# UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, DC 20549

# FORM 10-QSB

|[X] |  | Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
|--- |  | ------------------------------------------------------------------------------------

| |  | For the
quarterly period ended March 31, 2005
| |  | ---------------------------------------------

|[  ] |  | Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
|---- |  | -------------------------------------------------------------------------------------

For the transition period from _____
to  _____

Commission File Number: 000-31182

The Neptune Society, Inc.

(Exact name of small business issuer as specified in its charter)

|Florida
(State or Other Jurisdiction of Incorporation) |  | 59-2492929
(I.R.S. Employer Identification No.)
|------------------------------------------------------ |  | -----------------------------------------------

4312 Woodman Avenue, Third Floor Sherman Oaks, California91423
(Address of Principal Executive Offices)

(818) 953-9995
(Registrants Telephone Number, Including Area Code)

(Former Name, Former Address and
Former Fiscal Year, if Changed Since Last Report)

State the shares outstanding of each
of the Registrants classes of common equity, as of the latest practicable date:
May 6, 2005: 6,540,106 shares of common stock

Transitional Small Business Disclosure Format (Check One): Yes   [  ]
       No    [X]

---

# THE NEPTUNE SOCIETY, INC 
FORM 10  QSB 
March 31, 2005

TABLE OF CONTENTS

|                                     |                                                                                       |    |    | Page No.
|------------------------------------ | ------------------------------------------------------------------------------------- | -- | -- | --------
|Part IINTERIM FINANCIAL INFORMATION |                                                                                       |   
|ITEM 1.                              | FINANCIAL STATEMENTS                                                                  |    | 2 
|ITEM 2.                              | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |    | 12
|ITEM 3.                              | CONTROLS AND PROCEDURES                                                               |    | 18
|Part IIOTHER INFORMATION            |                                                                                       |   
|ITEM 1.                              | LEGAL PROCEEDINGS                                                                     |    | 19
|ITEM 2.                              | CHANGES IN SECURITIES                                                                 |    | 19
|ITEM 3.                              | DEFAULTS UPON SENIOR SECURITIES                                                       |    | 22
|ITEM 4.                              | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |    | 22
|ITEM 5.                              | OTHER INFORMATION                                                                     |    | 22
|ITEM 6.                              | EXHIBITS AND REPORTS ON FORM 8-K                                                      |    | 23
|SIGNATURES                           |                                                                                       | 27

i

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# FORWARD-LOOKING
STATEMENTS

We
use words like expects, believes, intends,
anticipates, plans, targets, projects or
estimates in this quarterly report. When used, these words and other, similar
words and phrases or statements that an event, action or result will,
may, could, or should occur, be taken or be achieved
identify forward-looking statements. Such forward-looking statements reflect
our current views with respect to future events and are subject to certain risks,
uncertainties and assumptions, including, but not limited to:

| |  |  | our
ability to manage an increasing number of sales offices and crematories,
| | - |  | ----------------------------------------------------------------------------

| |  |  | our
ability to retain key management personnel and to continue to attract and retain skilled
crematory management personnel,
| | - |  | ----------------------------------------------------------------------------------------------------------------------------

| |  |  | the
effect of state and federal regulations on the death care and pre-need cremation service
industry,
| | - |  | ------------------------------------------------------------------------------------------------------

| |  |  | changes
in the death rate or deceleration of the trend towards cremation,
| | - |  | -------------------------------------------------------------------------

| |  |  | availability
and cost of capital to finance our growth and meet our capital requirements,
| | - |  | -----------------------------------------------------------------------------------------

| |  |  | risk
related to a control position held by a single shareholder of our stock and such
shareholders notice related to taking us private through a short form merger,
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | our
ability to satisfy our debt obligations as they become due, and
| | - |  | -------------------------------------------------------------------

| |  |  | general
economic conditions that affect the death care and pre-need cremation service industry.
| | - |  | -----------------------------------------------------------------------------------------------

Should
one or more of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated, believed,
estimated or expected.

Our
management has included projections and estimates in this report, which are based
primarily on managements experience in the industry, assessments of our results of
operations, discussions and negotiations with third parties and a review of information
filed by our competitors with the Securities and Exchange Commission or otherwise publicly
available.

We caution readers not to place undue
reliance on any such forward-looking statements, which speak only as of the date made. We
disclaim any obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.

_________________

The Neptune Society,
Neptune Society and Trident Society are registered trademarks of
The Neptune Society, Inc. in the United States.

1

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|Item 1. |  | Financial Statements
|------- |  | --------------------

| | Consolidated
Balance Sheets 
March 31, 2005 (Unaudited) and December 31, 2004 (Audited)
| | ---------------------------------------------------------------------------------------

| | Consolidated
Statements of Operations (Unaudited)
                   Three Months Ended March 31, 2005
and 2004
| | ---------------------------------------------------------------------------------------------------------------

| | Consolidated
Statement of Stockholders' Equity
                   Three Months Ended March 31, 2005
| | ---------------------------------------------------------------------------------------------------

| | Consolidated
Statements of Cash Flows (Unaudited)
                   Three Months Ended March 31, 2005
and 2004
| | ---------------------------------------------------------------------------------------------------------------

| | Notes
to Consolidated Financial Statements (Unaudited)
| | ------------------------------------------------------

2

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THE NEPTUNE SOCIETY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                                                | March 31, 2005 | December 31, 2004
|--------------------------------------------------------------- | -------------- | -----------------
|                                                                |               
|
|ASSETS                                                          |                |                  
|Current assets:                                                 |               
|Cash and cash equivalents                                       |                | $   3,533,680    
|Accounts receivable, net of allowance of $250,000               |                | 3,171,028        
|Prepaid expenses and other current assets                       |                | 121,009          
|                                                                |               
|Total current assets                                            |                | 6,825,717        
|                                                                |               
|Accounts receivable, net - non current                          |                | 416,509          
|Property and equipment, net                                     |                | 346,677          
|Names and reputations                                           |                | 23,728,178       
|Deferred financing costs                                        |                | 313,068          
|Deferred charges and other assets                               |                | 6,402,892        
|                                                                |               
|Total assets                                                    |                | $ 38,033,041     
|                                                                |               
|LIABILITIES AND STOCKHOLDERS' EQUITY                            |               
|Current liabilities:                                            |               
|Accounts payable and accrued liabilities                        |                | $   2,826,213    
|Income tax payable                                              |                | 98,330           
|Current portion of deferred sales tax payable                   |                | 56,385           
|Current portion of long-term debt                               |                | 120,000          
|                                                                |               
|Total current liabilities                                       |                | 3,100,928        
|                                                                |               
|Notes payable                                                   |                | 9,240,000        
|Deferred sales tax                                              |                | 618,921          
|Deferred pre-need revenues                                      |                | 18,652,713       
|                                                                |               
|Total liabilities                                               |                | 31,612,562       
|                                                                |               
|Stockholders' equity:                                           |               
|Preferred stock, $.001 par value, 10,000,000 shares authorized, |               
|none issued or outstanding                                      |                | --               
|Common stock, $.001 par value, 75,000,000 shares authorized,    |               
|7,078,923 and 7,064,637 shares issued and                       |               
|6,540,106 and 7,064,637 shares outstanding                      |               
|at March 31, 2005 and December 31, 2004, respectively           |                | 7,079            
|Additional paid-in capital                                      |                | 33,759,849       
|Accumulated deficit                                             |                | (24,697,498      
|                                                                |               
|Subtotal                                                        |                | 9,069,430        
|Less: Treasury stock                                            |                | (2,648,951       
|                                                                |               
|Total stockholders' equity                                      |                | 6,420,479        
|                                                                |               
|Total liabilities and stockholders' equity                      |                | $ 38,033,041     
|                                                                |               

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

3

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THE NEPTUNE SOCIETY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

|                                                         | PERIOD ENDED
|-------------------------------------------------------- | ------------
|
|                                                         |             
|
|Revenue                                                  |             
|Services and merchandise                                 |             
|Management and finance fees                              |             
|                                                         |             
|Total revenue                                            |             
|                                                         |             
|Costs and expenses                                       |             
|                                                         |             
|Gross profit                                             |             
|                                                         |             
|Sales commissions and obtaining costs                    |             
|                                                         |             
|Operating Expenses                                       |             
|                                                         |             
|Salaries and payroll costs                               |             
|Compensation - stock based                               |             
|Premises rent and utilities                              |             
|Insurance                                                |             
|Communications                                           |             
|Other operating services and supplies                    |             
|Amortization and depreciation                            |             
|Professional fees                                        |             
|                                                         |             
|Total operating expenses                                 |             
|                                                         |             
|Operating profit                                         |             
|                                                         |             
|Other income (expense)                                   |             
|Loss on assets held for disposal                         |             
|Insurance marketing allowances                           |             
|Trust placement fees                                     |             
|Separation agreement expense                             |             
|Net investment income                                    |             
|Interest and finance expense                             |             
|                                                         |             
|Net income before income tax                             |             
|                                                         |             
|Income tax expense-current                               |             
|Income tax expense                                       |             
|                                                         |             
|Net income for the period                                |             
|                                                         |             
|Net income per share (basic)                             |             
|                                                         |             
|Net income per share (diluted)                           |             
|                                                         |             
|Weighted average numbers of shares outstanding (basic)   |             
|                                                         |             
|Weighted average numbers of shares outstanding (diluted) |             

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

4

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THE NEPTUNE SOCIETY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

|                            | Common Stock |           |   |        | 
|--------------------------- | ------------ | --------- | - | ------ | 
|                            |              |          
|
|                           
|Balance at December 31, 200 |              | 7,064,637 |   | 7,065  | 
|                           
|Net Income                  |              |           |   |        | 
|Shares issued for:          |             
|Cash                        |              | 14,286    |   | 14     | 
|Compensation related to     |             
|stock options               |              |           |   |        | 
|Shares, warrants and option |              |           |  
|acquired for Separation     |             
|agreement                   |              | (538,817  | ) |        | 
|                           
|Balance at March 31, 2005   |              | 6,540,106 |   | $7,079 | 
|                           

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

5

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THE NEPTUNE SOCIETY, INC. AND
SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                     | PERIOD ENDED
|---------------------------------------------------- | ------------
|
|                                                     |             
|
|Cash flows provided by (used in)                     |             
|                                                     |             
|Operating Activities                                 |             
|Net income for the period                            |             
|Adjustments to reconcile net income to               |             
|net cash provided by (used in) operating activities: |             
|Depreciation and amortization                        |             
|Accretion of discount on notes payable               |             
|Non-cash interest and amortization of deferred       |             
|finance costs                                        |             
|Loss on assets held for disposal                     |             
|Stock compensation                                   |             
|Deferred sales tax                                   |             
|Changes in operating assets and liabilities:         |             
|Accounts receivable                                  |             
|Prepaid expenses and other current assets            |             
|Income tax payable                                   |             
|Deferred charges and other assets                    |             
|Accounts payable and accrued liabilities             |             
|Deferred pre-need revenues                           |             
|                                                     |             
|Net cash provided by (used in) operating activities  |             
|                                                     |             
|Investing activities                                 |             
|Purchase of names and reputations                    |             
|Purchase of property and equipment                   |             
|                                                     |             
|Net cash used in investing activities                |             
|                                                     |             
|Financing activities                                 |             
|Proceeds of common stock issued                      |             
|Purchase of treasury shares                          |             
|Payments on notes payable                            |             
|Proceeds from issuance of debt, net                  |             
|                                                     |             
|Net cash provided by (used in) financing activities  |             
|                                                     |             
|Increase in cash during the period                   |             
|                                                     |             
|Cash, beginning of period                            |             
|                                                     |             
|Cash, end of period                                  |             
|                                                     |             

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

6

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|                                                                       | PERIOD ENDED
|---------------------------------------------------------------------- | ------------
|
|                                                                       |             
|
|Supplemental disclosure of cash flow information                       |             
|                                                                       |             
|Cash paid during the period for interest                               |             
|                                                                       |             
|Supplemental disclosure of non-cash investing and financing activities |             
|                                                                       |             
|Stock issued on conversion of debentures                               |             
|Stock issued for compensation                                          |             

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

7

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NEPTUNE SOCIETY, INC.
AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|(1) |  | Description
of Business and Operations
|--- |  | --------------------------------------

| | Basis
of Presentation
| | ---------------------

| | These
unaudited interim financial statements have been prepared in accordance with the
instructions to SEC Form 10  QSB. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant to such
instructions. These unaudited financial statements and notes thereto should be read in
conjunction with the audited financial statements and notes thereto included in the
Companys annual report on Form 10-KSB for the year ended December 31, 2004. Certain
amounts have been reclassified in order to be comparable with 2005 financial statement
presentation.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
the opinion of the Companys management, all adjustments considered necessary for a
fair presentation of these unaudited interim financial statements have been included and
all such adjustments are of a normal recurring nature. Operating results for the three
month period ended March 31, 2005 are not necessarily indicative of the results that can
be expected for the year ended December 31, 2005.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Stock
Based Compensation
| | ------------------------

| | Pro
forma information regarding the effect on operations as required by SFAS 123 and SFAS
148, has been determined as if the Company had accounted for its employee stock options
under the fair value method of that statement. Pro forma information using the
Black-Scholes method at the date of grant is based on the following assumptions:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Expected life -- 3 Years
Risk - free interest rate -- 1.5%
Dividend yield -- -0-
Volatility -- 21%
| | --------------------------------------------------------------------------------------------------

| | This
option valuation model requires input of highly subjective assumptions. Because the
Companys employee stock options have characteristics significantly different from
those of traded options, affect the fair value estimate, in managements opinion,
the existing model does not necessarily provide a reliable single measure of fair value
of its employee stock options.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
purpose of SFAS 123 pro forma disclosures, the estimated fair value of the options is
amortized to expense over the options vesting period. The companys pro forma
information is as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               
|-----------------------------------------------
|
|                                               
|Net income as reported                         
|                                               
|Compensation recognized under APB 25           
|                                               
|Approximate compensation expense under SFAS 123
|                                               
|Pro forma net income                           
|                                               

8

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|(2) |  | 13.5%
Secured Promissory Note Payable
|--- |  | -------------------------------------

| | The
Company entered into an Agreement dated February 2, 2005 pursuant to which it issued
Brooklyn Holdings LLC a $3,000,000 13.5% secured promissory note, due February 2, 2010.
The Note provides for monthly interest only payments through February 2, 2010 and the
full payment of the $3,000,000 principal due on February 2, 2010. In addition, an annual
loan fee of 3.5% on the unpaid principal balance is payable in arrears upon the payment
in full of the principal amount.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Under
the terms of the Agreement, the Company is restricted from entering into any encumbrances
in excess of $100,000 or purchase money mortgages in excess of $500,000. In addition, the
lender has a first priority lien on all assets of the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company used the proceeds to make payments under its Separation and Release Agreement
with its Chief Executive Officer, primarily through the purchase of treasury shares of
stock.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Capital
Stock Transactions
|--- |  | --------------------------

| | 14,286
shares were issued for proceeds of $11,286 or $.79 per share upon the exercise of
outstanding warrants.
| | --------------------------------------------------------------------------------------------------------------

| | 538,817
shares were repurchased for $1,616,451 or $3.00 per share under the terms of the Companys
Separation and Release Agreement with its Chief Executive Officer.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Warrants
exercisable to purchase 307,692 shares of common stock at $ .79 per share were
repurchased for $680,000 or $2.21 per share ($3.00 less the exercise price of $ .79)
under the terms of the Companys Separation and Release Agreement with its Chief
Executive Officer.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Options
exercisable to purchase 150,000 shares of common stock at $ .65 per share were
repurchased for $352,500 or $2.35 per share ($3.00 less the exercise price of $ .65)
under the terms of the Companys Separation and Release Agreement with its Chief
Executive Officer.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | New
Employment Agreements and Commitments
|--- |  | -----------------------------------------

| | On
February 7, 2005 the Company and its President and Chief Marketing Officer (President)              entered
into an amended employment agreement whereby the President agreed to           serve as
President and Chief Executive Officer. This agreement was further           amended
effective February 8, 2005 to provide for an annual salary of $222,000           and
executive benefits including health insurance and $48,000 annual housing
          allowance. The agreement also provides an annual bonus of up to a maximum of
          100% of annual compensation based on the achievement of yearly goals to be set
          by the Board of Directors. In addition, the agreement grants the President a
          one-
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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| | time
bonus equal to 1.5% of the increased value as defined in the agreement,           due
within ninety days of the termination date. The agreement continues until
          February 7, 2008 unless terminated by the President or the Company in
accordance           with the agreement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective
March 1, 2005 the Company and its Chief Financial Officer (CFO) entered into an amended
employment agreement providing for an annual salary of $200,000 and executive benefits
including health insurance and $12,000 annual housing allowance. The agreement also
provides an annual bonus of up to a maximum of 100% of annual compensation based on the
achievement of yearly goals to be set by the Board of Directors. In addition, the
agreement grants the CFO a one-time bonus equal to 1.5% of the increased value as defined
in the agreement, due within ninety days of the termination date. The agreement continues
until February 28, 2008 unless terminated by the CFO or the Company in accordance with
the agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective
March 1, 2005 the Company and its Vice President of Operations (VPO) entered into an
agreement superseding the previous employment agreement dated September 1, 2004 and
amended February 7, 2005, whereby the VPO agreed to serve as Chief Operating Officer.
This agreement provides for an annual salary of $170,000 during the first year of the
agreement, $176,800 during the second year, and $183,872 during the third year of the
agreement. The agreement also provides an annual bonus of up to a maximum of 60% of
annual compensation based on the achievement of yearly goals to be set by the Board of
Directors. In addition, the agreement grants the VPO a one-time bonus equal to .75% of
the increased value as defined in the agreement, due within ninety days of the
termination date. The agreement continues until February 28, 2008 unless terminated by
the VPO or the Company in accordance with the agreement.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective
March 1, 2005 the Company entered into an employment agreement with its National Sales
Manager (NSM) providing for an annual salary of $75,000 and additional bonus of $10 for
each pre-need contract sold. The NSM will also be provided with a vehicle paid for and
insured by the Company at a lease rate up to $1,000 per month. The agreement also
provides an annual bonus of up to a maximum of 10% of annual compensation based on the
achievement of yearly goals to be set by the Board of Directors. In addition, the
agreement grants the NSM a one-time bonus equal to .75% of the increased value as defined
in the agreement, due within ninety days of the termination date. The agreement continues
until February 28, 2008 unless terminated by the NSM or the Company in accordance with
the agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Separation
and Release Agreement
|--- |  | --------------------------------

| | On
February 2, 2005 the Company entered into a separation and release agreement with its
Chief Executive Officer (CEO). Under the terms of the agreement, the CEO
received a lump sum payment of $221,061 as sole consideration for termination of the
Employment Agreement and for general release of claims. During a six month transition
period, the CEO will serve as a consultant to the Company and will be entitled to
compensation and benefits at the level paid immediately prior to the separation date,
with the exception of the right to participate in any stock option or securities purchase
plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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| | In
addition, under the terms of the agreement, 538,817 shares of common stock, stock
options for 150,000 shares at an exercise price of $0.65 per share, and warrants for
307,692 shares at an exercise price of $0.79 per share that were beneficially owned by
the CEO and related parties were purchased from the various parties at a fair market
value of $3.00 per share for net proceeds of $2,649,000. No gain or loss was recognized
on this transaction.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

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|Item 2: |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations
|------- |  | -------------------------------------------------------------------------------------

# Overview

We,
The Neptune Society, Inc., are the holding company for the Neptune Society of America,
Inc., a California corporation. Neptune Society of America, Inc. is the holding company
for Neptune Management Corp., Heritage Alternatives, Inc. and Trident Society, Inc., which
are engaged in marketing and administering Pre-Need and At-Need cremation services in
Arizona, California, Colorado, Florida, Illinois, Missouri, Nevada, New York, Oregon,
Texas and Washington. We also operate crematories and licensed holding facilities in
California and Washington. We provide cremation services in the areas in which we own
crematories. We use the services of licensed third-party crematories and holding
facilities in locations in which we do not own facilities.

Our
service programs include:

| |  |  | Pre-need
programs that allow our clients to pre-plan and pre-pay for cremation services; and
| | - |  | --------------------------------------------------------------------------------------------

| |  |  | At-need
programs in which we arrange cremation services at the time of need.
| | - |  | ----------------------------------------------------------------------------

We
compete in the cremation services sector of the death care service industry. Our primary
business focus is on marketing our pre-need cremation services using an integrated
promotion and professional sales strategy. We operate our locations under branded names,
The Neptune Society, The Trident Society, Neptune Cremation
Services, and Neptune Society, A For Profit Corporation, and offer only
services and products related to cremation services. We do not offer traditional funeral
services and we do not own or operate cemeteries. We do not intend to evolve into a
traditional funeral services company and do not intend to compete directly with the larger
competitors that provide traditional funeral and burial services.

# Results of Operations

Three months ended March
31, 2005 (unaudited) compared with the three months ended March 31, 2004 (unaudited)

The following discussion compares our
results of operations for the three months ended March 31, 2005 (Q1-2005) to our results
of operations for the three months ended March 31, 2004 (Q1-2004)

Revenues

Total
revenue was $6,924,000 for the first quarter of 2005, up 28% from the $5,399,000 reported
in the first quarter of  2004.

Revenue
from the sale of pre-need contracts led the way, increasing by 32% from $3,587,000 in the
first quarter of 2004 to $4,726,000 in the first quarter of 2005. Pre-need sales

12

---

volume was up 41% for the period,
increasing from 3,547 units sold to 5,018 units sold. The average revenue per unit
declined by 7%, largely as a result of a shift in volume by region. The impact of this
shift should moderate over the remainder of the calendar year.

Revenue
from cremation services was up by 16%, from $1,647,000 in the first quarter of 2004 to
$1,911,000 in the first quarter of 2005. This increase was fueled primarily by higher case
volume which was up 10% from the prior year. Revenue per case was also up by 6%, mostly as
a result of increases in cases arranged at the time of need.

Management
and finance fee income was $287,000 in the first quarter of 2005, up from $165,000 in the
first quarter of 2004. Finance fees are up as a result of increased pre-need volume and
management fees reflect recurring marketing allowances on group life insurance in our
California pre-need trusts.

Costs and Expenses

The
most significant component of direct costs and expenses relates to the providing of
at-need and fulfillment cremation services. Also included in direct costs and expenses are
the cost of merchandise delivered at the time pre-need contracts are sold including the
cost of travel premiums. Total direct costs and expenses were up by $305,000, to
$1,333,000 for the quarter ended March 31, 2005.

Direct
costs associated with pre-need sales increased from $203,000 for the first three months of
2004 to $256,000 for the first three months of 2005. This increase is consistent with the
increased volume in pre-need contracts sold.

Direct
costs associated with at-need and fulfillment cremation services were up $252,000, from
$825,000 in the first three months of 2004 to $1,077,000 in the first three months of
2005. This increase is partially explained by increased case volume. Direct costs vary by
geographic location. The costs associated with the first quarter of 2004 were unusually
low and the costs associated with the first quarter of 2005 are more consistent with our
normal experience.

Sales Commissions and
Obtaining Costs

Sales
commissions and obtaining costs represent the cost of acquiring our pre-need contracts and
the costs associated with marketing our at-need services. These costs include sales
commissions and advertising costs. Overall, selling and obtaining costs increased by
$627,000 from $1,776,000 for the period ended March 31, 2004 to $2,403,000 for the period
ended March 31, 2005. This 35% increase is entirely consistent with the 41% increase in
pre-need sales volume.

Operating Expenses

Total
operating expenses increased by $374,000 to $2,551,000 for the first three months of 2005.
The net increase of 17% from the same period in 2004 was the result of our continued
growth initiatives including the opening of three new locations during the first quarter
of 2005.

13

---

Operating
expenses as a percentage of total revenue decreased from 40% in the first quarter of 2004
to 37% in the first quarter of 2005.

Operating Profit

Operating
profit was $637,000 for the first quarter of 2005, up 52% from $418,000 for the first
quarter of 2004. The increase in profit is attributed to the increase in pre-need contract
volume and case volume associated with at-need and fulfillments.

Other revenue and expenses

The
company incurred a net expense of $435,000 in other income and expense for the first three
months of 2005 compared with net other income of $1,146,000 in the first three months of
2004. The first quarter of 2005 includes $221,000 associated with the buy-out of the
management contract for the Companys former CEO. First quarter of 2004 included a
loss of $593,000 associated with the sale of our Iowa operations and income of $2,041,000
in non-recurring marketing allowances and trust placement fees associated with the trust
conversions executed during the quarter.

# Liquidity and Capital
Resources

Cash
and cash equivalents totaled $3,534,000 at March 31, 2005, up from $3,422,000 at December
31, 2004, an increase of $112,000.

We
used $74,000 in net cash in operating activities. This section should be read in
conjunction with our consolidated financial statements included under Item 1. Financial
Statements, and in particular the Consolidated Statements of Cash Flows. The section
titled Cash Flows Provided By (Used For) Operating Activities for the three months ended
March 31, 2005 reconciles the net income of approximately $188,000 for the three months
ended March 31, 2005 to the net cash used in operating activities for the same period of
$74,000.

Another
$103,000 was used in investing activities. We purchased property and equipment and names
and reputations. This compares to $32,000 in acquisition expenditures for the first three
months of 2004.

$288,000
was provided from financing activities. In the first quarter of 2005, we entered into an
agreement providing $3,000,000 under the terms of a 13.5% secured promissory note dated
February 2, 2005. The proceeds of the note were used for general working capital and to
make payments under the Separation and Release Agreement with the Companys former
CEO. This included the purchase of treasury shares for $2,649,000 or $3.00 per share and
payments of $221,000 made under the terms of the agreement.

At
March 31, 2005 we had current assets of approximately $6,826,000 offset by current
liabilities of $3,101,000, for net working capital of approximately $3,725,000.

14

---

Long-term Obligations

At
March 31, 2005 our material long-term debt consisted of the following:

| |  |  | 13.5%
Secured Promissory Note with a single scheduled principal repayment of $3,000,000 on
February 2, 2010 and annual loan fee of 3.5% payable upon the payment in full of the
principal amount,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | 11%
Convertible Debentures with a single scheduled principal repayment of $6,000,000 on June
18, 2014, and
| | - |  | ----------------------------------------------------------------------------------------------------------

| |  |  | Employee
settlement note with scheduled payments of $240,000 in the period April 1, 2006 to March
31, 2008.
| | - |  | -----------------------------------------------------------------------------------------------------------

Payments
required under our long-term debt obligations are approximately $120,000 during the next
twelve months. We are also required to make interest payments under these long term
obligations of approximately $89,000 per month during the next twelve months. We believe
that we will have sufficient cash flow from operations to satisfy our cash requirements
for the next twelve months and for the foreseeable future.

We
intend to finance any acquisitions or start-ups in 2005 from operational cash flow, or a
combination of operational cash flow, cash on hand and vendor financing. During 2005, we
have opened two locations expanding our Trident brand into San Jose and Walnut Creek,
California, and Las Vegas, Nevada and St. Louis, Missouri locations using our Neptune
brand. Expansion into new locations is subject to a number of challenges, most
significantly the time required to obtain the appropriate licenses and our ability to
achieve target volumes in a start-up mode. By advance planning, we are able to mitigate
the costs associated with these locations incurred prior to opening. Our ability to
achieve target volumes is driven by competitive factors, the success of our lead
generation programs and our ability to acquire and train quality sales and service
personnel in the local market. Some of this can be mitigated by market research and
testing but ultimately our success is dependant on our ability to execute.

We
have no material commitments for capital expenditures at this time.

Our
only internal sources of liquid assets are cash flows from operations. We have no standby
line of credit at this time. We have no external sources of liquid assets.

# Inflation

We
do not believe that inflation has had a significant impact on our consolidated results of
operations or financial condition.

# Off Balance Sheet
Arrangements

Other
than our trust funds described below, we have no off balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our business, financial
condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to investors.

15

---

| | Trust
Funds
| | -----------

In
all States in which we sell pre-need arrangements, the Company is required to place in
trust the costs of providing fulfillment cremation services (Trust Funds). The
trustors of such trusts are the purchasers of the pre-need arrangements. The Company does
not have title to nor control of the trust fund or escrow corpus and, therefore, such
amounts are not reflected in the accompanying consolidated financial statements. Earnings
on the trust funds and escrow deposits generally accumulate in the trust fund or escrow
until the cremation service is performed and the funds are released to the Company. The
earnings on the trust funds are provided to the Company to offset inflation in costs to
provide the cremation services. Accordingly, the Company recognizes such earnings as
additional revenue at the time the cremation service is performed and the funds are
released to the Company. However, California and one grandfathered Florida
trust allow the Company to withdraw nonrefundable fees from the trust on an annual basis
in consideration for administering the trust funds. California allows a maximum fee of
four percent of beginning year trust fund corpus, subject to the trust funds annual
performance. The Florida trust fund allows the Company to withdraw the annual earnings of
the fund as a fee, subject to meeting certain funding requirements. Such fees are
recognized currently as management fees in the accompanying consolidated statements of
operations.

The
fair value of pre-need trust funds and the face value of insurance policies are
approximately $52 million at March 31, 2005. All trust funds are invested in accordance
with individual state regulations.

# Critical Accounting
Policies

| | Revenue
Recognition
| | -------------------

Pre-need
cremation arrangements  From January 1, 2000 to December 31, 2002 (with the
exception of a four month period in the second and third quarters of 2001), our pre-need
merchandise delivery and handling procedures in virtually all locations did not meet the
test for revenue recognition at the point of sale. Rather, revenue related to the
merchandise component of pre-need arrangements was generally recorded as deferred pre-need
revenue. Commissions paid with respect to obtaining pre-need arrangements were also
deferred. Both the revenue received and costs paid by us during the life of the contract
were accordingly not taken into account until the cremation services were actually
performed. At that point, these deferred amounts, together with the previously trusted
funds for the cremation service, were matched and recorded in operations in accordance
with generally accepted accounting principles. Over the next estimated 12 years we expect
to bring into income deferred revenue of approximately $18.7 million and deferred expenses
of $6.1 (without any cash receipts or disbursements) related to prearrangements made
during this period, over and above trust funds or insurance policy proceeds (cash) on
actual provision of the cremation services, as discussed above.

Effective
January 1, 2003, we implemented a full merchandise delivery policy for new pre-need
arrangement contracts sold in all locations, except in the states of Florida, Illinois and

16

---

New York. In all states, except
Florida, Illinois and New York, we now irrevocably deliver to the purchaser at the time
of sale all the merchandise purchased in connection with the contract. The effect of this
revised business practice is that the selling price of all merchandise sold in connection
with pre-need contracts, together with administrative charges for set-up of the contract,
are recognized as revenue in accordance with generally accepted accounting policies at
the time the contract is entered into and the merchandise is delivered. Also, all sales
commissions paid relating to the obtaining of such contracts are recognized as expense
when the revenue associated with such contract is recognized, rather than being deferred
until fulfillment (the time the cremation services are performed).

The
portion of the pre-need contract relating to the cremation services to be performed in the
future continues to be paid into trust to support our obligations in accordance with
applicable state regulations and is released to the Company once the cremation services
are performed. These receipts are not recognized in income until earned through the
provision of the actual cremation.

For
the majority of prearrangements made by our customers after January 1, 2003, there is no
element of deferred revenue or expenses to be taken into income. Accordingly, over the
next 10-12 years as the pre-January 1, 2003 arrangements are serviced, the amount of
revenue recognized (but not cash received) for at-need services on fulfillment will
decrease steadily as more and more of our cremations are derived from the post January 1,
2003 pool. For these customers, the revenue related to merchandise delivered and
administrative services provided will already have been recognized at the time of sale,
with only the cash received from trust/insurance to be recognized at the time of the
cremation services. The cash expected to be received from trust/insurance is expected to
be sufficient to meet our costs of the services, as well as our existing profit margin.

At-need cremation services
 all merchandise and services revenue is recognized at the time services are
provided.

Installment sales  we
recognize an account receivable for the unpaid amount of the pre-need arrangement at the
time of sale, to the extent the installment payments will not be required to be trusted.

Travel plan sales  we
recognize revenue related to the sale of travel plans at the time of sale. We also
concurrently recognize the premium cost to the third party carrier obligated to provide
the services if required.

Trust placement fees the Company has earned revenue of approximately $706,000 during 2004 in exchange for
transfer of certain of its trust assets to a different asset manager. Management
considered the accounting for the fees received from this transfer and concluded that
revenue recognition upon completion of the transfer, as opposed to deferral and
recognition upon performance of the cremation service, was appropriate. The fees were not
in exchange for any future services to be performed by the company, their payment did not
represent a sacrifice of future economic benefits to be derived from the trusts, reserves
for cancellations were practicably determinable, and the transfer represented a
culmination of an earnings process. Accordingly Neptune has met the revenue recognition
criteria of Statement on Financial

17

---

Accounting Concepts No. 5
Recognition and Measurement in Financial Statements of Business Enterprises, and the SEC
Staff Accounting Bulletin No. 104, Revenue Recognition.

The
Company also earns marketing allowances on the purchase of life insurance policies by our
trustees and when acquired by our customers directly as a replacement of their trust
assets. Such marketing allowances are earned upon the sale and will continue to be earned
in the future, augmenting the management fees which Neptune has earned in the past.

Recent Accounting
Pronouncements

Goodwill (Names and
Reputations)

In
July 2001 the Financial Accounting Standards Board issued Statement No. 142,
Goodwill and other Intangible Assets, which requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but instead tested
for impairment at least annually. We adopted FASB 142 effective January 1, 2002. The asset
Names and Reputations meets the definition of goodwill under FASB 142.

On
implementation of FASB 142, management determined that the fair value of the Company as a
single reporting unit under FASB 142 exceeded the carrying value of the net assets,
including goodwill. We completed the required annual evaluation of the implied value of
our goodwill on December 31, 2003, and determined that there was no impairment in value.

The
carrying value of goodwill (Names and Reputations) constitutes the single most significant
asset of the Company. At March 31, 2005 the carrying value of the asset was $23,728,000
(December 31, 2004: $23,693,000). The increase of $35,000 represents contingent
consideration paid during the quarter ended March 31, 2005 on one of our previous
acquisitions. No amount of amortization was required in the opinion of management for the
quarter ended March 31, 2005 as the implied value of goodwill exceeded its carrying value.

For
the 2001 and prior fiscal years, the Company amortized Names and Reputations over a period
of 20 years from acquisition, resulting in amortization expense of approximately
$1,500,000 annually. There was no amortization recorded in the quarters ended March 31,
2004 or 2005 as the implied value of goodwill exceeded its carrying value.

With
the requirement to adopt FASB 142, the Company will no longer amortize its acquired
goodwill on a systematic basis. Rather it will test the value of Goodwill annually, and if
it is determined that goodwill is impaired, the carrying value of Names and Reputations
will be written down to its implied value by a charge to operations in the year that such
determination is made.

|Item 3: |  | Controls and Procedures
|------- |  | -----------------------

Evaluation
of Disclosure Controls and Procedures.  Our Chief Executive Officer and Chief
Financial Officer have evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Securities
Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly
report (the Evaluation Date). Based on such evaluation, such officers have
concluded that, as of the

18

---

Evaluation Date, our disclosure
controls and procedures are effective in alerting them on a timely basis to material
information relating to the Company required to be included in its reports filed or
submitted under the Securities Exchange Act of 1934, as amended.

Changes
in Internal Controls over Financial Reporting.  During the most recent fiscal
quarter, there have not been any significant changes in our internal controls over
financial reporting or in other factors that have materially affected, or are reasonably
likely to materially affect, our internal controls over financial reporting.

# PART II: OTHER
INFORMATION

|Item 1. |  | Legal Proceedings
|------- |  | -----------------

Not
applicable.

|Item 2. |  | Changes In Securities
|------- |  | ---------------------

| | Recent
Sales of Unregistered Securities
| | ---------------------------------------

Set
forth below is a description of unregistered securities issued by the Company during the
three months ended March 31, 2005.

| |  |  | On
January 21, 2005 we issued 14,286 shares to CapEx, L.P., under the terms of their
warrant. The securities were issued in a private transaction pursuant to an exemption
from the registration requirements available under Section 4(2) of the Securities Act of
1933, as amended.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | On
February 2, 2005, we issued a Secured Promissory Note in the principal amount of
$3,000,000 to Brooklyn Holdings LLC, a Nevis limited liability company. The note was
issued in a private transaction pursuant to Section 4(2) of the Securities Act of 1933,
as amended.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Additional
information regarding the Companys issuance of unregistered securities during the
past three fiscal years is contained in the Companys annual reports on Form 10-KSB
for the year ended December 31, 2004 under Item 5. Market for Common Equity and
Related Shareholder Matters  Recent Sale of Unregistered Securities filed with
the United States Securities and Exchange Commission. The information contained under Item
5. Market for Common Equity and Related Shareholder Matters  Recent Sale of
Unregistered Securities of the Companys annual report on Form 10-KSB for the
year ended December 31, 2004, is hereby incorporated by reference to this report.

| | Sales
of Unregistered Securities Subsequent to March 31, 2005
| | -------------------------------------------------------------

On
April 25, 2005, Bow River Capital Fund, LP and Bow River Capital Fund II, LP tendered a
notice of exercise and photocopies of warrant certificates representing 194,445 and
472,222 shares of common stock. In connection with the exercise notice, Bow River Capital

19

---

Fund, LP provided notice and claim
for the issuance of 49,680 shares of common stock and Bow River Capital Fund II, LP
provided notice and claim for the issuance of 120,650 shares of common stock, in each
case on a cashless exercise basis calculated based on the current market price of $4.55
on April 22, 2005 (average of the high and low bid prices) net of the $3.00 exercise
price. The issuer is evaluating whether the exercise constituted a valid exercise of the
warrants as of April 25, 2005. On April 28, 2005, Bow River Capital Fund, LP and Bow
River Capital Fund II, LP tendered the original warrant certificates. Assuming that the
exercise is valid, Bow River Capital Fund, LP and Bow River Capital Fund II, LP would
continue to hold warrants exercisable to acquire 48,611 and 118,055 shares, respectively.

On
April 25, 2005, CapEx, LP tendered a notice of exercise and photocopies of three warrant
certificates representing 15,000, 15,000 and 1,000,000 shares of common stock,
respectively, each on a cashless exercise basis. In connection with the respective
exercise notices, CapEx provided notice and claim for the issuance of 4,773 shares of
common stock each for the two warrants representing 15,000 share of common stock, each
case on a cashless exercise basis calculated based on the current market price of $4.40 on
April 22, 2005 (closing price) net of the $3.00 exercise price, and 340,659 shares of
common stock for the warrant representing 1,000,000 shares of common stock on a cashless
exercise basis based on the current market price of $4.55 on April 22, 2005 (average of
the high and low bid prices) net of the $3.00 exercise price. The issuer is evaluating
whether the exercise constituted a valid exercise of the warrants as of April 25, 2005.

If
issued, the shares will be issued to accredited investors in a private transaction
pursuant to Section 4(2) of the Securities Act of 1933, as amended

| | Purchases
of Equity Securities by the Small Business Issuer and Affiliates
| | --------------------------------------------------------------------------

The following table sets forth
purchases of equity securities by Neptune Society on February 2, 2005.

|                
|----------------
|
|                
|February 2, 2005
|                

| | (1) |  | On
February 2, 2005, Neptune Society and its subsidiaries entered into a
          separation and release agreement effective as of February 2, 2005, with Marco
          Markin, our former Chief Executive Officer, Chairman and a member of the Board
          of Directors of Neptune Society (Markin); Karla Markin, spouse of
          Marco Markin; and 570421 B.C. Ltd., a British Columbia corporation (B.C.
          Limited). Under the terms of the Separation Agreement, Neptune Society
          agreed to purchase the following securities of Neptune Society beneficially
          owned by each of Markin, Karla Markin and B.C. Limited: Markin and Karla Markin
          beneficially own 231,125 common shares of The Neptune Society Inc.; Markin
holds           options exercisable to acquire an additional 150,000 shares of common
stock of           The Neptune Society Inc. at $0.65 per share; and B.C. Limited, a
British           Columbia corporation, owns 307,692 shares of common stock of The
Neptune Society           Inc. and warrants exercisable to acquire an additional 307,692
shares of common           stock of The Neptune Society Inc. at $0.79 per share
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

---

| | (collectively,
the           Purchased Securities). The parties agreed that (a) Neptune
Society           would purchase the Purchased Securities and (b) the parties would
mutually           release each other from any and all claims arising out of or in
connection with           the Purchased Securities. Neptune Society paid (i) Markin a
total of $722,625           for shares and options delivered on the Separation Date, (ii)
Karla Markin a           total of $323,250 for shares delivered on the Separation Date,
and (iii) B.C.           Limited a total of $1,603,076 for shares and warrants delivered
on the           Separation Date. Each of Markin, Karla Markin and B.C. Limited provided
to           Neptune Society general releases from claims related to the Purchased
          Securities. Markin also provided to Neptune Society and the Neptune
Subsidiaries           general releases from claims related to the Employment Agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On
February 17, 2005, BG Capital Group Ltd., a Bahamian corporation, Brooklyn Holdings LLC, a
Nevis limited liability company, and Robert Genovese (collectively, the BG Capital
Group) filed an amended Schedule 13G with the Securities and Exchange Commission
reporting that it beneficially owned 5,360,589 shares of our common stock or approximately
82.14% of our issued and outstanding voting stock based on the number of shares of Common
Stock (6,525,820 shares) we reported as outstanding on November 12, 2004 in our Quarterly
Report on Form 10-QSB for the period ended September 30, 2004 less 538,817 shares of our
common stock that were repurchased and cancelled in connection with a Separation and
Release Agreement dated February 2, 2005. According to information disclosed in the
amended Schedule 13G submitted by the BG Capital Group, the BG Capital Group is
considering whether to make a proposal to acquire substantially all of our assets. The BG
Capital Group further disclosed that the terms of such proposal have not been determined
and are dependent on various factors, including income taxes, which have not yet been
fully analyzed, and that it currently does not intend to cause us to be liquidated
following such transaction, if such transaction is consummated.

On
April 26, 2005, the BG Capital Group filed a Schedule 13e-3 with the Securities and
Exchange Commission reporting information in connection with (a) open market or privately
negotiated purchases of shares of common stock of Neptune Society by the BG Capital Group,
(b) the contribution by the BG Capital Group of all shares of Neptunes common stock
to a newly formed holding company (Holdco), (c) the contribution by Holdco
contemplated of all shares of Neptunes common stock to a newly formed Florida
corporation (Newco), and (d) the contemplated short-form merger (the
Merger) of Neptune Society with and into Newco, with Newco as the survivor
corporation pursuant to a Plan of Merger to be adopted by the Board of Directors of
Holdco, whereby each shareholder (other than Holdco, the sole shareholder of Newco, which
is seeking to acquire Neptune Society) would receive cash in exchange for each share of
Neptune Society common stock owned at the time of the Merger. The BG Capital Group
reported that it held in the aggregate approximately 88.18% of Neptune Societys
outstanding common stock and intend to acquire additional shares in order to achieve
ownership of at least 90% of such stock, which would allow the BG Capital Group to cause
the Merger of Neptune Society into Newco without any vote or meeting of Neptune
Societys shareholders. In order to acquire such additional stock, the BG Capital
Group intend to purchase shares of Neptune Societys common stock in the open market
or in privately negotiated transactions at prices to be determined but which may exceed
the price ultimately determined by the BG Capital Group to be the amount paid in the
Merger. The BG Capital Group reported that they are currently in negotiations with certain
shareholders.

The
BG Capital Group reported the following transactions in the past two years:

21

---

|                     
|---------------------
|
|                     
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|Brooklyn Holdings LLC
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.
|BG Capital Group Ltd.

| | (1) |  | For
purposes of calculating the average purchase price during the applicable fiscal quarter,
the Filing Persons have                   used the average of the daily closing prices of
Neptune's common stock during such quarter. For purposes of                   calculating
the average price for the most recent quarter, the Filing Persons have used the average
of the daily                   closing prices from April 1, 2005 through April 21, 2005.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) |  | These
shares were issued by the Subject Company to Brooklyn Holdings LLC as part of a
commitment fee in connection                   with the execution of a Debenture Purchase
Agreement by Brooklyn Holdings LLC.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 3. |  | Defaults Upon Senior Securities
|------- |  | -------------------------------

Not
applicable.

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

No
matters were submitted to a vote of security holders during the quarter ended March 31,
2005.

|Item 5. |  | Other Information
|------- |  | -----------------

The
following events were previously reported on Form 8-K.

Effective
February 15, 2005, Bernard C. Darre resigned from Neptune Societys Board of
Directors

22

---

On
March 2, 2005, the Board of Directors of Neptune Society appointed Brent Lokash as
chairman of the Board of Directors of Neptune Society.

On
April 12, 2005, Neptune Society entered into employment agreements with the following
executive officers: Jerry Norman, President and Chief Executive Officer; Daniel Solberg,
Chief Financial Officer, Secretary and Treasurer; James Ford, Chief Operating Officer; and
Gary Harris, the National Sales Manager of the Company.

On
April 26, 2005, Marco Markin resigned as a member of the Board of Directors of Neptune
Society.

|Item 6. |  | Exhibits and Reports On Form 8-K
|------- |  | --------------------------------

|Exhibit      Number | Description
|------------------- | -----------
|
|3                   | .1(1)      
|
|3.2                 | (1)        
|
|3.3                 | (1)        
|
|3.4                 | (1)        
|
|3.5                 | (1)        
|
|3.6                 | (6)        
|
|3.7                 | (1)        
|
|10.1                | (2)        
|
|10.2                | (2)        
|
|10.3                | (2)        
|
|10.4                | (2)        
|
|10.5                | (3)        
|
|10.6                | (3)        
|
|10.7                | (3)        
|
|10.8                | (3)        
|

23

---

|Exhibit      Number | Description
|------------------- | -----------
|                    |            
|10.9                | (3)        
|
|10.10               | (4)        
|
|10.11               | (4)        
|
|10.12               | (4)        
|
|10.13               | (4)        
|
|10.14               | (4)        
|
|10.15               | (5)        
|
|10.16               | (5)        
|
|10.17               | (5)        
|
|10.18               | (5)        
|
|10.19               | (5)        
|
|10.20               | (5)        
|
|10.21               | (6)        
|
|10.22               | (7)        
|
|10.23               | (7)        
|
|10.24               | (7)        
|
|10.25               | (8)        
|
|10.26               | (8)        
|
|10.27               | (8)        
|

24

---

|Exhibit      Number | Description
|------------------- | -----------
|                    |            
|10.28               | (8)        
|
|10.29               | (8)        
|
|10.30               | (8)        
|
|10.31               | (8)        
|
|10.32               | (8)        
|
|10.33               | (8)        
|
|10.34               | (8)        
|
|10.35               | (8)        
|
|10.36               | (9)        
|
|10.37               | (9)        
|
|10.38               | (9)        
|
|10.39               | (9)        
|
|10.40               | (9)        
|
|10.41               | (9)        
|
|10.42               | (9)        
|
|10.43               | (9)        
|
|10.44               | (9)        
|
|10.45               | (9)        
|
|10.46               | (9)        
|

25

---

|Exhibit      Number | Description
|------------------- | -----------
|                    |            
|10.47               | (9)        
|
|10.48               | (9)        
|
|10.49               | (12)       
|
|10.50               | (10)       
|
|10.51               | (10)       
|
|10.52               | (11)       
|
|10.53               | (11)       
|
|10.54               | (11)       
|
|10.55               | (11)       
|
|31.1                |            
|
|31.2                |            
|
|32.1                |            
|
|32.2                |            
|
|99.1                |            

_________________

|(1) |  | Previously
filed on February 12, 2001.
|--- |  | --------------------------------------

|(2) |  | Previously
filed as an exhibit to Form 10-Q (for the Period ended June 30, 2001)           on August
14, 2001.
|--- |  | --------------------------------------------------------------------------------------------------------------

|(3) |  | Previously
filed as an exhibit to Form 10-K (for the           period ended December 31, 2001) on
April 2, 2002.
|--- |  | ----------------------------------------------------------------------------------------------------------------

|(4) |  | Previously
filed on Form           10-K (for the period ended December 31, 2002) on May 1, 2003.
|--- |  | ------------------------------------------------------------------------------------------------

|(5) |  | Previously
          filed on Form 10-QSB (for the period ended June 30, 2003) on August 19, 2003.
|--- |  | --------------------------------------------------------------------------------------------------

|(6) |  | Previously
filed on Form 10-KSB (for the period ended December 31, 2003) on           March 30,
2004.
|--- |  | -----------------------------------------------------------------------------------------------------

|(7) |  | Previously
filed on Form 10-QSB (for the period ended March           31, 2004) on May 21, 2004.
|--- |  | ------------------------------------------------------------------------------------------------

|(8) |  | Previously
filed on Form 10-QSB (for the period           ended June 30, 2004) on August 13, 2004.
|--- |  | --------------------------------------------------------------------------------------------------

|(9) |  | Previously
filed on Form 8-K on February 8, 2005
|--- |  | ------------------------------------------------

|(10) |  | Previously
filed on Form           10-KSB (for the period ended December 31, 2004) on March 31, 2005
|---- |  | ----------------------------------------------------------------------------------------------------

|(11) |  | Previously
filed on Form 8-K on April 19, 2005
|---- |  | ----------------------------------------------

|(12) |  | Previously
filed on Form S-8           on May 6, 2005
|---- |  | -----------------------------------------------------

# Current Reports on Form
8-K

We filed current reports on Form 8-K
on February 8, 2005, February 22, 2005, March 4, 2005, April 19, 2005 and April 29, 2005.

26

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# 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 hereunto duly authorized.

| | THE NEPTUNE SOCIETY, INC.
(Registrant)
| | --------------------------------------

|Date:   May 16, 2005 | By:   /s/ Jerry Norman
       Jerry Norman
       Chief Executive Officer
|-------------------- | -------------------------------------------------------------------------

|Date:   May 16, 2005 | By:  /s/ Daniel Solberg
       Daniel Solberg
       Chief Financial Officer
|-------------------- | ----------------------------------------------------------------------------

27

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