FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark one)

     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

                                       or

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

                        Commission File Number: 000-32859

                              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.)


3300 N. Central Ave., Suite 900, Phoenix, Arizona                 85012
    (Address of principal executive offices)                    (Zip Code)

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

         Former Address: 1313 E. Osborn Rd, Suite 250, Phoenix, AZ 85014

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  by check mark  whether  the  registrant  is an  accelerated  filer (as
described in Rule 12b-2 of the Act [ ] 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  August  12,  2003,
448,213,228 units of Class A Beneficial Interests and 137,176,571 units of Class
B Beneficial Interests were outstanding.

<PAGE>

                              BFA Liquidation Trust
                                    Form 10-Q
                                Table of Contents


PART 1 - FINANCIAL INFORMATION
Item 1.  Financial Statements                                                 1

Item 2.  Management's Discussion and Analysis of Financial Condition
         And Results of Operations                                           11

Item 4   Controls and Procedures                                             13

PART 2 - OTHER INFORMATION
Item 1   Legal Proceedings                                                   14

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                     BFA LIQUIDATION TRUST AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                              June 30, 2003        December 31, 2002
                                                                                              -------------        -----------------
<S>                                                                                            <C>                    <C>
ASSETS IN LIQUIDATION AT ESTIMATED FAIR VALUE
Cash and cash equivalents                                                                      $  1,995,115           $  2,254,806
Receivables, net (note 2)                                                                        50,634,451             59,434,985
Other trust assets, net (notes 3 and 8)                                                          41,891,950             46,149,276
Restricted cash and cash equivalents                                                              2,166,153              6,631,801
Fair value of expected cash flows from settlements (note 4)                                            --              188,478,673
                                                                                               ------------           ------------

      TOTAL ASSETS                                                                               96,687,669            302,949,541
                                                                                               ------------           ------------

                LIABILITIES IN LIQUIDATION
Accounts Payable and accrued liabilities                                                          1,079,698              3,071,617
Notes payable (note 5)                                                                            2,167,328              4,126,217
Estimated costs to complete liquidation and litigation (note 6)                                   4,666,772              6,679,030
Settlement liability (note 7)                                                                     3,380,513             94,239,336
                                                                                               ------------           ------------

      TOTAL LIABILITIES                                                                          11,294,311            108,116,200
                                                                                               ------------           ------------

Commitments and contingencies (note 9)

      NET ASSETS IN LIQUIDATION                                                                $ 85,393,358           $194,833,341
                                                                                               ============           ============

CLAIMS AGAINST NET ASSETS IN LIQUIDATION CONSIST OF THE FOLLOWING:
 Class "3A" Certificate,
   448,213,228 units outstanding, $.17 per unit at June 30, 2003
   and $.36 at December 31, 2002                                                               $ 78,416,796           $162,294,947
 Class "3B" Certificate,
   137,176,571 units outstanding, $.05 per unit at June 30, 2003
   and $.24 at December 31, 2002                                                                  6,976,562             32,538,394
                                                                                               ------------           ------------

      TOTAL NET ASSETS                                                                         $ 85,393,358           $194,833,341
                                                                                               ============           ============
</TABLE>

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

                                       1
<PAGE>

                     BFA LIQUIDATION TRUST AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                         Three months ended
                                                                                                -----------------------------------
                                                                                                June 30, 2003         June 30, 2002
                                                                                                -------------         -------------
<S>                                                                                             <C>                   <C>
Net assets in liquidation, April 1, 2003 and April 1, 2002, respectively                        $ 100,959,333         $ 129,808,985

Interest income on notes receivable (note 2)                                                        1,224,995             1,650,221
Interest expense on notes payable (note 5)                                                            (63,374)             (179,978)
Changes in fair value of other trust assets and liabilities (note 8)                               (4,470,239)            2,736,793
Changes in fair value of estimated costs to complete liquidation (note 6)                                --                (504,959)
Distributions to holders of Class 3A and 3B beneficial interests                                  (12,257,357)           (5,615,268)
                                                                                                -------------         -------------

Net assets in liquidation, June 30, 2003 and June 30, 2002, respectively                        $  85,393,358         $ 127,895,794
                                                                                                =============         =============
</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>
                                                                                                        Six months ended
                                                                                                -----------------------------------
                                                                                                June 30, 2003         June 30, 2002
                                                                                                -------------         -------------
<S>                                                                                             <C>                   <C>
Net assets in liquidation, January 1, 2003 and January 1, 2002,
  respectively                                                                                  $ 194,833,341         $ 128,980,963

Interest income on notes receivable (note 2)                                                        2,732,473             3,323,424
Interest expense on notes payable (note 5)                                                           (121,958)             (385,940)
Changes in fair value of other trust assets and liabilities (note 8)                               (6,224,462)            2,097,574
Changes in fair value of estimated costs to complete liquidation (note 6)                                --                (504,959)
Distributions to holders of Class 3A and 3B beneficial interests                                 (105,826,036)           (5,615,268)
                                                                                                -------------         -------------

Net assets in liquidation, June 30, 2003 and June 30, 2002, respectively                        $  85,393,358         $ 127,895,794
                                                                                                =============         =============
</TABLE>

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

                                       3
<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  ("BFA")
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  ("BANKRUPTCY  COURT"), 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 one
subsidiary.  The assets will be grouped in a consistent and coherent  manner and
held,  pending sale, by the new  subsidiary.  The Trust and the it's  subsidiary
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 on January 22, 2006 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  ("LIQUIDATION  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  consolidated  financial  statements  as of June 30,  2003 and
December  31, 2002 and for the three and six months ended June 30, 2003 and 2002
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

                                       4
<PAGE>

basis of accounting,  the financial  statements  reflect the estimated  costs of
liquidating  the assets and  distributing  the proceeds to holders of beneficial
interests.

The  accompanying   unaudited  consolidated  financial  statements  reflect  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, 2002 and for the fiscal year ended December 31, 2002 included
in the Trust's Form 10 -K as filed with the Securities and Exchange  Commission.
The  results  for the  three  and six  months  ended  June  30,  2003 may not be
indicative of the future results for the entire year 2003.

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
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.

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.

                                       5
<PAGE>

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 a 4.25% present value factor at June 30, 2003 and December 31,
2002. These costs, which include personnel,  facilities, Trustee and Liquidating
Trust Board compensation,  professional fees, 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 6).  Given  that  there is  inherent
uncertainty  in the  estimation  process,  actual  results  could be  materially
different.


2. RECEIVABLES, NET

         Receivables  primarily  consist of a note  receivable  from Shea Homes,
Inc.  ("SHEA") of $45.8  million and $53.0 million at June 30, 2003 and December
31, 2002,  respectively.  The note receivable from Shea is  collateralized  by a
master planned  community,  and the remaining other  receivables  relate to land
contracts,  mortgage notes receivable and various other commercial  receivables.
See note 11 for additional information.

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

<TABLE>
<CAPTION>
                                                                                        June 30, 2003             December 31, 2002
                                                                                        -------------             -----------------
<S>                                                                                     <C>                        <C>
Total gross future cash flows from notes receivable                                     $  88,644,875              $ 138,853,065
Collectibility discount                                                                   (37,435,544)               (69,241,041)
Present value discount (8-9%)                                                                (574,880)               (10,177,039)
                                                                                        -------------              -------------
Net receivables                                                                         $  50,634,451              $  59,434,985
                                                                                        =============              =============
</TABLE>


Some of the  debtors  other  than  Shea  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.


3. OTHER TRUST ASSETS, NET

The other trust assets,  net 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>
                                                                                         June 30, 2003            December 31, 2002
                                                                                         -------------            -----------------
<S>                                                                                      <C>                         <C>
Real estate assets and partnerships, net                                                 $ 39,168,674                $ 43,601,619
Investments in other operating companies, net                                               5,300,332                   5,007,029
Other assets, net                                                                             503,618                     696,956
                                                                                         ------------                ------------
Future value of other trust assets                                                         44,972,624                  49,305,604
Present value discount (various rates)                                                     (3,080,674)                 (3,156,328)
                                                                                         ------------                ------------
Other trust assets value                                                                 $ 41,891,950                $ 46,149,276
                                                                                         ============                ============
</TABLE>

                                       6
<PAGE>

4. FAIR VALUE OF EXPECTED CASH FLOWS FROM SETTLEMENTS

Settlement  proceeds at December 31, 2002 primarily consist of net proceeds from
Arthur  Andersen  ("AA").  The AA settlement  consists of gross proceeds of $217
million less legal fees of approximately  $32.9 million and litigation  expenses
incurred for prosecuting the litigation of approximately  $4.0 million for a net
amount of approximately $180.1 million. Both the Superior Court for the State of
Arizona,  Maricopa County (the "SUPERIOR  COURT") and Bankruptcy  Court approved
the settlement on September 13, 2002. Interest of approximately $1.1 million was
earned on the cash  balances held by the Trust for the AA settlement at December
31, 2002 and is reflected in these financial  statements.  On December 27, 2002,
the Trust  distributed  $6.5 million of the AA settlement to the Class 3A and 3B
beneficial  interest holders of the Trust and class action members in accordance
with the court approved plan of allocation.  At December 31, 2002, approximately
$174.7  million  representing  both the Trust and class  action  share of the AA
settlement  proceeds  remained  to  be  distributed.   In  addition  to  the  AA
settlement, the Trust and class action were able to reach settlements with Henry
& Horne, P.L.C.,  Nelson Lambson & Co., P.L.C., E. A. and Rebecca Kuhn, Jalma W.
and  Carole  Hunsinger  and  their  affiliates,  The  Arizona  Southern  Baptist
Convention  and  affiliated  entities,  Harold D. and  Stephanie B. Friend their
affiliated  entities and L. Dwain Hoover, Beva J. Hoover, D. Hoover & Associates
and the D.  Hoover  &  Associates  Investments,  Inc.  Retirement  Trust.  These
settlements  aggregately  total  approximately  $15.3 million less discounts and
consist of cash and other real property.  Litigation  expenses  related to these
settlements total  approximately  $1.6 million for a net amount of approximately
$13.7 million.

The court approved plan of allocation  states that the Trust is allocated 50% of
the proceeds and that the class action is  allocated  the  remaining  50% of the
proceeds.  On January 23,  2003,  the  remaining AA  settlement  funds of $174.7
million were distributed to the Class 3A and 3B beneficial  interest holders and
class action  members in accordance  with the court approved plan of allocation.
On  March  24,  2003 the  cash  proceeds  received  from  the  other  litigation
settlements  of $7.1 million were  distributed to the Class 3A and 3B beneficial
interest  holders and class action members in accordance with the court approved
plan of allocation.  The remaining  non-cash assets of $6.6 million  received as
part of these  additional  settlements has been  reclassified to the appropriate
asset  classification.  Therefore  at June 30,  2003 all  cash  from  litigation
settlements had been distributed.


5. NOTES PAYABLE

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

Gross note payable of approximately $2.2 million 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%.  See note 11 for additional
information.

At June 30, 2003, aggregate debt maturities including interest were as follows:

                                                2003            $2,184,287
                                                2004                    --
                                                2005                    --
                                                2006                    --
                                                2007                    --
                                          Thereafter                    --
                                                                ----------
                                                                 2,184,287
                 Less present value discount (6.75%)              (16,959)
                                                                ----------

                      Notes payable                             $2,167,328
                                                                ==========


6. ESTIMATED COSTS TO COMPLETE LIQUIDATION AND LITIGATION

The estimated costs to complete liquidation and litigation of $4,666,772 at June
30, 2003 and  $6,679,030 at December 31, 2002  represent the estimated  costs of
operating  the Trust  through its  expected  termination  on January  21,  2006,
discounted  using an 4.25%  present  value  factor.  These costs,  which include
personnel,  facilities,  Trustee

                                       7
<PAGE>

and Board  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  9).  Given  that  there  is  inherent  uncertainty  in the
estimation process, actual results could be materially different.


7. SETTLEMENT LIABILITY

The  settlement  liability at June 30, 2003  represents  the class  action's 50%
portion of the settlement proceeds and assets from Jalma W. and Carole Hunsinger
and their affiliates and Harold D. and Stephanie B. Friend and their affiliates.
The  settlement   liability   relates  to  assets  reported  in  receivables  of
approximately $2.4 million and other trust assets of approximately $4.3 million.
In January 2003 the courts  approved an allocation  process for the January 2003
settlements whereby the Trust and the class action each are allocated 50% of the
settlement  proceeds.  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 members.  The Trust has recorded a
settlement  liability for the settlement  proceeds,  net of legal fees, equal to
the amount  allocated to the class action.  The liability  will remain until the
proceeds are distributed to the class action investors by the Trust.


8. CHANGES IN OTHER TRUST ASSETS

During the three months ended June 30, 2003 the valuation of certain other trust
assets were adjusted based on current and pending sales offers,  new information
received  by  management  and  actual  operating   results.   These  adjustments
aggregately  total an approximate  $4.5 million  decrease in other trust assets.
Included in actual operating results are sales of approximately $4.4 million for
the sale of the Park at Juniper Ridge, property in Casa Grande and various other
lots and parcels from Westside Property.

During the three months ended June 30, 2002 the valuation of certain other trust
assets were adjusted based on current and pending sales offers,  new information
received  by  management  and  actual  operating   results.   These  adjustments
aggregately  total an approximate  $2.7 million  increase in other trust assets.
Included in actual operating results are sales of approximately $2.1 million for
the sale of various  lots and parcels  from  Coyote  Lakes,  Rancho  Vistoso and
Westside Property.

During the six months ended June 30, 2003 the  valuation of certain  other trust
assets were adjusted based on current and pending sales offers,  new information
received  by  management  and  actual  operating   results.   These  adjustments
aggregately  total an approximate  $6.2 million  decrease in other trust assets.
Included in actual operating results are sales of approximately $4.6 million for
the sale of the Park at Juniper Ridge, property in Casa Grande and various other
lots and parcels from ASC San Antonio and Westside Property.

During the six months ended June 30, 2002 the  valuation of certain  other trust
assets were adjusted based on current and pending sales offers,  new information
received  by  management  and  actual  operating   results.   These  adjustments
aggregately  total an approximate  $2.1 million  increase in other trust assets.
Included in actual operating results are sales of approximately $3.4 million for
the sale of various lots and parcels from Coyote Lakes, Rancho Vistoso, Show Low
Country Club and Westside Property.


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. As of June 30, 2003 all
of these claims have been resolved and paid in full if any amount was due.

Contingent Assets

During late 2001, the Trust commenced two (2) separate adversary  proceedings in
the  Bankruptcy  Court against

                                       8
<PAGE>

William Crotts and Thomas  Grabinski,  the Chief  Executive  Officer and General
Counsel,  respectively,  of BFA during the period that the fraud  occurred.  The
Trust alleges that Messrs.  Crotts and Grabinski were the primary  architects of
the fraud,  thereby  breaching their fiduciary  duties to BFA and its investors.
The Trust has  successfully  defeated motions by Crotts and Grabinski to dismiss
the action,  and since that time has engaged in extensive  discovery  with these
parties. Trial for this action is scheduled to commence in early 2004. No amount
has been recorded in the accompanying  consolidated financial statements related
to this contingent asset.

In 2002 a complaint alleging four (4) separate causes of action was filed in the
Superior Court against BFA's former limited liability company member,  Chaparral
Pines,  LLC, in the development of the Chaparral Pines property.  The complaints
center  around the  mismanagement  of the property by the  defendant.  Chaparral
Pines filed a Motion to dismiss the complaint. After briefings and argument, the
Superior  Court has  allowed the Trust to proceed on three of the four counts in
the complaint. Discovery has commenced. Because of the substantial nature of the
Chaparral  Pines  project,  the  defendants'  are working to accumulate  all the
construction-related  documents. Currently, both the Trust and defendants are in
a document  review  process.  No amount has been  recorded  in the  accompanying
consolidated financial statements related to this contingent asset.

In an effort to avoid  repaying  $4 million  dollars  in debt to the Trust,  Mr.
William  Blair has engaged in a number of legal  maneuvers.  In 2001,  the Trust
filed a Notice of Trustee's Sale on the collateral  securing repayment on one of
the Notes (the "DESERT DIAMOND NOTE").  The Trust separately filed a lawsuit and
obtained a judgment  against  Mr.  Blair  individually  as a co-maker  under the
Desert Diamond Note. That debt has been reduced to judgment in an amount of $1.4
million  dollars,  plus interest at 19% until paid in full.  With regards to Mr.
Blair's  second  obligation  (the  "CAMPBELL  NOTE") the Superior  Court entered
judgment on March 19, 2003 against both Mr. Blair and his Trust in the amount of
$1,418,329.82 with interest at the rate of 18% from August 13, 2001, until paid.
The Trust now has successfully litigated and received judgments on the two state
court actions and defended the Trust's  claims  against the actions of Mr. Blair
in connection with the Desert Diamond  bankruptcy.  This  bankruptcy  included a
proposed  cramdown  plan and an  adversary  lawsuit  to  modify  the  underlying
contract.  The assets of the  bankruptcy  estate  have been  liquidated  and the
proceeds from the sale of the assets  distributed  to the Trust.  With regard to
the remaining  action  against  Fidelity  Title (the "TITLE  COMPANY") the Title
Company  hired  by Mr.  Blair  to  transfer  title to  portions  of the  Trust's
collateral to third parties without lien releases, the Bankruptcy Court recently
granted the Title Company's  Motion for  Reconsideration  and reversed its prior
ruling.  The effect is that the Bankruptcy  Court has upheld an alleged contract
modification  disallowed by a different judge in an earlier  litigation.  If the
Bankruptcy  Court's  ruling  stands as issued,  the Trust  would be  required to
release its liens on the remaining real property  collateral for a release price
of $12,500/lot (a total of $275,000 for the remaining  lots).  The Title Company
also has on file a Motion for Award of Fees  seeking  an award of  approximately
$138,000 in fees and costs incurred. The Trust is currently considering filing a
Motion for Reconsideration, or in the alternative, an appeal. An amount equal to
approximately  $137,000  has  been  recorded  in the  accompanying  consolidated
financial statements related to this contingent asset.

The Trust holds a note receivable in an outstanding  amount of  approximately $2
million  dollars from  W.H.H.C.  Through this note the Trust holds a mortgage on
approximately  70 acres of real property  located in Maricopa  County,  Arizona.
Additionally,  the  Trust  has  recourse  against  one  of the  partners  of the
partnership. All remaining partners have previously paid the Trust cash payments
in exchange for release of their of personal recourse  liability.  A lawsuit has
been filed in the  Superior  Court to  foreclose  on the  mortgage  and obtain a
judgment  against the  partnership  and the one  remaining  liable  partner.  No
answers  have  been  filed.  No amount  has been  recorded  in the  accompanying
consolidated  financial  statements  related to future  amounts not yet received
from this contingent asset.

Because of the  significant  uncertainty  associated with the valuation of these
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.

                                       9
<PAGE>

10.  CASH RECEIPTS AND DISBURSEMENTS

For the three months ended June 30, 2003 and June 30, 2002,  the Trust  received
net cash  proceeds  from  sales  of  assets,  note  receivable  collections  and
operations of approximately $12.6 and $7.0 million  respectively,  consisting of
the following:

<TABLE>
<CAPTION>
                                                                                                      Three months ended
                                                                                            ----------------------------------------
                                                                                            June 30, 2003              June 30, 2002
                                                                                            ----------------------------------------
<S>                                                                                         <C>                          <C>
Notes receivable                                                                            $ 7,391,536                  $   824,425
Cash flows from other trust assets                                                            5,249,181                    6,200,788
                                                                                            ----------------------------------------
                                                                                            $12,640,717                  $ 7,025,213
                                                                                            ========================================
</TABLE>


Conversely,  for the same  respective  periods,  the Trust  paid out to  various
creditors approximately $17.4 and $11.3 million as follows:

<TABLE>
<CAPTION>
                                                                                                    Three months ended
                                                                                         ------------------------------------------
                                                                                         June 30, 2003                June 30, 2002
                                                                                         ------------------------------------------
<S>                                                                                      <C>                           <C>
Trust operations                                                                         $   (986,858)                 $ (1,452,411)
Payables & class 5 creditors                                                               (2,818,174)                   (3,735,106)
Payments to secured notes payables                                                         (1,316,594)                     (460,636)
Distributions to 3A and 3B                                                                (12,257,357)                   (5,615,267)
                                                                                         ------------------------------------------
                                                                                         $(17,378,983)                 $(11,263,420)
                                                                                         ==========================================
</TABLE>


11. SUBSEQUENT EVENTS

On July 1, 2003 Shea made it's quarterly  interest payment of approximately $1.1
million.  On July 15, 2003 Shea paid all principal and interest owed on its debt
obligation to the Trust in the approximate  amount of $44.9 million.  From these
proceeds the Trust paid all principal and interest due to a creditor  secured by
the Shea note in the approximate amount of $2.2 million.

On July 29,  2003 the Trust  and Class  Action  reached a  tentative  settlement
agreement  with  National  Union  Insurance  Company in regards to the Trust and
Class Action claims for monetary damages from insurance  coverage related to the
conduct of the former BFA directors and officers.  The settlement agreement will
now be drafted  and must be approved by the  bankruptcy  court and Class  Action
members  before any amounts may be  realized by the Trust and Class  Action.  No
amount has been recorded in the accompanying  consolidated  financial statements
related to this settlement.

On August  8, 2003 the Trust  distributed  approximately  $40.0  million  to the
holders of Class 3A and 3B beneficial interests.

                                       10
<PAGE>

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

The historical financial data presented below for the three and six months ended
June 30,  2003 and June 30,  2002 are derived  from our  consolidated  financial
statements.  The selected  financial data should be read in conjunction with the
notes below and the consolidated financial statements and related notes included
in Item 1.

<TABLE>
<CAPTION>
                                                                  Three months ended                       Six months ended
                                                          ---------------------------------       ---------------------------------
                                                          June 30, 2003       June 30, 2002       June 30, 2003       June 30, 2002
                                                          -------------       -------------       -------------       -------------
<S>                                                       <C>                 <C>                 <C>                 <C>
Net assets in liquidation                                 $ 100,959,333       $ 129,808,985       $ 194,833,341       $ 128,980,963

Interest income on notes receivable                           1,224,995           1,650,221           2,732,473           3,323,424
Interest expense on notes payable                               (63,374)           (179,978)           (121,958)           (385,940)
Changes in fair value of other trust
  assets and liabilities                                     (4,470,239)          2,736,793          (6,224,462)          2,097,574
Changes in fair value of estimated costs
  to complete liquidation                                          --              (504,959)               --              (504,959)
Distributions to holders of Class 3A and
  3B beneficial interests                                   (12,257,357)         (5,615,268)       (105,826,036)         (5,615,268)
                                                          -------------       -------------       -------------       -------------

Net assets in liquidation, June 30, 2003
  and June 30, 2002, respectively                         $  85,393,358       $ 127,895,794       $  85,393,358       $ 127,895,794
                                                          =============       =============       =============       =============
</TABLE>


Certain statements under the headings  "Management's  Discussion and Analysis of
Financial  Condition and Results of  Operations,"  "Business,"  and elsewhere in
this report constitute  "forward-looking  statements"  within the meaning of the
rules and regulations promulgated by the Securities and Exchange Commission.

This report contains a number of forward-looking  statements,  which reflect the
Trust's  current views with respect to future events and financial  performance.
Such   forward-looking   statements  are  based  on  management's   beliefs  and
assumptions  regarding  information  that is currently  available,  and are made
pursuant to the "safe harbor"  provisions of the federal  securities laws. These
forward-looking  statements are subject to certain risks and uncertainties.  The
Trust's  actual  performance  and results  could  differ  materially  from those
expressed in the forward-looking  statements due to risks and uncertainties that
could materially impact the Trust in an adverse fashion and are only predictions
of future results, and there can be no assurance that the Trust's actual results
will not  materially  differ  from those  anticipated  in these  forward-looking
statements.  In this report,  the words  "anticipates",  "believes",  "expects",
"intends",   "plans",   "may",   "future",   and  similar  expressions  identify
forward-looking statements. Readers are cautioned not to place undue reliance on
the forward-looking statements contained herein, which speak only as of the date
hereof.  The Trust has no  obligation  to  publicly  update or revise any of the
forward-looking  statements to reflect  events or  circumstances  that may arise
after the date hereof.

         THREE MONTHS ENDED JUNE 30, 2003 AND 2002

The  estimated  fair value of the  Trust's net assets in  liquidation  decreased
approximately $15.6 million for the three months ended June 30, 2003 as compared
to approximately $1.9 million decrease for the three months ended June 30, 2002.
Factors  which  contributed  to the net  decrease  of the net asset value of the
Trust's net assets for the three months ended June 30, 2003 include (i) interest
income from notes receivables  which increased net assets by approximately  $1.2
million,  (ii) interest  expense for notes payable which decreased net assets by
approximately  $63,000,  (iii)  decrease in value of certain  other trust assets
which decreased net assets by approximately  $4.5 million and (iv) distributions
to holders of Class 3A and 3B beneficial interests which decreased net assets by
approximately  $12.2 million.  Factors which  contributed to the net decrease of
the net asset value of the Trust's  net assets for the three  months  ended June
30, 2002 include (i) interest income from notes  receivable  which increased net
assets by  approximately  $1.7 million,  (ii) interest expense for notes payable
which decreased net assets by approximately $180,000, (iii) increase in value of
certain  other trust  assets which  increased  net asset by  approximately  $2.7
million,  (iv)  increase in estimated  costs to liquidate  which  decreased  net
assets by  approximately  $505,000 and (v)

                                       11
<PAGE>

distributions to holders of Class 3A and 3B beneficial interests which decreased
net assets by approximately $5.6 million.

Interest  income  from notes  receivable  decreased  in 2003 as compared to 2002
because of  principal  payments  received.  Interest  expense  on notes  payable
decreased  from 2003 as compared 2002 because of principal  payments made by the
Trust.  The changes in fair value of other  trust  assets in 2003 as compared to
2002 differed  because of changes in the fair market value of assets and certain
related  liabilities due to pending or current sales offers,  receipt of current
information and actual operating results of the assets.

In the three  months ended June 30, 2003,  the Trust  distributed  approximately
$12.2  million  to  holders  of  Class  3A  or  3B  beneficial  interests.  This
distribution was made principally from collections on Trust Assets. The Class 3A
and 3B beneficial  interests were valued at approximately  $85.4 million at June
30, 2003 and $194.8 million at December 31, 2002.

         SIX MONTHS ENDED JUNE 30, 2003 AND 2002

The  estimated  fair value of the  Trust's net assets in  liquidation  decreased
approximately  $109.4 million for the six months ended June 30, 2003 as compared
to  approximately  $1.1 million decrease for the six months ended June 30, 2002.
Factors  which  contributed  to the net  decrease  of the net asset value of the
Trust's net assets for the six months  ended June 30, 2003  include (i) interest
income from notes receivables  which increased net assets by approximately  $2.7
million,  (ii) interest  expense for notes payable which decreased net assets by
approximately  $122,000,  (iii)  decrease in value of certain other trust assets
which decreased net assets by approximately  $6.2 million and (iv) distributions
to holders of Class 3A and 3B beneficial interests which decreased net assets by
approximately  $105.8 million.  Factors which contributed to the net decrease of
the net asset value of the Trust's net assets for the six months  ended June 30,
2002 include (i)  interest  income from notes  receivable  which  increased  net
assets by  approximately  $3.3 million,  (ii) interest expense for notes payable
which decreased net assets by approximately $386,000, (iii) increase in value of
certain  other trust  assets which  increased  net asset by  approximately  $2.1
million,  (iv)  increase in estimated  costs to liquidate  which  decreased  net
assets by  approximately  $505,000 and (v)  distributions to holders of Class 3A
and 3B beneficial  interests  which decreased net assets by  approximately  $5.6
million.

Interest  income  from notes  receivable  decreased  in 2003 as compared to 2002
because of  principal  payments  received.  Interest  expense  on notes  payable
decreased  from 2003 as compared 2002 because of principal  payments made by the
Trust.  The changes in fair value of other  trust  assets in 2003 as compared to
2002 differed  because of changes in the fair market value of assets and certain
related  liabilities due to pending or current sales offers,  receipt of current
information and actual operating results of the assets.

In the six  months  ended June 30,  2003,  the Trust  distributed  approximately
$105.8  million  to  holders  of  Class  3A or 3B  beneficial  interests.  These
distributions  were  made  principally  from  collections  on Trust  Assets  and
proceeds from litigation.  The Class 3A and 3B beneficial  interests were valued
at  approximately  $85.4 million at June 30, 2003 and $194.8 million at December
31, 2002.

Non-cash  trust assets at June 30, 2003 and December 31, 2002 were  comprised of
the following:

<TABLE>
<CAPTION>
      NON-CASH ASSETS IN LIQUIDATION AT ESTIMATED FAIR VALUE                              June 30, 2003           December 31, 2002
                                                                                          -------------           -----------------
<S>                                                                                       <C>                       <C>
Receivables, net                                                                          $ 50,634,451              $ 59,434,985
Other trust assets, net                                                                     41,891,950                46,149,276
Fair value of expected cash flows from settlement                                                                   $  6,594,000
                                                                                          ------------              ------------
TOTAL                                                                                     $ 92,526,401              $112,178,261
                                                                                          ============              ============
</TABLE>

                                       12
<PAGE>

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 June 30, 2003 and June
30, 2002, the projected  monthly cash flows were  discounted at various rates to
reflect the Trust Assets at estimated fair value.

The Trust's  consolidated  financial statements have been prepared in accordance
with accounting  principles  generally  accepted in the United States of America
and in accordance with the liquidating basis of accounting.  During  preparation
of these  consolidated  financial  statements,  the  Trust is  required  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of  assets at
estimated fair value,  liquidation  liabilities,  resolution of disputed claims,
estimates  of  liquidating  costs to be  incurred,  resolution  of  current  and
potential  litigation and the fair value of and related disclosure of contingent
assets and liabilities. On an on-going basis the Trust evaluates and updates its
estimates and  assumptions.  The Trust bases its estimates  and  assumptions  on
historical  experience and on various other  assumptions that the Trust believes
are reasonable under the circumstances. The basis for making judgments about the
fair  values  of assets  and  liquidation  liabilities  are not  always  readily
apparent  from other  sources.  Actual  results may differ from these  estimates
under different assumptions or conditions.

         The Trust believes the following  critical  accounting  policies affect
the Trust's more  significant  estimates and assumptions used in the preparation
of our consolidated financial statements, which have been prepared in accordance
with the liquidation basis of accounting:

         o        Receivables are recorded at fair value,  which  represents our
                  discounted  expected future cash flows calculated based on the
                  following  factors:   receivable  payment  history,  financial
                  performance of debtor, and underlying collateral of the Trust.

         o        Other assets consist of real estate partnerships, interests in
                  operating  companies and other assets and are recorded at fair
                  value, which represents discounted expected future cash flows,
                  based on estimates and assumptions  regarding timing of sales,
                  timing of  payments,  projected  cash  flows  and  appropriate
                  discount factors.

         o        Payables,  accrued  liabilities and notes payable are recorded
                  based on expected cash outflows,  which require  estimates and
                  assumptions  relating  to  the  timing  of  the  payments  and
                  discount factors.

         o        Estimated   costs  to  complete   liquidation  and  litigation
                  represent  the  estimated  costs of operating the Trust to its
                  expected  termination on January 21, 2006,  discounted using a
                  4.25%  present  value  factor at June 30, 2003 and at December
                  31, 2002.

                  o        The costs include personnel, facilities,  Liquidating
                           Trustee and  Liquidating  Trust  Board  compensation,
                           professional  fees  and  litigation  costs,  and  are
                           estimated  based on assumptions  regarding the number
                           of  employees,  use  of  outside  professionals,  and
                           timing of cash flows.

         o        Contingent   Assets,   Litigation   Settlements   and  related
                  liabilities are recorded at the Trust's  estimated future cash
                  flows which  require a  significant  amount of  estimates  and
                  assumptions  regarding   collectibility,   probable  outcomes,
                  timing of cash flows and various other factors.


Item 4.    Controls and Procedures

Based on their  evaluation,  as of the end of the  period  covered  by this Form
10-Q, the Trust's  Liquidating Trustee (the Trust's principal executive officer)
and  Assistant  to the  Liquidating  Trustee (the  Trust's  principal  financial
officer) have concluded that they have reasonable assurance of the effectiveness
of the Trust's disclosure  controls and procedures (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934).

                                       13
<PAGE>

In connection with this evaluation, the Liquidating Trustee and the Assistant to
the Liquidating  Trustee identified no change in internal control over financial
reporting  that occurred  during the Trust's fiscal quarter ended June 30, 2003,
and that has materially affected,  or is reasonably likely to materially affect,
the Trust's internal control over financial reporting.


PART II     OTHER INFORMATION

Item 1.     Legal Proceedings

Crotts and Grabinski

         During  late  2001,  the Trust  commenced  two (2)  separate  adversary
proceedings in the Bankruptcy Court against William Crotts and Thomas Grabinski,
the Chief Executive Officer and General Counsel, respectively, of BFA during the
period  that the fraud  occurred.  The Trust  alleges  that  Messrs.  Crotts and
Grabinski  were the primary  architects of the fraud,  thereby  breaching  their
fiduciary duties to BFA and its investors.

         The Trust has successfully  defeated motions by Crotts and Grabinski to
dismiss the action, and since that time has engaged in extensive  discovery with
these parties. Trial for this action is scheduled to commence in early 2004.

Cook Charitable Trust Claim and Related Matters

         This claim arises out of the Sovereign Sherwood Crossing LLC venture in
which  Cook  Charitable   Trust  and  Sovereign  Realty  Advisors  ("SRA")  were
shareholders. In 1999, BFA exercised its power as trustee of the Cook Charitable
Trust  ("CCT") to arrange  for CCT to  contribute  $6.3  million in capital  and
substitute for a BFA  subsidiary as a shareholder  in the entity  purchasing the
Sherwood Crossing apartment  complex.  CCT alleges that, among other things, BFA
breached its fiduciary duties to CCT by investing virtually the entire corpus of
the trust in  Sovereign  Sherwood  Crossing and by  permitting  SRA to receive a
substantial  equity stake in the entity without  contributing  any capital.  CCT
brought an  arbitration  proceeding  against  SRA,  in which the Trust  produced
documents and witnesses. That case was settled in September 2002 with CCT buying
out SRA's interest for $4 million,  exclusive of  approximately  $1.1 million in
prior  distributions  to SRA.  CCT sought to recoup its  payments  to SRA in its
claim  against  BFA. The Trust has settled this claim and as of June 30, 2003 no
liability remains outstanding.

W.H.H.C.

         The Trust  holds a note  receivable  from  W.H.H.C.  in an  outstanding
amount of approximately $2 million dollars.  The Trust through this note holds a
mortgage on  approximately 70 acres of real property located in Maricopa County,
Arizona. Additionally, the Trust has recourse against one of the partners of the
partnership. All remaining partners have previously paid the Trust cash payments
in exchange for release of their of personal recourse liability.

         A lawsuit  has been filed in the  Superior  Court to  foreclose  on the
mortgage and obtain a judgment  against the  partnership  and the one  remaining
liable partner. No answers have yet been filed.

Chaparral Pines

         In 2002 a complaint  alleging  four (4)  separate  causes of action was
filed in the Superior  Court  against  BFA's former  limited  liability  company
member,  Chaparral  Pines,  LLC,  in  the  development  of the  Chaparral  Pines
property.  The complaints center around the mismanagement of the property by the
defendant.  Chaparral  Pines  filed a Motion to  dismiss  the  complaint.  After
briefings and argument,  the Superior  Court has allowed the Trust to proceed on
three of the four counts in the complaint.  Discovery has commenced.  Because of
the  substantial  nature of the Chaparral  Pines project,  the  defendants'  are
working to accumulate all the construction-related  documents.  Currently,  both
the Trust and defendants are in a document review process.

                                       14
<PAGE>

William Blair

         In an effort to avoid repaying $4 million dollars in debt to the Trust,
Mr. Blair has engaged in a number of legal maneuvers. In 2001, the Trust filed a
Notice of  Trustee's  Sale on the  collateral  securing  repayment on one of the
Notes  (the  "DESERT  DIAMOND  NOTE").  Mr.  Blair  then  filed a  petition  for
bankruptcy  relief under Chapter 11 to frustrate the  collection  efforts of the
Trust. Separately, Fidelity Title (the "TITLE COMPANY"), the Title Company hired
by Mr. Blair to transfer  title to portions of the Trust's  collateral  to third
party  buyers  without  lien  releases,  filed its own  lawsuit  in a  different
jurisdiction, seeking a variety of legal and equitable relief.

         With regard to the petition for bankruptcy relief filed by Mr. Blair in
the name of Desert Diamond, in 2002, the Trust successfully opposed a "cramdown"
plan of reorganization,  and then separately  succeeded in converting the Desert
Diamond  bankruptcy case to a liquidation under the provisions of Chapter 7. The
Trust  worked with the  Chapter 7 Trustee to sell the  remaining  real  property
collateral  to  a  third  party  purchaser.   That  sale  has  closed,   netting
approximately   $380,000   to  the  Trust.   The  Trust   previously   recovered
approximately  $100,000  from other  collection  efforts,  bringing  the Trust's
recovery to approximately $480,000.

         The Trust  separately  filed a lawsuit and obtained a judgment  against
Mr. Blair  individually  as a co-maker under the Desert Diamond Note.  That debt
has been reduced to judgment in an amount of $1.4 million dollars, plus interest
at 19% until paid in full.  With regards to Mr. Blair's second  obligation  (the
"CAMPBELL  NOTE") the Superior Court entered  judgment on March 19, 2003 against
both Mr. Blair and his Trust in the amount of $1,418,329.82 with interest at the
rate of 18% from August 13, 2001, until paid. Additionally the court awarded the
Trust legal fees in the amount of $54,931.00  and costs of $1,279.20.  The Trust
now has  successfully  litigated  and received  judgments on the two state court
actions and  defended  the Trust's  claims  against the actions of Mr.  Blair in
connection  with the  Desert  Diamond  bankruptcy.  This  bankruptcy  included a
proposed  cramdown  plan and an  adversary  lawsuit  to  modify  the  underlying
contract.  The assets of the  bankruptcy  estate  have been  liquidated  and the
proceeds from the sale of the assets distributed to the Trust.

         With  regard  to  the  remaining   action  against  the  Title  Company
defendants, the Bankruptcy Court recently granted the Title Company's Motion for
Reconsideration and reversed its prior ruling. The effect is that the Bankruptcy
Court has upheld an alleged  contract  modification  disallowed  by a  different
judge in earlier litigation.  If the Bankruptcy Court's ruling stands as issued,
the Trust would be required to release its liens on the remaining  real property
collateral  for a release  price of  $12,500/lot  (a total of  $275,000  for the
remaining  lots) The Title  Company  also has on file a Motion for Award of Fees
seeking an award of approximately $138,000 in fees and costs incurred. The Trust
is  currently  considering  filing  a  Motion  for  Reconsideration,  or in  the
alternative, an appeal.

Disputed Proofs of Claims

         A number of creditors filed proofs of claims in the Debtors' bankruptcy
proceedings. As of June 30, 2003 all of these claims have been resolved and paid
in full if any amount was due.


                                   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 August 13, 2003                        BFA LIQUIDATION TRUST

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

                                       15