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, 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)

   3500 W. Olive, Suite 1430
   Burbank, California 91505                               98105
-----------------------------------        -------------------------------------
       (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.

3,818,400  shares of Common Stock,  $0.008 par value,  outstanding  as of May 3,
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 ..................................15

Item 3: Quantitative and Qualitative Disclosures About Market Risk............23

PART II -- OTHER INFORMATION..................................................24

Item 1. Legal Proceedings.....................................................24

Item 2. Changes in Securities.................................................24

Item 3. Defaults Upon Senior Securities.......................................25

Item 4. Submission of Matters to a Vote of Security Holders...................25

Item 5. Other Information.....................................................25

Item 6. Exhibits and Reports on Form 8-K......................................25

Signatures....................................................................28

<PAGE>

                         PART 1 -- FINANCIAL INFORMATION

Item 1: Financial Statements

                                  Neptune Society, Inc.
                               Consolidated Balance Sheets
                           March 31, 2002 and December 31, 2001

<TABLE>
                                                      March 31, 2002         December 31, 2001
                                                       (unaudited)                (audited)
                                                    -------------------      -----------------
<S>                                                   <C>                          <C>
                 Assets
Current assets:
  Cash                                                $    768,002                 213,219
  Accounts receivable                                    2,409,981               1,751,276
  Prepaid expenses and other current assets                111,352                 113,644
                                                    -------------------      -----------------
                   Total current assets                  3,289,336           2,078,138

Property and equipment, net                                496,657                 548,469
Names and reputations, net                              24,364,472              24,364,472
Non compete agreements, net                                 36,250                  48,333
Deferred financing costs                                 1,326,958               1,539,132
Deferred charges and other assets                        4,991,602               4,343,159
                                                    -------------------      -----------------
                                                        34,505,274              32,921,704
                                                    ===================      =================
        Liabilities and Shareholders' Equity

Current liabilities:
  Current portion of long-term debt                      1,253,664               2,890,215
  Accounts payable                                       1,230,993               1,700,487
  Accrued and other current liabilities                  2,570,036               1,478,188
                                                    -------------------      -----------------
                   Total current liabilities             5,054,693               6,068,889

Long-term debt                                           2,198,661               2,291,575

Convertible debentures                                   5,760,000               5,000,000

Other long-term liabilities                              1,052,716               848,861

Deferred pre-need revenues                              13,842,492              11,688,952
                                                    -------------------      -----------------
                                                        27,908,562              25,898,278
Shareholders' equity:
  Common stock                                              19,074                  17,224
  Additional paid-in capital                            28,645,661              27,886,170
  Accumulated deficit                                  (22,068,023)            (20,879,968)
                                                    -------------------      -----------------
                   Total shareholders' equity            6,596,712               7,023,426
                                                    -------------------      -----------------
                                                      $ 34,505,274              32,921,704
                                                    ===================      =================
</TABLE>

See accompanying notes to consolidated financial statements.



                                       1
<PAGE>

                              Neptune Society, Inc.
                      Consolidated Statements of Operations
                   Three Months ended March 31, 2002 and 2001


<TABLE>
                                                             Three months       Three months
                                                             ended March        ended March
                                                              31, 2002            31, 2001
                                                             (unaudited)        (unaudited)
                                                            --------------     --------------
<S>                                                          <C>                  <C>
Revenues:
  Services and merchandise                                   $  2,511,334         2,241,688
  Management and finance fees                                     265,520           447,612
                                                            --------------     --------------
                                    Total revenues              2,776,855         2,689,300

Costs and expenses                                              1,389,040         1,385,150
                                                            --------------     --------------
                                    Gross profit                1,387,815         1,304,150

General and administrative expenses                             1,825,494         1,758,690

Amortization and depreciation expense                              76,095           541,305

Professional fees                                                 175,117           176,420
                                                            --------------     --------------
Total general and administrative expenses                       2,076,706         2,476,415
                                                            --------------     --------------
Loss from operations                                             (688,891)       (1,172,265)

Interest expense                                                  499,164           618,513
                                                            --------------     --------------
Loss before income taxes                                       (1,188,055)       (1,790,778)

Income tax expense                                                      -                 -
                                                            --------------     --------------
                                    Net loss                 $ (1,188,055)       (1,790,778)
                                                            ==============     ==============
Loss per share - Basic and Diluted                           $      (0.54)            (0.93)

Weighted average number of shares-
  Basic and Diluted                                             2,202,202         1,915,342
</TABLE>


See accompanying notes to consolidated financial statements.



                                       2
<PAGE>

                                      Neptune Society, Inc.
                              Consolidated Statements of Cash Flows
                           Three Months ended March 31, 2002 and 2001


<TABLE>
                                                                Three Months           Three Months
                                                               Ended March 31,        Ended March 31,
                                                                   2002                    2001
                                                                (unaudited)             (unaudited)
                                                               ---------------        ---------------
<S>                                                             <C>                      <C>
Net loss                                                        $(1,188,055)             (1,790,778)
Adjustments to reconcile net loss to net
  net cash provided by (used in) operating activities:
    Depreciation and amortization                                    76,095                 541,305
    Accretion of discount on notes payable                            7,512                  28,750
    Non-cash interest & amortization of deferred
      finance costs                                                 280,703                 308,944
    Stock compensation                                               75,000                   1,365

    Change in operating assets and liabilities:
    Accounts receivable                                            (658,706)                (98,819)
    Prepaid expenses and other current assets                       171,180                (166,686)
    Deferred charges and other assets                              (254,484)               (565,346)
    Accounts payable                                               (469,494)               (299,054)
    Accrued and other liabilities                                    (2,879)                220,704
    Deferred preneed revenues                                     2,153,540               1,549,485
                                                               ---------------        ---------------
Net cash provided by (used in) operating activities:                190,412                (270,131)
                                                               ---------------        ---------------
Cash flows from investing activities:
  Purchases of property and equipment                               (11,218)                 (3,208)
  Acquisitions, net of cash acquired                                      -                       -
                                                               ---------------        ---------------
Net cash used in investing activities                               (11,218)                 (3,208)
                                                               ---------------        ---------------
Cash flows from financing activities:
  Payments on notes payable                                      (1,007,936)                 (5,922)
  Proceeds from issuance of debt, net                               200,000                       -
  Net proceeds of common stock issued                             1,183,525                       -
                                                               ---------------        ---------------
Net cash provided by (used in) financing activities                 375,589                  (5,922)
                                                               ---------------        ---------------
Net increase (decrease) in cash                                     554,783                (279,261)

Cash, beginning of period                                           213,219               1,065,339
                                                               ---------------        ---------------
Cash, end of period                                              $  768,002                 786,078
                                                               ===============        ===============
Supplemental disclosure of cash flow information -
  Cash paid during the period for Interest                          210,948                194,545
                                                               ===============        ===============
</TABLE>


See accompanying notes to consolidated financial statements.



                                       3
<PAGE>

                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 and 2001
                                   (Unaudited)


(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,  2002,  the Company has a working  capital  deficit of $1.8
     million. The working capital deficit included approximately $1.2 million of
     accrued expensed related to the Company's  obligation to issue common stock
     pursuant to a private  placement  sales  agreement  which was  subsequently
     issued in April 2002. 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
     months  ended March 31, 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--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.

     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,  Colorado, Iowa, Washington and
     Oregon may be prior to the performance of cremation  services.  The Company


                                       4
<PAGE>

                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 and 2001
                                   (Unaudited)


     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  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 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  Colorado,  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  March 31,  2002,  the  Company  recognized
     previously   deferred   pre-need   merchandise   revenues   and   costs  of
     approximately $14,000 and $6,000, respectively,  related to the fiscal year
     2001 cumulative effect of change in accounting principle adjustment.

     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. Prior to January 1, 2001, due to
     the  uncertainty  of  collections  of these  accounts,  we  recorded  these
     transactions in accordance with our revenue recognition accounting policies
     as cash was received.


                                       5
<PAGE>

                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 and 2001
                                   (Unaudited)


     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

     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 months ended March 31, 2002,  options to purchase  600,296 shares
     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) were not included in the
     computation  of  diluted  loss  per  share  because  the  effect  would  be
     antidilutive.

     For the three ended March 31, 2001,  options to purchase  60,375  shares of
     common  stock at prices  ranging  from  $48.48 to $57.00  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.

     During the three months ended March 31, 2002, no options to acquire  common
     stock were granted.  In addition,  2,625  options were canceled  during the
     three-month period.

     At March 31,  2002,  2,417,952  shares of the  Company's  common stock were
     issued and outstanding.



                                       6
<PAGE>

                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               FOR THE THREE MONTHS ENDED MARCH 31, 2002 and 2001
                                   (Unaudited)


(5)  Debt

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

<TABLE>
                                                                               March 31,       December 31,
                                                                                 2002              2001
                                                                            --------------    --------------
<S>                                                                          <C>                <C>
13% Convertible debentures, non-amortizing, interest accruing at 13%
per year payable monthly at 6.5% per year, due February 24, 2005.
See (b) below.                                                               $ 5,000,000        5,000,000

Note payable, non-amortizing, interest accruing at 9% per year on
$5,635,905 payable in monthly installments of $37,006. Non-interest
bearing on $9,238,313. Balance due in three payments of $4,874,216,
$5,275,562, and $4,724,440, on January 3, 2000 and July 31, 2000 and
2001, respectively. In July 2000, this note was amended to extend the
due date of $4,724,440 to July 31, 2001. Secured by a first trust deed
on all assets of the Company. See (a), (e) and (l) below.                      2,286,255         2,391,940

Note payable to a private investor, non-interest bearing, non-
amortizing, due on September 30, 2001. 3,000 shares of the
Company's common shares were issued in connection with the
transaction.  The value of these shares were amortized over the life of
the note. See (c) and (h) below.                                                 300,000         1,000,000

13.75% Convertible debentures, non-amortizing, interest accruing at
13.75% payable monthly, due March 2004. The balance is net of
unaccreted discount of $280,000.  See (k) below.                                 720,000           800,000

Note  payable, non-amortizing, non-interest bearing due July 2003.
See (l) below.                                                                   350,000           350,000

13% Convertible debentures, non-amortizing, interest accruing at 12%
per year payable monthly, due July 31, 2003.  See (d), (g) and (m) below.         75,000            75,000

Notes  payable, non-interest bearing payable in monthly installments of
$15,000, due November 2003 and February  2004. The balance is net of
unaccreted discount of $52,731.  See (i) below.                                  332,230            369,872

Note payable, interest accruing at 10% payable in monthly installments
of $14,000, due July 2003.  See (j) below.                                        54,440            94,102
</TABLE>



                                       7
<PAGE>

<TABLE>
                                                                               March 31,       December 31,
                                                                                 2002              2001
                                                                            --------------    --------------
<S>                                                                          <C>                <C>
Notes payable, interest accruing at 9% payable in monthly installments
of $1,244 and $980, respectively, both notes due May 31, 2002.                     4,400            10,877

Line of credit, interest accruing at 9%, interest only payable monthly,
maximum limit $100,000, principal due April 1, 2002.                              90,000            90,000

                                                                               9,212,325        10,181,791
                                                                            --------------    --------------
    Less current installments                                                  1,253,664         2,890,215
                                                                            --------------    --------------
                                                                             $ 7,958,661         7,291,576
                                                                            ==============    ==============
</TABLE>


     (a)  On August 1, 1999, a $19,000,000  note issued in  connection  with the
          acquisition of the Predecessor  was amended as follows:  i) $9,625,088
          of the note became interest free in exchange for $76,000 cash,  34,375
          warrants to acquire common shares at $48 per share and revised payment
          due dates of $386,776  on August 11,  1999,  $4,172,476  on January 3,
          2000 and $5,065,836 on July 31, 2000, and ii) $9,374,912  retained its
          9% interest  rate and became due as follows:  $3,739,008 on August 11,
          1999, $701,740 on January 3, 2000 and $4,934,164 on July 31, 2000. The
          costs associated with the amendment and the fair value of the warrants
          issued have been  deferred  and  recognized  as an  adjustment  to the
          notes'  interest rate on a prospective  basis from August 1, 1999. The
          fair value of the warrants  issued was estimated to be $401,324  based
          on  the  Black-Scholes   option  pricing  model  using  the  following
          assumptions:  dividends yield of zero;  expected  volatility 20%; risk
          free interest rate 4.61%; and expected life of 4 years.

     (b)  On December 30, 1999, the Company issued $5,000,000 of 13% convertible
          debentures  due  February 24, 2005.  The  debentures  were issued with
          detachable  warrants  to acquire  25,000  common  shares at $41.68 per
          share and 25,000 common shares at $50.00 per share.  The fair value of
          the warrants,  $670,409, was recorded as a deferred financing cost and
          a credit to additional paid-in-capital. The following assumptions were
          used in the Black Scholes pricing model:  expected  volatility of 20%,
          risk  free  interest  rate  of  5.11%,  and the  expected  life of the
          warrants of 4 years. The amortization of such deferred  financing cost
          results in an  effective  interest  rate of 15.8%.  In  addition,  the
          debentures are  convertible  to common stock at an initial  conversion
          ratio of 40:1 (adjustable based on certain anti-dilution rights), or a
          total of 125,000 common shares.  The intrinsic value of the beneficial
          conversion  feature,  $562,000,  has  been  recorded  as a  credit  to
          additional  paid-in-capital  and a discount to the related  debt.  The
          fair value of the Company's common stock is based on its quoted market
          price.  Such  discount  was  recognized  as interest  expense over the
          period up to the initial  conversion  date,  September 30, 2000. Under
          the terms of the debenture purchase agreement, the Company has granted
          demand and piggy-back  registration  rights, at the Company's expense,
          for the resale of any shares  received upon  conversion or exercise of
          the  debentures or warrants.  The Company is also  obligated to adjust
          the number of shares  issuable  under the  convertible  debentures and
          warrants  if it issues  additional  shares of common  stock  under the
          following  scenarios:  (i) the  Company  issues  shares  for less than
          $40.00 in cash, in which case the debenture  shall be  convertible  at
          the  lower  price  or  (ii)  the   Company   issues   shares   without
          consideration  in a transaction that results in the issuance of shares
          for  consideration  of less than  $40.00 per share,  in which case the



                                       8
<PAGE>

          debenture  shall be  convertible at a price adjusted to give effect to
          the lower value of the share issuance.

          In December  2001,  in exchange for the  amendment of certain terms in
          the  debenture  agreements,  the Company  agreed to (i) issue  168,750
          shares  of  the  Company's  common  stock  to  the  above  convertible
          debenture holder, (ii) reduce the conversion price to $3.00 per share,
          (iii) accelerate payment of certain deferred interest  payments,  (iv)
          reduce the warrant exercise price to $12.00,  (v) effect a 4:1 reverse
          stock split on or before June 30, 2002,  and (vi)  restrict the amount
          of equity  securities  issued by the  Company.  The  debenture  holder
          agreed to (i) eliminate the "full ratchet" anti-dilution provision and
          (ii) amend the certain debt  coverage  ratios.  The  debenture  holder
          retained certain  anti-dilution rights that would allow it to maintain
          its proportion ownership percentage.

     (c)  On March 31, 2000,  the Company  obtained an additional  $750,000 loan
          from  Private  Investment  Company,  Ltd.,  bringing  the total of the
          promissory  note  to  $1,000,000.   The  note  is  an   interest-free,
          non-amortizing,  promissory  note to be repaid no later than September
          30, 2001.  Financing costs of 3,000 common shares valued at $50.00 per
          share were paid in connection  with this loan and are being  amortized
          to interest expense over the life of the loan.

     (d)  On  July  17,  2000,  the  Company  issued  a  three-year   $1,000,000
          convertible  debenture in connection with the purchase of the Portland
          acquisition   at  an   interest   rate  of  8%,   payable  in  monthly
          installments.  The debenture is convertible  into 20,833 shares of our
          common stock upon election of the holder at any time between the first
          anniversary of the closing date and the due date. The intrinsic  value
          of the  beneficial  conversion  feature,  $115,000  was  recorded as a
          credit to  additional  paid-in-capital  and a discount to the carrying
          value  of the  debentures.  The  discount  is  being  accreted  to the
          redemption  price  of  the  debentures  and  results  in an  effective
          interest  rate of 11.8%.  Upon our  notification  of our  intention to
          redeem  the  debenture,  the  holder  has the  right  to  convert  the
          debenture,  or accept  the cash  payment  and  receive  a  warrant  to
          purchase  shares of our common stock  calculated  by dividing the then
          principal amount by $48.00 at the time of the redemption.  The warrant
          shall be  exercisable  until  July  2003.  We  granted  the  purchaser
          piggyback  registration rights pursuant to which we agreed to register
          the  purchasers'  common  stock in the  event  we file a  registration
          statement,  at our expense,  to register any of our securities for our
          own account or for the account of other security holders.

     (e)  On July  31,  2000,  the  Company  restructured  its  note  due to the
          Weintraub Trust. The Company i) repaid $1,297,778 ($1,024,000 carrying
          value)  outstanding under its $2,000,000  acquisition note, ii) repaid
          $341,396  under  the  $19,000,000  acquisition  note  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 844 shares of the
          Company's  common stock held by the  Weintraub  Trust monthly over the
          extension  term  (a  total  of  10,125  shares).  As a  result  of the
          guarantee, the Company paid $271,000 over the two years ended December
          31, 2001.  The Company  recorded a liability  and  deferred  financing
          costs for the fair value of such  guarantee  and  adjustments  to such
          liability were recorded through interest expense.

     (f)  In August 2001, the Company paid $2,000,000 of its $4,700,000  million
          note  payable  and  restructured  the  remaining  $2.7  million of its



                                       9
<PAGE>

          original  acquisition  debt. The remaining $2.7 million became due and
          payable on January  2, 2002,  along with a cash loan fee of  $168,000.
          The restructured amount will accrue interest at 12% per annum, payable
          monthly. The Company also issued 13,750 shares of the Company's common
          stock  valued at  $224,000.  The value of the shares and the cash loan
          fees was amortized to interest expense over the life of the note.

     (g)  In August 2001,  the Company  borrowed  $1,575,000 at 12% interest per
          annum, payable monthly,  which was due and payable January 2, 2002. Of
          the principle amount,  $75,000 represents a loan fee. The Company also
          issued  3,947 shares of the  Company's  common stock valued at $41,000
          and a warrant to purchase up to 7,500 shares of the  Company's  common
          stock at $41.68 per share.  The value of the shares and  warrants  and
          cash loan fees was amortized to interest  expense over the life of the
          note. The debt is collateralized by certain assets of the Company.

     (h)  In March 2002,  the Company  repaid  $700,000 of the  $1,000,000  note
          payable due to Private Investment Company,  Ltd. The Company agreed to
          repay the remaining  $300,000 note balance the following  month.  Such
          payment was subsequently made in April 2002.

     (i)  In November  2001,  the Company  issued  non-interest  bearing,  notes
          payable of $360,000  and $70,000,  respectively,  in  connection  with
          professional  services  rendered due November 2003 and February  2004.
          The $360,000 note is amortizing at $15,000 per month. The Company also
          issued  25,000  shares  valued at $72,000.  The notes were  discounted
          $65,000  to their  approximate  fair  market  value.  The value of the
          shares and the discount is being  amortized  to interest  expense over
          the  respective  lives of the notes.  The carrying  value of the notes
          payable at December 31, 2001 was  $370,000.  To the extent the Company
          complies  with the terms of the notes,  the note holder shall  forgive
          the $70,000 obligation. The notes are collateralized by certain assets
          of the Company.

     (j)  In November 2001, the Company issued a 10% amortizing, note payable of
          $120,000 in connection with  professional  services  rendered due July
          31, 2002. The debt is collateralized by certain assets of the Company.

     (k)  In December  2001,  the Company  entered into an agreement to borrow a
          total of $1,500,000 for payment of Weintraub debt and working  capital
          purposes.   On  December  28,  2001,   the  Company  issued  a  19.98%
          non-amortizing,  note payable of $800,000 due December 28, 2002. Under
          the  agreement,  the  Company  had the right to  borrow an  additional
          $700,000  at 19.98% due one year from the date of the note which would
          also be non-amortizing.

          In March 2002,  the Company  entered  into an  agreement  to issue the
          holder of this note a 13.75%  convertible  debenture in the  principal
          amount  of  $1,000,000  maturing  in March  2004 in  consideration  of
          $200,000  in cash and the  satisfaction  of a  promissory  note in the
          principal  amount of $800,000.  These  debentures are convertible into
          833,333 shares of the Company's  common stock at $1.20 per share.  The
          Company is obligated to issue 83,333  shares of common stock as a loan
          concession  fee valued at $107,000.  The  convertible  debenture has a
          beneficial  conversion  feature valued at $173,000.  The debenture was
          recorded at its carrying  value of $720,000.  The $280,000  aggregated
          value of the loan conversion fee and the beneficial  conversion fee is
          being  amortized to interest  expense over the life of the  debenture.
          The  effective  interest  rate is  33.6%.  The  debentures  also has a
          mandatory conversion feature and a repayment penalty of 150%.

     (l)  In December 2001, the Company executed an agreement with Mr. Weintraub
          and the Weintraub  Trust  ("Weintraub")  to restructure  the remaining



                                       10
<PAGE>

          $2.7 million of acquisition debt,  previously due January 2002, at 12%
          interest per annum.  On December 28, 2001,  the Company paid Weintraub
          $333,000 of note  principle,  and agreed to amortize  $963,000 over 18
          months and make a lump-sum payment of $1,429,000 in July 2003. Also as
          a part of the  agreement,  the  Company  paid  $168,000  in loan  fees
          related to previous loan restructurings,  issued a 13% non-amortizing,
          note  payable of $350,000 due July 31, 2001 for  additional  loan fees
          related to this  restructuring  and issued  Weintraub 75,000 shares of
          the Company's common stock valued to $126,000. The value of the shares
          and the cash loan fees is being amortized to interest expense over the
          life of the note.  The Company and Weintraub  further agreed to either
          mutual releases with insurers and/or  Weintraub to forebear from suing
          insurers.  The Company also paid-out the remainder of all payments due
          over  Weintraub's  consulting  agreement in the amount of $355,000 and
          terminated the agreement.

     (m)  In December 2001, as a condition of the sale of certain assets related
          to its Portland,  Oregon businesses (the "Oregon Assets"), the Company
          entered  into an agreement to  restructure  and extend its  $1,575,000
          note payable at 12%  previously due January 2, 2002 to a July 2002 due
          date.  Under the agreement,  $1,500,000 of the $1,575,000 note payable
          and the $1,000,000 convertible debenture,  respectively,  were assumed
          by the purchaser of the Oregon Assets.  The debt holder  exchanged the
          remaining  $75,000  of the note  for a 13%  debenture  convertible  at
          $0.33333 per share maturing July 2002, subject to anti-dilution  price
          protection,  which in the  event  that the  Company  effects a reverse
          split of it common stock prior to July 31, 2002, the conversion  price
          of the  convertible  debenture  would not exceed  $0.333333  per share
          (post split).  Also,  the Company issued the debt holder 75,000 shares
          of the Company's  common stock valued at $120,000 and  guaranteed  the
          payment of the  $1,500,000  assumed  note.  The value of the shares is
          being amortized to interest expense over the life of the debenture.

(6)  Income Taxes

     As a result of the  Company's  continuing  losses,  during the three months
     ended March 31, 2002, the Company did not recognize any tax benefit related
     to its tax net operating losses.

(7)  Subsequent Events

     In April  2002,  the  Company  received  $300,000  of  stock  subscriptions
     receivable at March 31, 2002, and issued  1,388,889 shares of the Company's
     common stock pursuant to a March 2002 private placement agreement.

     In April 2002,  the Company  became  obligated  to issue  64,448  shares of
     common stock to CapEx, L.P. and 42,992 shares of common stock to D.H. Blair
     Investment  Banking  Corp.  at $1.08 per  share in  connection  with  their
     exercise of  preemptive  rights  granted under the terms of a Debenture and
     Warrant Amendment Agreement dated effective December 31, 2001. In addition,
     we issued 13.75% convertible  debentures in the principal amount of $42,992
     to stock to CapEx, L.P. and $28,661 to D.H. Blair Investment  Banking Corp.
     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.  The shares issued to CapEx,  L.P. and D.H. Blair
     Investment  Banking Corp.  and the shares  issuable upon  conversion of the



                                       11
<PAGE>

     convertible  debenture were  registered for resale in the  registration  in
     which this prospectus was filed with the SEC.

(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 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.

     The  Company  is  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 the Company
     evaluate its 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  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,  the
     Company 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 the Company to perform an assessment of whether
     there  is an  indication  that  goodwill  is  impaired  as of the  date  of
     adoption.  To accomplish this the Company must identify 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
     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  the  Company  must  perform  the  second  step  of  the
     transitional  impairment test. In the second step, the Company 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



                                       12
<PAGE>

     required to be completed as soon as possible,  but no later than the end of
     the year of adoption.  Any transitional  impairment loss will be 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  expects  to  have  unamortized
     goodwill  in the  amount of $24.4  million  which  will be  subject  to the
     transition  provisions  of  Statements  141 and 142.  Amortization  expense
     related to goodwill was $1.7 million and $1.8  million,  respectively,  for
     the years ended December 31, 2000 and 2001. Because of the extensive effort
     needed  to  comply  with  adopting  Statements  141  and  142,  it  is  not
     practicable to reasonably  estimate the impact of adopting these Statements
     on the Company's financial statements at the date of this report, including
     whether  any  transitional   impairment  losses  will  be  required  to  be
     recognized as the cumulative effect of a change in accounting principle.

     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.

     The  Company  is  required  to adopt  Statement  144 no later than the year
     beginning  after  December  15, 2001.  Accordingly,  the Company will adopt
     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 October 2001,  the FASB recently  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 are  incurred.  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



                                       13
<PAGE>


     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.











                                       14
<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
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.

Overview

     We are a provider of pure cremation  services in North  America.  As of May
14, 2002, we operate 18 locations serving California,  Colorado,  Florida, Iowa,
Oregon,  New York and  Washington.  Our  strategy is to grow by: (i)  initiating
start-up operations;  (ii) selectively acquiring small,  family-owned  cremation



                                       15
<PAGE>

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.

     During the three  months  ended March 31, 2002 and 2001,  respectively,  we
made no  acquisitions.  We opened an office in a suburb of Denver,  Colorado  in
January 2002

     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.

                         SELECTED FINANCIAL INFORMATION

     The selected financial  information presented below as of and for the three
months  ended March 31, 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.  Three  Months  Ended  Three  Months  Ended March 31, 2002 March 31, 2001

<TABLE>
                                           Three Months         Three Months
                                              Ended                 Ended
                                          March 31, 2002        March 31, 2001
                                          ------------------------------------
                                           (in 000's except per share amounts)
                                            (unaudited)          (unaudited)

INCOME STATEMENT DATA:

<S>                                         <C>                  <C>
Total Revenue                               $     2,777          $     2,689
Gross Profit                                      1,388                1,304
General and Administrative Expenses               1,825                1,759
Professional Fees                                   175                  176
Amortization and Depreciation Expense                76                  541
Operating Loss                                     (689)              (1,172)
Interest Expense                                    499                  619
Net Loss                                         (1,188)              (1,791)
Loss per share                                       (0.54)               (0.93)
Weighted Average Number of Shares                 2,202                1,915
</TABLE>

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

<TABLE>
<S>                                                 <C>                  <C>
Total Revenue                                       100%                 100%
Gross Profit                                         50%                  48%
General and Administrative Expenses                  66%                  65%
Professional Fees                                     6%                   7%
Amortization and Depreciation Expense                 3%                  20%
Operating Loss                                      -25%                 -44%
Interest Expense                                     18%                  23%
Net Loss                                            -43%                 -67%
</TABLE>



                                       16
<PAGE>

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

<S>                                         <C>                  <C>
Current Assets                              $     3,289          $     2,078
Current Liabilities                               5,055                6,069
Long-Term Debt                                    2,199                2,292
Convertible Debentures                            5,760                5,000
Shareholders' Equity                              6,597                7,023
</TABLE>

OTHER FINANCIAL DATA:
Number of Offices                                    18                   18


THREE MONTHS ended March 31, 2002 compared with THE Three months ended March 31,
2001:

Results of Operations

     The following  discussion compares the operations of the registrant for the
three months ended March 31, 2002 to the  operations of the  registrant  for the
three months ended March 31, 2001.

Revenues
--------

     Effective on October 1, 2001, the Company  adopted changes to its inventory
management  policy in an effort to reduce  expenses  related to storing  certain
delivered  merchandise in connection  with the sale of pre-need  contracts.  The
Company  will  continue  to  deliver  and  store  certain  merchandise  sold  in
connection  with pre-need  sales  contracts as required by  applicable  law, but
because this certain  merchandise  is identical in each pre-need  contract,  the
Company will no longer segregate and  specifically  identify such merchandise by
customer. As a result of this change in inventory management policy, the Company
will not continue to recognize  revenue on the sale of certain  future  pre-need
merchandise  sales.  Merchandise  and service sales of $1,977,000  were deferred
during the quarter ended March 31, 2002. This change in inventory  management is
expected to result in an immediate  improvement  in the Company's cash flow. The
Company  anticipates  recognizing cost savings of approximately  $300,000 during
the year ending December 31, 2002. See "Liquidity and Capital Resources."

     Cremation  service and  merchandise  revenues were $2,511,000 for the three
months ended March 31, 2002 compared to $2,242,000  for the same period in 2001,
an increase of $269,000 or 12%.  The  increase  was  primarily  due to increased
travel plan sales, $731,000 during the quarter ended March 31, 2002, compared to
$295,000 during the same quarter in 2001. This increase was partially off-set by
a reduction  in cremation  revenues,  resulting  from our sale of our  crematory
business in Portland, Oregon.

     During the three  months  ended  March 31, 2002 and 2001,  merchandise  and
service sales of $1,977,000 and  $1,558,000,  respectively,  were deferred as we
did not meet our revenue recognition criteria.  The $419,000 or 27% increase was
primarily due to increased pre-need merchandise and service sales activity.

     In January  2002,  we opened a new office in a suburb of Denver,  Colorado.
The  Company did not acquire or open any new  properties  or offices  during the
first  quarter of 2001.  We operated 18 offices at March 31,  2002.  The Company
intends to open three  additional  offices  during the year ending  December 31,
2002.



                                       17
<PAGE>

     Cremation  service and  merchandise  revenues  generated by offices  opened
after December 31, 2000 were $44,000 for the quarter ended March 31, 2002 and $0
for the same period in 2001.

     Revenues  earned for the three  months  ended  March 31, 2002 and 2001 from
trust fund management and finance fees were $266,000 and $448,000, respectively.
The trust fund  management  and finance fees declined  $182,000 or 41% resulting
from decreased  management fees due to reduced  investment yields, and decreased
finance fees due to increased paid-in-full sales versus installment sales.

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

     Direct costs and expenses were  $1,389,000 or 50% of revenues for the three
months ended March 31, 2002  compared to  $1,385,000  or 52% of revenues for the
comparable period in 2001. The $4,000 or 1% decrease was primarily  attributable
to reduced  cremation  costs  resulting  from the  divestiture  of the Portland,
Oregon properties.  These cost savings were partially off-set by costs to open a
new office and increased  variable costs related to travel  revenues.  The gross
profit  during the three  months ended March 31, 2002 was  $1,388,000  or 50% of
total revenues  compared to $1,304,000 or 48% for the comparable period in 2001,
an $84,000 increase.

     The gross profit margin for the three months ended March 31, 2002 increased
6% over the  comparable  2001  period.  The  increase was due in part to reduced
fixed  cremation  costs  resulting  from the sale of our  crematory in Portland,
Oregon, offset by increased travel sales in the first quarter of 2002. The gross
margin  related  to travel  sales was higher  than the  Company's  gross  margin
related to cremation services.

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

     General and  administrative  expenses  for the three months ended March 31,
2002 were $1,825,000 or 66% of revenues. General and administrative expenses for
the three  months  ended  March 31,  2001 were  $1,759,000  or 65% of  revenues.
General and administrative expenses increased $67,000 or 4% in the first quarter
of 2002  compared to 2001 due  primarily to  additional  costs  associated  with
supporting an increased  number of geographic  locations.  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  $76,000  and  $541,000,
respectively,  for the three months ended March 31, 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."

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

     Professional  fees were  $175,000  or 6% of revenues  for the three  months
ended March 31, 2002 compared to $176,000 or 7% of revenues for the three months
ended March 31, 2001.  Professional  fees primarily  related to general business
matters and audit and tax services.  Professional  fees also include  $83,000 of
consulting fees paid by us to the former principal shareholder for marketing and
sales  consultation  services  in the  first  quarter  2001  and 0 in  2002  The
consulting  agreement  with the  former  principal  shareholder  was  terminated
effective December 31, 2001.

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

     Interest expense was $499,000 or 18% of revenues for the three months ended
March 31, 2002  compared to  $619,000  or 23% of revenues  for the three  months
ended March 31, 2001. Interest expense decreased primarily due to the payment of
certain acquisition debt, disposition of certain debt related to 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 $1,188,000  ($0.54 per share) and $1,791,000 ($0.93 per share)
for the three months ended March 31, 2002 and 2001,  respectively.  The net loss
was primarily due to deferred net earnings



                                       18
<PAGE>

(deferred   revenues   less  deferred   costs)  of   $1,248,000   and  $995,000,
respectively,  as we did not meet our revenue recognition criteria. The net loss
related to each respective period differed for the reasons described above.

Liquidity and Capital Resources

     At March 31, 2002, we had current assets of $3,289,000,  which is comprised
of $768,000 in cash,  $3,410,000 in accounts  receivable and $111,000 in prepaid
expenses  and  other  current  assets.  We  had  total  current  liabilities  of
$5,095,000,  comprised mainly of $1,231,000 in accounts  payable,  $2,570,000 in
accrued liabilities, and $1,254,000 in the current portion of long-term debt. We
had long-term debt of $2,199,000,  convertible  debentures with a carrying value
of  $5,760,000  and  other  long-term  liabilities  of  $1,053,000.  We also had
deferred  pre-need  revenue of $13,842,000.  We had a working capital deficit of
$1,765,000 at March 31, 2002. Current  liabilities include an expense accrual of
$1,200,000  related to common  stock  purchased  and paid for, but not issued at
March 31, 2002. Such common stock was issued April 1, 2002.

As of March 31, 2002, we had the following debt obligations:

<TABLE>
    Obligations as of March 31, 2002:                 Principal   Interest    Due
                                                         Due        Rate      Date

    <S>                                             <C>            <C>      <C>
    Convertible debentures                          $  5,000,000   13.00%   February 2005
    Note payable (original acquisition debt)           2,286,255   13.00%   July 2003
    Note payable*                                        300,000    0.00%   September 2001
    Convertible debentures, net discount
    of $280,000                                          720,000   13.75%   March 2004
    Notes payable, net discount of $60,090               332,230   11.87%   November 2003
    Note payable                                         350,000   13.00%   July 2003
    Note payable                                          54,440   10.00%   July 2002
    Line of credit                                        90,000    9.00%   April 2002
    Convertible debentures                                75,000   13.00%   July 2002
    Notes payable                                          4,400    9.00%   May 2002

    Total Debt Obligations                             9,212,325
    Current Portion (Due over next 12 months)          1,253,664
                                                       ---------

    Long-term obligations                            $ 7,958,661
                                                      ==========
</TABLE>

     * In March 2002, the Company repaid $700,000 of the $1,000,000 note payable
     due to Private  Investment  Company,  Ltd.  from the  proceeds of a private
     placement.  See  "Subsequent  Events."  The  Company  agreed  to repay  the
     remaining  $300,000  note  balance the  following  month.  Such payment was
     subsequently made in April 2002.

     We had net cash provided by (used in) operating  activities of $190,000 and
$(270,000)  for the three  months  ended March 31, 2002 and 2001,  respectively.
Interest  paid for the three  months  ended March 31, 2002 and 2001 was $211,000
and $195,000, respectively.



                                       19
<PAGE>

Subsequent Events

     In April 2002,  we completed a private  placement  of  1,388,889  shares of
common stock at $1.08 per share to raise $1,500,000 outside the United States to
non-U.S.  persons.  The private placement was completed pursuant to an exemption
from  the  registration   requirements  available  under  Regulation  S  of  the
Securities Act of 1933, as amended (the "Securities  Act"). We used the proceeds
to  satisfy  our  obligation  under a  $1,000,000  note  we  issued  to  Private
Investment Company,  Ltd. We granted resale registration rights to the investors
in the private placement.

     In May 2002,  we  completed  a  private  placement  of  13.75%  convertible
debentures  due  March  2004  in  the  principal  amount  of  $1,000,000  to CCD
Consulting  Commerce  Distribution  AG, a non-U.S.  person,  outside  the United
States,  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 convertible  debentures were issued in reliance upon an exemption
from  the  registration   requirements  available  under  Regulation  S  of  the
Securities Act.

     In April 2002,  we became  obligated to issue 64,449 shares of common stock
to CapEx,  L.P.  and  42,992  shares of common  stock to D.H.  Blair  Investment
Banking Corp. at $1.08 per share in connection with their exercise of preemptive
rights  granted under the terms of a Debenture and Warrant  Amendment  Agreement
dated  effective  December 31, 2001. In addition,  we issued 13.75%  convertible
debentures  in the  principal  amount of  $42,992  to stock to CapEx,  L.P.  and
$28,661 to D.H. Blair Investment Banking Corp. 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. The securities
were issued in reliance  upon an exemption  from  registration  available  under
Section 4(2) of the Securities Act. We granted investor  registration  rights to
CapEx L.P. and D.H.  Blair  Investment  Banking  Corp.  in  connection  with the
private placement.

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 to 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."

Set out below is a summary of our Plan of  Operation  for the fiscal year ending
2002.

Material Commitments--Short-term Funding Requirements

<TABLE>
        <S>                                                   <C>
         Operating expenditures (incl. Working capital)       $17.7 million
         Interest payments                                      1.2 million
         Current portion of long-term debt                      2.3 million
         Capital expenditures                                   0.1 million
                                                              -------------
         Estimated total Short-term commitments                21.3 million
         Estimated total Cash from Operations                  19.7 million
         Estimated total Cash from Equity Sales                 1.5 million
         Estimated total Cash from Debt Proceeds                0.2 million
                                                              -------------
         Estimated net Cash Surplus                           $  .1 million
                                                              --------------
</TABLE>

Net Cash Flow operations: Management's current year forecast for the year ending
December  31,  2002  projects  it will  achieve  approximately  $2.0  million in
positive  net cash flows  before the  payment of debt and  interest  and capital
expenditures.  We anticipate generating cash from operations (cash receipts from



                                       20
<PAGE>

sales and other  income) of $19.7  million,  and  operating  expenditures  (cash
expenditures) of $17.7 million.

Working capital: Management had a net working capital deficit of $1.8 million as
of March 31, 2002. The deficit  relates to the current portion of long-term debt
of $1.3 million coming due. See "Liquidity & Capital  Resources".  The remainder
relates to accounts  payable of $1,230,993 and accrued expenses of $2,570,036 in
connection with our on-going  operations.  The current portion of long term debt
included  a  $800,000  bridge  loan from  Consulting  Commerce  Distribution  AG
("CCD").  In April 2002, we completed a private placement of 13.75%  convertible
debentures,  due March 31, 2004, in the principal amount of $1,000,000 to CCD 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 Company at $1.20 per share.

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  $78,000 for the year ending December 31, 2002. These expenditures
include office furniture and office and computer equipment.

     We anticipate  that we may have to raise capital  during the next 15 months
to meet our obligations under the portions of long-term debt due. See "Liquidity
and Capital Resources".  If required, 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 total  operating and capital budgets for the fiscal year ended December
31, 2002 is estimated  to be  approximately  $19 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 obtaining and maintaining licenses for our
locations and the  professional  fees associated with our reporting  obligations
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 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 the current portion of 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 criteria intangible
assets  acquired  in a  purchase  method  business  combination  must meet to be



                                       21
<PAGE>

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.

     The  Company  is  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 the Company
evaluate its 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 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, the Company 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 the Company to perform an assessment of whether there
is an  indication  that  goodwill  is impaired  as of the date of  adoption.  To
accomplish  this the Company must identify 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 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 the Company must perform the second step of
the  transitional  impairment test. In the second step, the Company 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 of the  year of
adoption. Any transitional  impairment loss will be 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  expects  to  have  unamortized
goodwill in the amount of $24.4 million which will be 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.  Because  of the  extensive  effort  needed  to comply  with
adopting  Statements 141 and 142, it is not  practicable to reasonably  estimate
the impact of adopting these Statements on the Company's financial statements at
the date of this report,  including  whether any transitional  impairment losses
will be  required  to be  recognized  as the  cumulative  effect  of a change in
accounting principle.

     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).



                                       22
<PAGE>

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.

     The  Company  is  required  to adopt  Statement  144 no later than the year
beginning after December 15, 2001. Accordingly, the Company will adopt 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 October 2001,  the FASB recently  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
incurred. The statement applies to a company's legal obligations associated with
the retirement of a tangible ling-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.

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.



                                       23
<PAGE>

                          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.

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 February,  2002, the Company issued 25,000 shares,  and cancelled  3,750
shares  previously  issued in October 2001, of Neptune  Society  common stock to
Dorsey  &  Whitney  LLP in  connection  with a fee  restructuring  agreement  to
restructure  our  obligations  of  approximately  $460,000 in accrued and unpaid
legal  fees and  expenses.  The  shares  were  issued in a  private  transaction
pursuant to an exemption from the registration requirements available under Rule
506 of Regulation D and Section 4(2) of the Securities Act.

     In March,  2002,  the Company  issued  Green Leaf in a private  transaction
75,000  shares  of  common  stock  as a loan  extension  fee  and a  convertible
debenture in the principal  amount of $75,000  convertible into shares of common
stock at $0.333333  per share,  subject to certain  anti-dilution  rights in the
event  we  completed  a share  consolidation.  The  shares  and the  convertible
debenture  were  issued   pursuant  to  an  exemption   from  the   registration
requirements available under Section 4(2) of the Securities Act.

     In March 2002,  the Company issued CapEx 101,250 shares of common stock and
DHB  67,500  shares of  common  stock in a private  transaction  as a  debenture
restructuring fee. The shares were issued in a private  transaction  pursuant to
an exemption from the registration  requirements available under Section 4(2) of
the Securities Act.

     In March,  2002, the Company became  obligated to issue 6,250 shares of our
common stock in  connection  with the  employment of certain  senior staff.  The
shares will be issued in a private transaction pursuant to an exemption from the
registration requirements available under Section 4(2) of the Securities Act.

     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.  The  Reverse  Split  resulted  in  adjustments  to the
convertible  debentures  issued to CapEx,  D.H.  Blair and Green  Leaf under the
antidilution rights thereunder.

Subsequent Events

     In April 2002,  we completed a private  placement  of  1,388,889  shares of
common  stock at $1.08 per share to raise  $1,500,000.  We used the  proceeds to
satisfy our obligation  under a $1,000,000 note we issued to Private  Investment
Company,  Ltd. The private  placement was made to non-U.S.  persons  outside the
United  States  pursuant  to an  exemption  from the  registration  requirements
available under Regulation S of the Securities Act.

     In April 2002,  we  completed  a private  placement  of 13.75%  convertible
debentures in the principal  amount of  $1,000,000  to CCD  Consulting  Commerce
Distribution AG, a non-U.S. person outside



                                       24
<PAGE>

the United States,  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 private  placement
was  completed  pursuant  to an  exemption  from the  registration  requirements
available under Regulation S of the Securities Act.

     In May 2002, the Company became  obligated to issue 64,448 shares of common
stock to CapEx,  L.P. and 42,992 shares of common stock to D.H. Blair Investment
Banking Corp. at $1.08 per share in connection with their exercise of preemptive
rights  granted under the terms of a Debenture and Warrant  Amendment  Agreement
dated  effective  December 31, 2001. In addition,  we issued 13.75%  convertible
debentures  in the  principal  amount of  $42,992  to stock to CapEx,  L.P.  and
$28,661 to D.H. Blair Investment Banking Corp. 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.  These
debentures  automatically convert into common shares at $1.20 per share on March
31, 2004. The private placement was completed in reliance upon an exemption from
registration available under Section 4(2) of the Securities Act.

Item 3. Defaults Upon Senior Securities.

None.

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.

The annual meeting of shareholders is scheduled for May 22, 2002.

Item 5. Other Information.

     During the quarter  ended March 31,  2002,  Tom Camp,  Tom Soucy,  and Gary
Harris resigned as directors.

On May 8, 2002, the Company  announced the  appointment of Douglas Irving as the
Company's Chief Operating Officer.  Prior to joining Neptune, Mr. Irving had his
own management consulting business.  From 1997-1998, he served as Vice President
of Operations  for Service  Corporation  International,  and from  1988-1996 Mr.
Irving had several  positions  including  Operations  Controller  for The Loewen
Group, Inc. Mr. Irving is also a Licensed Funeral Director,  holds a Bachelor of
Commerce  Degree from the  University of British  Columbia and is a Professional
Accountant.  To accommodate Mr. Irving's  appointment David Schroder resigned as
acting  Chief  Operating  officer and will  continue  to serve as the  Company's
President.

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



                                       25
<PAGE>

  Exhibit
  Number   Description
  -------- ---------------------------------------------------------------------
  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(1)   Bylaws of Neptune Society (previously filed as Exhibit 3.5)
  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
  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



                                       26
<PAGE>

  Exhibit
  Number   Description
  -------- ---------------------------------------------------------------------
  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
  10.45 Form of Debenture

---------------------
(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, 1002.


(b) Reports on Form 8-K

  Form 8-K filed 2-1-02 regarding changes in registrant's certifying accountant
  Form 8-K filed 2-12-02 regarding change in inventory management policy
  Form 8-K Amendment No. 1 filed 3-5-02 regarding changes in registrant's
    certifying accountant
  Form 8-K filed 3-25-02 regarding reverse split


                                       27
<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, 2002 to be
signed on its behalf by the undersigned duly authorized.

                                       THE NEPTUNE SOCIETY

                                       /s/ Marco Markin
May 15, 2002                           -----------------------------------------
                                       Marco Markin, Chief Executive Officer
                                       (Principal Executive Officer)


                                       /s/ Rodney M. Bagley
May 15, 2002                           -----------------------------------------
                                       Rodney M. Bagley, Chief Financial Officer
                                       (Principal Accounting Officer)





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