UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

         For the quarterly period ended September 30, 2002

                                       OR

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

         For the transition period from _______________ to __________________

                        Commission file number: 000-30480



                            The Neptune Society, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              Florida                                  59-2492929
-----------------------------------        -------------------------------------
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
 of incorporation or organization)

   4312 Woodman Avenue, 3rd Floor,
   Sherman Oaks, California 91505                         91423
-----------------------------------        -------------------------------------
       (Address of principal                            (Zip Code)
         executive offices)


       Registrant's telephone number, including area code: (818) 953-9995

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

4,157,090 shares of Common Stock,  $0.001 par value,  outstanding as of November
7, 2002.


<PAGE>


                            The Neptune Society, Inc.
                                    Form 10-Q
                                      Index

                                                                            Page

PART 1  --  FINANCIAL INFORMATION..............................................1

Item 1: Financial Statements...................................................1

Item 2: Management's  Discussion and Analysis of Financial Condition
        and Results of Operations..............................................9

Item 3:  Quantitative and Qualitative Disclosures About Market Risk...........19

Item 4.  Controls and Procedures..............................................19

PART II  --  OTHER INFORMATION................................................19

Item 1.  Legal Proceedings....................................................19

Item 2.  Changes in Securities................................................20

Item 3.  Defaults Upon Senior Securities......................................20

Item 4.  Submission of Matters to a Vote of  Security Holders.................20

Item 5.  Other Information....................................................20

Item 6.  Exhibits and Reports on Form 8-K.....................................21


<PAGE>


                         PART 1 -- FINANCIAL INFORMATION

Item 1: Financial Statements


                                       1
<PAGE>


<TABLE>
                 Neptune Society, Inc.
              Consolidated Balance Sheets
       September 30, 2002 and December 31, 2001


                                        ------------------    -----------------
                                        September 30, 2002    December 31, 2001
                                        ------------------    -----------------
                   Assets
Current assets:
<S>                                            <C>                    <C>
Cash                                   $           513,364              213,219
Accounts receivable                              2,292,610            1,751,276
Prepaid expenses and other
 current assets                                    101,322              113,645
                                                   -------              -------

               Total current assets              2,907,296            2,078,139

Property and equipment, net                        496,094              548,469
Names and reputations, net                      24,374,713           24,364,472
Non compete agreements, net                         12,082               48,333
Deferred financing costs                         1,108,553            1,539,132
Deferred charges and other assets                6,365,797            4,343,159
                                                 ---------            ---------

                                                35,264,535           32,921,704
                                                ==========           ==========

       Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt                2,365,319            2,890,215
Accounts payable                                 1,223,573            1,700,487
Accrued and other current liabilities            1,652,106            1,478,188
                                                 ---------            ---------

               Total current liabilities         5,240,998            6,068,889

Long-term debt                                     266,715            2,291,575
Convertible debentures                           5,861,653            5,000,000
Other long-term liabilities                      1,080,575              848,861
Deferred pre-need revenues                      17,569,354           11,688,952
                                                ----------           ----------

                                                30,019,295           25,898,278
Shareholders' equity:
Common stock                                         4,157                2,153
Additional paid-in capital                      30,513,681           27,901,241
Accumulated deficit                            (25,272,598)         (20,879,968)
                                               -----------          -----------

               Total shareholders' equity        5,245,240            7,023,426
                                                 ---------            ---------

                                       $        35,264,535           32,921,704
                                                ==========           ==========
</TABLE>
See accompanying notes to consolidated financial statements.


<PAGE>


<TABLE>
                              Neptune Society, Inc.
                      Consolidated Statements of Operations
                 Three and Nine Months ended September 30, 2002

                                     ---------------   ---------------      ------------------   ------------------
                                      Three months      Three months
                                     ended September   ended September      Nine months ended    Nine months ended
                                        30, 2002          30, 2001          September 30, 2002   September 30, 2001
                                     ---------------   ---------------      ------------------   ------------------
Revenues:
<S>                                        <C>               <C>                    <C>                  <C>
Services and merchandise           $       2,562,381         3,599,326              8,015,748            8,712,407
Management and finance fees                  216,237           255,308                655,121            1,015,466
                                     ---------------   ---------------      ------------------   ------------------
             Total revenues                2,778,618         3,854,634              8,670,869            9,727,873

Costs and expenses                         1,520,376         1,604,905              4,337,910            4,376,677
                                     ---------------   ---------------      ------------------   ------------------
             Gross profit                  1,258,242         2,249,729              4,332,959            5,351,196

General and administrative
   expenses                                2,334,199         1,866,244              6,347,950            5,779,131
Amortization and depreciation
   expense                                    72,107           518,506                203,897            1,576,278
Professional fees                            153,388           277,020                526,469              823,183
                                     ---------------   ---------------      ------------------   ------------------
Total general and administrative
   expenses                                2,559,694         2,661,770              7,078,316            8,178,592
                                     ---------------   ---------------      ------------------   ------------------

Income (Loss) from operations             (1,301,452)         (412,041)            (2,745,357)          (2,827,396)

Interest expense                             531,684           671,125              1,647,273            1,716,043
                                     ---------------   ---------------      ------------------   ------------------
Loss before income taxes                  (1,833,136)       (1,083,166)            (4,392,630)          (4,543,439)

Income tax expense                                 -                 -                      -                    -
                                     ---------------   ---------------      ------------------   ------------------

             Net loss              $      (1,833,136)       (1,083,166)            (4,392,630)          (4,543,439)
                                     ===============   ===============      ==================   ==================


Loss per share - Basic and Diluted $           (0.45)            (0.54)                 (1.29)               (2.31)

Weighted average number of shares-
 Basic and Diluted                         4,077,251         2,010,159              3,394,493            1,966,660
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>


<TABLE>
                              Neptune Society, Inc.
                      Consolidated Statements of Cash Flows
             Three and Nine Months ended September 30, 2002 and 2001

                                            ------------------      ------------------     -----------------     ------------------
                                            Three Months Ended      Three Months Ended     Nine Months Ended     Nine Months Ended
                                            September 30, 2002      September 30, 2001     September 30,2002     September 30, 2001
                                            ------------------      ------------------     -----------------     ------------------
<S>                                                 <C>                     <C>                   <C>                    <C>
Net loss                                  $        (1,833,136)             (1,083,166)           (4,392,630)            (4,543,439)
Adjustments to reconcile net loss to net
 cash provided by (used in) operating
 activities:
    Depreciation and amortization                      72,107                 518,506               203,897              1,576,278
    Accretion of discount on notes payable             42,844                   5,200                93,045                 62,699
    Non-cash interest & amortization of
     deferred finance                                 314,042                 484,575               951,189              1,050,159
    Stock issued for professional services                  -                       -                     -                      -
    Stock compensation                                 81,243                  75,000               237,301                455,532
    Loss on disposal of assets                              -                       -                     -                      -
    Deferred tax benefit                                    -                       -                     -                      -
 Change in operating assets and liabilities:
    Accounts receivable                               (74,425)               (459,133)             (541,335)            (1,537,681)
    Prepaid expenses and other current assets         114,274                  65,654                12,322                 25,759
    Deferred charges and other assets              (1,266,695)               (353,445)           (2,269,456)            (1,401,826)
    Accounts payable                                 (165,125)                439,854              (476,914)               119,147
    Accrued and other liabilities                     738,049                 111,737               847,965                453,484
    Deferred pre-need revenues                      1,927,115                 389,189             5,880,402              3,779,813
                                                    ---------                 -------             ---------              ---------
Net cash provided by (used in) operating
  activities                                          (49,708)                193,971               545,786                 39,925
                                                    ---------                 -------             ---------              ---------

Cash flows from investing activities:
 Purchases of property and equipment                  (16,847)                   (669)             (115,271)                (8,198)
 Acquisitions, net of cash acquired                         -                       -               (10,240)                     -
                                                    ---------                 -------             ---------              ---------
Net cash used in investing activities                 (16,847)                   (669)             (125,511)                (8,198)
                                                    ---------                 -------             ---------              ---------

Cash flows from financing activities:
 Payments on notes payable                           (306,912)             (2,006,197)           (1,820,129)            (2,018,173)
 Proceeds from issuance of debt, net                        -               1,500,000               200,000              1,500,000
 Net proceeds of common stock issued                        -                       -             1,500,000                      -
                                                    ---------                 -------             ---------              ---------
Net cash provided by (used in) financing
 activities                                          (306,912)               (506,197)             (120,129)              (518,173)
                                                    ---------                 -------             ---------              ---------

Net increase (decrease) in cash                      (373,467)               (312,895)              300,145               (486,446)

Cash, beginning of period                             886,831                 891,788               213,219              1,065,339
                                                    ---------                 -------             ---------              ---------

Cash, end of period                       $           513,364                 578,893               513,364                578,893
                                                    =========                 =======               =======                =======

Supplemental disclosure of cash flow
 information - Cash paid during the
 period for Interest                      $           174,798                 181,350               603,039                603,185
                                                    =========                 =======               =======                =======
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>


                            THE NEPTUNE SOCIETY, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 and 2001

                                   (Unaudited)

(1)  The Business

     The Neptune Society,  Inc., (the "Company") a Florida  Corporation,  is the
     holding company for Neptune  America,  Inc., a California  Corporation.  On
     March 31, 1999, the Company acquired a group of private  companies  engaged
     in marketing and administering  pre-need and at-need cremation  services in
     California,  Florida and  New York. The business  combination was accounted
     for using the purchase method of accounting, and the excess of the purchase
     price over the fair value of identifiable net assets acquired, $26,809,237,
     was  recorded  as names and  reputations.  The Company  currently  operates
     crematories  in  Los  Angeles,   California,   Ankeny,  Iowa  and  Spokane,
     Washington.

     As of September  30,  2002,  the Company had a working  capital  deficit of
     approximately  $2.3  million.  The Company is currently  exploring  various
     financing alternatives to address such working capital deficiency.

(2)  Interim Financial Statements (Unaudited)

Basis of Presentation

     The accompanying  condensed consolidated financial statements for the three
     and nine months ended  September  30, 2002 and 2001 include the accounts of
     the Company  and all  majority-owned  subsidiaries  and are  unaudited  but
     include all adjustments,  consisting of normal  recurring  accruals and any
     other  adjustments  which  management   considers   necessary  for  a  fair
     presentation of the results for these periods. These condensed consolidated
     financial  statements  have been prepared in a manner  consistent  with the
     accounting  policies described in the annual report on Form 10-K filed with
     the  Securities and Exchange  Commission  (the  "Commission")  for the year
     ended  December  31,  2001,  and should be read in  conjunction  therewith.
     Operating results for interim periods are not necessarily indicative of the
     results that may by expected for the full year period.

     Summary of Significant Accounting Policies

     At-need  cremation  services--The  Company  recognizes  revenue  on at-need
     cremation  services  and  merchandise  sales at the time the  services  are
     provided and the merchandise is delivered.

     Pre-need  cremation  arrangements--The  Company  sells  pre-need  cremation
     services and  merchandise  under contracts that provide for delivery of the
     services  at the time of  need.  Revenues  related  to  pre-need  cremation
     services are recorded as revenue in the period the services are performed.

     Prior  to  2000,  revenue  related  to  merchandise  sold  with a  pre-need
     cremation  service  arrangement  was recognized  upon meeting certain state
     regulatory  criteria,  which,  in California and Washington may be prior to
     the performance of cremation services. The Company considered such criteria
     met when the Company was  permitted  to receive one hundred  percent of the


                                       2
<PAGE>


     unrestricted  funds  associated with the merchandise  sale, the merchandise
     was in a condition  for its intended use and the Company did not retain any
     specific  performance  obligations  essential to the  functionality  of the
     merchandise,  the  customer  accepted  the  merchandise  as  evidenced by a
     written  transfer of title to the customer and  certificate  of  ownership,
     and, if the customer so requested, the Company stored the merchandise in an
     insured  location on the customer's  behalf until  customer  pick-up or the
     time of  need,  but no later  than the  customer's  death.  Customers  that
     purchase pre-need  cremation  arrangements do not have cancellation  rights
     with respect to the purchase of merchandise.

     In  response to SAB No. 101,  the Company  changed its revenue  recognition
     accounting   policy  with  respect  to  merchandise   sold  in  a  pre-need
     arrangement  to  include  certain   conditions   beyond  state   regulatory
     requirements.  As of January  1,  2000,  the  Company  added the  following
     criteria  related  to its  revenue  recognition  policy  for  the  sale  of
     merchandise:  (i) a definitive  delivery date,  (ii) stored  merchandise is
     required to be segregated  and  specifically  identified  by customer,  and
     (iii) a customer's  merchandise  is labeled or marked for such customer and
     may not be used  to fill  another  customer's  order,  and  exchange  for a
     different  piece of merchandise in the future is remote.  In addition,  the
     merchandise must not be subject to claims of the Company's  creditors,  the
     risks and rewards of  merchandise  ownership  must have  transferred to the
     customer,  and the Company's custodial risks are insurable and insured. The
     Company  shall  defer  pre-need  merchandise  sales  until such time as the
     merchandise  has been  physically  delivered  or upon  satisfaction  of the
     additional  criteria noted. The Company  recognizes  revenue on the sale of
     future  pre-need  merchandise  sales  upon  the  physical  delivery  of the
     merchandise  or upon the  satisfaction  of the  Company's  current  revenue
     recognition policy criteria outlined above.

     Florida  and  New  York do not  allow  the  Company  to  deliver  cremation
     merchandise  prior to the  provision  of cremation  services,  and as such,
     revenue related to merchandise sold with a pre-need  cremation  arrangement
     in these states is not recognized until the merchandise is delivered, which
     is generally concurrent with the period services are performed.

     The Company is allowed under state regulations in Colorado, Illinois, Iowa,
     Washington,  Oregon and Florida to retain  certain cash  receipts  received
     related to services to be performed in the future.  These cash receipts are
     recorded as deferred revenue and recognized when services are provided.

     During the three months ended  September 30, 2002,  the Company  recognized
     previously   deferred   pre-need   merchandise   revenues   and   costs  of
     approximately $15,000 and $6,000, respectively,  related to the fiscal year
     2000 cumulative effect of change in accounting principle adjustment. During
     the nine months ended September 30, 2002, the Company recognized previously
     deferred pre-need merchandise  revenues and costs of approximately  $38,000
     and $15,000,  respectively related to the above-mentioned cumulative effect
     of change in accounting principle adjustment.

     Pre-need  installment  sales--The  Company  also sells  pre-need  cremation
     arrangements  under installment plans. Under such plans, the customer makes
     an initial  down-payment and pays the balance in monthly  installments plus
     interest.  To the extent  that cash  received is not  trusted,  the Company
     accounts for this cash as deferred revenue until the transaction  qualifies
     for revenue recognition under its accounting policies.  Prior to January 1,
     2001, due to the uncertainty of collections of these accounts,  the Company
     recorded  these  transactions  in accordance  with its revenue  recognition
     accounting policies as cash was received.

     Worldwide travel sales--The Company sells a worldwide travel assurance plan
     (the "plan") which guarantees the provision of cremation  services anywhere
     in the world to the extent the plan  holder is more than 75 miles away from
     their legal  residence at the time of death.  The plan is underwritten by a
     third party  carrier who  receives a premium  payment,  and is obligated to
     perform  services  if the above  criteria is met.  The  Company  recognizes
     revenue  related to these plans at the time of sale. The Company also sells
     worldwide  travel  plans under  installment  plans.  Under such plans,  the
     customer  makes an  initial  down-payment  and pays the  balance in monthly
     installments plus interest.


                                       3
<PAGE>


     Commission  income--  Under  pre-need  cremation  services and  merchandise
     arrangements  funded  through  insurance  purchased by customers from third
     party  insurance  companies,  the Company earns a commission on the sale of
     the policies.  Commission income, net of related expenses, is recognized at
     the point at which the commission is no longer subject to refund, generally
     3 to 5 days after the  contract is sold.  Policy  proceeds  are paid to the
     Company as cremation services and merchandise are delivered.

     Direct and indirect  costs--The  Company expenses direct and indirect costs
     in the  period  incurred,  with  the  exception  of  expenses  specifically
     identifiable  to  individual  pre-need  cremation  arrangements,   such  as
     commissions.  Such  expenses  are  recognized  when  the  related  pre-need
     merchandise and/or service revenues, respectively, are recognized.

(3)  Computation of Earnings (Loss) Per Common Share

     Basic and diluted  loss per share is  computed by dividing  net loss by the
     weighted average number of common shares outstanding during the period. For
     the three and nine months ended  September  30,  2002,  options to purchase
     607,296 of common stock at prices  ranging from $10.00 to $56.04 per share,
     13% convertible  debentures (which are convertible into 1,666,667 shares of
     common  stock at $3.00 per  share  with  detachable  warrants  to  purchase
     200,000  shares of common stock at $3.00 per share) and 13.75%  convertible
     debentures  (which are  convertible  into 893,045 shares of common stock at
     $1.20 per share),  were not included in the computation of diluted loss per
     share because the effect would be antidilutive.

     For the three and nine months ended September 30, 2001, options to purchase
     17,046 and 235,671 shares, respectively,  of common stock at prices ranging
     from $10.00 to $56.04 per share and 13% convertible  debentures  (which are
     convertible  into  125,000  shares of common stock at $40.00 per share with
     detachable  warrants to purchase  50,000  shares of common  stock at prices
     ranging  from  $41.68 to $50.00 per share)  and 8%  convertible  debentures
     (which are  convertible  into 20,833  shares of common  stock at $48.00 per
     share),  were not  included in the  computation  of diluted  loss per share
     because the effect would be antidilutive.

(4)  Shareholders' Equity

     Effective as of March 22, 2002, the Company's Board of Directors authorized
     and affected a 1 for 4 reverse split of its common stock. Per share amounts
     in the  accompanying  consolidated  financial  statements give  retroactive
     effect to the reverse stock split.

     On May 31,  2002,  the Company  amended its  Articles of  Incorporation  to
     increase the authorized capital to consist of 85,000,000 shares,  including
     75,000,000  shares of common stock,  $0.001 par value, and 10,000,000 share
     of preferred stock, $0.001 par value.

     On July 31,  2002,  the  holder  of a 13%,  $75,000  convertible  debenture
     maturing July 31, 2002  converted its debenture  into 225,000 shares of the
     Company's common stock.

     During the three and nine months ended  September  30, 2002,  no options to
     acquire common stock were granted.  2,625 options were canceled  during the
     three- and nine-month periods ended September 30, 2002.

     At September 30, 2002,  4,157,090 shares of the Company's common stock were
     issued and outstanding.


                                        4
<PAGE>


(5)  Debt

     Long-term  debt at September 30, 2002 and December 31, 2001,  respectively,
     is as follows:

                                             September 30,          December 31,
                                                 2002                   2001
13% Convertible debentures,
  due February 24, 2005.                    $   5,000,000             5,000,000

Note payable, amortizing,
  interest accruing at 13%, due
  July 31, 2003.                                1,955,181             2,391,940

Note payable to a private investor,
  non-interest bearing, non-amortizing,
  due on September 30, 2001.                            -             1,000,000

13.75%  Convertible  debentures,
  non-amortizing,  due March 2004.
  The balance is net of unaccreted
  discount of $210,000. (c)                       790,000               800,000

Note payable, 13% non-amortizing,
  due July 2003.                                  350,000               350,000

13% Convertible debentures,
  non-amortizing due July 31, 2002. (d)                 -                75,000

Notes  payable,  due November  2003
  and February  2004.  The balance is
  net of unaccreted discount of $38,014.          256,947               369,872

Note payable, non-interest bearing
  revolving debt.                                  39,203                94,102

Notes payable, interest accruing
  at 9%, due May 31, 2002.                              -                10,876

Line of credit, interest accruing
  at 9%, due April 1, 2002 (e).                         -                90,000

13.75% Convertible debentures,
  non-amortizing,  due April 2004. (b)             71,653                     -

Note  payable,  non-amortizing,
  due  April  2005.  The  balance
  is  net  of unaccreted discount of $3,615. (a)   30,703                     -
                                                  -------               -------
                                                8,493,687            10,181,790
  Less current installments                     2,365,319             2,890,215
                                                ---------             ---------
                                       $        6,128,368             7,291,575
                                               ==========             =========

a) In April 2002, the Company issued an amortizing,  non-interest  bearing, note
payable in the amount of $34,318 in  connection  with the  purchase of vehicles.
The note was  collateralized  by the  vehicle.  The note was  discounted  to its
approximate fair market value.

b) In  May  2002,  the  Company  issued  13.75%  convertible  debentures  in the
principal  amount of $71,653 to


                                       5
<PAGE>


certain convertible debt holders in connection with their exercise of preemptive
rights  granted under the terms of a Debenture and Warrant  Amendment  Agreement
dated effective  December 31, 2001. The  convertible  debentures are convertible
into common stock at $1.20 per share.

c) In May 2002, the Company completed a private placement of 13.75%  convertible
debentures in the principal  amount of  $1,000,000  to CCD  Consulting  Commerce
Distribution AG in  consideration  of $200,000 in cash and the satisfaction of a
promissory note in the principal amount of $800,000.  The convertible  debenture
is exercisable for shares of common stock of The Neptune Society,  Inc. at $1.20
per share.  The Company became obligated to issue 83,333 shares of the Company's
common stock as a loan conversion fee. These  debentures  automatically  convert
into common  shares at $1.20 per share on March 31,  2004.  The Company  granted
resale registration rights to this investor.

d) In July 2002, a 13% convertible  debenture in the principal amount of $75,000
due July 31, 2002 was  converted  by Green Leaf  Investors  I, LLC into  225,000
shares of our common stock.

e) In July 2002,  the Company  terminated  a  line-of-credit  acquired  with the
Portland, Oregon businesses.

f) The Company has an obligation under Convertible Debentures dated December 24,
1999,  due February 24, 2005 in the initial  principal  amount of  $5,000,000 to
maintain a fixed charge  coverage  ratio (the  "Coverage  Ratio").  Although the
Company is current in all our debt obligations under the debentures, the Company
did not maintain the Coverage Ratio for the quarter ended September 30, 2002. If
the holders provide the Company with written  notice,  the Company would have 30
days to meet the Coverage Ratio or the holders could  accelerate the due date of
the  debentures,  which would have a material  adverse  affect on the  Company's
business  and results of  operations.  The holders have not provided the Company
with written notice.  A default under the debentures  could cause the Company to
default under other obligations.

(6)  Income Taxes

     As a result of the Company's  continuing losses,  during the three and nine
     months ended  September  30, 2002,  the Company did not  recognize  any tax
     benefit related to its tax net operating losses.

(7)  Contingent Liabilities

     The  Company   guaranteed  the  obligations  of  Wilhelm   Mortuary,   Inc.
     ("Wilhelm"),  a  wholly-owned  subsidiary,  to Green Leaf  Investors I, LLC
     ("Green  Leaf") in the principal  amount of $1.5 million due July 31, 2002.
     This obligation was assumed by Western Management Services, LLC ("Western")
     in connection  with the sale of the assets of Wilhelm.  The Company remains
     obligated under its guarantee to Green Leaf, which is secured by a security
     interest granted in the Company's  assets.  On August 12, 2002, the Company
     received  notice that  Western and Green Leaf agreed in principle to extend
     the due date of the note to November 1, 2002. The Company  anticipates that
     Western will satisfy the obligation in full in November, 2002.

(8)  New Accounting Pronouncements

     In July 2001, the FASB issued Statement No. 141, Business Combinations, and
     Statement  No. 142,  Goodwill and Other  Intangible  Assets.  Statement 141
     requires  that the purchase  method of  accounting be used for all business
     combinations  initiated  after June 30, 2001.  Statement 141 also specifies
     criteria   intangible   assets  acquired  in  a  purchase  method  business
     combination  must meet to be recognized  and reported  apart from goodwill,
     noting that any purchase price allocable to an assembled  workforce may not
     be accounted  for  separately.  Statement  142 requires  that  goodwill and
     intangible assets with indefinite useful lives no longer be amortized,  but
     instead  tested for  impairment at least  annually in  accordance  with the
     provisions of Statement  142.  Statement 142 also requires that  intangible
     assets  with  definite  useful  lives be  amortized  over their  respective
     estimated useful lives to their estimated residual values, and reviewed for
     impairment in accordance  with SFAS No. 121,  Accounting for the Impairment
     of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.

     The  Company  adopted the  provisions  of  Statement  141  immediately  and
     Statement 142 effective January 1, 2002.

     Statement  141 requires  upon  adoption of Statement  142, that the Company
     evaluate its


                                       6
<PAGE>


     existing  intangible  assets and  goodwill  that were  acquired  in a prior
     purchase business combination,  and to make any necessary reclassifications
     in order to conform with the new criteria in Statement 141 for  recognition
     apart from  goodwill.  Upon  adoption  of  Statement  142,  the Company was
     required to reassess the useful lives and residual values of all intangible
     assets acquired in purchase business  combinations,  and make any necessary
     amortization  period  adjustments  by the end of the first  interim  period
     after  adoption.  In  addition,  to  the  extent  an  intangible  asset  is
     identified as having an indefinite useful life, the Company was required to
     test the intangible  asset for impairment in accordance with the provisions
     of Statement 142 within the first interim  period.  Any impairment loss was
     measured as of the date of adoption and recognized as the cumulative effect
     of a change in accounting principle in the first interim period.

     In  connection  with  the  transitional  goodwill  impairment   evaluation,
     Statement  142  required  the Company to perform an  assessment  of whether
     there  is an  indication  that  goodwill  was  impaired  as of the  date of
     adoption. To accomplish this the Company identified its reporting units and
     determine the carrying value of each reporting unit by assigning the assets
     and liabilities,  including the existing goodwill and intangible assets, to
     those reporting units as of the date of adoption.  The Company then had six
     months  from the  date of  adoption  to  determine  the fair  value of each
     reporting unit and compare it to the reporting unit's carrying  amount.  To
     the extent a reporting  unit's  carrying  amount exceeds its fair value, an
     indication  exists that the reporting  unit's  goodwill may be impaired and
     the Company  must  perform the second step of the  transitional  impairment
     test.  In the second step,  the Company  compared the implied fair value of
     the reporting  unit's  goodwill,  determined  by  allocating  the reporting
     unit's fair value to all of it assets  (recognized  and  unrecognized)  and
     liabilities  in  a  manner  similar  to  a  purchase  price  allocation  in
     accordance with Statement 141, to its carrying  amount,  both of which were
     measured as of the date of  adoption.  This second step was  required to be
     completed no later than the end of the year of adoption.  Any  transitional
     impairment  loss was  recognized  as the  cumulative  effect of a change in
     accounting principle in the Company's statement of earnings.

     As of the date of  adoption,  the Company had  unamortized  goodwill in the
     amount of $24.4 million which was subject to the  transition  provisions of
     Statements 141 and 142.  Amortization  expense related to goodwill was $1.8
     million and $1.7 million,  respectively,  for the years ended  December 31,
     2001 and 2000.  The Company has, as of September  30, 2002,  completed  the
     first  step of  determining  the  fair  value  of each  reporting  unit and
     comparing it to the reporting unit's carrying amount,  and does not believe
     that an impairment exists.

     In August  2001,  the  Financial  Accounting  Standards  Board  issued FASB
     Statement No. 144,  Accounting for the Impairment or Disposal of Long-Lived
     Assets  (Statement  144),  which  supersedes  both FASB  Statement No. 121,
     Accounting  for the  Impairment  of  Long-Lived  Assets and for  Long-Lived
     Assets to Be Disposed Of (Statement  121) and the  accounting and reporting
     provisions   of  APB   Opinion   No.   30,   Reporting   the   Results   of
     Operations--Reporting  the  Effects of Disposal of a Segment of a Business,
     and   Extraordinary,   Unusual  and   Infrequently   Occurring  Events  and
     Transactions  (Opinion 30), for the disposal of a segment of a business (as
     previously defined in that Opinion).  Statement 144 retains the fundamental
     provisions in Statement 121 for recognizing and measuring impairment losses
     on long-lived  assets held for use and long-lived  assets to be disposed of
     by sale, while also resolving significant  implementation issues associated
     with Statement 121.  Statement 144 retains the basic  provisions of Opinion
     30 on how to present  discontinued  operations in the income  statement but
     broadens that presentation to include a component of an entity (rather than
     a segment of a business).  Unlike  Statement 121, an impairment  assessment
     under Statement 144 will never result in a write-down of goodwill.  Rather,
     goodwill is evaluated for impairment under Statement No. 142.

     In October  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
     Retirement  Obligations," which requires companies to record the fair value
     of a liability for asset


                                       7
<PAGE>


     retirement  obligations in the period in which they occurred. The statement
     applies to a company's legal obligations  associated with the retirement of
     a  tangible   long-lived   asset  that   results   from  the   acquisition,
     construction,  and  development  or  through  the  normal  operation  of  a
     long-lived asset. When a liability is initially recorded, the company would
     capitalize the cost,  thereby increasing the carrying amount of the related
     asset.  The capitalized  asset retirement cost is depreciated over the life
     of the  respective  asset  while the  liability  is accreted to its present
     value.  Upon settlement of the liability,  the obligation is settled at its
     recorded  amount or the company  incurs a gain or loss.  The  statement  is
     effective for fiscal years  beginning after June 30, 2002. The Company does
     not  expect  the  adoption  to  have a  material  impact  to the  Company's
     financial position or results of operations.

     The Company  was  required  to adopt  Statement  144 no later than the year
     beginning  after  December  15,  2001.  Accordingly,  the  Company  adopted
     Statement 144 in the first quarter of 2002.  Management does not expect the
     adoption  of  Statement  144 for  long-lived  assets held for use to have a
     material  impact  on  the  Company's   financial   statements  because  the
     impairment  assessment  under  Statement  144  is  largely  unchanged  from
     Statement  121. The provisions of the Statement for assets held for sale or
     other disposal generally are required to be applied prospectively after the
     adoption date to newly initiated disposal activities. Therefore, management
     cannot determine the potential  effects that adoption of Statement 144 will
     have on the Company's financial statements.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
     No.  4, 44 and 64,  Amendment  of FASB  Statement  No.  13,  and  Technical
     Corrections  (Issued  4/02)"  which  the  Company  does  not  believe  will
     materially affect our financial statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
     Associated  with  Exit or  Disposal  Activities."  SFAS  No.  146  requires
     companies to recognize costs  associated  with exit or disposal  activities
     when they are incurred  rather than at the date of a commitment  to an exit
     or disposal plan, as previously  required under Emerging  Issues Task Force
     ("EITF") Issue 94-3. A fundamental  conclusion  reached by the FASB in this
     statement is that an entity's  commitment  to a plan,  by itself,  does not
     create a present  obligation  to others  that  meets  the  definition  of a
     liability.  SFAS No. 146 also  establishes that fair value is the objective
     for initial measurement of the liability.  The provisions of this statement
     are effective  for exit or disposal  activities  that are  initiated  after
     December  31,  2002.  The Company  believes  that this SFAS will not have a
     significant impact on our results of operations or financial position.


                                       8
<PAGE>


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

     This report contains  forward-looking  statements within the meaning of the
Securities  Exchange Act of 1934,  as amended.  Any  statements  that express or
involve discussions with respect to predictions,  expectations,  beliefs, plans,
objectives,  assumptions or future events or performance (often, but not always,
using words and  phrases  such as  "expects,"  "believe,"  "believes,"  "plans,"
"anticipate,"  "anticipates," "is anticipated," or stating that certain actions,
events or  results  "will,"  "may,"  "should,"  or "can" be  taken,  occur or be
achieved)  are not  statements of  historical  fact and may be  "forward-looking
statements." Forward-looking statements are based on expectations, estimates and
projections  at the time the  statements are made that involve a number of risks
and  uncertainties  which  could  cause  actual  results  or  events  to  differ
materially  from  those  anticipated  by  the  Company.   Such   forward-looking
statements  reflect  our  current  views with  respect to future  events and are
subject to certain risks,  uncertainties and assumptions,  including our ability
to expand our  operations,  our ability to manage an increasing  number of sales
offices,  our  ability to retain key  management  personnel  and to  continue to
attract and retain skilled funeral home and crematory management personnel,  our
ability to comply with state and federal regulations, our ability to satisfy our
debt  obligations as they become due,  changes in the death rate or deceleration
of the trend towards cremation, the availability and cost of capital and general
industry  and  economic  conditions.  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.  Important  factors which could cause actual results of the Company
to differ materially from those in  forward-looking  statements  include,  among
others, the following:

1)   Changes in general economic  conditions  impacting  financial  markets that
     could negatively affect the Company.

2)   Changes in credit  relationships  impacting the  availability of credit and
     the general availability of credit in the marketplace.

3)   Changes in consumer  demand and/or  pricing for the Company's  products and
     services caused by several  factors,  such as local death rates,  cremation
     rates, competitive pressures and local economic conditions.

4)   The  Company's  ability  to  successfully  finance  and  implement  certain
     strategic  growth  initiatives  that  could  result in  increased  pre-need
     contract sales and case volume.

5)   Changes in domestic  political and/or regulatory  environments in which the
     Company operates, including tax and accounting policies.

6)   The Company's ability to successfully raise financing to extinguish certain
     debt coming due in the current year.

     Other  specific  risks and  uncertainties  are set  forth in the  Company's
annual report on Form 10-K filed with the  Securities  and Exchange  Commission.
Our management has included  projections and estimates in this quarterly 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 its  competitors  with the
Securities and Exchange Commission.  Investors are cautioned against attributing
undue  certainty  to  management's   projections.   The  Company  undertakes  no
obligation   to  publicly   release  the  results  of  any   revision  to  these
forward-looking  statements that may be made to reflect events or  circumstances
after the date hereof or to reflect the occurrence of unanticipated events.


                                       9
<PAGE>


Overview

     We are a provider of cremation  services in North  America.  As of November
13,  2002,  we operate  18  locations  serving  Arizona,  California,  Colorado,
Florida,  Illinois,  Iowa, Oregon,  New York and Washington.  Our strategy is to
grow by: (i) initiating start-up operations;  (ii) selectively  acquiring small,
family-owned cremation service providers strategically located across the United
States;  (iii) operating all of our locations under one nationally branded name,
"The Neptune Society" (where  permitted);  (iv) avoiding direct competition with
the larger  competitors  in the death care industry by  concentrating  solely on
marketing  and  selling  cremation  services  and  cremation  products;  and (v)
improving   revenue  and   profitability   of  newly   acquired   operations  by
consolidating  administrative and management  functions within our organization.
We believe  that  implementing  these  initiatives  are  critical  to  achieving
profitability and are our most important challenges in competing  effectively in
the death care industry.

     We have made no  acquisitions  since August 2000. We opened  offices in the
suburbs of Denver,  Colorado,  Chicago,  Illinois, and Tempe, Arizona in January
2002, June 2002, and September 2002, respectively.

     Effective March 22, 2002, we completed a consolidation of our share capital
on a four share  (old) for one share  (new) basis (the  "Reverse  Split").  As a
result of the Reverse Split, our authorized  capital was reduced from 25,000,000
shares of common stock to 6,250,000  shares of common stock,  and our issued and
outstanding  share capital  consisting  of 9,697,604  shares of common stock was
reduced to 2,424,401 shares.  Information  contained in this report gives effect
to the Reverse Split.

     On May 31, 2002, we amended our Articles of  Incorporation  to increase our
authorized capital to consist of 85,000,000 shares,  including 75,000,000 shares
of common stock,  $0.001 par value,  and  10,000,000  share of preferred  stock,
$0.001 par value.  Information  contained  in this  report  gives  effect to the
amendment.

                         SELECTED FINANCIAL INFORMATION

     The selected financial  information presented below as of and for the three
and nine months ended September 30, 2002 and 2001 are derived from our unaudited
condensed  consolidated  financial  statements.  The  following  discussion  and
analysis  is  provided  to  increase  understanding  of,  and  should be read in
conjunction with, the unaudited condensed  consolidated financial statements and
accompanying notes.


                                       10
<PAGE>


<TABLE>
                                     Three Months      Three Months      Nine Months       Nine Months
                                        Ended             Ended             Ended            Ended
                                     September 30,     September 30,    September 30,     September 30,
(in 000's except number of offices)     2002              2001              2002             2001
                                     ------------      ------------      -----------       -----------

INCOME STATEMENT DATA:
<S>                                         <C>              <C>               <C>              <C>
Total Revenue                        $      2,779            3,855             8,671            9,728
Gross Profit                                1,258            2,250             4,333            5,351
General and Administrative
  Expenses                                  2,334            1,866             6,348            5,779
Professional Fees                             153              277               526              823
Amortization and Depreciation
  Expense                                      72              519               204            1,576
Operating Loss                             (1,301)            (412)           (2,745)          (2,827)
Interest Expense                              532              671             1,647            1,716
Net Loss                                   (1,833)          (1,083)           (4,393)          (4,543)
Loss per share                        $     (0.45)           (0.54)            (1.29)           (2.31)
</TABLE>

The following table set forth the Company's comparable financial  information as
a percentage of revenues:

<TABLE>
<S>                                      <C>              <C>               <C>              <C>
Total Revenue                            100%             100%              100%             100%
Gross Profit                              45%              58%               50%              55%
General and Administrative Expenses       84%              48%               73%              59%
Professional Fees                          6%               7%                6%               8%
Amortization and Depreciation Expense      3%              13%                2%              16%
Operating Loss                           -47%             -11%              -32%             -29%
Interest Expense                          19%              17%               19%              18%
Net Loss                                 -66%             -28%              -51%             -47%
</TABLE>

<TABLE>
BALANCE SHEET DATA:
                                           September            December 31,
                                             2002                   2001
                                             ----                   ----
(in 000's except number of offices)       (unaudited)            (audited)
                                          -----------            ---------

<S>                                            <C>                  <C>
Current Assets                           $     2,907                2,078
Current Liabilities                            5,241                6,069
Long-Term Debt                                   267                2,292
Convertible Debentures                         5,862                5,000
Shareholders' Equity                     $     5,245                7,023

OTHER DATA:
Number of Offices                                 18                   18
</TABLE>

THREE AND NINE MONTHS ENDED  SEPTEMBER 30, 2002 COMPARED WITH THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2001:

Results of Operations

     The following  discussion  compares our results of operations for the three
and nine months ended  September 30, 2002 to our results of  operations  for the
three and nine months ended September 30, 2001.

Revenues
--------

     Effective  on  October  1,  2001,  we  adopted  changes  to  our  inventory
management  policy in an effort to reduce  expenses  related to storing  certain
delivered merchandise in connection with the sale of pre-need contracts. We will
continue to deliver and store certain merchandise sold in connection with pre-


                                       11
<PAGE>


need sales  contracts  as required by  applicable  law, but because this certain
merchandise is identical in each pre-need contract,  we will no longer segregate
and  specifically  identify such  merchandise  by customer.  As a result of this
change in our  inventory  management  policy,  we will not continue to recognize
revenue on the sale of certain future pre-need  merchandise  sales.  Merchandise
and service  sales of  $5,880,000  were  deferred  during the nine months  ended
September 30, 2002. Our change in inventory  management is expected to result in
an  improvement  in cash flow and a reduction in the revenue we  recognize  from
sales  of  pre-need  contracts.   We  anticipate  recognizing  cost  savings  of
approximately  $300,000 during the year ending December 31, 2002. See "Liquidity
and Capital Resources."

     Whether  pre-need  merchandise and service  revenues were recognized or not
recognized,  there  was no  effect  on our cash  flows  during  the  three-  and
nine-month periods ended September 30, 2002 and 2001,  respectively,  except for
the cash effect of our change in inventory management policy.

     Cremation  service and  merchandise  revenues were $2,562,000 for the three
months ended  September 30, 2002  compared to $3,599,000  for the same period in
2001, a decrease of $1,037,000  or 28.8%.  The decrease was primarily due to our
decision  to change our  inventory  management  policy on  October  1, 2001.  We
recognized  pre-need  merchandise  revenues of $393,000  during the three months
ended September 30, 2002 compared to $1,460,000 for the same period in 2001. The
decrease was partially  off-set by increased travel plan sales,  $748,000 during
the quarter  ended  September  30,  2002,  compared to $530,000  during the same
quarter in 2001.

     Cremation  service and  merchandise  revenues were  $8,016,000 for the nine
months ended  September 30, 2002  compared to $8,712,000  for the same period in
2001,  a decrease of $697,000 or 8.0%.  The decrease  was  primarily  due to our
decision  to change our  inventory  management  policy on  October  1, 2001.  We
recognized  pre-need  merchandise  revenues of $1,206,000 during the nine months
ended September 30, 2002 compared to $2,062,000 for the same period in 2001. The
decrease was partially off-set by increased travel plan sales, $2,226,000 during
the nine months ended September 30, 2002, compared to $1,418,000 during the same
period in 2001. This increase was partially  off-set by a reduction in cremation
service revenues.  The reduction of cremation  revenues resulted  primarily from
the sale of our crematory business in Portland, Oregon.

     During  the three  months  ended  September  30,  2002 and  2001,  pre-need
merchandise and service revenues of $1,927,000 and $389,000,  respectively, were
deferred as we did not meet our revenue recognition criteria.  The $1,538,000 or
395.4%  increase  was due to our  decision  to change our  inventory  management
policy on October 1, 2001.

     During  the  nine  months  ended  September  30,  2002 and  2001,  pre-need
merchandise  and service  revenues of $5,880,000 and  $3,780,000,  respectively,
were  deferred  as we  did  not  meet  our  revenue  recognition  criteria.  The
$2,100,000  or 55.6%  increase was due to our  decision to change our  inventory
management policy on October 1, 2001.

     We opened new offices in the suburbs of Denver,  Colorado in January  2002,
Chicago,  Illinois in June 2002 and Tempe, Arizona in September 2002. We did not
acquire or open any new properties or offices during the same nine  month-period
in 2001. We operated 18 offices at September 30, 2002.

     Cremation  service and merchandise  revenues related to new office openings
after  December 31, 2000 were $143,000 and $245,000 for the three and nine month
periods ended September 30, 2002.

     Revenues earned for the three months ended September 30, 2002 and 2001 from
trust fund management and finance fees were $216,000 and $255,000, respectively.
Trust fund management and finance fees declined $39,000 or 15.3%,  when compared
to the same quarter in 2001.  Trust fund  management  fees decreased  $19,000 or
11.3% as a result of declining investment yields. Finance fees decreased $15,000
or 18.5% due to a decrease in pre-need  contracts sold on an  installment  sales
basis.

     Revenues  earned for the nine months ended September 30, 2002 and 2001 from
trust  fund   management   and  finance  fees  were  $655,000  and   $1,015,000,
respectively. Trust fund management and


                                       12
<PAGE>


finance fees  declined  $360,000 or 35.5%,  when  compared to the same period in
2001.  Trust fund  management  fees  decreased  $122,000 or 21.2% as a result of
declining  investment yields.  Finance fees decreased $223,000 or 53.2% due to a
decrease in pre-need contracts sold on an installment sales basis.

Costs and Expenses and Gross Profit
-----------------------------------

     Direct  costs and  expenses  were  $1,520,000  or 54.7% of revenues for the
three  months  ended  September  30,  2002  compared to  $1,605,000  or 41.6% of
revenues for the  comparable  period in 2001.  The $85,000 or 5.3%  decrease was
primarily  attributable to the deferral of certain pre-need contract acquisition
costs,  reduced  variable  costs related to travel  revenues and the sale of our
Portland,  Oregon  crematory  operations.  These cost  reductions were partially
off-set  by the costs to open new  offices.  The gross  profit  during the three
months  ended  September  30,  2002 was  $1,258,000  or 45.3% of total  revenues
compared to $2,250,000 or 58.4% for the comparable period in 2001, a $991,000 or
44.1% decrease.

     The gross  profit  margin for the three  months  ended  September  30, 2002
decreased  22.4%  compared  to the same  period in 2001.  The  decrease  was due
primarily to the deferral of pre-need  merchandise revenues in the third quarter
of 2002.

     Direct costs and expenses were $4,338,000 or 50.0% of revenues for the nine
months ended  September 30, 2002 compared to $4,377,000 or 45.0% of revenues for
the  comparable  period in 2001.  The  $39,000 or 0.9%  decrease  was  primarily
attributable to the deferral of certain pre-need contract  acquisition costs and
the sale of our Portland,  Oregon  crematory  operations.  These cost reductions
were partially off-set by the costs to open new offices. The gross profit during
the nine  months  ended  September  30,  2002 was  $4,333,000  or 50.0% of total
revenues  compared to $5,351,000 or 55.0% for the  comparable  period in 2001, a
$1,018,000 or 19.0% decrease.

     The gross  profit  margin for the nine  months  ended  September  30,  2002
decreased 9.1% over the comparable  2001 period.  The decrease was due primarily
to the deferral of pre-need merchandise revenues during the first nine months of
2002.

General and Administrative Expenses
-----------------------------------

     General and  administrative  expenses for the three months ended  September
30,  2002 were  $2,334,000  or 84.0% of  revenues.  General  and  administrative
expenses for the three months ended  September 30, 2001 were $1,866,000 or 48.4%
of revenues.  General and administrative expenses increased $468,000 or 25.1% in
the third quarter of 2002  compared to 2001 due  primarily to  additional  costs
associated  with  supporting  an increased  number of  geographic  locations and
activities  related to seeking  financing to  recapitalize  the company and fund
expansion.  These increased costs were partially  off-set by reduced general and
administrative  costs  resulting  from the sale of our  crematory  in  Portland,
Oregon.

     General and administrative expenses for the nine months ended September 30,
2002 were $6,348,000 or 73.2% of revenues.  General and administrative  expenses
for the nine  months  ended  September  30,  2001  were  $5,779,000  or 59.4% of
revenues.  General and administrative expenses increased $569,000 or 9.8% in the
first nine months of 2002  compared to 2001 due  primarily to  additional  costs
associated  with  supporting  an increased  number of  geographic  locations and
activities  related to seeking  financing to  recapitalize  the company and fund
expansion.  These increased costs were partially  off-set by reduced general and
administrative  costs  resulting  from the sale of our  crematory  in  Portland,
Oregon.

Amortization and Depreciation Expenses
--------------------------------------

     Amortization   and   depreciation   expenses  were  $72,000  and  $519,000,
respectively,   for  the  three  months  ended  September  30,  2002  and  2001.
Amortization   and   depreciation   expenses  were   $204,000  and   $1,576,000,
respectively,  for the nine  months  ended  September  30,  2002 and  2001.  The
decrease in amortization and depreciation expenses resulted from the adoption of
FASB  Statements  No. 141 and 142 and the  divestiture  of the Portland,  Oregon
properties. See "New Accounting Pronouncements."


                                       13
<PAGE>


Professional Fees
-----------------

     Professional  fees were  $153,000 or 5.5% of revenues  for the three months
ended  September 30, 2002 compared to $277,000 or 7.2% of revenues for the three
months ended  September  30, 2001.  Professional  fees were  $526,000 or 6.1% of
revenues for the nine months ended  September  30, 2002  compared to $823,000 or
8.5% of revenues for the nine months ended  September 30, 2001. The decreases in
the three- and  nine-month  periods were  primarily due to the completion of the
registration of our common stock with Securities and Exchange Commission in June
2001 and the  settlement of a certain  trademark  infringement  claim in October
2001.  Professional fees primarily related to general business matters and audit
and tax services.  Professional  fees also include  $167,000 of consulting  fees
paid  by  us to  the  former  principal  shareholder  for  marketing  and  sales
consultation services in the first nine months of 2001. The consulting agreement
with the former  principal  shareholder  was terminated  effective  December 31,
2001, and we incurred no consulting fees as a result of that agreement in 2002.

Interest Expense
----------------

     Interest  expense was  $532,000 or 19.1% of revenues  for the three  months
ended September 30, 2002 compared to $671,000 or 17.4% of revenues for the three
months ended  September 30, 2001.  Interest  expense was  $1,647,000 or 19.0% of
revenues for the nine months ended  September 30, 2002 compared to $1,716,000 or
17.6% of revenues for the nine months ended September 30, 2001. Interest expense
decreased  primarily due to the  amortization  of certain  acquisition  debt and
deferred  financing  costs incurred to acquire or refinance  certain debt during
the fourth quarter of 2001 and/or the first half of 2002.  Interest expense also
decreased as a result of disposition of certain debt in connection with the sale
of our Portland  crematory and building and the July 2001 expiration of a "stock
purchase  guarantee"   obligation  related  to  a  July  2000  restructuring  of
acquisition debt.

Net Loss
--------

     Net loss was $1,833,000  ($0.45 per share) and $1,083,000 ($0.54 per share)
for the three months ended September 30, 2002 and 2001,  respectively.  Net loss
was $4,393,000  ($1.29 per share) and $4,543,000  ($2.31 per share) for the nine
months ended September 30, 2002 and 2001,  respectively.  During the comparative
three-month  periods,  we deferred  net  earnings  of  $1,216,000  and  $36,000,
respectively,  as we did not meet our revenue recognition  criteria.  During the
nine-month  comparative  periods,  we deferred  net earnings of  $3,880,000  and
$2,378,000,  respectively,  as we did not meet our revenue recognition criteria.
The net loss  related to each  respective  period  also  differed  for the other
reasons described above.

Liquidity and Capital Resources

     At  September  30,  2002,  we had current  assets of  $2,907,000,  which is
comprised of $513,000 in cash, $2,293,000 in accounts receivable and $101,000 in
prepaid expenses and other current assets.  We had total current  liabilities of
$5,241,000,  comprised mainly of $1,224,000 in accounts  payable,  $1,652,000 in
accrued liabilities, and $2,365,000 in the current portion of long-term debt. We
had long-term debt of $267,000,  convertible debentures with a carrying value of
$5,862,000 and other long-term  liabilities of $1,081,000.  We also had deferred
pre-need revenue of $17,569,000.  We had a working capital deficit of $2,334,000
at September 30, 2002.

Debt Obligations
----------------

As of September 30, 2002, we had the following debt obligations:

<TABLE>
Obligations as of September 30, 2002:                 Principal        Monthly       Interest  Due
                                                         Due           Payment       Rate      Date

<S>                                                   <C>              <C>           <C>           <C>
Convertible debentures                                5,000,000        Interest      13.00%    Feb-2005
Convertible debentures                                   71,653        Interest      13.75%    Apr-2004
</TABLE>


                                       14
<PAGE>


<TABLE>
<S>                                                   <C>              <C>           <C>           <C>
Note payable (original acquisition debt)              1,955,181        Prin. & Int.  13.00%    Jul-2003
Convertible debentures, net discount of $210,000        790,000        Interest      13.75%    Mar-2004
Notes payable, net discount of $38,014                  256,947        Principal     11.87%    Nov-2003
Note payable                                            350,000        Interest      13.00%    Jul-2003
Note payable                                             39,203        Principal      0.00%           *
Notes payable, net discount of $3,615                    30,703        Prin. & Int.  10.00%    Apr-2005
                                                      ---------
                                                      8,493,687
    Obligations coming due over next 12 months     $  2,365,319
                                                      ---------

    Long-term obligations at carrying value        $  6,128,368
                                                      =========
</TABLE>

*  Revolving note

     We had net cash (used by) provided by operating activities of $(50,000) and
$194,000 for the three months ended  September 30, 2002 and 2001,  respectively.
We had net cash provided by operating activities of $546,000 and $40,000 for the
nine months ended September 30, 2002 and 2001,  respectively.  Interest paid for
the three months ended  September  30, 2002 and 2001 was $175,000 and  $181,000,
respectively.  Interest  paid for the nine months ended  September  30, 2002 and
2001 was $603,000 and $603,000, respectively.

     In addition,  we guaranteed the obligations of Wilhelm Mortuary,  Inc., our
wholly-owned subsidiary,  to Green Leaf Investors I, LLC in the principal amount
of $1.5 million due July 31, 2002, secured by a security interest granted in our
assets.  This  obligation  was assumed by Western  Management  Services,  LLC in
connection  with the sale of the assets  and  properties  used in our  Portland,
Oregon  crematory  operations  by Wilhelm.  We did not included a reserve in our
financial  statements in connection with our guarantee,  which is disclosed as a
contingent  liability  under Note 7 of our financial  statements.  We anticipate
that Western Management Services,  LLC will satisfy this obligation in November,
2002.

     In July  2002,  a 13%  convertible  debenture  in the  principal  amount of
$75,000  due July 31, 2002 was  converted  by Green Leaf  Investors  I, LLC into
225,000 shares of our common stock.

     In July 2002,  we terminated a  line-of-credit  acquired with the Portland,
Oregon businesses.

     We have an obligation under Convertible Debentures dated December 24, 1999,
due February 24, 2005 in the initial principal amount of $5,000,000, to maintain
a fixed charge coverage ratio (the "Coverage Ratio"). Although we are current in
all our debt obligations under the debentures,  we did not maintain the Coverage
Ratio for the quarter ended  September 30, 2002. If the holders  provide us with
written notice,  we would have 30 days to meet the Coverage Ratio or the holders
could  accelerate  the due date of the  debentures,  which would have a material
adverse affect on our business and results of  operations.  The holders have not
provided us with written notice.  A default under the debentures  could cause us
to default under other obligations.

Plan of Operation

     Our plan of operation is based,  in part,  on  information  provided in the
reports of our  consultants  and the decisions of  management.  Our  independent
auditors have not examined, compiled or otherwise applied procedures to the plan
of operations presented herein, and,  accordingly,  do not express an opinion or
any  other  form of  assurance  on it.  Information  contained  in this  plan of
operation is presented on a cash basis, which is not in accordance with US GAAP,
and represents  projections  and  assumptions of management.  Actual results can
vary materially from the estimates of management and investors are cautioned not
to place  undue  reliance  on  management's  projections  and  assumptions.  See
"Forward-Looking Statements."


                                       15
<PAGE>


     Management  has  revised its plan of  operation  for the fiscal year ending
December  31,  2002 as a result of weaker  than  anticipated  sales of  pre-need
contracts  during  the  first  nine  months of 2002.  As a  result,  our plan of
operations  differs from  projections made in our annual report on Form 10-K for
the year ended December 31, 2001. Set out below is a summary of our revised Plan
of Operation for the fiscal year ending December 31, 2002.

Material Commitments--Short-term Funding Requirements

      Operating expenditures (incl. working capital)         $17.5 million
      Interest payments                                        1.1 million
      Current portion of long-term debt                        2.1 million
      Capital expenditures                                     0.2 million
                                                           ---------------
      Estimated total Short-term commitments                  20.9 million
      Estimated total Cash from Operations                    18.7 million
      Cash from Equity Sales                                   1.5 million
      Cash from Debt Proceeds                                  0.2 million
                                                           ---------------
      Estimated net Cash (Deficit)                           $(0.5) million
                                                           ---------------

Net Cash Flow operations: Management's current year forecast for the year ending
December  31,  2002  projects  it will  achieve  approximately  $1.2  million in
positive net cash flows from operations  before the payment of debt and interest
and capital  expenditures.  We anticipate  generating cash from operations (cash
receipts  from  sales and other  income) of  approximately  $18.7  million,  and
operating expenditures (cash expenditures) of approximately $17.5 million.

Working  capital:  Management had a net working capital deficit of approximately
$2,334,000 as of September 30, 2002. We had current assets of $2,907,000, offset
by the current portion of long-term debt of $2,365,000  coming due over the next
twelve months.  See "Liquidity & Capital  Resources".  The remainder  relates to
accounts  payable of $1,224,000 and accrued expenses of $1,652,000 in connection
with our on-going operations.

Interest  payments:  We carry  outstanding  debt,  including  convertible  debt,
requiring annual cash interest payments of approximately  $1.1 million,  payable
in monthly  installments  for the year ending  December  31,  2002.  There is no
guarantee  that any  convertible  debt will be converted;  therefore the maximum
amount of interest payments have been projected.

Capital   Expenditures:   We  anticipate  capital   expenditures  to  amount  to
approximately $200,000 for the year ending December 31, 2002. These expenditures
include office furniture and telephone and computer equipment.

     We anticipate  that we will have to raise capital during the next 12 months
to meet our obligations under the portions of long-term debt due. See "Liquidity
and  Capital  Resources".  We intend to raise the  capital  required to fund our
financing  needs by  issuance  of debt and  equity.  There  can be no  assurance
financing  will be available or accessible on reasonable  terms.  Our management
has also been exploring a variety of other options to meet our  obligations  and
future  capital  requirements,  including  the  possibility  of debt  financing,
business combination or a leveraged buyout.

     Our total  operating and capital budgets for the fiscal year ended December
31, 2002 is estimated  to be  approximately  $21 million.  There is no assurance
that our actual  expenditures  for the fiscal year ending December 31, 2002 will
not exceed our estimated operating budgets. Actual expenditures will depend on a
number of factors,  some of which are beyond our control including,  among other
things,  timing of regulatory  approval of its  projects,  the  availability  of
financing on acceptable  terms,  reliability of the assumptions of management in
estimating cost and timing,  the death and cremation  rates in the  geographical
locations that we serve,  consumer acceptance of our pre need plans,  changes in
governmental  regulation  as they relate to our business,  certain  economic and
political  factors,  the time expended by consultants and professionals and fees
associated with applications  related to obtaining and maintaining  licenses for
our  locations  and  the   professional   fees  associated  with  our  reporting
obligations under the


                                       16
<PAGE>


Securities  Exchange  Act of 1934.  If the  actual  expenditures  for such costs
exceed  the  estimated  costs  or  if  events  occur  that  require   additional
expenditures,  we will be required  to raise  additional  financing  or to defer
certain  expenditures  to meet other  obligations.  If we cannot raise  adequate
financing  to fund our plan of  operation,  we may be  required  to suspend  our
growth  strategy;  consolidate  our operations  through  reductions in staffing,
marketing and sales, promotion and hours of operation;  terminate our operations
in  unprofitable or difficult to service  markets;  sell assets or operations in
some of the markets we service and/or suspend our operations in certain markets.
The  failure to meet  certain  expenditures  may cause us to default on material
obligations and such default may have a material  adverse effect on our business
and results of operations.

     We expect  operating  cash  flows,  before  debt  servicing  and  expansion
expenditures, to be adequate to finance our basic operations. We anticipate that
we will finance long-term debt, additional acquisitions,  if any, and growth, in
part, by issuing equity and/or debt securities.

New Accounting Pronouncements
-----------------------------

     In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets.  Statement 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  after June 30, 2001.  Statement 141 also  specifies  that  intangible
assets  acquired in a purchase  method  business  combination  must meet certain
criteria to be  recognized  and reported  apart from  goodwill,  noting that any
purchase  price  allocable to an assembled  workforce  may not be accounted  for
separately.  Statement 142 will require that goodwill and intangible assets with
indefinite  useful  lives  no  longer  be  amortized,  but  instead  tested  for
impairment at least annually in accordance with the provisions of Statement 142.
Statement  142 will also require that  intangible  assets with  definite  useful
lives  be  amortized  over  their  respective  estimated  useful  lives to their
estimated  residual values,  and reviewed for impairment in accordance with SFAS
No. 121,  Accounting for the Impairment of Long-Lived  Assets and for Long-Lived
Assets to Be Disposed Of.

     We were required to adopt the provisions of Statement 141  immediately  and
Statement 142 effective January 1, 2002.

     Statement 141 will require upon adoption of Statement 142, that we evaluate
our  existing  intangible  assets and  goodwill  that were  acquired  in a prior
purchase business  combination,  and to make any necessary  reclassifications in
order to conform with the new criteria in Statement  141 for  recognition  apart
from  goodwill.  Upon adoption of Statement 142, we will be required to reassess
the useful  lives and  residual  values of all  intangible  assets  acquired  in
purchase  business  combinations,  and make any  necessary  amortization  period
adjustments by the end of the first interim period after adoption.  In addition,
to the extent an intangible  asset is identified as having an indefinite  useful
life,  we will be  required  to test the  intangible  asset  for  impairment  in
accordance with the provisions of Statement 142 within the first interim period.
Any  impairment  loss will be measured as of the date of adoption and recognized
as the  cumulative  effect  of a change  in  accounting  principle  in the first
interim period.

     In  connection  with  the  transitional  goodwill  impairment   evaluation,
Statement  142 will require us to perform an  assessment  of whether there is an
indication  that goodwill is impaired as of the date of adoption.  To accomplish
this we must  identify our reporting  units and determine the carrying  value of
each  reporting  unit by assigning  the assets and  liabilities,  including  the
existing goodwill and intangible assets, to those reporting units as of the date
of  adoption.  We will then have up to six months  from the date of  adoption to
determine the fair value of each  reporting unit and compare it to the reporting
unit's carrying amount. To the extent a reporting unit's carrying amount exceeds
its fair value, an indication  exists that the reporting  unit's goodwill may be
impaired  and we must  perform  the second step of the  transitional  impairment
test.  In the  second  step,  we must  compare  the  implied  fair  value of the
reporting  unit's  goodwill,  determined by allocating the reporting unit's fair
value to all of it assets  (recognized  and  unrecognized)  and liabilities in a
manner similar to a purchase price  allocation in accordance with Statement 141,
to its  carrying  amount,  both of  which  would be  measured  as of the date of
adoption.  This second step is required to be completed as soon as possible, but
no later than the end


                                       17
<PAGE>


of the year of adoption. Any transitional  impairment loss will be recognized as
the  cumulative  effect of a change in accounting  principle in our statement of
earnings.

     As of the date of adoption,  we had  unamortized  goodwill in the amount of
$24.4 million which was subject to the  transition  provisions of Statements 141
and 142.  Amortization  expense  related to goodwill  was $1.8  million and $1.7
million,  respectively, for the years ended December 31, 2001 and 2000. We have,
as of September 30, 2002, completed the first step of determining the fair value
of each reporting unit and comparing it to the reporting unit's carrying amount,
and does not believe that an impairment exists.

     In October  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
Retirement  Obligations," which requires companies to record the fair value of a
liability for asset retirement obligations in the period in which they occurred.
The  statement  applies to a company's  legal  obligations  associated  with the
retirement  of a tangible  long-lived  asset that results from the  acquisition,
construction,  and  development or through the normal  operation of a long-lived
asset.  When a liability is initially  recorded,  we would  capitalize the cost,
thereby  increasing the carrying  amount of the related asset.  The  capitalized
asset retirement cost is depreciated over the life of the respective asset while
the  liability  is  accreted  to  its  present  value.  Upon  settlement  of the
liability,  the  obligation  is settled at its  recorded  amount or the  company
incurs a gain or loss.  The  statement is effective  for fiscal years  beginning
after June 30, 2002. We do not expect the adoption to have a material  impact to
our financial position or results of operations.

     In August  2001,  the  Financial  Accounting  Standards  Board  issued FASB
Statement  No. 144,  Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets (Statement 144), which supersedes both FASB Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of (Statement  121) and the accounting  and reporting  provisions of APB Opinion
No. 30, Reporting the Results of  Operations--Reporting  the Effects of Disposal
of  a  Segment  of a  Business,  and  Extraordinary,  Unusual  and  Infrequently
Occurring Events and Transactions (Opinion 30), for the disposal of a segment of
a business (as previously  defined in that  Opinion).  Statement 144 retains the
fundamental provisions in Statement 121 for recognizing and measuring impairment
losses on long-lived assets held for use and long-lived assets to be disposed of
by sale, while also resolving significant  implementation issues associated with
Statement 121.  Statement 144 retains the basic  provisions of Opinion 30 on how
to present  discontinued  operations  in the income  statement but broadens that
presentation  to include a component  of an entity  (rather  than a segment of a
business).  Unlike  Statement 121, an impairment  assessment under Statement 144
will never result in a write-down of goodwill. Rather, goodwill is evaluated for
impairment under Statement No. 142.

     We were required to adopt  Statement  144 no later than the year  beginning
after  December 15, 2001.  Accordingly,  we adopted  Statement  144 in the first
quarter of 2002.  The adoption of Statement 144 for  long-lived  assets held for
use did not have a  material  impact on our  financial  statements  because  the
impairment  assessment under Statement 144 was largely  unchanged from Statement
121. The  provisions of the Statement for assets held for sale or other disposal
generally  are required to be applied  prospectively  after the adoption date to
newly initiated disposal activities.  Therefore, management cannot determine the
potential  effects  that  adoption of Statement  144 will have on our  financial
statements.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical  Corrections
(Issued  4/02)" which we do not believe  will  materially  affect our  financial
statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to
recognize  costs  associated  with  exit or  disposal  activities  when they are
incurred rather than at the date of a commitment to an exit or disposal plan, as
previously  required  under  Emerging  Issues Task Force  ("EITF") Issue 94-3. A
fundamental conclusion reached by the FASB in this statement is that an entity's
commitment to a plan, by itself,  does not create a present obligation to others
that meets the  definition of a liability.  SFAS No. 146 also  establishes  that
fair


                                       18
<PAGE>


value is the objective for initial measurement of the liability.  The provisions
of this  statement  are  effective  for  exit or  disposal  activities  that are
initiated  after  December 31,  2002.  We believe that this SFAS will not have a
significant impact on our results of operations or financial position.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

     The market  risk  inherent  in our market risk  sensitive  instruments  and
positions  is the  potential  change  arising  from  increases  or  decreases in
interest  rates as  discussed  below.  Our  exposure to market risk as discussed
below  includes  "forward-looking  statements"  and  represents  an  estimate of
possible  changes in fair value or future  earnings  that would  occur  assuming
hypothetical  future  movements in interest rates.  Our views on market risk are
not necessarily indicative of actual results that may occur and do not represent
the maximum  possible  gains and losses that may occur,  since  actual gains and
losses will  differ from those  estimated,  based upon  actual  fluctuations  in
interest rates and the timing of transactions.

Item 4. Controls and Procedures

     We maintain  disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Securities Exchange Act of 1934
reports is recorded, processed,  summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and  communicated to our management,  including our Chief Executive  Officer and
Chief Financial  Officer,  as appropriate,  to allow timely decisions  regarding
required disclosure.

     Within  90 days  prior  to the  date  of this  report,  we  carried  out an
evaluation,  under the supervision and with the participation of our management,
including  our Chief  Executive  Officer  and Chief  Financial  Officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures pursuant to Exchange Act Rule 13a-14.  Based upon the foregoing,  our
Chief  Executive   Officer  and  Chief  Financial  Officer  concluded  that  our
disclosure  controls and procedures are effective in connection  with the filing
of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.

     There were no  significant  changes in our  internal  controls  or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation,  including any significant deficiencies or material weaknesses
of internal controls that would require corrective action.

PART II -- OTHER INFORMATION

Item 1. Legal Proceedings.

     Our  operations are subject to numerous  laws,  regulations  and guidelines
adopted by various  governmental  authorities in the  jurisdictions  in which we
operate.   Liabilities  are  recorded  when  liabilities  are  either  known  or
considered probable and can be reasonably  estimated.  Our policies are designed
to control risk upon acquisition  through extensive due diligence and corrective
measures  taken prior to  acquisition.  We believe  liabilities to be immaterial
individually and in the aggregate.

     On June 13, 2002, the Iowa State Board of Mortuary  Science  Examiners (No.
01-011,  DIA No. 01DPHMS002 and No. 01-015,  DIA No. 01DPHMS001) issued an order
against our Iowa  operations  and an employee of the Neptune  Society  under the
Iowa Code for  failure  to comply  with  appropriate  procedures  related to its
operations.  Under the order, our license to operate a funeral establishment and
cremation  establishment  in Iowa was  suspended for a period of thirty days; we
were required to make  arrangements  during the period of suspension  with other
licensed funeral and/or cremation establishments to provide funeral or cremation
services; we were required to pay a civil penalty in the amount of $7,500 and we
were placed on probation for a period of two years, subject to certain terms and
conditions.  On June 26, 2002,  we filed a rehearing  application  with the Iowa
Board,  which was denied by order dated July 9, 2002. On July 18, 2002, we filed
a petition with the Iowa State Board of Mortuary Science


                                       19
<PAGE>


requesting  a  temporary  stay of the  30-day  suspension  of our Iowa  office's
license. Our petition for the temporary stay was denied on July 24, 2002. At the
instruction  of our legal  counsel  in Iowa,  our Iowa  office  surrendered  its
license  on July 23,  2002 and our Iowa  office  suspended  providing  cremation
services  for a 30-day  period  ending on August  23,  2002.  Our Iowa  office's
license was  reinstated  on August 23,  2002.  On September  18, 2002,  our Iowa
office was served with a subpoena  issued by the Iowa Board of Mortuary  Science
requesting the records  related to services  provided to two clients on July 20,
2002, in connection  with the Board's  investigation  of whether our Iowa office
performed services while its license was suspended.  We have received no further
notices from the Iowa Board of Mortuary Science  concerning this  investigation.
We believe these services were performed prior to the suspension period and that
our Iowa office is in compliance with the Board's June 13, 2002 order.

     We are not currently subject to any other material  litigation  proceeding.
We are party to other legal  proceedings in the ordinary course of its business,
but do not expect the outcome of any of other  proceedings,  individually  or in
the  aggregate,  to have a material  adverse  effect on our financial  position,
results of operations or liquidity.

Item 2. Changes in Securities.

     In July  2002,  a 13%  convertible  debenture  in the  principal  amount of
$75,000  due July 31, 2002 was  converted  by Green Leaf  Investors  I, LLC into
225,000 shares of our common stock.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

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

None.

Item 5. Other Information.

     On July 1, 2002,  we entered into an agreement for Mr. Irving to act as our
Chief Operating  Officer.  Mr. Irving's annual base compensation is $144,000 per
annum,  and a bonus of no less  than 25% of base  compensation  upon  successful
performance  as  defined  by us. We are  obligated  to grant  stock  options  to
purchase  50,000  shares of its  common  share at $2.00 per  share.  Such  stock
options shall vest June 30, 2003. The term of the agreement  extends to June 30,
2005,  unless terminated prior to that date. We may terminate the agreement upon
written notice and payment of any and all balances due. Mr. Irving may terminate
the agreement upon four weeks written notice.

     In  October  2002,  we filed a Form S-1  Registration  Statement  under the
Securities Act of 1933 (the "S-1 Registration Statement").  The S-1 Registration
Statement  registered  for resale  shares of our common stock issued or issuable
pursuant to certain debentures  convertible into our common stock or warrants to
purchase  shares of our common stock.  Total shares of  approximately  4,900,000
were included in the S-1 Registration Statement.  The Registration Statement was
declared effective on November 13, 2002.

     On October 1, 2002,  David Schroeder  resigned as a director of The Neptune
Society,  Inc. On October 21, 2002, Mr.  Schroeder  resigned as president of The
Neptune  Society,  Inc.  and  entered  into a  Consulting  Agreement  to provide
services  as our Senior  Vice  President  of  Operations  and  Development.  The
Consulting Agreement was effective October 1, 2002.


                                       20
<PAGE>


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

                               (a) EXHIBIT INDEX

        Exhibit
        Number      Description
        ------------------------------------------------------------------------

        3.1(1)      Articles of  Incorporation  of L R Associates,  Inc.,  filed
                    January 4, 1985
        3.2(1)      Articles of Amendment of L R Associates,  Inc. changing name
                    to Lari Corp., filed August 3, 1998
        3.3(1)      Articles of Amendment of Lari Corp. changing name to Neptune
                    Society, filed April 26, 1999
        3.4(1)      Articles of Amendment of The Neptune Society, Inc. filed May
                    9, 2000, effecting a combination of the Corporation's shares
                    of common stock
        3.5(1)      Articles of Amendment of The Neptune Society, Inc. effective
                    as of  March  22,  2002,  related  to a  combination  of the
                    Corporation's shares of common stock
        3.6(6)      Articles of Amendment of The Neptune Society, Inc.
        3.7(1)      Bylaws of Neptune Society (previously filed as Exhibit 3.6)
        10.1(1)     Form of Stock Option Plan
        10.2(1)     Share Purchase  Agreement dated for reference March 26, 1999
                    by and  between  Lari  Acquisition  Company,  Inc.,  Emanuel
                    Weintraub  Inter Vivos  Trust,  Emanuel  Weintraub,  Neptune
                    Management  Corp.,  Heritage  Alternatives,   Inc.,  Neptune
                    Pre-Need Plan, Inc. and Lari Corp.
        10.3(1)     Share Purchase Agreement dated March 31, 1999 by and between
                    Lari  Acquisition  Company,  Inc.,  Lari Corp.  and  Stanley
                    Zicklin
        10.4(1)     Share Purchase Agreement dated March 31, 1999 by and between
                    Lari Acquisition Company, Inc., Lari Corp. and Jill Schulman
        10.5(1)     Agreement   dated   August  1,  1999  by  and  between  Lari
                    Acquisition  Company,  Inc.,  Neptune  Society  and  Stanley
                    Zicklin
        10.6(1)     Agreement   dated   August  1,  1999  by  and  between  Lari
                    Acquisition   Company,   Inc.,  Neptune  Society,   Emmanuel
                    Weintraub and Emmanuel Weintraub Inter Vivos Trust
        10.7(1)     Interest  Purchase  Agreement  dated for reference March 31,
                    1999 by and between  Neptune  Management  Corp.  Lari Corp.,
                    Lari Acquisition  Company,  Inc. and the limited partners of
                    Neptune-Los  Angeles,  Ltd.,  Neptune-Santa  Barbara,  Ltd.,
                    Neptune-Miami,    Ltd.,   Neptune-St.    Petersburg,   Ltd.,
                    Neptune-Ft.   Lauderdale,   Ltd.,   Neptune-Nassau,    Ltd.,
                    Neptune-Yonkers, Ltd.
        10.8(1)     Interest  Purchase  Agreement  dated for reference March 31,
                    1999 by and between Heritage Alternatives, Inc., Lari Corp.,
                    Lari Acquisition  Company,  Inc. and the limited partners of
                    Heritage Alternatives, L.P.
        10.9(1)     Consulting  Agreement  dated  March 31,  1999 by and between
                    Lari Acquisition Company, Inc. and Emanuel Weintraub
        10.10(1)    Amendment to  Consulting  Agreement  dated August 1, 1999 by
                    and  between  Lari  Acquisition  Company,  Inc.  and Emanuel
                    Weintraub
        10.11(1)    $19,000,000  Promissory  Note dated  March 31,  1999 by Lari
                    Acquisition Company, Inc.
        10.12(1)    Amendment  to  $19,000,000  Promissory  Note dated August 1,
                    1999 by Lari Acquisition  Company,  Inc. in favor of Emanuel
                    Weintraub Inter Vivos Trust
        10.13(1)    $2,000,000  Promissory  Note  dated  March 31,  1999 by Lari
                    Acquisition Company, Inc.
        10.14(1)    Amendment to $2,000,000 Promissory Note dated August 1, 1999
                    by Lari  Acquisition  Company,  Inc.  in  favor  of  Emanuel
                    Weintraub Inter Vivos Trust
        10.15(1)    Pre-Need  Trust  Agreement  dated  October  1,  1993  by and
                    between Neptune Management Corp. and Sunbank/South  Florida,
                    N.A.
        10.16(1)    Asset Purchase Agreement dated March 31, 1992 by and between
                    Heritage  Cremation  Services,  Inc., Joseph Estephan,  Elie
                    Estephan and Emanuel Weintraub


                                       21
<PAGE>


        Exhibit
        Number      Description
        ------------------------------------------------------------------------
        10.17(1)    Form of Commissioned Contractor Agreement
        10.18(1)    Agency  Agreement  dated for reference  July 22, 1999 by and
                    between  Neptune  Society and  Standard  Securities  Capital
                    Corporation
        10.19(1)    Amendment  to Agency  Agreement  dated August 5, 1999 by and
                    between  Neptune  Society and  Standard  Securities  Capital
                    Corporation
        10.20(1)    Form of Subscription Agreement
        10.21(1)    Form of Registration Rights Agreement
        10.22(1)    Debenture and Warrant Purchase  Agreement dated November 24,
                    1999.
        10.23(1)    Form of Convertible Debenture
        10.24(1)    Asset  Purchase  Agreement  dated  December 31, 1999, by and
                    among  Neptune  Society,  Crematory  Society of  Washington,
                    Inc., and John C. Ayres.
        10.25(1)    Asset Purchase  Agreement dated March 15, 2000, by and among
                    Neptune  Society,  Cremation  Society  of Iowa,  Inc.,  Dave
                    Noftsger, and John Bethel
        10.26(1)    Asset Purchase Agreements and Merger Agreement dated July 5,
                    2000,  by and  among  Neptune  Society,  Heritage  Memorial,
                    Community  Memorial  Centers,  David Schroeder,  and Michael
                    Ashe
        10.27(1)    Agency  Agreement  dated for reference  July 31, 2000 by and
                    between  Neptune  Society and  Standard  Securities  Capital
                    Corporation
        10.28(2)    Employment  Agreement  by and  between the Company and Marco
                    Markin
        10.29(2)    Employment  Agreement  by and  between the Company and David
                    Schroeder
        10.30(2)    Employment  Agreement  by and between the Company and Rodney
                    M. Bagley
        10.31(2)    Memorandum of  Understanding  by and between the Company and
                    Private Investment Company
        10.32(2)    Loan  Agreement   dated  August  8,  2001  with  Green  Leaf
                    Investors I, LLC, a California limited liability company
        10.33(2)    Warrant issued to Green Leaf
        10.34(2)    Guaranty issued to Green Leaf
        10.35(3)    Second Debt Restructuring Agreement
        10.36(3)    Third Debt Restructuring Agreement
        10.37(4)    Asset Purchase Agreement effective as of January 31, 2002 by
                    and between Western Management  Services,  L.L.C., an Oregon
                    limited  liability  company,   Wilhelm  Mortuary,   Inc.,  a
                    corporation  incorporated  under  the  laws of the  State of
                    Oregon,   and  The   Neptune   Society,   Inc.,   a  Florida
                    corporation,   and  Neptune  Society  of  America,  Inc.,  a
                    California corporation.
        10.38(4)    Service  Agreement  effective  as of March 8,  2002,  by and
                    between  Western  Management  Services,  L.L.C.,  an  Oregon
                    limited liability company, and The Neptune Society,  Inc., a
                    Florida Corporation.
        10.39(4)    Note  Extension  And  Assumption  Agreement  effective as of
                    January  31,  2002,  and  is  made  by and  between  Western
                    Management  Services,  L.L.C.,  an Oregon limited  liability
                    company, Wilhelm Mortuary, Inc., an Oregon corporation,  The
                    Neptune  Society,  Inc.,  a  Florida  corporation,   Neptune
                    Society of America,  Inc.,  a  California  corporation,  and
                    Green Leaf Investors I, LLC, a California  limited liability
                    company.
        10.40(4)    Convertible  Debenture in the  principal  amount of $75,000,
                    due July 31, 2002,  issued to Green Leaf Investors I, LLC, a
                    California limited liability company.
        10.41(4)    Debenture and Warrant  Amendment  Agreement  effective as of
                    December 31, 2001, by and between The Neptune Society, Inc.,
                    a Florida  corporation,  CapEx,  L.P.,  a  Delaware  limited
                    partnership,  and D.H. Blair Investment Banking Corp., a New
                    York corporation.
        10.42(4)    Form of CapEx, L.P. Debenture Amendment
        10.43(4)    Form  of  D.H.  Blair  Investment  Banking  Corp.  Debenture
                    Amendment
        10.44(4)    Form of Warrant  Amendment


                                       22
<PAGE>


        Exhibit
        Number      Description
        ------------------------------------------------------------------------
        10.45(5)    Form of Debenture
        10.46       Employment  Agreement by and between the Company and Douglas
                    Irving
        99.1        Section 906 Certificate of Chief Executive Officer
        99.2        Section 906 Certificate of Chief Financial Officer

----------
(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-Q/A  (for the Period  ended June
     30, 2001) on August 20, 2001.
(4)  Previously  filed as an exhibit to Form 10-K (for the period ended December
     31, 2001) on April 2, 2002.
(5)  Previously  filed on Form 10-Q (for the period ended March 31, 2002) on May
     15, 2002.
(6)  Previously filed on Form 8-K on June 3, 2002.

----------

(b)  Reports on Form 8-K

     None


                                       23
<PAGE>


SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant has duly caused this Form 10-Q,  period ending  September 30, 2002 to
be signed on its behalf by the undersigned duly authorized.

                                      THE NEPTUNE SOCIETY

                                      /s/ Marco Markin
November  14, 2002                    --------------------------------------
                                      Marco Markin, Chief Executive Officer
                                      (Principal Executive Officer)


                                      /s/ Rodney M. Bagley
November 14, 2002                     --------------------------------------
                                      Rodney M. Bagley, Chief Financial Officer
                                      (Principal Accounting Officer)


                                       24
<PAGE>


                                 CERTIFICATIONS

                            SECTION 302 CERTIFICATION

I, Marco Markin, certify that:

1. I have reviewed this quarterly report of The Neptune Society, Inc.

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

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

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

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

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

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

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

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

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

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

                                          /s/ Marco Markin
                                          -------------------------------------
                                          Marco Markin, Chief Executive Officer
                                          November 14, 2002


                                       25
<PAGE>


                            SECTION 302 CERTIFICATION

I, Rodney Bagley, certify that:

1. I have reviewed this quarterly report of The Neptune Society, Inc.

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

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

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

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

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

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

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

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

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

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

                                         /s/ Rodney Bagley
                                         --------------------------------------
                                         Rodney Bagley, Chief Financial Officer
                                         November 14, 2002


                                       26