courts have set a hearing date
in November 2002 for a hearing on the  allocation of the funds between the Trust
and the class action. The AA settlement of $217.0 million,  net of legal fees of
approximately $34.2 million and litigation expenses incurred for prosecuting the
litigation of approximately  $4 million,  has been recognized and recorded as an
asset of the Trust in these unaudited  consolidated  financial  statements (note
4). The Trust has proposed an allocation process, with approval by Verde Baptist
Church,  whereby the Trust is credited  with  receipt of 50% of the net proceeds
and the Class Action is credited  with the receipt of the  remaining  50% of the
net  proceeds.  At the  November 25, 2002 court  hearing,  the court will decide
which of the proposed allocation processes, including the Trust's, is the in the

                                       12
<PAGE>
best  interest  of  all  parties.  The  most  significant  obstacles  to  prompt
distribution  of the settlement  funds to investors are investor  objections and
investor  appeals.  Because of the significant  uncertainty  associated with the
valuation  of this  trust  asset,  it is  possible  that the  amount  ultimately
realized  could be  materially  less than the amount  reflected in the unaudited
consolidated financial statements.

The Trust engaged in mediation  with JSS regarding  JSS'  liability as attorneys
for the Debtors prior to bankruptcy. A settlement fund of $21.0 million has been
deposited into an interest bearing account held for the benefit of the Trust. As
of September 13, 2002,  the Trust had received the requisite  approvals from the
Trust Board of Directors,  the Maricopa County Superior Court and the Bankruptcy
Court for distribution of the settlement funds. This amount has been included in
the accompanying unaudited consolidated financial statements,  net of legal fees
of approximately $1.2 million. Because of the significant uncertainty associated
with  the  valuation  of this  trust  asset,  it is  possible  that  the  amount
ultimately  realized could be materially  less than the amount  reflected in the
accompanying unaudited consolidated financial statements.

In addition  the Trust and class action have  reached  settlements  with various
other responsible parties in the amount of $4.13 million net (see note 4 and 8).
These  settlements  also  include  releases  of  claims  against  the  Trust  of
approximately  $18.0  million.  It is expected  that these  settlements  will be
presented  to the courts for  approval  as soon as  reasonably  possible.  These
amounts have been included in the accompanying  unaudited consolidated financial
statements. Because of the significant uncertainty associated with the valuation
of these trust assets, it is possible that the amount ultimately  realized could
be  materially  less than the amount  reflected  in the  accompanying  unaudited
consolidated financial statements.

CONTINGENCIES

The Trust has also engaged in litigation or settlement  discussions with various
parties considered by Trust management as culpable parties regarding the failure
of  BFA,  which  include  but may  not be  limited  to  BFA's  former  officers,
directors,  and other  insiders  such as Dwain  Hoover  and  entities  under his
control. No amount has been included in the accompanying  consolidated financial
statements  related to potential proceeds from these matters since management is
unable to assess the probability of receiving proceeds from these actions.

Because  of  the  significant  uncertainty  associated  with  the  valuation  of
contingent  assets,  it is likely that the  amounts  ultimately  realized  could
differ  from  the  amounts  that  are  actually  reflected  in the  accompanying
consolidated financial statements and the differences could be material.

10. CASH RECEIPTS AND DISBURSEMENTS

For the three months ended  September 30, 2002 and September 30, 2001, the Trust
received net cash proceeds from sales of assets, note receivable collections and
operations of approximately $20.3 and $8.6 million  respectively,  consisting of
the following:

                                                       Three months ended
                                                -------------------------------
                                                September 30,      September 30,
                                                    2002               2001
                                                ------------       ------------
                                                 (Unaudited)        (Unaudited)
NOTE RECEIVABLES                                $ 10,000,000       $  1,300,000
CASH FLOWS FROM OTHER TRUST ASSETS                10,300,000          7,300,000
                                                ------------       ------------
                                                $ 20,300,000       $  8,600,000
                                                ============       ============

Conversely,  for the same  respective  periods,  the Trust  paid out to  various
creditors approximately $13.2 and $15.5 million as follows:

                                                       Three months ended
                                                -------------------------------
                                                September 30,      September 30,
                                                    2002               2001
                                                ------------       ------------
                                                 (Unaudited)        (Unaudited)
TRUST OPERATIONS                                $ (1,100,000)     $ (1,300,000)
LITIGATION COSTS                                    (500,000)         (700,000)
PAYABLES & CLASS 5 CREDITORS                        (200,000)         (700,000)
PAYMENTS TO SECURED NOTES PAYABLE                 (2,400,000)       (2,700,000)
DISTRIBUTIONS TO 3A & 3B                          (9,000,000)      (10,100,000)
                                                ------------      ------------
                                                $(13,200,000)     $(15,500,000)
                                                ============      ============

                                       13
<PAGE>
For the period  from  January 1, 2002 to  September  30, 2002 and for the period
from January  22,2001  (inception) to September 30, 2001, the Trust received net
cash proceeds from sales of assets,  note receivable  collections and operations
of  approximately  $35.5  and  $41.7  million  respectively,  consisting  of the
following:

                                                               January 22, 2001
                                          January 1, 2002 -      (inception) -
                                         September 30, 2002   September 30, 2001
                                         ------------------   ------------------
                                             (Unaudited)          (Unaudited)
NOTE RECEIVABLES                            $ 17,800,000         $  5,300,000
CASHFLOWS FROM OTHER TRUST ASSETS             17,700,000           36,400,000
                                            ------------         ------------
                                            $ 35,500,000         $ 41,700,000
                                            ============         ============


Conversely,  for the same  respective  periods,  the Trust  paid out to  various
creditors approximately $28.7 and $54.8 million as follows:

                                                               January 22, 2001
                                          January 1, 2002 -      (inception) -
                                         September 30, 2002   September 30, 2001
                                         ------------------   ------------------
                                             (Unaudited)          (Unaudited)
TRUST OPERATIONS                            $ (2,800,000)        $ (2,700,000)
LITIGATION COSTS                              (3,700,000)          (1,800,000)
PAYABLE & CLASS 5 CREDITORS                   (4,700,000)          (5,000,000)
PAYMENTS TO SECURED NOTES PAYABLE             (2,900,000)          (3,800,000)
DISTRIBUTIONS TO 3A & 3B                     (14,600,000)         (41,500,000)
                                            ------------         ------------
                                            $(28,700,000)        $(54,800,000)
                                            ============         ============

11. SUBSEQUENT EVENTS

CREDITOR DISTRIBUTION

In October  2002,  the Trust made a  distribution  of $7.0 million to holders of
Class 3A, 3B and Class 5 claims.

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

The  operations  of the Trust for the  quarter  ending  September  30,  2002 and
September 30, 2001 and for the period from January 1, 2002 to September 30, 2002
and for the period from January 22, 2001  (inception)  to September 30, 2001 are
summarized below:

                                       14
<PAGE>
<TABLE>
<CAPTION>
                                                                 Third Quarter                                   January 22, 2001
                                                         ------------------------------     January 1, 2002 -      (inception) -
                                                             2002             2001         September 30, 2002   September 30, 2001
                                                         -------------    -------------    ------------------   ------------------
<S>                                                      <C>              <C>                 <C>                  <C>
Net assets in liquidation, beginning                     $ 127,895,794    $ 137,888,441       $ 128,980,963        $ 171,414,559

Interest on notes receivable                                 1,597,445        2,146,222           4,920,869            5,844,754
Interest on notes payable                                     (143,203)        (121,963)           (526,858)            (728,959)
Changes in fair value of other trust assets                  1,146,201           92,364           3,486,440           (5,097,020)
Changes in fair value of costs to complete liquidation        (894,995)          75,270          (1,644,904)                  --
Distributions to holders of
     Class 3A and 3B beneficial interests                   (9,005,705)     (10,125,220)        (14,620,973)         (41,478,220)
                                                         -------------    -------------       -------------        -------------
Net assets in liquidation, ending                        $ 120,595,537    $ 129,955,114       $ 120,595,537        $ 129,955,114
                                                         =============    =============       =============        =============
</TABLE>

     QUARTER ENDED SEPTEMBER 30 2002 AND 2001

The estimated fair value of the Trust's net assets in liquidation decreased $7.3
million  in the third  quarter  2002 as  compared  to $7.9  million in the third
quarter of 2001.  Factors which contributed to the net decrease of the net asset
value of the Trust's net assets in  liquidation in the third quarter of 2002 and
2001 include (i) interest income from notes  receivables,  (ii) interest expense
for notes payable, (iii) appreciation in value of certain other trust assets and
(iv) distributions to holders of Class 3A and 3B beneficial interests.

Interest income from notes receivables decreased in the third quarter of 2002 as
compared to the third  quarter of 2001 because of principal  payments  received.
The  changes  in the  estimated  costs to  complete  liquidation  were more than
anticipated  for the third  quarter  of 2002  because  of  increased  legal fees
related to various legal matters.

In the third quarter of 2002, the Trust  distributed  $9.0 million to holders of
Class  3A or 3B  beneficial  interests.  This  distribution  was  made  possible
principally  from  collections  on Trust Assets in the third quarter of 2002 and
June 30, 2002 cash balances. The Class 3A and 3B beneficial interest were valued
at $120.6 million at September 30, 2002. In October 2002, the Trust  distributed
an additional $6.3 million to holders of Class 3A or 3B beneficial interests.

In the third quarter of 2001, the Trust  distributed $10.1 million to holders of
Class  3A or 3B  beneficial  interests.  This  distribution  was  made  possible
principally  from  collections  on Trust Assets in the third quarter of 2001 and
June 30,  2001 cash  balances.  The Class 3A and 3B  beneficial  interests  were
valued at $129.9 million at September 30, 2001.

     FOR THE PERIOD FROM JANUARY 1, 2002 TO SEPTEMBER 30, 2002 COMPARED TO
       THE PERIOD FROM JANUARY 22, 2001 (INCEPTION) TO SEPTEMBER 30, 2001

The estimated fair value of the Trust's net assets in liquidation decreased $8.4
million in the period from January 1, 2002 to September  30, 2002 as compared to
$41.5  million for the period of January 22, 2001  (inception)  to September 30,
2001.  Factors which  contributed  to the net decrease of the net asset value of
the Trust's net assets for the period from January 1, 2002 to September 30, 2002
and for the period from  January  22, 2001  (inception)  to  September  30, 2001
include (i) interest income from notes  receivables,  (ii) interest  expense for
notes  payable,  (iii)  appreciation  in value of certain other trust assets and
(iv) distributions to holders of Class 3A and 3B beneficial interests.

Interest  income from notes  receivables  decreased  in 2002 as compared to 2001
because of principal  payments  received.  The changes in the estimated costs to
complete  liquidation  were more than  anticipated for 2002 because of increased
legal fees  related to various  legal  matters.  While 2001  estimated  costs to
complete liquidation met expectations at that time.

For the period from January 1, 2002 to September 30, 2002, the Trust distributed
$14.6  million  to  holders  of  Class  3A  or  3B  beneficial  interests.  This
distribution  was made possible  principally from collections on Trust Assets in
2002.  The Class 3A and 3B beneficial  interest were valued at $120.6 million at
September 30, 2002. In October 2002, the Trust  distributed  an additional  $6.3
million to holders of Class 3A or 3B beneficial interests.

                                       15
<PAGE>
For the period from  January 22, 2001  (inception)  to September  30, 2001,  the
Trust  distributed  $41.5  million  to  holders  of  Class  3A or 3B  beneficial
interests.  This distribution was made possible  principally from collections on
Trust  Assets in 2001 and January 22,  2001 cash  balances.  The Class 3A and 3B
beneficial interest were valued at $129.9 million at September 30, 2001.

Non-cash trust assets at September 30, 2002 and December 31, 2001 were comprised
of the following:

<TABLE>
<CAPTION>
     NON-CASH ASSETS IN LIQUIDATION AT ESTIMATED FAIR VALUE     SEPTEMBER 30,    DECEMBER 31,
                                                                    2002             2001
                                                                ------------     ------------
                                                                (UNAUDITED)
<S>                                                             <C>              <C>
Receivables, net                                                $ 57,047,653     $ 73,877,916
Other trust assets, net                                           45,219,381       57,479,167
                                                                ------------     ------------

          TOTAL ASSETS                                          $102,267,034     $131,357,083
                                                                ============     ============
</TABLE>

The fair value of Trust Assets is reassessed at least  quarterly and adjustments
to estimated fair values are reflected in the period in which they become known.
For each asset,  estimates of income,  expenses and net cash flow on a quarterly
basis through the expected final  disposition date are prepared.  The individual
asset cash flow  estimates  are  developed  based upon  factors,  which  include
appraisals by independent  appraisers,  physical  inspection of the asset or the
collateral  underlying the related loans, local market  conditions,  contractual
payments and discussions with the relevant  borrower.  At September 30, 2002 and
December 31, 2001, the projected  monthly cash flows were discounted at 8-15% to
reflect the Trust Assets at estimated fair value.

PART II - OTHER INFORMATION

Item 2. Legal Proceedings

LAWSUIT AGAINST ARTHUR ANDERSEN

     On August 25, 2000, the Trust engaged in litigation  with AA regarding AA's
audits of some of the  Debtor  entities  prior to  bankruptcy,  and was the lead
plaintiff  in a lawsuit  against AA, which  consisted of 3 actions.  The actions
consisted of a lawsuit  filed by BFA alleging  claims of  negligence,  breach of
contract and breach of fiduciary  duty,  which was  transferred  to the Trust on
January 22, 2001, a class action  lawsuit  filed by a group of investors  (Class
Action),  and the lawsuit filed by the state of Arizona. All of the Class Action
investors  are  beneficial  holders of the  Trust,  however  not all  beneficial
holders of the Trust are Class Action investors. On May 6, 2002, the Trust, lead
plaintiffs  in the  Class  Action  lawsuit  and  the  Arizona  Attorney  General
announced that they had tentatively agreed to settle their claims against AA for
the sum of $217  million  and  that AA had made an  initial  payment  of  $10.68
million net of State of Arizona  legal costs.  AA's  insurance  company paid the
balance of the $217 million  settlement  on June 5, 2002 to an interest  bearing
joint escrow account.

     On July 12, 2002, a joint hearing was held by the United States  Bankruptcy
Court and the  Superior  Court for the State of Arizona  to  approve  the global
settlement  with AA.  At the  hearing,  the  Bankruptcy  Court  approved  the AA
settlement and shortly thereafter,  the State Court gave interim approval of the
AA settlement and of the notice to go to class members.  Since that time,  Dwain
Hoover has appealed the Bankruptcy Court approval of the AA settlement and Verde
Baptist  Church has appealed the interim  approval of the AA  settlement  by the
State Court.  Verde Baptist Church attempted to obtain a stay to prevent further
action in connection  with the final  approval in the State Court.  This attempt
was denied by the State  Court on August 15,  2002.  On August 28,  2002,  Verde
Baptist  Church filed another  Request for Stay of  Proceedings  in the Court of
Appeals, State of Arizona,  Division One. On approximately August 30, 2002, this
stay was  denied.  As of  September  13,  2002  both  the  State  Court  and the
Bankruptcy Court had approved the AA settlement,  however a 30-day appeal period
was open until October 13, 2002.  During the 30-day appeal period,  Dwain Hoover
filed an appeal,  which was later denied.  On November 25, 2002, the State Court
will hold a hearing on the allocation of the settlement  funds between the Trust
and Class Action  cases.  The Trust has  proposed an  allocation  process,  with
approval by Verde Baptist Church, whereby the Trust is credited with the receipt
of 50% of the net proceeds and the Class Action is credited  with the receipt of
the remaining 50% of the net proceeds.  At the November 25, 2002 court  hearing,
the court will decide which of the proposed allocation processes,  including the
Trust's, is the in the best interest of all parties.  Among the most significant
obstacles to prompt  distribution  of the settlement  funds to investors are (a)
investor  objections;  and (b) investor  appeals,  including  appeals from Dwain
Hoover.  The Trust's claims against AA may be jeopardized if AA seeks bankruptcy
protection.

NEGOTIATIONS WITH JENNINGS STROUSS & SALMON

     The Trust extensively  investigated  claims against BFA's former attorneys,
JSS and participated (along with counsel for lead plaintiffs in the Class Action
lawsuit) in a  non-judicial  mediation  of claims  against  JSS,  conducted by a
retired   U.S.   District   Court   Judge,   in  which   the   Trust   presented
evidence-supporting  claims  against  JSS.  The  Trust,  counsel  for  the  lead
plaintiffs  in the  class  action  lawsuit,  and the  Arizona  Attorney  General
negotiated  a  tentative  settlement  of claims  against  JSS for the sum of $21

                                       16
<PAGE>
million in 2001 and in late May 2002 completed  documentation of the settlement.
As of  September  13,  2002 both the State  Court and the  Bankruptcy  Court had
approved the JSS  settlement.  On November 25, 2002, the State Court will hold a
hearing on the  allocation of the  settlement  funds between the Trust and Class
Action cases.  The Trust expects that the proceeds of the JSS settlement will be
distributed along with the AA settlement, subject to the same risks of delay and
allocation process.  The litigation claims that BFA had with respect to JSS were
transferred to the Trust on January 22, 2001.

NET PROCEEDS TO THE INVESTORS FROM THE AA AND JSS SETTLEMENTS

     Assuming  that  the  settlements  are  approved,   beneficiaries  of  these
settlements will receive approximately $178.8 million from the AA settlement and
$19.8  million  from  the  JSS  settlement,  for  a  total  of  $198.6  million.
Approximately   $4  million  of  the  $217  million  in  the  AA  settlement  is
attributable to the expense of prosecuting  the litigation (for example,  expert
fees, court reporter fees, and travel costs,  but not attorneys fees).  Based on
the fee  schedule  approved by the  Bankruptcy  Court in 2000 after  competitive
bidding by various law firms, the attorneys' fees for the AA and JSS matter will
be  approximately  $35.4 million in addition to the expenses of approximately $4
million for prosecuting the litigation.

ADVERSARY PROCEEDING AGAINST L. DWAIN HOOVER

     On February 15, 2000,  BFA filed an adversary  proceeding in the Bankruptcy
Court against L. Dwain Hoover,  a former BFA director,  and the related  parties
that he owns or controls  (collectively,  "HOOVER").  The complaint alleges that
Mr. Hoover  breached his  fiduciary  duties to BFA by both  illegally  obtaining
loans from, and making loans to, certain companies affiliated with or managed by
BFA. As alleged in the complaint, most of the loans were initially obtained from
companies that were managed by BFA, but which were not BFA  subsidiaries,  which
avoided the appearance of Hoover illegally obtaining loans from BFA. However, on
several  occasions,  these loans were quickly assigned from the initial creditor
entity to a BFA  subsidiary.  In  addition,  Hoover used the funds from  certain
loans to re-lend  or invest  with third  parties  on terms  that  netted  Hoover
returns far in excess of the return BFA realized on its loans to Hoover.  Hoover
made loans to certain BFA-managed  companies at above-market interest rates that
were not  available to outside  investors in BFA. BFA seeks to recover all funds
improperly  borrowed by Hoover,  all  profits  improperly  made on funds  Hoover
borrowed from BFA and its affiliates, all other profits Hoover improperly reaped
from  these  transactions  with BFA,  and other  damages.  Hoover  has  asserted
set-offs based on funds placed with New Church Ventures Credit Corporation,  and
an alleged oral agreement to pay Hoover $5 million in connection with one of the
loan transactions.

     Substantial  litigation is ongoing in the Hoover adversary proceeding.  The
court issued a Temporary  Restraining  Order on March 27, 2000 and a Preliminary
Injunction on April 10, 2000  freezing over $9.0 million in cash and  negotiable
promissory notes held by Hoover.  BFA's litigation claims with respect to Hoover
were  transferred to the Trust on January 22, 2001 and an amended  complaint was
filed naming the BFA Liquidating Trustee as the Plaintiff.  The case is expected
to proceed  to trial in the first  quarter of 2003  unless it is  resolved  in a
settlement.

ADVERSARY PROCEEDING AGAINST HAROLD FRIEND

     On February 18, 2000,  BFA filed a lawsuit  against  Harold  Friend and two
companies co-owned by Mr. Friend and BFA-related companies,  Export Tyre Holding
Company  ("ETHC") and F&F Capital  Investment  Company  ("F&F"),  seeking a full
accounting  of his  financial  records and  business  dealings  with BFA and its
former senior  management  team.  Upon the filing of the complaint,  Mr. Friend,
through his counsel,  entered into a  stipulation  whereby Mr.  Friend agreed to
give BFA a full accounting of his financial records. The exchange of information
pursuant to that  stipulation  has been ongoing and has continued  following the
transfer of  litigation  claims that BFA had with respect to Mr.  Friend and his
companies to the Trust on January 22, 2001 and Mr.  Friend has  participated  in
ongoing  settlement  discussions  relating  to this  proceeding  and  his  prior
relationship  with BFA,  including  discussions  of the  disputed  claims of Mr.
Friend and related parties in the BFA bankruptcy.  A settlement in principal was
reached on September 9, 2002,  which if finalized  and approved  would result in
the Trust receiving cash,  commercial  paper and a third party  promissory note.
The Trust would exchange releases of claims by or against Mr. Friend and related
parties ("Friend-related parties"), including tort based claims and claims based
on  promissory  notes,  and transfer to the  Friend-related  parties the Trust's
shareholding  interests in ETHC and F&F. It is expected that the settlement will
be submitted for court approval as soon as reasonably possible.

NEGOTIATIONS WITH HENRY & HORNE P.L.C.

     The Trust extensively investigated claims against BFA's former accountants,
Henry & Horne  P.L.C.  ("H&H") and  participated  (along  with  counsel for lead
plaintiffs in the Class Action  lawsuit) in a  non-judicial  mediation of claims
against H&H, in which the Trust  presented  evidence-supporting  claims  against
H&H. The Trust,  counsel for the lead  plaintiffs  in the class action  lawsuit,
negotiated a tentative  settlement  of claims  against H&H.  The  settlement  is
subject to approval by the Maricopa  County  Superior  Court and the  Bankruptcy

                                       17
<PAGE>
Court.  The  settlement  documents  are expected to be filed for approval by the
courts and a ruling on the  allocation  process as soon as reasonably  possible.
The litigation  claims that BFA had with respect to H&H were  transferred to the
Trust on January 22, 2001.

NEGOTIATIONS WITH NELSON LAMBSON & CO., P.L.C.

     The Trust extensively investigated claims against BFA's former accountants,
Nelson Lambson & Co.,  P.L.C.  ("NL") and  participated  (along with counsel for
lead  plaintiffs  in the Class Action  lawsuit) in a  non-judicial  mediation of
claims  against  NL,  in which the Trust  presented  evidence-supporting  claims
against  NL. The Trust,  counsel  for the lead  plaintiffs  in the class  action
lawsuit,  negotiated a tentative settlement of claims against NL. The settlement
is subject to approval by the Maricopa  County Superior Court and the Bankruptcy
Court.  The  settlement  documents  are expected to be filed for approval by the
courts and a ruling on the  allocation  process as soon as reasonably  possible.
The  litigation  claims that BFA had with respect to NL were  transferred to the
Trust on January 22, 2001.

LAWSUITS INVOLVING WILLIAM BLAIR

     Pre-petition,  various BFA entities  entered into a series of  transactions
with Mr. Blair. Two outstanding debts remain unresolved. One debt relates to the
unpaid  purchase  price for  certain  real  property  located at 23rd Street and
Campbell  Avenue in Phoenix.  The other debt  relates to a loan for Mr.  Blair's
development of a residential subdivision identified as "Desert Diamond Estates."
With  regard  to the  Campbell  property  transaction,  counsel  for  the  Trust
conducted a search of BFA's books and  records to identify  collateral  recovery
sources.  Having determined that no collateral exists to secure repayment of the
balance of the purchase price,  the Trust filed a lawsuit in state court for the
unpaid balance, $0.77 million plus accrued interest, fees, and costs.

     With regard to the Desert Diamond loan, the Trust commenced  foreclosure on
the real property  collateral  securing  repayment of the underlying  debt. This
transaction has been made extraordinarily complicated by virtue of the fact that
Mr. Blair, in conjunction with Fidelity Title (the "TITLE  COMPANY")  developed,
sold  and  conveyed  fee  title to  approximately  twelve  lots  collateralizing
repayment of the BFA loan, to  third-party  purchasers  without first  obtaining
consents or releases  from NAS.  The Trust made demand on the Title  Company for
payment of the outstanding indebtedness.  In response, the Title Company has now
filed a  multi-count  lawsuit  against  the  Trust  alleging  a number  of novel
theories in an attempt to avoid payout on their insurance policies.  In addition
to the lawsuit  filed by the  third-party  purchasers  Mr.  Blair has placed the
subdivision,  Desert Diamond, into a Chapter 11 reorganization  proceeding.  NAS
filed a Motion to Convert Mr. Blair's Chapter 11 to a liquidation  under Chapter
7. The court granted the Motion and the bankruptcy case has been converted.  The
court appointed  trustee is proceeding to liquidate the assets of the bankruptcy
for the benefit of creditors including NAS. NAS expects that it may recover half
of the  Desert  Diamond  obligation  from the  Chapter 7  Trustee,  with  claims
remaining against the Title Company and Bill Blair  individually for the balance
of the Desert Diamond Note.

     The total  obligations  owing by Mr.  Blair to the Trust  approximate  $2.5
million dollars. To date, Mr. Blair has failed to offer any reason or excuse for
his  continued  and willful  failure to repay  these debts to the Trust.  Absent
payment  or  other  satisfactory   arrangement,   the  Trust  is  continuing  to
aggressively pursue the judgment and collateral recovery efforts.

     The state court is still pushing off  resolution of the amount of liability
under the  Campbell  Note.  The state  court  has sent the  parties  back to the
bankruptcy court a second time for  interpretation  of the  confirmation  order.
That  hearing  is set for this  month.  After the  bankruptcy  court  issues its
ruling,  the  parties  will have to go back to state court again to try to get a
resolution from the state court judge.

ADVERSARY PROCEEDINGS AGAINST WILLIAM P. CROTTS AND OTHERS

     On  November  7, 2001 and  December  14,  2001,  the Trust  filed  separate
adversary  proceedings in Bankruptcy Court against William P. Crotts  ("CROTTS")
and against  Dwain L.  Hoover and  related  entities  that he  controls;  Thomas
Grabinski;  Edgar Allen Kuhn; Nelson Lambson,  P.L.C. and Henry & Horne,  P.L.C.
("H&H"). Those actions assert claims for breach of fiduciary duties, substantial
assistance in the breach of fiduciary duties and professional negligence against
the  defendants  for their roles in  facilitating  and  carrying out the alleged
ponzi scheme that led to BFA's  collapse.  Crotts filed an answer to the Trust's
complaint against him. The other defendants,  however, moved to dismiss, and the
Trust opposed their motions and also proffered a proposed amended complaint. The
Court granted the Trust's motion for leave to amend the complaint and denied the
motion to dismiss.  Several  defendants have appealed from this ruling to the U.
S. District Court. No pretrial schedule or trial date has been set.

                                       18
<PAGE>
DISPUTED PROOFS OF CLAIMS

     A  number  of  creditors  filed  proofs  of  claims  in the BFA  bankruptcy
proceeding,  which  have been  objected  to by BFA.  All of these  disputes  are
pending in the Bankruptcy Court. Those claims in excess of $1 million, which are
still in dispute, are the following:

     1.   COOK  CHARITABLE  TRUST.  On March 31, 2000,  Cook  Charitable  Trust,
          through its current trustee, Mitchell C. Laird, filed a proof of claim
          alleging  that BFA abused its  discretion  and breached its  fiduciary
          duty  when it  served  as  trustee  of the Cook  Charitable  Trust and
          seeking $2 million in damages.  Management does not believe that it is
          likely that any future cash outflows will result from this claim.

     2.   HOOVER PARTIES. On March 19, 2000, March 29-31, 2000 and May 22, 2000,
          Dwain Hoover and Beva Hoover, together with certain of their relatives
          and  entities  controlled  by them,  including  D. Hoover & Associates
          Investments,  Inc., The Hoover Family  Charitable  Trust,  The Dwain &
          Beva Hoover  Charitable Trust II, SLS Trust, CRM Holdings,  and United
          Development  Inc., filed fourteen proofs of claim aggregating over $16
          million based on a number of theories. The most significant claims are
          (i) a claim  in the  approximate  amount  of  $278,000  alleging  that
          officers  of BFA  made an oral  promise  to  repurchase  certain  real
          property;  (ii) a claim in the  approximate  amount  of $14.2  million
          alleging  note   obligations   between  New  Church   Ventures  Credit
          Corporation and D. Hoover & Associates Investments,  Inc; (iii) claims
          in  the   approximate   amount  of  $328,000   based  on  IRA  account
          investments; (iv) a claim by The Hoover Family Charitable Trust in the
          approximate  amount of  $580,000  based on the alleged  conversion  of
          trust property;  and (v) a claim by The Dwain & Beva Hoover Charitable
          Trust II in the  approximate  amount of $680,000  based on the alleged
          conversion of trust  property.  Management does not believe that it is
          likely that any future cash outflows will result from these claims.

     3.   ARIZONA SOUTHERN BAPTIST CONVENTION.  On March 31, 2000 the ASBC filed
          a proof of claim  in the  approximate  amount  of $1  million  plus an
          unknown  amount  based on its alleged  beneficial  interest in various
          trusts or endowments for which BFA or one of its affiliates  served as
          trustee.  Further, the proof of claim seeks to have the court transfer
          BFA's  beneficial  interest  in the  trusts  to ASBC.  The  Trust  has
          objected  to this  claim  on  various  grounds  and has  counterclaims
          against ASBC.  Management  does not believe that it is likely that any
          future cash outflows will result from this claim.

     4.   ARIZONA STATE  MISSION  BOARD,  INC. On March 31, 2000,  Arizona State
          Mission Board, Inc. ("ASMB") filed a proof of claim in the approximate
          amount of $1.45  million  plus an unknown  amount based on its alleged
          beneficial  interest in various  trusts or endowments for which BFA or
          one of its affiliates  served as trustee.  ASMB also seeks to have the
          court transfer BFA's beneficial  interest in the trusts,  which is now
          held by the Trust,  to ASMB.  The Trust has  objected to this claim on
          various grounds and has  counterclaims  against ASMB.  Management does
          not  believe  that it is likely  that any future  cash  outflows  will
          result from this claim.

     5.   ARIZONA BAPTIST CHILDREN'S  SERVICES,  INC. On March 31, 2000, Arizona
          Baptist Children's  Services,  Inc. ("ABCS") filed a proof of claim in
          the approximate amount of $2.3 million plus an unknown amount based on
          its alleged  beneficial  interest in various trust or  endowments  for
          which BFA or one of its affiliates served as trustee.  ABCS also seeks
          to have the court  transfer BFA's  beneficial  interest in the trusts,
          which is now held by the Trust,  to ABCS.  The Trust has  objected  to
          this claim on various  grounds  and has  counterclaims  against  ABCS.
          Management  does not  believe  that it is likely  that any future cash
          outflows will result from this claim.

     6.   HAROLD FRIEND AND RELATED PARTIES. On March 31, 2000 Harold Friend and
          several  entities  controlled  by him  including  Export Tyre  Holding
          Company,    Stockbridge    holding   Company,    Stockbridge    Realty
          Investors--Arizona,  Inc.,  Property  Consultants,  Inc. and HMR, Inc.
          filed a proof of  claim in the  approximate  amount  of $18.0  million
          based on a number of theories.  The most significant  claim is one for
          unpaid fees and  commissions,  both earned and projected to be earned,
          in the approximate amount of $14.88 million. The Trust has objected to
          these  claims  on  various  grounds  and has  counterclaims  of action
          against  Friend for his role at Baptist  Foundation  of  Arizona.  The
          parties have reached a  non-binding  settlement  in  principle,  which
          would result in the withdrawal of all of these proof of claims.  It is
          expected that the settlement will be finalized and submitted for court
          as soon as reasonably possible. Management does not believe that it is
          likely that any future  cash  outflows  will result from these  claims
          based on this settlement.

     7.   CLAIM OF GRAND  CANYON  UNIVERSITY.  On March 31,  2000,  Grand Canyon
          University   ("GCU")  filed  a  proof  of  claim  seeking  payment  of
          approximately  $3.2 million for various unsecured  investments held by
          BFA,  approximately $3.67 million for the balance due under a note and
          deed of trust executed by Cora Properties,  Inc. (the "CORA NOTE") and
          a  quarterly  $24,425  annuity  payment  for  which  BFA is  primarily
          obligated and GCU is the guarantor. The Trust has objected to the $3.2
          million  claim and the  $24,425  quarterly  annuity  claim on  various
          grounds and is pursuing  discussions with GCU in regards to settlement
          of these  claims.  The claim  related  to the Cora Note has since been

                                       19
<PAGE>
          resolved and the  liability  has been  recorded.  Management  does not
          believe  that it is likely that any future cash  outflows  will result
          from the $3.2 million claim and the $24,425 quarterly annuity claim.

     8.   Various  other  claims  were  filed  by  unsecured  creditors  seeking
          compensation.  These claims individually total less than $200,000. The
          Trust has objected to these claims on various grounds. Management does
          not  believe  that it is likely  that any future  cash  outflows  will
          result from these claims

ITEM 4. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this  report,  the Trust  carried out an
evaluation,  under the  supervision  and with the  participation  of the Trust's
management,  including the Liquidating  Trustee (the Trust's principal executive
officer) and the  Assistant to the  Liquidating  Trustee (the Trust's  principal
financial  officer),  of the  effectiveness  of the design and  operation of the
Trust's  disclosure  controls  and  procedures,  as defined in Exchange Act Rule
15d-14(c).  Based upon that evaluation,  the Trust's Liquidating Trustee and the
Assistant  to the  Liquidating  Trustee  concluded  that the Trust's  disclosure
controls and procedures are effective in enabling the Trust to record,  process,
summarize and report information required to be included in the Trust's periodic
SEC filings  within the  required  time period.  There have been no  significant
changes  in the  Trust's  internal  controls  or in  other  factors  that  could
significantly  affect the  internal  controls  subsequent  to the date the Trust
carried out its evaluation.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     99.1      Certification  pursuant  to 18 U.S.C.  Section  1350,  as adopted
               pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)  Reports on Form 8-K

     None

                                   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.


Dated: November 15, 2002                BFA LIQUIDATION TRUST


                                        By: /s/ Clifton R. Jessup, Jr.
                                            ------------------------------------
                                            Name: Clifton R. Jessup, Jr.
                                            Title: Liquidating Trustee

                                       20
<PAGE>
                                  CERTIFICATION

I, Clifton R. Jessup, Jr., certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of the BFA  Liquidation
Trust;

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

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
issuer 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 we have:

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

     (ii) 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 ("EVALUATION DATE"); and

     (iii)  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 and the audit committee
of the  registrant's  board of directors (or persons  fulfilling  the equivalent
function):

     (i) 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

     (ii) 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.


Date: November 15, 2002          By: /s/ Clifton R. Jessup, Jr.
                                     -------------------------------------------
                                     Name: Clifton R. Jessup, Jr.
                                     Title: Liquidating Trustee

                                       21
<PAGE>
                            CERTIFICATION (CONTINUED)

I, Mark A. Roberts, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of the BFA  Liquidation
Trust;

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

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
issuer 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 we have:

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

     (ii) 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 ("EVALUATION DATE"); and

     (iii)  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 and the audit committee
of the  registrant's  board of directors (or persons  fulfilling  the equivalent
function):

     (i) 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

     (ii) 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.


Date: November 15, 2002          By: /s/ Mark A. Roberts
                                     -------------------------------------------
                                     Name: Mark A. Roberts
                                     Title: Assistant to the Liquidating Trustee

                                       22