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 March 31, 2001

                                       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 of            (I.R.S. Employer Identification No.)
 incorporation or organization)


3500 W. Olive, Suite 1430, Burbank, California                91505
----------------------------------------------       ---------------------------
   (Address of principal executive offices)                 (Zip Code)



       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.

               7,666,039 shares of Common Stock, $0.002 par value,
                        outstanding as of June 1, 2001.


<PAGE>

                            THE NEPTUNE SOCIETY, INC.
                                    FORM 10-Q
                                      INDEX

<TABLE>

                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
PART 1  --  FINANCIAL INFORMATION........................................................................1

Item 1: Condensed Consolidated Financial Statements......................................................1

        Condensed Consolidated Balance Sheets--March 31, 2001 and December 31, 2000......................1
        Condensed Consolidated Statements of Operations--March 31, 2001 and 2000.........................2
        Condensed Consolidated Statements of Cash Flows--March 31, 2001 and 2000.........................3
        Notes to Condensed Consolidated Financial Statements.............................................4

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

Item 3: Quantitative and Qualitative Disclosures About Market Risk......................................17



PART II  --  OTHER INFORMATION..........................................................................18

Item 1. Legal Proceedings...............................................................................18

Item 2.  Changes in Securities..........................................................................18

Item 3. Defaults Upon Senior Securities.................................................................18

Item 4. Submission of Matters to a Vote of Security Holders.............................................19

Item 5.  Other Information..............................................................................19

Item 6.  Exhibits and Reports on Form 8-K...............................................................19

Signatures..............................................................................................20

</TABLE>





                                       ii
<PAGE>

                         PART 1 -- FINANCIAL INFORMATION

Item 1: Financial Statements

                              Neptune Society, Inc.
                      Condensed Consolidated Balance Sheets
                      March 31, 2001 and December 31, 2000
                                   (Unaudited)



<TABLE>
                                                                March 31, 2001     December 31, 2000
                                                             -------------------   -----------------
<S>                                                           <C>                        <C>
                       Assets
Current Assets:
   Cash                                                       $     786,078              1,065,339
   Accounts receivable                                              333,189                234,370
   Prepaid expenses and other current assets                        287,747                121,061
                                                             -------------------   -----------------
                                Total current assets              1,407,014              1,420,770

Property and equipment, net                                       2,298,708              2,365,806
Names & reputations,  net                                        29,052,067             29,451,385
Non compete agreements,  net                                        401,811                474,051
Deferred financing costs                                          1,002,591              1,208,081
Deferred charges and other assets                                 3,137,686              2,572,340
                                                             -------------------   -----------------
                                                                 37,299,877             37,492,433
                                                             ===================   =================
        Liabilities and Shareholders' Equity
Current liabilities:
   Current portion of long term debt                              5,751,694             $5,748,946
   Accounts payable                                               1,100,484              1,399,538
   Accrued and other current liabilities                          1,349,493              1,132,671
                                                             -------------------   -----------------
                           Total current liabilities              8,201,671              8,281,155

Long term debt                                                       92,208                100,878
Convertible debentures                                            5,966,051              5,937,303
Other long term liabilities                                         573,865                467,087
Deferred pre-need revenue                                         8,147,732              6,598,247
                                                             -------------------   -----------------
                                                                 22,981,527             21,384,670
                                                             -------------------   -----------------
Shareholders' equity:
   Common stock                                                      15,323                 15,323
   Additional paid-in capital                                    26,822,605             26,821,240
   Accumulated deficit                                         (12,519,578)           (10,728,800)
                                                             -------------------   -----------------
                          Total shareholders' equity             14,318,350             16,107,763
                                                             -------------------   -----------------
                                                              $  37,299,877            37,492,433
                                                             ===================   =================
</TABLE>


See accompanying notes to condensed consolidated financial statements.



                                       1
<PAGE>

                              Neptune Society Inc.
                 Condensed Consolidated Statements of Operations
               For the Three Months Ended March 31, 2001 and 2000
                                   (Unaudited)


<TABLE>
                                                                           March 31, 2001        March 31, 2000
                                                                         ------------------    ------------------
<S>                                                                      <C>                       <C>
Revenues
  Services and merchandise                                               $   2,241,688             1,328,381
  Management and finance fees                                                  447,612               274,000
                                                                         ------------------    ------------------
                                                     Total revenues          2,689,300             1,602,381

Cost and expenses                                                            1,385,150               951,344
                                                                         ------------------    ------------------
                                                     Gross profit            1,304,150               651,037

General and administrative expenses                                          1,758,690             1,414,753
Amortization and depreciation expense                                          541,305               412,562
Professional fees                                                              176,420               229,890
                                                                         ------------------    ------------------
Total general and administrative expenses                                    2,476,415             2,057,205

Income (loss) from operations                                               (1,172,265)           (1,406,168)

Interest expense                                                               618,513               702,000
                                                                         ------------------    ------------------
Income (loss) before provision for taxes                                    (1,790,778)           (2,108,168)

Income tax benefit                                                                   -               254,128
                                                                         ------------------    ------------------
        Income (loss) before cumulative effect
        of a change in accounting principle                                 (1,790,778)           (1,854,040)
                                                                         ------------------    ------------------
         Cumulative effect of change in accounting principle                         -              (403,927)

                                                     Net loss            $  (1,790,778)           (2,257,967)
                                                                         ==================    ==================
Earnings (loss) per share -
 Income(loss) before cumulative effect
    of a change in accounting principle
Basic & Diluted                                                          $       (0.23)                (0.28)

Cumulative effect on prior years of changing
   to a different revenue recognition method
Basic & Diluted                                                          $           -                 (0.06)

Net loss
Basic & Diluted                                                          $       (0.23)                (0.34)

Weighted average number of shares -
Basic & Diluted                                                              7,661,369             6,606,061

</TABLE>



See accompanying notes to condensed consolidated financial statements.



                                       2
<PAGE>

                              Neptune Society Inc.
                 Condensed Consolidated Statements of Cash Flows
               For the Three Months Ended March 31, 2001 and 2000
                                   (Unaudited)


<TABLE>
                                                                             March 31,              March 31,
                                                                               2001                   2000
                                                                         ------------------     ------------------
<S>                                                                        <C>                     <C>
Net loss                                                                   $ (1,790,778)           (2,257,967)
Adjustments to reconcile net loss to net cash
  used in operating activities:
   Depreciation & amortization                                                  541,305               412,562
   Accretion of discount on notes payable                                        28,750               287,374
   Non-cash interest & amortization of deferred finance costs                   308,944               223,470
   Stock compensation                                                             1,365                     -
   Deferred tax asset                                                                 -              (410,572)

Accounts receivable                                                             (98,819)              (33,138)
Prepaid & other current assets                                                 (166,686)             (277,772)
Deferred charges & other assets                                                (565,346)             (208,481)
Accounts payable                                                               (299,054)              (81,287)
Accrued & other liabilities                                                     220,704               197,908
Deferred pre-need revenues                                                    1,549,485             1,434,249
                                                                         ------------------     ------------------
Cash used in operating activities                                              (270,131)             (713,654)
                                                                         ------------------     ------------------
Property, plant & equipment                                                      (3,208)             (232,030)

Acquisitions, net                                                                     -              (110,000)
                                                                         ------------------     ------------------
Cash used in investing activities                                                (3,208)             (342,030)
                                                                         ------------------     ------------------
Repayment of debt                                                                (5,922)           (4,410,479)

Proceeds from issuance of debt                                                        -               750,000
                                                                         ------------------     ------------------
Cash used in  financing activities                                               (5,922)           (3,660,479)
                                                                         ------------------     ------------------
Net decrease in cash                                                           (279,261)           (4,716,163)

Cash, beginning of period                                                     1,065,339             6,825,533
                                                                         ------------------     ------------------
Cash, end of period                                                        $    786,078             2,109,370
                                                                         ==================     ==================
Supplemental disclosure of cash flow information:

   Cash paid during the period for interest                                $    194,545               191,156
                                                                         ==================     ==================
</TABLE>



See accompanying notes to condensed consolidated financial statements.



                                       3
<PAGE>

                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

               FOR THE THREE MONTHS ENDED MARCH 31, 2000 and 2001




(1)  The Business

     Neptune Society,  Inc., 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,  New York and Washington.  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.  Neptune  Society,  Inc.  operates
     crematories in Los Angeles, California and Spokane, Washington.

     As of March  31,  2001,  the  Company  has a  working  capital  deficit  of
     $6,795,000.   The  Company  is  currently   exploring   various   financing
     alternatives to address such working capital deficiency.

(2)  Interim Financial Statements (Unaudited)

     Basis of Presentation

     The condensed  consolidated financial statements for the three months ended
     March  31,  2001 and 2000  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 filed  with  the  Securities  and  Exchange
     Commission  (the  Commission)  for the year ended  December 31,  2000,  and
     should  be  read  in  conjunction  therewith.   The  accompanying  year-end
     condensed  consolidated  balance  sheet was derived from audited  financial
     statements  but does not include  all  disclosures  required by  accounting
     principles  generally accepted in the United States.  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--We  recognize  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--We  sell 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.



                                       4
<PAGE>

     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,  Iowa, Washington and Oregon 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 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 current state regulations.
     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,  (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  intends  to  recognize  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.  The Company  has not  recognized  any  pre-need
     merchandise  revenue  subsequent to January 1, 2000,  since the  additional
     revenue recognition criteria have not been met.

     Florida and New York do not allow us 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.

     We are allowed  under state  regulations  in 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.

     Pre-need  installment  sales--We also sell 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  our  accounting  policies.  Due to the  uncertainty  of
     collections of such accounts,  we record these  transactions  in accordance
     with our revenue recognition accounting policies as cash is received.



                                       5
<PAGE>

     Worldwide  travel  sales--We  sell 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. We also sell 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.

     Commission   income--Under  pre-need  cremation  services  and  merchandise
     arrangements  funded  through  insurance  purchased by customers from third
     party  insurance  companies,  we  earn  a  commission  on the  sale  of the
     policies. Commission income, net of related expenses, are 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 us as
     cremation services and merchandise are delivered.

     Direct and indirect  costs--We  expense  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

     For the three months ended March 31, 2001 and 2000,  basic and diluted loss
     per share is computed by dividing net loss by the weighted  average  number
     of common  shares  outstanding  during the  period.  As of March 31,  2001,
     options to purchase  241,500  shares of common stock at prices ranging from
     $12.12  to  $14.25  per  share,  13%  convertible   debentures  (which  are
     convertible  into  500,000  shares of common stock at $10.00 per share with
     detachable  warrants to purchase  200,000  shares of common stock at prices
     ranging  from  $10.42 to 12.50 per  share)  and 8%  convertible  debentures
     (which are  convertible  into 83,333  shares of common  stock at $12.00 per
     share)  were not  included  in the  computation  of diluted  loss per share
     because the effect would be antidilutive.

     As of March 31, 2000, options to purchase 519,250 shares of common stock at
     prices  ranging  from  $11.75  to  $12.12  per  share  and 13%  convertible
     debentures  (which are  convertible  into 500,000 shares of common stock at
     $10.00 per share with  detachable  warrants to purchase  200,000  shares of
     common  stock at prices  ranging  from  $10.42 to 12.50 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 May 19, 2000, the Company's  Board of Directors  authorized
     and affected a 1 for 2 reverse split of its common stock. Per share amounts
     in the  accompanying  consolidated  financial  statements give  retroactive
     effect to the reverse stock split.

     During the three months ended March 31, 2001, no options to acquire  common
     stock were granted.  In addition,  118,250 options were canceled during the
     three-month period.

     At March 31,  2001,  7,661,369  shares of the  Company's  common stock were
     issued and outstanding.



                                       6
<PAGE>

(5)  Debt

     Long-term debt at March 31, 2001 and December 31, 2000,  respectively,  was
     as follows:

<TABLE>
                                                                    Mar. 31, 2001      Dec. 31, 2000
                                                                   --------------      -------------
     <S>                                                          <C>                    <C>
     13% Convertible debentures, due February 24, 2005.            $   5,000,000         5,000,000

     Note payable, due July 31, 2001. (a)                              4,724,440         4,724,440

     Note payable due on September 30, 2001.                           1,000,000          1,000,000

     8% Convertible debentures, due July 17, 2003. The balance
     is net of unaccreted discount of $33,949, arising from the
     beneficial conversion feature of the debentures.                    966,051            937,503

     Notes payable due May 31, 2002.                                      29,462             35,184

     Line of credit, due April 1, 2002.                                   90,000             90,000
                                                                   --------------      -------------
                                                                      11,809,953         11,787,127
     Less current installments                                         5,751,694          5,748,946
                                                                   --------------      -------------
                                                                   $   6,058,259          6,038,181
</TABLE>
     -----------------------
     (a)  On July  31,  2000,  the  Company  restructured  its  note  due to the
          Weintraub  Trust  resulting  in  a  remaining  balance  of  $4,724,440
          outstanding and extended the due date on such amount to July 31, 2001.
          In  consideration  for the  extension  of the due  date,  the  Company
          guaranteed the difference between $47,250 and the aggregate cash to be
          received on the sale of 3,375  shares of the  Company's  common  stock
          held by the Weintraub  Trust monthly over the extension  term (a total
          of 40,500 shares). As a result of the guarantee,  the Company has paid
          and expensed $111,000 through March 31, 2001. The Company has recorded
          a liability  and deferred  financing  costs for the fair value of such
          guarantee  and  adjustments  to such  liability  are recorded  through
          interest expense.

(6)  Income Taxes

     As a result of the  Company's  continuing  losses,  during the three months
     ended March 31, 2001, the Company established a valuation allowance against
     all of its deferred tax assets.




                                       7
<PAGE>

(7)  Litigation

     On May 15, 2000, Leneda,  Inc. dba Neptune Society of San Diego County, San
     Bernardino County,  Riverside County, and Imperial County filed a Complaint
     for  service  mark  infringement,   breach  of  contract,  unfair  business
     practices,  and  interference  with prospective  economic  advantage in the
     United States District Court in and for the Central  District of California
     (Honorable Gary A. Fees). Both Leneda and we operate under the service mark
     "Neptune Society", and the concurrent use of that mark was the subject of a
     lawsuit before the U.S. Patent and Trademark  Office,  which stretched from
     1986 to 1995.  We and  Leneda  were  parties  to that  lawsuit,  which  was
     resolved  through a settlement  agreement that, in essence,  divided up the
     territories  in which  the  parties  could use the  mark.  Leneda  received
     exclusive  rights in four  southern  California  counties  and we  received
     rights for use in some limited  areas in the Los Angeles,  California  area
     and  outside  of  California.  Subsequent  to  the  settlement,  we  had an
     arrangement  with Leneda whereby Leneda would perform at-need  services for
     certain  of  the  pre-need  contracts  sold  within  Leneda's  territories.
     Leneda's  lawsuit  alleges that we  unlawfully  used a trademark,  "Neptune
     Society",  for certain services in a prohibited  geographic area defined by
     the settlement agreement.

     Thus far, we have answered the complaint and asserted affirmative defenses.
     We have also  counterclaimed  for breach of contract  and breach of implied
     covenants  of good  faith  and fair  dealing.  Leneda  filed a  motion  for
     preliminary  injunction  that sought to prohibit  Neptune's use of the mark
     pending  resolution of the  litigation  and a freeze of assets.  We opposed
     this  motion,  which the Court  granted in part  (regarding  the  temporary
     prohibition  on using  the mark) and  denied in part  (regarding  the asset
     freeze) on July 31, 2000.  Under the order,  we are prohibited from selling
     Pre-Need plans under the name "Neptune Society" within Leneda's  territory,
     which  consists of four  counties in Southern  California:  San  Bernadino,
     Imperial, Riverside and San Diego. Leneda is seeking monetary damages in an
     unspecified amount. We intend to defend this case vigorously.

     We began  marketing  pre-need plans in the counties  affected by the Leneda
     litigation  under the name "Trident  Society," which is not affected by the
     litigation.



                                       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 competition
for and availability of acquisitions, our ability to manage an increasing number
of sales offices and crematories, our ability to retain key management personnel
and to  continue  to  attract  and retain  skilled  funeral  home and  crematory
management personnel,  state and federal regulations,  changes in the death rate
or deceleration of the trend towards cremation, 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
registration  statement  on Form 10  filed  with  the  Securities  and  Exchange
Commission.  The Company  assumes no obligation to publicly update or revise any
forward-looking  statements made therein or any other forward-looking statements
made by the Company.

     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 June 4,
2001, we operate 18 locations serving  California,  Florida,  Iowa,  Oregon, New
York,  and  Washington.  Our strategy is to grow by: (i)  selectively  acquiring
small,  family-owned  cremation service providers  strategically  located across
North America;  (ii)  initiating  start up operations to be associated  with key
acquisitions;  (iii)  operating all our locations  under one nationally  branded
name, "The Neptune Society" (where permitted);  (iv) avoiding direct competition
with corporate  consolidators by concentrating  solely on 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.

     During the quarter  ended March 31,  2001,  we acquired our  operations  in
Iowa, and subsequent to March 31, 2001, we acquired our operations in Oregon. As
a result of these  acquisitions,  our historical  results of operations may vary
from future results and  period-to-period  comparisons  may not be indicative of
our future results.


SELECTED FINANCIAL INFORMATION

     The selected financial  information presented below as of and for the three
months  ended March 31, 2001 and 2000 are derived from the  unaudited  condensed
consolidated  financial  statements of the Company. The following discussion and
analysis  is  provided  to  increase  understanding  of,  and  should be read in
conjunction   with,  the  unaudited   consolidated   financial   statements  and
accompanying notes.


<TABLE>
                                                         March 31, 2001   % of Revenue  March 31, 2000  % of Revenue
                                                       ----------------   ------------  --------------  ------------
                                                          (unaudited)      (unaudited)     (unaudited)   (unaudited)
<S>                                                     <C>                <C>           <C>              <C>
Revenues
   Services and merchandise                             $   2,241,688         83.4%$      1,328,381         82.9%
   Management and finance fees                                447,612         16.6%         274,000         17.1%
                                                       ----------------   ------------  --------------  ------------
                            Total revenues                  2,689,300        100.0%       1,602,381        100.0%

Cost and expenses                                           1,385,150         51.5%         951,344         59.4%
                                                       ----------------   ------------  --------------  ------------
                            Gross profit                    1,304,150         48.5%         651,037         40.6%

General and administrative expenses                         1,758,690         65.4%       1,414,753         88.3%
Amortization and depreciation expense                         541,305         20.1%         412,562         25.7%
Professional fees                                             176,420          6.6%         229,890         14.3%
                                                       ----------------   ------------  --------------  ------------
Total general and administrative expenses                   2,476,415         92.1%       2,057,205        128.4%

Loss  from operations                                      (1,172,265)       (43.6%)     (1,406,168)       (87.8%)
</TABLE>



                                       10
<PAGE>


<TABLE>
                                                         March 31, 2001   % of Revenue  March 31, 2000  % of Revenue
                                                       ----------------   ------------  --------------  ------------
                                                          (unaudited)      (unaudited)     (unaudited)   (unaudited)
<S>                                                     <C>                <C>           <C>              <C>

Interest expense                                              618,513         23.0%         702,000         43.8%
                                                       ----------------   ------------  --------------  ------------
Loss  before provision for taxes                           (1,790,778)       (66.6%)     (2,108,168)      (131.6%)

Income tax benefit                                                  -          0.0%         254,128         15.9%
                                                       ----------------   ------------  --------------  ------------
Loss before cumulative effect
   of a change in accounting principle                     (1,790,778)       (66.6%)     (1,854,040)      (115.7%)

      Cumulative effect of change in accounting                     -          0.0%        (403,927)       (25.2%)
                                                       ----------------   ------------  --------------  ------------
                            Net loss                    $  (1,790,778)       (66.6%)    $(2,257,967)      (140.9%)
</TABLE>


BALANCE SHEET DATA Unaudited)
                                                    March 31,      December 31,
                                                      2001             2000
                                                ------------       -------------

Current Assets                                  $  1,407,014       1,420,770
Current Liabilities                                8,201,671       8,281,155
Long-term Debt                                        92,208         100,878
Convertible Debentures                             5,966,051       5,937,303
Shareholders' Equity                            $ 14,318,350      16,107,763

OTHER FINANCIAL INFORMATION:

Number of Offices                                         18              18


THREE MONTHS ended March 31, 2001 compared with THE Three months ended March 31,
2000:

Results of Operations

     The following  discussion compares the operations of the registrant for the
three months ended March 31, 2001 to the  operations of the  registrant  for the
three months ended March 31, 2000.

Revenues

     Cremation service revenues were $2,242,000 for the three months ended March
31, 2001 compared to $1,328,000 for the same period in 2000.  Revenues increased
68.8%  due to  increased  at-need  and  pre-need  fulfillment  activity  and the
introduction of a new travel assurance  product  offering.  At-need and pre-need
fulfillment  case  volume  increased  50.1% and  27.8%,  respectively,  over the
comparable 2000 period. The introduction of the Worldwide Travel Assurance Plan,
a new product offering, during the first quarter of 2001 contributed $295,000 to
the increase in revenues.



                                       11
<PAGE>

     During the first quarters of 2001 and 2000, merchandise sales of $1,557,000
and  $944,000,  respectively,  were  deferred  as we did not  meet  our  revenue
recognition criteria.  Although such revenues were deferred,  pre-need cremation
arrangement  sales contract volume  increased 75.7% in the first quarter of 2001
over the same period in 2000.

     Revenues  were also lower  during the three  months  ended  March 31,  2001
resulting from the Leneda  litigation for trademark  infringement as a result of
our use of the "Neptune Society" name in Riverside,  Imperial, San Bernadino and
San Diego Counties.  We suspended sales in these areas, and we estimate that the
Leneda  litigation  caused our revenues to decline by  approximately  $50,000 or
1.9% during the three months ended March 31, 2001. See "Legal  Proceedings."  We
began marketing pre-need arrangement  contracts in the Southern California areas
affected by the Leneda  litigation under the Trident  Society,  Inc. name in the
first  quarter of 2001,  which  over time is  expected  to allow us to  generate
revenues from the affected area at historical levels.

     Cremation service and merchandise  revenues related to acquisitions and new
office openings after December 31, 1999 were $457,000 and $29,000, respectively,
for the three  months  ended March 31,  2001 and 2000.  On March 15,  2000,  the
Company acquired the Ankeny, Iowa property.  In the fiscal year 2000, subsequent
to the first quarter,  the Company  acquired the Portland,  Oregon  property and
opened two new offices.  The Company did not acquire or open any new  properties
or offices during the first quarter of 2001.

     Revenues  earned for the three  months  ended  March 31, 2001 and 2000 from
Trust Fund management and finance fees were $448,000 and $274,000, respectively.
The $174,000 or 63.4% increase is attributable to increased  finance fee income.
Finance fees increased due to the Company's  current ability to recognize income
over the life of the pre-need  contract  versus at the end of the  contract,  as
previously recognized.


Costs and Expenses and Gross Profit

     Direct  costs and  expenses  were  $1,385,000  or 51.5% of revenues for the
three months ended March 31, 2001  compared to $951,000 or 59.4% of revenues for
the comparable period in 2000. The $434,000 or 45.6% increase is attributable to
fiscal 2000  acquisitions and new office  openings,  increases in variable costs
related to  increased  pre-need  and at-need  activity  and  increases  in costs
related to a new product  offering.  The gross  profit  during the three  months
ended  March 31,  2001 was  $1,304,000  or 48.5% of total  revenues  compared to
$651,000 or 40.6% for the comparable period in 2000.

General and Administrative Expenses

     General and  administrative  expenses  for the three months ended March 31,
2001 were $1,759,000 or 65.4% of revenues.  General and  administrative  for the
three months  ended March 31, 2000 were  $1,415,000  or 88.3% of  revenues.  The
increase in general  and  administrative  expenses  in 2001  compared to 2000 is
related to additional  costs  associated with the increased number of management
level personnel and the additional  costs  associated with supporting  increased
geographic locations.

Amortization and Depreciation Expenses

     Amortization  and   depreciation   expenses  were  $541,000  and  $413,000,
respectively,  for the three months ended March 31, 2001 and 2000.  The increase
in amortization and depreciation  expenses during 2001 were primarily the result
of the Iowa and Oregon acquisitions.

Professional Fees

     Professional  fees were  $176,000 or 7.0% of revenues  for the three months
ended  March 31, 2001  compared  to $230,000 or 14.4% of revenues  for the three
months ended March 31, 2000. The decrease in professional  fees during 2001 were
related to costs  associated  with the Leneda  litigation and audit and advisory
services in connection  with our ongoing  efforts to register  common stock with
the Securities and Exchange  Commission.  Professional fees also include $83,000
of consulting  fees paid by us to the former  principal  shareholder in 2001 and
2000,   respectively,   for  marketing  and  sales  consultation.   The  Company
anticipates that  professional  fees will remain at approximately the same level
until the Leneda litigation is resolved.



                                       12
<PAGE>

Interest Expense

     Interest  expense was  $619,000 or 23.0% of revenues  for the three  months
ended March 31, 2001. Interest expense was $702,000 or 43.8% of revenues for the
three months ended March 31, 2000. The decrease in interest  expense in 2001 was
a result of our pay-down of  acquisition  debt.  This  reduction  was  partially
offset by the addition of debt related to the Oregon acquisition.

Loss before Cumulative Effect of Change in Accounting Principle

     Loss  before  cumulative  effect of a change in  accounting  principle  was
$1,791,000 and  $1,854,000,  respectively,  for the three months ended March 31,
2001 and 2000.  The loss  related to each  respective  period  differed  for the
reasons described above.

Cumulative Effect of Change in Accounting Principle

     In response to the Securities and Exchange  Commission's  issuance of Staff
Accounting Bulletin No. 101 "Revenue  Recognition in Financial  Statements" (SAB
No. 101), effective January 1, 2000, the Company changed its accounting policies
applicable to pre-need  merchandise sales. The implementation of SAB No. 101 had
no effect on the consolidated cash flows of the Company.

     Prior  to  2000,  revenue  related  to  merchandise  sold  with a  pre-need
cremation   service   arrangement  was  recognized  upon  physical  delivery  of
merchandise  to  the  customer  or  upon  satisfying  certain  state  regulatory
criteria,  which, in California,  Iowa, Washington and Oregon may occur prior to
the performance of cremation services. The Company considered the criteria to be
satisfied  when (i) the Company was permitted to receive one hundred  percent of
the  unrestricted   funds  associated  with  the  merchandise   sale,  (ii)  the
merchandise  was in a condition  for its  intended  use (iii) the Company had no
specific  performance   obligations   essential  to  the  functionality  of  the
merchandise; (iv) the customer accepted title of the merchandise, evidenced by a
written  transfer of title to the customer and  certificate  of ownership.  And,
also at the request of the customer, the Company arranged for the storage of the
merchandise on the customer's  behalf in an insured  location until the customer
picked  up the  merchandise  or at the  time of  need,  but no  later  than  the
customer's  death.  Customers that purchase pre-need  cremation  arrangements in
California,  Iowa,  Washington and Oregon 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 current state  regulations.  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,  (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  deferred
revenues and costs of $1,558,000  and $541,000,  respectively,  during the three
month period ended March 31, 2001,  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.

     The cumulative effect adjustment  represents  revenue and cost deferrals of
$488,000  and  $84,000,  respectively,  related to  pre-need  merchandise  sales
transactions previously recognized in 1999. For the three months ended March 31,
2000 the  effect of this  change on loss  before  the  cumulative  effect of the
accounting  change was to increase  such loss by  $404,000,  or $.06 per diluted
share.

     The Company intends to change its inventory  procedures and sales contracts
to conform to its  revised  revenue  recognition  policy  which will allow it to
recognize pre-need  merchandise revenues prior to the performance of the related
cremation service. The Company expects the cost of such changes to be immaterial
and the impact on the Company's operations to be minimal.



                                       13
<PAGE>

Net Loss

     Net loss was $1,791,000 and $2,258,000,  respectively, for the three months
ended March 31, 2001 and 2000.  The net loss related to each  respective  period
differed for the reasons described above.

Liquidity and Capital Resources

     At March 31, 2001, we had current assets of $1,407,000,  which is comprised
of cash, accounts receivable and prepaid expenses. Our total current liabilities
were $8,202,000 comprised mainly of accounts payable,  accrued liabilities,  and
the  current  portion  of long  term  debt.  We had  long-term  debt,  including
convertible  debentures,  with a carrying value of $6,058,000.  We had a working
capital deficit of $6,795,000 at March 31, 2001.

     In connection  with the acquisition of the Neptune Group on March 31, 1999,
the Company  issued two  promissory  notes totaling $21 million (one note in the
amount of $19 million and one in the amount of $2  million).  At July 31,  2000,
$10 million of long-term  debt  related to the original $19 million  acquisition
note was due. In July and August,  2000, we  negotiated a 12 month  extension on
$4.7 million of the above  mentioned note at an effective  interest rate of 11%,
paid off the $5.3 million remainder of the note and the $1.3 million outstanding
balance related to the original $2 million acquisition note due March 2002. Such
payments were funded with through a private equity  placement of $7 million.  In
connection with the extension of the due date on the $4.7 million, we guaranteed
the  difference  between the aggregate  cash received and $47,250 on the sale of
3,375 shares  monthly of our common stock held by the  Weintraub  Trust over the
extension  term. As a result of the guarantee,  we paid Weintraub Trust $111,000
during the three months ended March 31,  2001.  We recorded a liability  for the
fair value of such  guarantee  and  adjustments  to such  liability are recorded
through interest expense.  At March 31, 2001, a liability of $160,000 related to
the fair value of such  guarantee  was  included  in current  accrued  and other
liabilities in the Company's  consolidated  balance sheet.  We also released Mr.
Weintraub  from liability for loss of, or projected loss of, revenue as a result
of the Leneda legal proceeding. See "Legal Proceedings".

     In connection with the Portland acquisition, we assumed outstanding 9% debt
of $137,000 through May 2002.

     We had net cash  out  flows  from  operating  activities  of  $270,000  and
$714,000,  respectively,  for the three  months  ended  March 31, 2001 and 2000.
Interest  paid for the three months ended March 31, 2001 and 2000 were  $195,000
and $191,000, respectively.

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 operation presented herein and, accordingly, do not express an opinion or any
other  form of  assurance  on it.  Set out  below  is a  summary  of our Plan of
Operation for the fiscal year ending 2001.

Material Commitments--Short-term                                Funding Required
         Cost of sales, general & admin expenditures             $13.8 million
         Current portion of long-term debt                         5.7 million
         Working capital, excluding
                  current portion of long-term debt                2.5 million
         Location expansion                                        2.2 million
         Lease payments                                             .5 million
         Interest payments                                          .4 million
         Contingent payments to former owners                       .3 million
         Consulting fee payments                                    .3 million



                                       14
<PAGE>


         Capital Expenditures                                       .1 million
                                                              ------------------
                  Estimated total
                  Short-term Commitments                          25.8 million
                  Estimated total
                  Cash from Operations                            18.9 million
                  Estimated net Funding Requirements             $ 6.9 million

     Net Cash Flow from existing  locations' on-going  operations:  Management's
current  year budget  projects it will achieve $2.6 million in positive net cash
flows before the payment of debt and interest,  contingent  asset purchase price
and capital expenditures.  We anticipate generating cash receipts from sales and
other income of $17.2 million, on cash expenditures of $14.6 million.

     Working  capital:  The Company had a net  working  capital  deficit of $6.8
million at March 31, 2001.  The  majority of the deficit  relates to the current
portion of long-term  debt of $5.7 million due during the third quarter of 2001.
The  remainder  relates to accounts  payable and accrued  expenses in connection
with our on-going operations.

     Current portion of Long-term Debt:  Acquisition debt of $5.7 million is due
and payable during the third quarter of 2001 as follows: $4.7 million related to
the initial acquisition is due and payable to Emanuel Weintraub on July 31, 2001
and $1 million  related to  acquisition  financing is due and payable to Private
Investment Corp on September 30, 2001.

     Location  expansion:  In accordance with the Management's plan of operation
to add eight new  locations  in the  current  year,  we estimate  our  expansion
investment, including capital expenditures, to be approximately $2.2 million. We
also  anticipate we will generate  current year cash receipts of $1.7 million on
our expansion  investment.  Net negative cash flows from location  expansion are
projected to be approximately $521,000.

     Lease  payments-current year: We are obligated under certain office rental,
facility rental,  storage rental equipment rental,  temporary housing rental and
automotive rental agreements. Current year lease payments amount to $454,000.

     Interest payments:  We carry outstanding debt, including  convertible debt,
requiring  annual  cash  interest  payments  of  $407,000,  payable  in  monthly
installments. There is no guarantee that any convertible debt will be converted;
therefore the maximum amount of interest payments have been projected.

     Consulting  payments:  We are obligated to pay consulting fees of $348,000,
payable in monthly  installments.  We have  consulting  agreements  with Emanuel
Weintraub   and  Charles   Martin,   which  expire  March  2002  and  May  2002,
respectively.  Mr.  Weintraub  is  entitled  to a fee of $27,775  per month with
$7,775 deferred until expiration or termination of the agreement.  At the end of
the agreement  term, Mr.  Weintraub  will receive a balloon  payment of $249,000
plus accrued interest at 9%. Mr. Martin receives a fee of $1,200 per month.

     Contingent  payments  to  former  owners:  Under  the  Washington  and Iowa
acquisition  agreements,  we agreed to pay the former owners,  in cash or common
stock,  at the Company's  option,  a percentage  of gross  revenues and earnings
before interest,  taxes,  depreciation and amortization "EBITDA". The Washington
agreement requires a payment related to gross revenues without regard to EBITDA.
In May 2001,  we issued an  additional  4,670  shares of common  stock valued at
$42,600  under  the  Washington  agreement.  The  Iowa  re-negotiated  agreement
requires  payment  only if both  gross  revenues  and  EBITDA  reach  or  exceed
predetermined  levels.  Iowa's gross revenues and EBITDA did not reach or exceed
predetermined  levels and no additional payment or stock issuance was made. As a
part  of  the  July  2000  Weintraub  debt  re-negotiation,  we  guaranteed  the
difference  between the aggregate cash received and $47,250 on the sale of 3,375
shares  monthly  of our  common  stock  held by the  Weintraub  Trust  over  the
extension term. The maximum  contingent payment at March 31, 2001 resulting from
the guarantee is $189,000.




                                       15
<PAGE>

     Capital  Expenditures:  We  anticipate  capital  expenditures  required for
on-going  operations of existing  locations to amount to approximately  $55,000.
These expenditures include office furniture and office and computer equipment.

     Our total  operating and capital budgets for the fiscal year ended December
31, 2001 is estimated to be approximately $18 million.  We expect operating cash
flows,  before debt  servicing  and  expansion  expenditures,  to be adequate to
finance our basic operations.  We will need to raise  approximately $7.2 million
during the  second and third  quarter  of 2001 to pay the  current  portions  of
long-term  debt due during the third  quarter,  to fund our  location  expansion
program and to meet our working  capital needs.  We intend to raise such capital
by issuance of debt,  equity or  convertible  securities.  We are  attempting to
raise additional  financing;  however,  we have no current arrangement to obtain
such financing and there can be no assurance that financing will be available or
accessible on reasonable terms.

     In addition,  there is no assurance  that our actual  expenditures  for the
fiscal year ending  December  31, 2001 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   obtaining  and   maintaining   licenses  for  our  locations  and  the
professional  fees  associated  with  completing the  registration of our shares
under the 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 take some or all of the  following  actions to reduce our working
capital requirements:

     o    suspend our growth strategy;
     o    consolidate our operations through  reductions in staffing,  marketing
          and sales, promotion and hours of operation;
     o    terminate  our  operations  in  unprofitable  or  difficult to service
          markets;
     o    sell assets or operations in some of the markets we service and/or
     o    suspend our hoperations 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.

Long-Term Debt

     We had outstanding  long-term debt as of March 31, 2001 of $11,810,000.  We
intend  to  finance  our  long-term  debt  obligations  through  cash  flow from
operations  and  through  additional  issuance  of debt,  equity or  convertible
securities.


New Accounting Pronouncements

     In December 1999, the Securities and Exchange  Commission (the  Commission)
issued Staff  Accounting  Bulletin  No. 101 (SAB 101),  Revenue  Recognition  in
Financial  Statements,  which is to be applied  beginning with the fourth fiscal
quarter of fiscal years  beginning  after  December 15, 1999. SAB 101 summarizes
certain  of the  Staff's  views  in  applying  GAAP to  revenue  recognition  in
financial  statements.  The  Company  has  changed  its  accounting  for revenue
recognition  as a  result  of SAB 101 as  described  in Note 2 to the  Condensed
Consolidated Financial Statements.



                                       16
<PAGE>

     In March, 2000 the Financial  Accounting Standards Board (FASB) issued FASB
Interpretation No. 44 (Interpretation  44), "Accounting for Certain Transactions
Involving  Stock  Compensation".  Interpretation  44 provides  criteria  for the
recognition  of  compensation   expense  in  certain  stock-based   compensation
arrangements  that are  accounted for under APB Opinion No. 25,  Accounting  for
Stock-Based  Compensation.  Interpretation  44 is effective  July 1, 2000,  with
certain  provisions  that are  effective  retroactively  to March  15,  1998 and
January  12,  2000.  Interpretation  44 did not impact the  Company's  financial
statements.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as
amended by SFAS No. 137, is effective  for fiscal three months  beginning  after
June 15, 2000. SFAS No. 133 requires the Company to recognize all derivatives as
either assets or liabilities  and measure those  instruments  at fair value.  It
further  provides  criteria for derivative  instruments to be designated as fair
value,  cash  flow  and  foreign  currency  hedges  and  establishes  respective
accounting  standards for reporting  changes in the fair value of the derivative
instruments.  The adoption did not impact the  Company's  financial  position or
results of operations since the Company does not participate in such activities.

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.

         As of March 31, 2001,  the  carrying  value of our long term fixed rate
debt was approximately  $11,810,000,  which  approximated fair value. Fair value
was  determined  using  discounted  future  cash  flows  based  on  our  current
incremental borrowing rates for similar types of borrowing arrangements.








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<PAGE>

PART II  --  OTHER INFORMATION

Item 1.  Legal Proceedings.

Leneda Litigation
-----------------

     On May 15, 2000, Leneda,  Inc. dba Neptune Society of San Diego County, San
Bernardino  County,  Riverside County, and Imperial County filed a Complaint for
service mark infringement,  breach of contract,  unfair business practices,  and
interference with prospective  economic  advantage in the United States District
Court in and for the Central  District of California  (Honorable  Gary A. Fees).
Both Leneda and we operate  under the service mark  "Neptune  Society",  and the
concurrent use of that mark was the subject of a lawsuit before the U.S.  Patent
and  Trademark  Office,  which  stretched  from 1986 to 1995. We and Leneda were
parties to that lawsuit, which was resolved through a settlement agreement that,
in essence,  divided up the territories in which the parties could use the mark.
Leneda received  exclusive  rights in four southern  California  counties and we
received  rights for use in some limited  areas in the Los  Angeles,  California
area  and  outside  of  California.  Subsequent  to  the  settlement,  we had an
arrangement  with Leneda  whereby  Leneda  would  perform  at-need  services for
certain of the pre-need  contracts sold within  Leneda's  territories.  Leneda's
lawsuit  alleges that we unlawfully  used a trademark,  "Neptune  Society",  for
certain  services in a  prohibited  geographic  area  defined by the  settlement
agreement.

     Thus far, we have answered the complaint and asserted affirmative defenses.
We have  also  counterclaimed  for  breach of  contract  and  breach of  implied
covenants of good faith and fair dealing.  Leneda filed a motion for preliminary
injunction that sought to prohibit  Neptune's use of the mark pending resolution
of the  litigation  and a freeze of assets.  We opposed this  motion,  which the
Court granted in part  (regarding  the temporary  prohibition on using the mark)
and denied in part  (regarding  the asset  freeze) on July 31,  2000.  Under the
order,  we are  prohibited  from selling  Pre-Need plans under the name "Neptune
Society" within Leneda's territory,  which consists of four counties in Southern
California: San Bernadino,  Imperial, Riverside and San Diego. Leneda is seeking
monetary  damages  in an  unspecified  amount.  We intend  to  defend  this case
vigorously.

     We began  marketing  pre-need plans in the counties  affected by the Leneda
litigation  under  the name  "Trident  Society,"  which is not  affected  by the
litigation.

     Except as set forth above,  there is no other material  litigation  pending
against us. From time to time,  we may become a party to  litigation  and claims
incident to the ordinary course of its business. While the results of litigation
and claims cannot be predicted with certainty, we believe that the final outcome
of such  matters  will not  have a  material  adverse  effect  on our  business,
financial condition, operating results and cash flows.

Item 2.  Changes in Securities.

     We did not issue any securities during the quarter ended March 31, 2001.

     In May 2001,  the Company issued 4,670 shares of common stock to the former
owners of the Spokane,  Washington property in a private transaction pursuant to
the purchase agreement (the agreement).  The agreement required an adjustment to
the number of original  shares issued to the extent the  Company's  stock traded
below a certain average price for the thirty days immediately  preceding January
2, 2001.  The  Company's  stock  traded  below that price  which  triggered  the
issuance  of  the  above  mentioned  shares.  The  shares  were  issued  to  two
shareholders  pursuant  to  an  exemption  from  the  registration   requirement
available under Section 4(2) of the Securities Act of 1933, as amended.

Item 3.  Defaults Upon Senior Securities.

     None.




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<PAGE>


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

     No matters were submitted to a vote of security  holders during the quarter
covered by this report.

Item 5.   Other Information.

     None

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 Neptune  Society filed May 9, 2000,
                    effecting  a  combination  of the  Corporation's  shares  of
                    common stock

        3.5(1)      Bylaws of Neptune Society

        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




                                       19
<PAGE>

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

        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

        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



                                       20
<PAGE>

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

        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

        10.26(1)    Agency  Agreement  dated for reference  July 31, 2000 by and
                    between  Neptune  Society and  Standard  Securities  Capital
                    Corporation

        21.1(1)     List of Subsidiaries of the Registrant
--------------------

     (1)  Previously filed on February 12, 2001.



     (b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the period.





                                       21
<PAGE>

                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly caused this Form 10-Q,  period  ending March 31, 2001 to be
signed on its behalf by the undersigned duly authorized.

                                  THE NEPTUNE SOCIETY

                                  /s/ Marco Markin
June 4, 2001                      ------------------------------------------
                                  Marco Markin, Chief Executive Officer
                                  (Principal Executive Officer)


                                  /s/ Rodney M. Bagley
June 4, 2001                      -------------------------------------------
                                  Rodney M. Bagley, Chief Financial Officer
                                 (Principal Accounting Officer)









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