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

                                    FORM 10-Q

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

     For the quarterly period ended September 30, 2001

                                       OR

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

     For the transition period from _______________ to __________________

                        Commission file number: 000-30480



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


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


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


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

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

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

               8,317,601 shares of Common Stock, $0.002 par value,
                      outstanding as of November 14, 2001.


<PAGE>

                            THE NEPTUNE SOCIETY, INC.
               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2001
                                      INDEX

                                                                            Page

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


Item 1:  Condensed Consolidated Financial Statements (Unaudited)...............1

         Condensed Consolidated Balance Sheets --
           September 30, 2001 and December 31, 2000 ...........................1

         Condensed Consolidated Statements of Operations --
           Three and Nine Months Ended September 30, 2001 and 2000 ............2

         Condensed Consolidated Statements of Cash Flows --
           Three and Nine Months Ended September 30, 2001 and 2000 ............3

         Notes to Condensed Consolidated Financial Statements .................4


ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS ............................................13

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............25


PART II -- OTHER INFORMATION..................................................26

ITEM 1.   LEGAL PROCEEDINGS...................................................26

ITEM 2.   CHANGES IN SECURITIES...............................................27

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.....................................27

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................27

ITEM 5.   OTHER INFORMATION...................................................27

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K....................................28

SIGNATURES ...................................................................30



                                       i
<PAGE>
                         PART 1 -- FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

<TABLE>
                                              Neptune Society, Inc.
                                      Condensed Consolidated Balance Sheets
                                     September 30, 2001 and December 31, 2000
                                                   (Unaudited)

                                                               September 30, 2001   December 31, 2000
                                                              -------------------   -----------------
<S>                                                            <C>                       <C>
                    Assets
Current Assets:
  Cash                                                         $     578,893             1,065,339
  Accounts receivable                                              1,772,052               234,370
  Prepaid expenses and other current assets                           95,302               121,061
                                                              -------------------   -----------------
                         Total current assets                      2,446,247             1,420,770

Property and equipment, net                                        2,161,304             2,365,806

Names & reputations,  net                                         28,253,427            29,451,385

Non compete agreements,  net                                         308,431               474,051

Deferred financing costs                                           1,090,771             1,208,081
Deferred charges and other assets                                  3,974,166             2,572,340
                                                              -------------------   -----------------
                                                                  38,234,346            37,492,433
                                                              ===================   =================
       Liabilities and Shareholders' Equity
Current liabilities:
  Current portion of long-term debt                                5,406,652             5,748,946
  Accounts payable                                                 1,598,822             1,399,538
  Accrued and other current liabilities                            1,706,040             1,132,671
                                                              -------------------   -----------------
                         Total current liabilities                 8,711,514             8,281,155

Long-term debt                                                             -               100,878

Convertible debentures                                             6,000,000             5,937,303

Other long-term liabilities                                          774,704               467,087

Deferred pre-need revenue                                         10,378,060             6,598,247
                                                              -------------------   -----------------
                                                                  25,864,278            21,384,670
                                                              -------------------   -----------------
Shareholders' equity:

  Common stock                                                        16,624                15,323
  Additional paid-in capital                                      27,625,682            26,821,240
  Accumulated deficit                                            (15,272,238)          (10,728,800)
                                                              -------------------   -----------------
                         Total shareholders' equity               12,370,068            16,107,763
                                                              -------------------   -----------------
                                                               $  38,234,346            37,492,433
                                                              ===================   =================
</TABLE>

See accompanying notes to condensed consolidated financial statements.



                                       1
<PAGE>
<TABLE>
                                              Neptune Society, Inc.
                                 Condensed Consolidated Statements of Operations
                                    September 30, 2001 and December 31, 2000
                                                   (Unaudited)

                                                   -------------------------------      -----------------------------
                                                    Three months      Three months       Nine months      Nine months
                                                       ended              ended             ended            ended
                                                    September 30,     September 30,      September 30,    September 30,
                                                       2001               2000               2001             2000
                                                   --------------    -------------      --------------    ------------
<S>                                                 <C>                <C>                <C>              <C>
Revenues
  Services and merchandise                          $3,599,326         1,667,997          8,712,407        4,195,426
  Management and finance fees                          255,308           324,342          1,015,466        1,062,889
                                                   --------------    -------------      --------------    ------------
                            Total revenues           3,854,634         1,992,339          9,727,873        5,258,315

Cost and expenses                                    1,604,905         1,245,521          4,376,677        3,229,552
                                                   --------------    -------------      --------------    ------------
                            Gross profit             2,249,729           746,818          5,351,196        2,028,763

General and administrative expenses                  1,866,244         1,450,560          5,779,131        4,364,294

Amortization and depreciation expense                  518,506           463,176          1,576,278        1,142,481

Professional fees                                      277,020           524,934            823,183          987,539
                                                   --------------    -------------      --------------    ------------
Total general and admin. expenses                    2,661,770         2,438,670          8,178,592        6,494,314
                                                   --------------    -------------      --------------    ------------
                            Loss from operations      (412,041)       (1,691,852)        (2,827,396)      (4,465,551)

Interest expense                                       671,125           663,799          1,716,043        2,068,615
                                                   --------------    -------------      --------------    ------------
Loss before provision for taxes                     (1,083,166)       (2,355,651)        (4,543,439)      (6,534,166)

Income tax expense                                           -          (788,880)                 -         (254,128)

Loss before cumulative effect
      of a change in accounting principle           (1,083,166)       (3,144,531)        (4,543,439)      (6,788,294)
                                                   --------------    -------------      --------------    ------------
Cumulative effect on prior years of changing
      to a different revenue recognition method              -                 -                  -         (403,927)
                                                   --------------    -------------      --------------    ------------
Net loss                                           ($1,083,166)       (3,144,531)        (4,543,439)      (7,192,221)
                                                   ==============    --===========      ==============    ============
Earnings (loss) per share -
    Income (loss) before cumulative effect
       of a change in accounting principle
             Basic & Diluted                             ($.13)             (.46)              (.58)            (.98)
    Cumulative effect on prior years of changing
       to a different revenue recognition method
             Basic & Diluted                                 -                 -                  -             (.06)
    Net income (loss)
             Basic & Diluted                             ($.13)             (.46)              (.58)           (1.04)
Weighted average number of shares -
             Basic & Diluted                          8,040,635        6,900,534          7,866,640        6,926,373
</TABLE>


See accompanying notes to condensed consolidated financial statements.



                                       2
<PAGE>
<TABLE>
                                              Neptune Society Inc.
                                 Condensed Consolidated Statements of Cash Flows
                         For the Three and Nine Months Ended September30, 2001 and 2000
                                                   (Unaudited)


                                                   -------------------------------      -----------------------------
                                                    Three months      Three months       Nine months      Nine months
                                                       ended              ended             ended            ended
                                                    September 30,     September 30,      September 30,    September 30,
                                                       2001               2000               2001             2000
                                                   --------------    -------------      --------------    ------------
<S>                                                 <C>                <C>                <C>              <C>
Cash flows from operating activities:
Net loss                                           $ (1,083,166)       (3,144,531)        (4,543,439)      (7,192,221)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities

   Depreciation & amortization                          518,506           560,688          1,576,278        1,292,843
   Accretion of discount on notes payable                 5,200           280,286             62,699          470,781
   Deferred tax asset                                         -           788,880                  -          254,128
   Stock compensation                                    75,000            30,829            455,532           30,829
   Non-cash interest & amortization of
      deferred financing costs                          484,575           357,071          1,050,159        1,094,205

Changes in operating assets and liabilities:
Accounts receiveable                                   (459,133)           65,210         (1,537,681)          (7,234)
Prepaid and other assets                                 65,654           462,346             25,759           95,292
Deferred charges and other assets                      (353,444)       (1,394,360)        (1,401,826)      (1,614,018)
Accounts payable                                        439,854           666,060            119,147        1,046,201
Accrued and other liabilities                           111,736           738,917            453,484          514,405
Deferred revenues                                       389,189         1,511,191          3,779,813        3,955,664
                                                   --------------    -------------      --------------    ------------
Net cash provided by (used in) operations               193,971           922,587             39,925          (59,125)
                                                   --------------    -------------      --------------    ------------
Cash flows from investing activities:
Property and equipment                                     (669)          170,163             (8,198)        (205,948)

Acquisitions, net                                             -          (593,620)                 -         (703,620)
                                                   --------------    -------------      --------------    ------------
Net cash used in investing activities                      (669)         (423,457)            (8,198)        (909,568)
                                                   --------------    -------------      --------------    ------------
Cash flows from financing activities:
Payment of debt                                      (2,006,197)       (7,428,156)        (2,018,173)     (11,879,066)
Proceeds from issuance of debt                        1,500,000                 -          1,500,000          750,000
Proceeds from issuance of common stock                        -         7,007,495                  -        7,007,495
                                                   --------------    -------------      --------------    ------------
Net cash used in financing activities                  (506,197)         (420,661)          (518,173)      (4,121,571)
                                                   --------------    -------------      --------------    ------------
Net increase (decrease) in cash                        (312,895)           78,469           (486,446)      (5,090,264)

Cash, beginning of period                               891,788         1,656,800          1,065,339        6,825,533
                                                   --------------    -------------      --------------    ------------
  Cash, end of period                         $         578,893         1,735,269            578,893        1,735,269
                                                   ==============    =============      ==============    ============
Supplemental disclosure of cash flow
  information:
Cash paid during period for interest        $           181,350           181,544            603,185          564,746
                                                   ==============    =============      ==============    ============
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>
                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (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 September  30,  2001,  the Company has a working  capital  deficit of
     $6,265,267.   The  Company  is  currently   exploring   various   financing
     alternatives to address such working capital deficiency.

(2)  Interim Financial Statements (Unaudited)

     Basis of Presentation

     The accompanying  condensed consolidated financial statements for the three
     and nine months ended  September  30, 2001 and 2000 include the accounts of
     the Company  and all  majority-owned  subsidiaries  and are  unaudited  but
     include all adjustments,  consisting of normal  recurring  accruals and any
     other  adjustments  which  management   considers   necessary  for  a  fair
     presentation of the results for these periods. These condensed consolidated
     financial  statements  have been prepared in a manner  consistent  with the
     accounting  policies  described in the annual  report on Form 10 filed with
     the Securities and Exchange  Commission (the Commission) for the year ended
     December 31, 2000, and should be read in conjunction  therewith.  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,  Iowa, Washington and Oregon may
     be prior to the performance of cremation  services.  The Company considered
     such  criteria  met when the Company was  permitted  to receive one hundred
     percent of the unrestricted funds associated with the merchandise



                                       4
<PAGE>
                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)


     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 Iowa,  Washington,  Oregon and
     Florida to retain certain cash receipts  received related to services to be
     performed  in the  future.  These cash  receipts  are  recorded as deferred
     revenue and recognized when services are provided.

     During the three months ended  September 30, 2001,  the Company  recognized
     previously   deferred   pre-need   merchandise   revenues   and   costs  of
     approximately $14,000 and $5,000, respectively,  related to the fiscal year
     2000 cumulative effect of change in accounting principle adjustment. During
     the nine months ended September 30, 2001, the Company recognized previously
     deferred pre-need merchandise  revenues and costs of approximately  $29,000
     and  $12,000,  respectively,  related  to the fiscal  year 2000  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 AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)



     Subsequent to December 31, 2000, we record these transactions in accordance
     with our revenue recognition accounting policies on an accrual basis.

     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 and nine months ended  September  30,  2001,  options to purchase
     68,182 and 942,682 shares, respectively,  of common stock at prices ranging
     from $2.50 to $14.01  per  share,  13%  convertible  debentures  (which are
     convertible  into  500,000  shares of common stock at $10.00 per share with
     detachable  warrants to purchase  200,000  shares of common stock at prices
     ranging  from  $10.42 to 12.50 per  share)  and 8%  convertible  debentures
     (which are  convertible  into 83,333  shares of common  stock at $12.00 per
     share)  were not  included  in the  computation  of diluted  loss per share
     because the effect would be antidilutive.

     For the three and nine months ended September 30, 2000, options to purchase
     165,000 and 573,750, respectively, shares of common stock at prices ranging
     from $11.75 to $14.25 per share and 13% convertible  debentures  (which are
     convertible  into  500,000  shares of common stock at $10.00 per share with
     detachable  warrants to purchase  200,000  shares of common stock at prices
     ranging  from  $10.42  to  $12.50  per  share)  were  not  included  in the
     computation  of  diluted  loss  per  share  because  the  effect  would  be
     antidilutive.

(4)  Shareholders' Equity

     Effective as of May 19, 2000, the Company's  Board of Directors  authorized
     and affected a 1 for 2 reverse split of its common stock. Per share amounts
     in the  accompanying  consolidated  financial  statements give  retroactive
     effect to the reverse stock split.



                                       6
<PAGE>
                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)



     During the nine months ended September 30, 2001, 364,000 options to acquire
     common stock were  granted.  In  addition,  118,250  options were  canceled
     during the nine-month period.

     Under the Portland Business purchase agreements, the Company agreed that if
     the value of the common stock (based on the average  trading  price for the
     60 day period  preceding  the first  trading  day  following  July 5, 2001)
     issued  to the  former  owners  of the  Portland  Business  was  less  than
     $3,885,000,  we would pay the owners the difference  between $3,885,000 and
     the value of the shares in cash or, at our option,  common stock of Neptune
     Society.  In  August  2001,  pursuant  to the  Portland  Business  purchase
     agreements, the Company issued 561,693 shares of the Company's common stock
     to the former owners of the Portland Business.

     At September 30, 2001,  8,311,807 shares of the Company's common stock were
     issued and outstanding.

(5)  Debt

     Long-term  debt at September 30, 2001 and December 31, 2000,  respectively,
     was as follows:

<TABLE>
                                                                                    Sep. 30,          Dec. 31,
                                                                                      2001             2000
                                                                                --------------------------------
          <S>                                                                   <C>                 <C>
          13% Convertible debentures, due February 24, 2005.                     $ 5,000,000         5,000,000

          Note payable, due January 2, 2002. (a)                                   2,724,440         4,724,440

          Note payable, due January 2, 2002. (b)                                   1,575,000                 -

          Note payable due on September 30, 2001. (c)                              1,000,000         1,000,000

          8% Convertible debentures, due July 17, 2003.                            1,000,000           937,503

          Notes payable due May 31, 2002.                                             17,212            35,184

          Line of credit, due April 1, 2002.                                          90,000            90,000
                                                                                -------------     -------------
                                                                                  11,406,652        11,787,127
          Less current installments                                                5,406,652         5,748,946
                                                                                -------------     -------------
                                                                                 $ 6,000,000         6,038,181
                                                                                =============     =============
</TABLE>

(a)  On July 31, 2000,  the Company  restructured  its note due to the Weintraub
     Trust  resulting  in a  remaining  balance of  $4,724,440  outstanding  and
     extended the due date on such amount to July 31, 2001. In consideration for
     the  extension  of the due date,  the  Company



                                       7
<PAGE>
                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)


     guaranteed  the  difference  between  $47,250 and the aggregate  cash to be
     received on the sale of 3,375 shares of the Company's  common stock held by
     the  Weintraub  Trust  monthly over the  extension  term (a total of 40,500
     shares).  As a result of the  guarantee,  the Company has paid and expensed
     $254,000  through  September 30, 2001. The Company has recorded a liability
     and  deferred  financing  costs for the fair  value of such  guarantee  and
     adjustments to such liability were recorded through interest expense.

     In August  2001,  the  Company  paid $2  million of its $4.7  million  note
     payable and  restructured  the remaining  $2.7 million.  The remaining $2.7
     million  will become 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 55,000 shares of the
     Company's common stock valued at $248,000.

(b)  In August 2001, the Company borrowed  $1,575,000 at 12% interest per annum,
     payable monthly, becoming due and payable January 2, 2002. Of the principle
     amount,  $75,000  represents  a loan fee.  The Company  also issued  15,789
     shares of the  Company's  common  stock  valued at $71,000 and a warrant to
     purchase up to 30,000  shares of the  Company's  common stock at $10.42 per
     share valued at $200. The debt is  collateralized  by certain assets of the
     Company.

(c)  In August 2001, the Company entered into a Memorandum of  Understanding  to
     convert its  $1,000,000  note due to Private  Investment  Company,  Ltd. on
     September 30, 2001 into a 12% convertible  debenture with interest  payable
     annually on September  30th of each year of the term.  The debenture  shall
     have a conversion  price of $6.00 per share of the  Company's  common stock
     and a maturity date of September  30, 2004.  The Company also issued 10,000
     shares of the Company's common stock valued at approximately $45,000.

(6)  Income Taxes

     As a result of the Company's  continuing losses,  during the three and nine
     months ended  September  30, 2001,  the Company did not  recognize  any tax
     benefit related to its tax net operating losses.

(7)  Litigation

     On May 15, 2000, Leneda,  Inc. dba Neptune Society of San Diego County, San
     Bernardino County,  Riverside County, and Imperial County filed a Complaint
     for  service  mark  infringement,   breach  of  contract,  unfair  business
     practices,  and  interference  with prospective  economic  advantage in the
     United States District Court in and for the Central  District of California
     (Honorable  Gary A. Fees).  Both Leneda and the Company  operate  under the
     service mark "Neptune Society", and the concurrent use of that mark was the
     subject of a lawsuit  before the U.S.  Patent and Trademark  Office,  which
     stretched  from 1986 to 1995.  The Company and Leneda were  parties to that
     lawsuit,  which  was  resolved  through a  settlement  agreement  that,  in
     essence,  divided up the  territories  in which the  parties  could use the
     mark. Leneda received exclusive rights in four southern California counties
     and the Company  received  rights for use in some limited  areas in the Los
     Angeles,  California  area and  outside of  California.  Subsequent  to the
     settlement,



                                       8
<PAGE>
                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)



     the Company had an  arrangement  with Leneda  whereby  Leneda would perform
     at-need  services  for certain of the  Company's  pre-need  contracts  sold
     within  Leneda's  territories.  Leneda's  lawsuit  alleges that the Company
     unlawfully used a trademark,  "Neptune Society",  for certain services in a
     prohibited geographic area defined by the settlement agreement.

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

     On  October  22,  2001,   the  Company   entered  into  a  settlement   and
     confidentiality  agreement,  effective  August  8,  2001  (the  "Settlement
     Agreement"),  by and among Leneda,  Inc., a California  corporation,  doing
     business as Neptune  Society of San Diego  County,  Neptune  Society of San
     Bernardino County,  Neptune Society of Riverside County and Neptune Society
     of  Imperial  County   ("Leneda");   the  Registrant,   Neptune  Management
     Corporation, a California corporation,  Neptune Society of Florida, Inc., a
     Florida corporation, Heritage Alternatives, Inc., a California corporation,
     Heritage  Alternatives,  L.P.,  Neptune-Los  Angeles,  Ltd.,  Neptune-Santa
     Barbara, Ltd., Neptune-St. Petersburg, Ltd., Neptune-Fort Lauderdale, Ltd.,
     and Neptune-Miami,  Ltd.  (collectively,  "Neptune  Society"),  and Emanuel
     Weintraub,  individually  ("Weintraub").  The Settlement Agreement provided
     for the dismissal of the lawsuit filed by Leneda (the "Leneda Litigation").
     The  "Neptune  Society"  Service  Mark is the subject of the United  States
     Patent and Trademark  Office's Trademark Trial and Appeals Board Concurrent
     Use Order No. 871 and a 1995 Settlement Agreement pertaining thereto.

     Under the terms of the  Settlement  Agreement,  Neptune  Society and Leneda
     entered into a Service  Agreement  under which Leneda agreed to be the sole
     service  provider of  fulfillment  cremation  services for a total of 7,300
     existing pre-need contracts (the "Relevant  Contracts"),  which were either
     executed in or otherwise  indicate that the contract  holder resided within
     the counties of San Diego,  San  Bernardino,  Riverside and  Imperial,  all
     located in the state of  California.  These  fulfillment  services  will be
     provided  by Leneda  for a  specified  price,  which  will be paid from the
     proceeds of the amount trusted for the beneficiary of the Relevant Contract
     with the  remaining  balance  in the  trust,  if any,  paid to the  Neptune
     Society in  accordance  with the terms of the trust.  Neptune  Society also
     granted to Leneda a security  interest in the Relevant  Contracts to secure
     performance  of  the  Neptune  Society's   obligations  under  the  Service
     Agreement and the  Settlement  Agreement.  Leneda and Neptune  Society each
     agreed to implement appropriate  procedures to ensure that the Service Mark
     would be used in a manner  consistent  with the  United  States  Patent and
     Trademark  Office's  Trademark Trial and Appeals Board Concurrent Use Order
     No. 871 and a 1995 Settlement Agreement.  Neptune Society's insurers agreed
     to pay Leneda $900,000 under the terms of the Settlement Agreement.



                                       9
<PAGE>

                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)


     In connection  with the  Settlement  Agreement,  Neptune  Society agreed to
     release any and all claims for indemnification  against Weintraub under the
     terms of the Share  Purchase  Agreement  dated March 26,  1999 .  Weintraub
     agreed to  subordinate  a security  interest in the  Relevant  Contracts to
     Leneda.

(8)  Subsequent Events

     In October 2001,  the Company  entered into an agreement in principle  with
     Mr.  Weintraub and the Weintraub  Trust to  restructure  the remaining $2.7
     million of acquisition  debt,  previously due January 2002, at 13% interest
     per annum. As a part of the agreement,  the Company and Weintraub agreed to
     roll  $168,000  in loan fees due January 2, 2002  related to previous  loan
     restructurings  and $350,000 in new loan fees related to this restructuring
     into the note balance due as principle,  and issue Weintraub 300,000 shares
     of the Company's common stock valued to $175,000. The Company agreed to pay
     Weintraub  $500,000 on January 2, 2002,  amortized $963,000 million over 18
     months and make a lump-sum  payment of  $1,779,000 in July 2003 The Company
     and Weintraub further agreed to either mutual releases with insurers and/or
     Weintraub to forebear from suing insurers.  (See "Legal  Proceedings".) The
     Company will pay-out $300,000 related to Weintraub's  consulting  agreement
     that would be owed March 31, 2002 on January 2, 2002.


(9)  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



                                       10
<PAGE>
                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)


     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 $28.3  million  which  will be  subject  to the
     transition  provisions  of  Statements  141 and 142.  Amortization  expense
     related to goodwill  was $1.7  million and $1.4  million for the year ended
     December  31,  2000  and  the  nine  months  ended   September   30,  2001,
     respectively.  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,



                                       11
<PAGE>
                            THE NEPTUNE SOCIETY, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000

                                   (Unaudited)



     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.








                                       12
<PAGE>

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

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

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

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

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

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

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

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

     Other  specific  risks and  uncertainties  are set  forth in the  Company's
registration  statement  on Form 10  filed  with  the  Securities  and  Exchange
Commission.  The Company  assumes no obligation to publicly update or revise any
forward-looking  statements made therein or any other forward-looking statements
made by the Company.

     Our  management  has included  projections  and estimates in this quarterly
report,  which are based primarily on  management's  experience in the industry,
assessments  of our results of operations,  discussions  and  negotiations  with
third  parties and a review of  information  filed by its  competitors  with the
Securities and Exchange Commission.  Investors are cautioned against attributing
undue  certainty  to  management's   projections.   The  Company  undertakes  no
obligation   to  publicly   release  the  results  of  any   revision  to  these
forward-looking  statements that may be made to reflect events or  circumstances
after the date hereof or to reflect the occurrence of unanticipated events.


                                       13
<PAGE>
Overview

     We are a provider of cremation services in North America. As of November 1,
2001, we operate 18 locations serving  California,  Florida,  Iowa,  Oregon, New
York and  Washington.  Our  strategy  is to grow by: (i)  selectively  acquiring
small,  family-owned  cremation service providers  strategically  located across
North America;  (ii)  initiating  start up operations to be associated  with key
acquisitions; (iii) opening start-up operations and new location; (iv) operating
all our  locations  under one  nationally  branded name,  "The Neptune  Society"
(where permitted);  (v) avoiding direct competition with corporate consolidators
by concentrating  solely on cremation services and cremation products;  and (vi)
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 nine months ended  September 30, 2001, we made no  acquisitions.
During the nine months ended  September 30, 2000, we acquired our  operations in
Iowa and Oregon. As a result of these  acquisitions,  our historical  results of
operations may vary from future results and period-to-period comparisons may not
be indicative of our future results.


SELECTED FINANCIAL INFORMATION

     The selected financial  information presented below as of and for the three
and nine months ended September 30, 2001 and 2000 are derived from the unaudited
condensed  consolidated  financial  statements  of the  Company.  The  following
discussion and analysis is provided to increase  understanding of, and should be
read  in  conjunction  with,  the  unaudited  condensed  consolidated  financial
statements and accompanying notes.

<TABLE>
                                                      ------------------------------      ----------------------------
                                                       Three months     Three months       Nine months    Nine months
                                                           ended           ended              ended          ended
                                                       September 30,   September 30,       September 30,  September 30,
                                                           2001            2000               2001           2000
                                                      ------------------------------      ----------------------------
<S>                                                    <C>              <C>                 <C>            <C>
Revenues
  Services and merchandise                             $ 3,599,326      1,667,997           8,712,407      4,195,426
  Management and finance fees                              255,308        324,342           1,015,466      1,062,889
                                                      -------------    -----------        -------------   -----------
                                     Total revenues      3,854,634      1,992,339           9,727,873      5,258,315

Cost and expenses                                        1,604,905      1,245,521           4,376,677      3,229,552
                                                      -------------    -----------        -------------   -----------
                                       Gross profit      2,249,729        746,818           5,351,196      2,028,763

General and administrative expenses                      1,866,244      1,450,560           5,779,131      4,364,294

Amortization and depreciation expense                      518,506        463,176           1,576,278      1,142,481

Professional fees                                          277,020        524,934             823,183        987,539
                                                      -------------    -----------        -------------   -----------
Total general and admin. expenses                        2,661,770      2,438,670           8,178,592      6,494,314
                                                      -------------    -----------        -------------   -----------
                               Loss from operations       (412,041)    (1,691,852)         (2,827,396)    (4,465,551)

Interest expense                                           671,125        663,799           1,716,043      2,068,615
                                                      -------------    -----------        -------------   -----------
Loss before provision for taxes                         (1,083,166)    (2,355,651)         (4,543,439)    (6,534,166)
Income tax expense                                               0       (788,880)                  0       (254,128)
                                                      -------------    -----------        -------------   -----------
Loss before cumulative effect
      of a change in accounting principle               (1,083,166)    (3,144,531)         (4,543,439)    (6,788,294)
                                                      -------------    -----------        -------------   -----------
Cumulative effect on prior years of changing
      to a different revenue recognition method                  0              0                   0       (403,927)
                                                      -------------    -----------        -------------   -----------
                                           Net loss    $(1,083,166)    (3,144,531)         (4,543,439)    (7,192,221)
                                                      =============    ===========        =============   ===========
</TABLE>



                                       14
<PAGE>
The following table sets forth the Company's comparable financial information as
a percentage of revenues:

<TABLE>
                                                -------------------------------      -------------------------------
                                                 Three months   Three months           Nine months    Nine months
                                                     ended          ended                 ended          ended
                                                 September 30,  September 30,         September 30,  September 30,
                                                     2001           2000                  2001           2000
                                                -------------------------------      -------------------------------
<S>                                              <C>             <C>                   <C>             <C>
Revenues
  Services and merchandise                         93.4%           83.7%                 89.6%           79.8%
  Management and finance fees                       6.6%           16.3%                 10.4%           20.2%
                                                 --------        --------              --------        --------
                           Total revenues         100.0%          100.0%                100.0%          100.0%

Cost and expenses                                  41.6%           62.5%                 45.0%           61.4%
                                                 --------        --------              --------        --------
                           Gross profit            58.4%           37.5%                 55.0%           38.6%

General and administrative expenses                48.4%           72.8%                 59.4%           83.0%
Amortization and depreciation expense              13.5%           23.2%                 16.2%           21.7%
Professional fees                                   7.2%           26.3%                  8.5%           18.8%
                                                 --------        --------              --------        --------
Total general and admin. expenses                  69.1%          122.4%                 84.1%          123.5%
                                                 --------        --------              --------        --------
                           Loss from operations   (10.7%)         (84.9%)               (29.1%)         (84.9%)

Interest expense                                   17.4%           33.3%                 17.6%           39.3%
                                                 --------        --------              --------        --------
Loss before provision for taxes                   (28.1%)        (118.2%)               (46.7%)        (124.3%)

Income tax expense                                    -           (39.6%)                   -            (4.8%)
                                                 --------        --------              --------        --------
Loss before cumulative effect
      of a change in accounting principle         (28.1%)        (157.8%)               (46.7%)        (129.1%)

Cumulative effect on prior years of changing
      to a different revenue recognition method       -               -                     -            (7.7%)
                                                 --------        --------              --------        --------
                           Net loss               (28.1%)        (157.8%)               (46.7%)        (136.8%)
                                                 ========        ========              ========        ========
</TABLE>


BALANCE SHEET DATA (Unaudited):
                                                  September 30,    December 31,
                                                      2001             2000
                                                 --------------   --------------

Current Assets                                   $ 2,446,247         1,420,770
Current Liabilities                                8,711,514         8,281,155
Long-term Debt                                             -           100,878
Convertible Debentures                             6,000,000         5,937,303
Shareholders' Equity                             $12,370,068        16,107,763

OTHER FINANCIAL INFORMATION:

Number of Offices                                         18                18



                                       15
<PAGE>
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED WITH THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 2000:

Results of Operations

     The following  discussion compares the operations of the registrant for the
three  and  nine  months  ended  September  30,  2001 to the  operations  of the
registrant for the three and nine months ended September 30, 2000.

Revenues

     In May  2001,  the  Company  changed  its  inventory  procedures  and sales
contracts  to conform  to its  revised  revenue  recognition  policy.  Under the
Company's  revised  revenue  recognition  policy,  the  Company  is  allowed  to
recognize  certain  pre-need  merchandise  revenues  from the  sale of  pre-need
contracts prior to the performance of the related cremation service.

     Cremation  service and  merchandise  revenues were $3,599,000 for the three
months ended  September 30, 2001  compared to $1,668,000  for the same period in
2000. Revenues increased $1,931,000 or 115.8% due to the recognition of pre-need
merchandise  revenue,  increased  fulfillment  revenues and the travel assurance
product offering. The Worldwide Travel Assurance Plan ("Travel Plan"), which was
introduced  company-wide during the first quarter of 2001,  contributed $530,000
to the increase in revenues in the third quarter.

     Cremation  service and  merchandise  revenues were  $8,712,000 for the nine
months ended  September 30, 2001  compared to $4,195,000  for the same period in
2000. Revenues increased $4,517,000 or 107.7% due to the recognition of pre-need
merchandise  revenue,   increased  at-need  and  fulfillment  revenues  and  the
introduction of Travel Plan.  At-need case volume increased 4.1% during the nine
months ended September 31, 2001 over the comparable 2000 period. The Travel Plan
contributed $1,418,000 to the increase in revenues.

     During the three  months  ended  September  30, 2001 and 2000,  merchandise
sales of $389,000 and $959,000,  respectively,  were deferred as we did not meet
our revenue recognition criteria.

     During the nine months ended September 30, 2001 and 2000, merchandise sales
of $3,780,000 and $3,077,000, respectively, were deferred as we did not meet our
revenue  recognition  criteria.  Although such revenues were deferred,  pre-need
cremation arrangement sales contract volume increased 26.8% over the same period
in 2000.

     The Company  believes that revenues  during the three and nine months ended
September  30, 2001 were  adversely  affected  by the  Company's  suspension  of
marketing and sales  activities in  Riverside,  Imperial,  San Bernadino and San
Diego  Counties  (the  "Four  County  Area")  pending  resolution  of the Leneda
litigation.  We  estimate  that  the  suspension  of  our  marketing  and  sales
activities   in  the  Four  County  Area  caused  our  revenues  to  decline  by
approximately  $200,000  or 5.2% and  $300,000 or 3.0% during the three and nine
months ended September 30, 2001, respectively. Subsequent to September 30, 2001,
the Company entered into a settlement  agreement with Leneda. Under the terms of
the  settlement  agreement,  we are  permitted  to market  pre-need  arrangement
contracts under the name "Trident  Society" in the Four County Area. The Company
believes  the Leneda  settlement  will not have a material  financial  impact on
operations.  We can not predict  when, or if,  revenues  related to the affected
areas will return to historical levels. See "Legal Proceedings."

     In March 2000 and July 2000,  the Company  acquired  the  Ankeny,  Iowa and
Portland,  Oregon  properties,  respectively,  and opened one new office. In the
fiscal year 2000,  subsequent to the third  quarter,  the Company opened one new
office in the State of  Washington.  The Company did not acquire or open any new
properties or offices during 2001.

     Cremation service and merchandise  revenues related to acquisitions and new
office  openings  after  December 31, 1999 were  $1,026,000 and $290,000 for the
three months ended September 30, 2001 and 2000, respectively.



                                       16
<PAGE>
     Cremation service and merchandise  revenues related to acquisitions and new
office  openings  after  December 31, 1999 were  $2,018,000 and $344,000 for the
nine months ended September 30, 2001 and 2000, respectively.

     Revenues earned for the three months ended September 30, 2001 and 2000 from
trust fund management and finance fees were $255,000 and $324,000, respectively.
The $69,000 or 21.3% decrease is attributable  to decreased  management fees due
to reduced investment yields.

     Revenues  earned for the nine months ended September 30, 2001 and 2000 from
trust  fund   management  and  finance  fees  were  $1,015,000  and  $1,063,000,
respectively.  The  $48,000  or  4.5%  decrease  is  attributable  to  decreased
management fees due to reduced investment yields,  which was partially offset by
increased  finance fee  income.  Finance  fees  increased  due to the  Company's
current  ability to  recognize  income  over the life of the  pre-need  contract
versus at the end of the contract, as previously recognized.


Costs and Expenses and Gross Profit

     Direct  costs and  expenses  were  $1,605,000  or 41.6% of revenues for the
three  months  ended  September  30,  2001  compared to  $1,246,000  or 62.5% of
revenues for the  comparable  period in 2000. The $359,000 or 28.9% increase was
attributable to fiscal 2000  acquisitions and new office openings,  increases in
variable costs related to the recognition of pre-need  merchandise  revenues and
increases in costs related to a new product offering, the Travel Plan. The gross
profit  during the three months ended  September 30, 2001 was $2,250,00 or 58.4%
of total  revenues  compared to $747,000 or 37.5% for the  comparable  period in
2000.

     Direct costs and expenses were $4,377,000 or 45.0% of revenues for the nine
months ended  September 30, 2001 compared to $3,230,000 or 61.4% of revenues for
the comparable period in 2000. The $1,147,000 or 35.5% increase was attributable
to the same factors discussed in the abovementioned  quarterly results,  as well
as  increased  at-need  activity.  Gross  profit  during the nine  months  ended
September  30,  2001 was  $5,351,000  or 55.0% of  total  revenues  compared  to
$2,029,000 or 38.6% for the comparable period in 2000.

     The gross profit  margin for the three and nine months ended  September 30,
2001 increased 55.7% and 42.4%, respectively,  over the comparable 2000 periods.
These  increases  were due to  increased  pre-need  and  at-need  activity,  the
introduction  of the Travel Plan and the  recognition  of  pre-need  merchandise
sales in the third quarter of 2001. The increase in activity allowed the Company
to achieve  greater  efficiencies  related to certain  fixed  costs  included in
direct  costs and  expenses.  The gross  margin  related to the Travel  Plan and
pre-need  merchandise sales,  respectively,  was higher than the Company's gross
margin in the comparable 2000 periods.


General and Administrative Expenses

     General and  administrative  expenses for the three months ended  September
30,  2001 were  $1,866,000  or 48.4% of  revenues.  General  and  administrative
expenses for the three months ended  September 30, 2000 were $1,451,000 or 72.8%
of  revenues.  The  $416,000 or 28.7%  increase  in general  and  administrative
expenses in 2001 compared to 2000 is related to additional costs associated with
the increased number of management level personnel,  non-cash compensation costs
related to employment  agreements entered into with certain executive management
staff members and the additional  costs  associated with supporting an increased
number of geographic locations.

     General and administrative expenses for the nine months ended September 30,
2001 were $5,779,000 or 59.4% of revenues.  General and administrative  expenses
for the nine  months  ended  September  30,  2000  were  $4,364,000  or 83.0% of
revenues.  The  $1,415,000  or 32.4%  increase  in  general  and  administrative
expenses  in 2001  compared  to 2000 is due to the  effects of the same  factors
discussed in the abovementioned quarterly results.



                                       17
<PAGE>
Amortization and Depreciation Expenses

     Amortization  and   depreciation   expenses  were  $519,000  and  $463,000,
respectively,   for  the  three  months  ended  September  30,  2001  and  2000.
Amortization   and   depreciation   expenses  were  $1,576,000  and  $1,142,000,
respectively,  for the nine  months  ended  September  30,  2001 and  2000.  The
increase in amortization and depreciation expenses during 2001 was primarily the
result of the Iowa and Oregon acquisitions.

Professional Fees

     Professional  fees were  $277,000 or 7.2% of revenues  for the three months
ended September 30, 2001 compared to $525,000 or 26.3% of revenues for the three
months ended  September  30, 2000.  Professional  fees were  $823,000 or 8.5% of
revenues for the nine months ended  September  30, 2001  compared to $988,000 or
18.8% of revenues for the nine months ended  September 30, 2000. The decrease in
professional  fees  during  2001 was  related to the  successful  completion  of
registration of the Company's common stock under the Securities  Exchange Act of
1934 with the Securities and Exchange  Commission in the second quarter of 2001.
The Company continued to incur  significant  legal expenses  associated with the
Leneda  litigation.  The Leneda  litigation  was  settled on October  22,  2001.
Professional  fees also include  $250,000 of  consulting  fees paid by us to the
former principal shareholder in 2001 and 2000,  respectively,  for marketing and
sales  consultation.   The  consulting   agreement  with  the  former  principal
shareholder  will expire January 2, 2002. A lump-sum payment of $300,000 will be
due upon expiration.  The Company  anticipates that professional fees will begin
to trend downward in subsequent periods.


Interest Expense

     Interest  expense was  $671,000 or 17.4% of revenues  for the three  months
ended September 30, 2001 compared to $664,000 or 33.3% of revenues for the three
months ended  September 30, 2000.  Interest  expense was  $1,716,000 or 17.6% of
revenues for the nine months ended  September 30, 2001 compared to $2,069,000 or
39.3% of revenues for the nine months ended  September 30, 2000. The increase in
interest  expense  in 2001  was a  result  of  certain  debt  restructuring  and
refinancing  to  partially  extinguish,  and extend the due date of the  current
portion of acquisition debt previously due July 31, 2001.

     We anticipate  interest  expense will increase in subsequent  periods.  The
Company entered into a Letter of Memorandum with Private Investment Company with
terms  to  convert  a $1  million  non-interest  bearing  promissory  note,  due
September 30, 2001, into a 12% per annum interest bearing convertible  debenture
maturing in September 2004 that would  contribute to higher interest costs.  See
"Other Financings".


Loss before Cumulative Effect of Change in Accounting Principle

     Loss  before  cumulative  effect of a change in  accounting  principle  was
$1,083,000 and  $3,145,000,  respectively,  for the three months ended September
30,  2001 and 2000.  Loss  before  cumulative  effect of a change in  accounting
principle was $4,543,000 and $6,788,000, respectively, for the nine months ended
September 30, 2001 and 2000. The loss related to each respective period differed
for the reasons described above.

Cumulative Effect of Change in Accounting Principle

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

     Prior  to  2000,  revenue  related  to  merchandise  sold  with a  pre-need
cremation   service   arrangement  was  recognized  upon  physical  delivery  of
merchandise  to  the  customer  or  upon  satisfying  certain  state  regulatory
criteria,  which, in California,  Iowa, Washington and Oregon may occur prior to
the performance of cremation services. The Company considered the criteria to be
satisfied  when (i) the Company was permitted to receive one hundred  percent of
the  unrestricted   funds  associated  with  the  merchandise   sale,  (ii)  the
merchandise  was in a condition  for its  intended  use (iii) the Company had no
specific performance



                                       18
<PAGE>
obligations essential to the functionality of the merchandise; (iv) the customer
accepted title of the  merchandise,  evidenced by a written transfer of title to
the customer  and  certificate  of  ownership.  And,  also at the request of the
customer,  the  Company  arranged  for the  storage  of the  merchandise  on the
customer's  behalf  in an  insured  location  until the  customer  picked up the
merchandise  or at the time of need,  but no later  than the  customer's  death.
Customers that purchase  pre-need  cremation  arrangements in California,  Iowa,
Washington  and  Oregon do not have  cancellation  rights  with  respect  to the
purchase of merchandise.

     In  response to SAB No. 101,  the Company  changed its revenue  recognition
accounting policy with respect to merchandise sold in a pre-need  arrangement to
include certain  conditions beyond current state  regulations.  As of January 1,
2000, the Company added the following criteria to its revenue recognition policy
for the  sale of  merchandise:  (i) a  definitive  delivery  date,  (ii)  stored
merchandise  is  required  to  be  segregated  and  specifically  identified  by
customer,  (iii) a customer's merchandise is labeled or marked for such customer
and may  not be  used to fill  another  customer's  order,  and  exchange  for a
different  piece of  merchandise  in the  future is  remote.  In  addition,  the
merchandise must not be subject to claims of the Company's creditors,  the risks
and rewards of merchandise ownership must have transferred to the customer,  and
the Company's  custodial risks are insurable and insured.  The Company  deferred
revenues  and costs of $389,000  and  $353,000,  respectively,  during the three
month  period  ended   September  30,  2001,  and  $3,780,000  and   $1,402,000,
respectively,  during the nine months ended September 30, 2001,  until such time
as the  merchandise has been  physically  delivered or upon  satisfaction of the
additional  criteria noted. The Company recognizes revenue on the sale of future
pre-need merchandise sales upon the physical delivery of the merchandise or upon
the satisfaction of the Company's  current revenue  recognition  policy criteria
outlined above.

     The cumulative effect adjustment  represents  revenue and cost deferrals of
$488,000  and  $84,000,  respectively,  related to  pre-need  merchandise  sales
transactions  previously recognized in 1999. For the nine months ended September
30, 2000 the effect of this change on loss before the  cumulative  effect of the
accounting  change was to increase  such loss by  $404,000,  or $.06 per diluted
share.


Net Loss

     Net loss was $1,083,000 and $3,145,000,  respectively, for the three months
ended  September  30, 2001 and 2000.  Net loss was  $4,543,000  and  $7,192,000,
respectively,  for the nine months ended  September  30, 2001 and 2000.  The net
loss related to each respective period differed for the reasons described above.


Liquidity and Capital Resources

     At  September  30,  2001,  we had current  assets of  $2,446,000,  which is
comprised of cash, accounts  receivable and prepaid expenses.  Our total current
liabilities  were  $8,712,000  comprised  mainly of  accounts  payable,  accrued
liabilities,  and the current  portion of long term debt. We had long-term debt,
including  convertible  debentures,  of  $6,000,000.  We had a  working  capital
deficit of $6,265,000 at September 30, 2001.

     In  connection  with  the  acquisition  of the  Neptune  Group,  a group of
privately-held  companies engaged in the business of marketing and administering
Pre-Need  and At-Need  cremation  services in  California,  Florida and New York
under the name the "Neptune Society",  on March 31, 1999, the Company issued two
promissory notes totaling $21 million (one note in the amount of $19 million and
one in the amount of $2 million).  In July and August,  2000, we negotiated a 12
month  extension on $4.7 million of the $10 million  principal due under the $19
million note (the "19 Million  Note") at an effective  interest  rate of 11% and
paid $5.3  million  of the  principal  balance of the $19  Million  Note and the
outstanding  balance of the $2 million note. Such payments were funded through a
private equity placement of $7 million.  In connection with the extension of the
$4.7 million balance  outstanding  under the $19 Million Note, we guaranteed the
difference  between the aggregate cash received and $47,250 on the sale of 3,375
shares  monthly  of our  common  stock  held by the  Weintraub  Trust  over  the
extension term, which ended July 31, 2001. As a result of the guarantee, we paid
Weintraub



                                       19
<PAGE>

Trust $0 and $254,000 during the three and nine months ended September 30, 2001,
respectively.  We recorded a liability for the fair value of such  guarantee and
adjustments  to such  liability  were  recorded  through  interest  expense.  At
September 30, 2001,  the liability  related to the fair value of such  guarantee
was $0. We also released Mr.  Weintraub from liability for loss of, or projected
loss of, revenue as a result of the Leneda legal proceeding  occurring after the
date of our acquisition of the Neptune Group. See "Legal Proceedings".

     In August 2001, the Company paid $2 million of the $4.7 million outstanding
under the $19 Million Note and  restructured the remaining $2.7 million balance.
The remaining  $2.7 million is due and payable on January 2, 2002,  along with a
cash loan fee of $168,000 paid as a fee for  restructuring the $19 Million Note.
The restructured amount will accrue interest at 12% per annum,  payable monthly.
The Company also issued 55,000  shares of the  Company's  common stock valued at
$248,000. See "Other Financings" and "Changes in Securities".

     In August 2001, the Company borrowed  $1,575,000 at 12% interest per annum,
payable  monthly,  becoming due and payable  January 2, 2002.  Of the  principle
amount,  $75,000 represents a loan fee. The Company also issued 15,789 shares of
the  Company's  common  stock  valued at $71,000 and a warrant to purchase up to
30,000 shares of the Company's  common stock at $10.42 per share valued at $200.
The  debt is  collateralized  by  certain  assets  of the  Company.  See  "Other
Financings" and "Changes in Securities".

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

     We had net  cash  in  flows  from  operating  activities  of  $194,000  and
$923,000,  respectively, for the three months ended September 30, 2001 and 2000.
We had net cash in flows (out flows) from  operating  activities  of $40,000 and
$(59,000),  respectively, for the nine months ended September 30, 2001 and 2000.
Interest  paid for the  three  months  ended  September  30,  2001 and 2000 were
$181,000 and  $192,000,  respectively.  Interest  paid for the nine months ended
September 30, 2001 and 2000 were $603,000 and $565,000, respectively.

Subsequent Events

     On October 19, 2001,  Neptune Society and Emanuel Weintraub and the Emanuel
Weintraub  Inter Vivos Trust  entered into an  agreement  in  principle  for the
restructuring  of  the  outstanding  principal  balance  of  approximately  $2.8
million,  due January 2, 2002 under the $19 Million Note. Under the terms of the
agreement,  Neptune  Society  has the option to  restructure  the payment of the
balance due under the $19 Million  Note as  follows:  (i)  $500,000 on or before
January 2, 2002, (ii) eighteen monthly installments of $78,471 beginning January
2002 and (iii) the remaining  principal balance of approximately  $1,779,000 due
on July 31, 2003. Neptune Society agreed to pay interest on the principal amount
restructured at the rate of 13% per annum.

     If the Company elects to restructure  the balance due under the $19 Million
Note,  the Company will pay  Weintraub a loan fee  consisting  of (i)  $350,000,
which will be added to the principal balance of the note and (ii) 300,000 shares
of Neptune Society common stock, issuable to Weintraub's  nominees.  The Company
also ratified its obligations under its consulting  agreement with Mr. Weintraub
and  agreed to pay on  January  2,  2002 Mr.  Weintraub  consulting  fees and to
reimburse  certain expenses under the agreement.  Neptune Society also agreed to
reimburse Mr.  Weintraub for attorneys' fees in the amount of $120,000  incurred
by him in connection with the Leneda litigation in consideration of an agreement
to forebear from  asserting  claims  against the Company's  insurers or settling
such claims arising out of the Leneda litigation.  See "Legal Proceedings".  The
Company may enter into a  definitive  agreement  with  Weintraub  related to the
restructuring prior to the end of the year 2001.

     In October 2001, the Company submitted  applications to open offices in the
state of Colorado.



                                       20
<PAGE>

Plan of Operation

     Our Plan of Operation is based,  in part,  on  information  provided in the
reports of our  consultants  and the decisions of  management.  Our  independent
auditors have not examined, compiled or otherwise applied procedures to the plan
of operation presented herein and, accordingly, do not express an opinion or any
other form of  assurance on it. Set forth below is a summary of our current Plan
of Operation for the fiscal year ending 2001.

Material Commitments--Short-term                         Funding Required
--------------------------------                         ----------------
    Cost of sales, general & admin expenditures           $13.9 million
    Current portion of long-term debt                       3.3 million
    Working capital, excluding
             current portion of long-term debt              1.5 million
    Location expansion                                       .1 million
    Lease payments                                           .5 million
    Interest payments                                       1.2 million
    Contingent payments to former owners                     .3 million
    Consulting fee payments                                  .7 million
    Capital Expenditures                                     .1 million
                                                         ----------------
Estimated total Short-term Commitments                     21.6 million

    Cash Receipts from revenues                            12.9 million
    Cash Receipts from deferred revenues                    3.9 million
                                                         ----------------

Estimated total Cash from Operations                       16.8 million
                                                         ----------------
Estimated net Funding Requirements                        $ 4.8 million
                                                         ================


     Net Cash Flow from existing  locations' on-going  operations:  Management's
current 2001 forecast projects it will achieve $1.5 million in positive net cash
flows before the payment of debt and interest,  contingent  asset purchase price
and capital expenditures.  We anticipate generating cash receipts from sales and
other income of $16.8 million, on cash expenditures of $15.3 million.

     Working  capital:  The Company had a net  working  capital  deficit of $4.3
million at October 31, 2001. The majority of the deficit  relates to the current
portion of long-term debt of $3.3 million,  which takes into  consideration  the
agreement in principal  between Mr. Weintraub and the Company to restructure the
Company's  obligations  under the $19 Million Note.  See  "Liquidity and Capital
Resources-Subsequent  Events".  The current portion of long-term debt due during
the first quarter of 2002 is approximately $2.2 million. $1 million is currently
due and payable under a note issued to the Private  Investment  Company ("PIC");
the Company and PIC have entered into a Letter of  Understanding  to restructure
certain terms under the note,  including the due date. The remainder  relates to
accounts   payable  and  accrued   expenses  in  connection  with  our  on-going
operations.

     Current  portion of Long-term  Debt: The current  portion of long-term debt
$3.3 million at October 31, 2001 which takes into consideration the agreement in
principal  between Mr.  Weintraub and the Company to  restructure  the Company's
obligations   under  the  $19  Million   Note.   See   "Liquidity   and  Capital
Resources-Subsequent  Events".  That  portion of debt  consisted  of $648,000 of
initial  acquisition  debt, $1.6 million of bridge financing debt, $1 million of
other  acquisition debt and the remainder  consists of various other loans and a
line of credit. Of this amount, $2.2 million is due and payable during the first
quarter of 2002 and $1 million is currently due and payable to PIC. However, the
Company  entered  into a Letter  of  Understanding  to  convert  the $1  million
promissory  note,  due  September  30, 2001,  into a 12%  convertible  debenture
(convertible  at $6.00 per share of the Company's  common stock) with a maturity
date of September 2004.

     Location  expansion:  In accordance with the  Management's  current plan of
operation to add one to two new  locations in the current  year, we estimate our
expansion  investment,  including  capital  expenditures,  to  be  approximately
$130,000.  We  anticipate  we will not generate  cash  receipts on our expansion
investment in fiscal year 2001.



                                       21
<PAGE>

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

     Interest  payments:   We  expect  to  carry  outstanding  debt,   including
convertible  debt,  requiring  annual cash  interest  payments of $1.2  million,
payable in monthly installments. There is no guarantee that any convertible debt
will be converted;  therefore the maximum amount of interest  payments have been
projected.

     Consulting  payments:  We are obligated to pay consulting fees of $348,000,
payable in monthly  installments.  We have  consulting  agreements  with Emanuel
Weintraub  and  Charles  Martin,   which  expire  January  2002  and  May  2002,
respectively.  Mr.  Weintraub  is  entitled  to a fee of $27,775  per month with
$7,775 deferred until expiration or termination of the agreement.  At the end of
the agreement  term, Mr.  Weintraub  will receive a balloon  payment of $300,000
which includes  $51,000 of interest accrued at 9%. We agreed to make the balloon
payment on January 2, 2002 if we elect to restructure our obligations  under the
$19 Million Note. See "Liquidity  and Capital  Resources -- Subsequent  Events."
Mr. Martin receives a fee of $1,200 per month.

     Contingent  payments  to  former  owners:  Under  the  Washington  and Iowa
acquisition  agreements,  we agreed to pay the former owners,  in cash or common
stock,  at the Company's  option,  a percentage  of gross  revenues and earnings
before interest, taxes, depreciation and amortization ("EBITDA"). The Washington
agreement requires a payment related to gross revenues without regard to EBITDA.
In May 2001,  we issued an  additional  2,956  shares of common  stock valued at
$28,771  under  the  Washington  agreement.  The  Iowa  re-negotiated  agreement
requires  payment  only if both  gross  revenues  and  EBITDA  reach  or  exceed
predetermined  levels.  Iowa's gross revenues and EBITDA did not reach or exceed
predetermined  levels and no additional payment or stock issuance was made. As a
part  of  the  July  2000  Weintraub  debt  re-negotiation,  we  guaranteed  the
difference  between the aggregate cash received and $47,250 on the sale of 3,375
shares  monthly of our common  stock held by the  Weintraub  Trust  through July
2001. The final contingent payment in July 2001 resulting from the guarantee was
$27,000.

     Capital  Expenditures:  We  anticipate  capital  expenditures  required for
on-going  operations  of  existing  locations  in fiscal  year 2001 to amount to
approximately  $55,000.  These expenditures  include office furniture and office
and computer equipment.

     Our total  operating and capital budgets for the fiscal year ended December
31, 2001 is estimated to be approximately $16 million.  We expect operating cash
flows,  before debt  servicing  and  expansion  expenditures,  to be adequate to
finance our basic operations.  We will need to raise approximately $4.8 million,
if the PIC note is not converted into a convertible debenture under the terms of
our  Letter of  Understanding,  during  the  fourth  quarter  of 2001 to pay the
current portions of long-term debt due now and during the first quarter of 2002,
to fund our location expansion program and to meet our working capital needs. We
intend  to raise  such  capital  by  issuance  of debt,  equity  or  convertible
securities. We are attempting to raise additional financing; however, we have no
current  arrangement to obtain such financing and there can be no assurance that
financing will be available or accessible on reasonable terms.

     In addition,  there is no assurance  that our actual  expenditures  for the
fiscal year ending  December  31, 2001 will not exceed our  estimated  operating
budgets.  Actual expenditures will depend on a number of factors,  some of which
are beyond our control  including,  among  other  things,  timing of  regulatory
approval of its projects,  the  availability  of financing on acceptable  terms,
reliability of the assumptions of management in estimating cost and timing,  the
death and cremation rates in the geographical  locations that we serve, consumer
acceptance  of our pre need plans,  changes in  governmental  regulation as they
relate  to our  business,  certain  economic  and  political  factors,  the time
expended by consultants and  professionals and fees associated with applications
related  to  obtaining  and  maintaining  licenses  for  our  locations  and the
professional  fees associated with the Leneda litigation and the outcome of such
litigation. 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.



                                       22
<PAGE>

     If we cannot raise adequate financing to fund our plan of operation, we may
be required to take some or all of the  following  actions to reduce our working
capital requirements:

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

Other Financings

     In July and August 2001,  the Company  entered into a Second and Third Debt
Restructuring  Agreement with the Weintraub  Trust to restructure  the Company's
outstanding  balance  under the $19 Million Note issued in  connection  with the
Company's acquisition of a private group of companies,  which form a majority of
the Company's ongoing business.  Under the terms of the Third Debt Restructuring
Agreement, the Company paid the Weintraub Trust $2 million on August 7, 2001 and
restructured  the remaining $2.7 million due under the note. The Company and the
Weintraub  Trust  agreed that the  remaining  $2.7  million  will become due and
payable  on  January  2,  2002,  along  with a cash  loan  fee  of  $168,000  as
consideration  for  the  restructuring.  The  restructured  amount  will  accrue
interest  at 12% per annum,  payable  monthly.  The Company  also issued  55,000
shares of the Company's common stock valued at $248,000 as consideration for the
restructuring to Weintraub nominees.

     In August 2001,  the Company  through a  wholly-owned  subsidiary  borrowed
$1,575,000 at 12% interest per annum,  payable monthly,  due January 2, 2002 for
the  purposes of  satisfying  our  obligations  due August 7, 2001 under the $19
Million Note, as amended by the Third Restructuring Agreement. A loan fee in the
amount of $75,000  was paid from the  proceeds  of the loan to the  lender.  The
Company  also issued  15,789  shares of the  Company's  common  stock  valued at
$71,000 and a warrant to purchase up to 30,000  shares of the  Company's  common
stock at $10.42  per share  valued at $200.  The debt is  collateralized  by the
Company's assets related to its Portland business.

     In August 2001, the Company entered into a Memorandum of  Understanding  to
convert a $1,000,000 note issued to Private Investment Company, Ltd. ("PIC"),due
September 30, 2001,  into a 12%  convertible  debenture  with  interest  payable
annually  on  September  30th  of  each  year  of the  term.  The  debenture  is
convertible  into common stock of the Company at a conversion price of $6.00 per
share and matures on September 30, 2004. The Company also agreed to issue 10,000
shares of the  Company's  common  stock  valued at  approximately  $45,000  as a
commitment  fee to PIC.  Definitive  agreements  have not been  entered  into in
connection with this transaction.

Long-Term Debt

     We had outstanding  long-term debt as of September 30, 2001 of $11,407,000.
We intend to finance  our  long-term  debt  obligations  through  cash flow from
operations  and  through  additional  issuance  of debt,  equity or  convertible
securities.

New Accounting Pronouncements

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



                                       23
<PAGE>

     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  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 $28.3 million which will be subject to the  transition
provisions of Statements 141 and 142.  Amortization  expense related to goodwill
was $1.7 million and $1.4  million for the year ended  December 31, 2000 and the
nine months ended  September  30, 2001,  respectively.  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-



                                       24
<PAGE>

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.


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.



                                       25
<PAGE>


PART II  --  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.


Leneda Litigation

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

     On  October  22,  2001,   the  Company   entered  into  a  settlement   and
confidentiality   agreement,   effective   August  8,   2001  (the   "Settlement
Agreement"), by and among Leneda, Inc., a California corporation, doing business
as  Neptune  Society of San Diego  County,  Neptune  Society  of San  Bernardino
County,  Neptune  Society of  Riverside  County and Neptune  Society of Imperial
County ("Leneda"); the Registrant,  Neptune Management Corporation, a California
corporation,  Neptune Society of Florida, Inc., a Florida corporation,  Heritage
Alternatives,  Inc.,  a California  corporation,  Heritage  Alternatives,  L.P.,
Neptune-Los Angeles, Ltd., Neptune-Santa Barbara, Ltd., Neptune-St.  Petersburg,
Ltd.,  Neptune-Fort  Lauderdale,  Ltd., and Neptune-Miami,  Ltd.  (collectively,
"Neptune  Society"),  and Emanuel  Weintraub,  individually  ("Weintraub").  The
Settlement  Agreement  provided for the dismissal of the lawsuit filed by Leneda
(the "Leneda Litigation").  The "Neptune Society" Service Mark is the subject of
the United  States  Patent and Trademark  Office's  Trademark  Trial and Appeals
Board  Concurrent Use Order No. 871 and a 1995 Settlement  Agreement  pertaining
thereto.

     Under the terms of the  Settlement  Agreement,  Neptune  Society and Leneda
entered  into a  Service  Agreement  under  which  Leneda  agreed to be the sole
service provider of fulfillment cremation services for a total of 7,300 existing
pre-need contracts (the "Relevant Contracts"),  which were either executed in or
otherwise  indicate that the contract  holder resided within the counties of San
Diego,  San  Bernardino,  Riverside  and  Imperial,  all located in the state of
California.  These  fulfillment  services  will  be  provided  by  Leneda  for a
specified price,  which will be paid from the proceeds of the amount trusted for
the  beneficiary  of the Relevant  Contract  with the  remaining  balance in the
trust,  if any, paid to the Neptune  Society in accordance with the terms of the
trust.  Neptune  Society  also  granted  to Leneda a  security  interest  in the
Relevant  Contracts to secure  performance of the Neptune Society's  obligations
under the Service  Agreement and the  Settlement  Agreement.  Leneda and Neptune
Society  each  agreed to  implement  appropriate  procedures  to ensure that the
Service Mark would be used in a manner  consistent with the United States Patent
and Trademark  Office's  Trademark Trial and Appeals Board  Concurrent Use Order
No. 871 and a 1995 Settlement  Agreement.  Neptune Society's  insurers agreed to
pay Leneda $900,000 under the terms of the Settlement Agreement.

     In connection  with the  Settlement  Agreement,  Neptune  Society agreed to
release any and all claims for indemnification against Weintraub under the terms
of the Share  Purchase  Agreement  dated  March 26,  1999.  Weintraub  agreed to
subordinate a security interest in the Relevant Contracts to Leneda.

     Except as set forth above,  there is no other material  litigation  pending
against us. From time to time,  we may become a party to  litigation  and claims
incident to the ordinary course of its business.


                                       26
<PAGE>

     While the  results  of  litigation  and  claims  cannot be  predicted  with
certainty,  we believe  that the final  outcome of such  matters will not have a
material adverse effect on our business, financial condition,  operating results
and cash flows.


ITEM 2. CHANGES IN SECURITIES.

     Under the Portland Business purchase agreements, the Company agreed that if
the value of the common stock (based on the average trading price for the 60 day
period  preceding the first  trading day  following  July 5, 2001) issued to the
former owners of the Portland  Business was less than  $3,885,000,  we would pay
the owners the difference between $3,885,000 and the value of the shares in cash
or, at our option,  common stock of Neptune Society. In August 2001, pursuant to
the Portland Business purchase agreements,  the Company issued 561,693 shares of
the Company's  common stock to the former owners of the Portland  Business.  The
shares  were  issued  in  reliance  upon  an  exemption  from  the  registration
requirements of the Securities Act available under Section 4(2) of such act.

     In August 2001,  the Company  issued  Weintraub's  nominees an aggregate of
55,000 shares of common stock as consideration  for restructuring the promissory
note due to  Weintraub.  See  "Other  Financings."  The  shares  were  issued to
accredited  investors in reliance  upon an  exemption  from  registration  under
Section 4(2) of the Securities Act.

     In August  2001,  the Company  issued  15,789  shares of common stock and a
warrant  exercisable  to acquire an additional  30,000 shares of common stock at
$10.32 per share to one accredited  investor as a loan fee in connection  with a
$1.5 million bridge loan. See "Other  Financings." The shares were issued to one
accredited  investor in  reliance  upon an  exemption  from  registration  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.


ITEM 5.   OTHER INFORMATION.

     None.




                                       27
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  EXHIBIT INDEX

        Exhibit
        Number      Description
        ------      -----------
         3.1(1)     Articles of  Incorporation  of L R Associates,  Inc.,  filed
                    January 4, 1985

         3.2(1)     Articles of Amendment of L R Associates,  Inc. changing name
                    to Lari Corp., filed August 3, 1998

         3.3(1)     Articles of Amendment of Lari Corp. changing name to Neptune
                    Society, filed April 26, 1999

         3.4(1)     Articles of Amendment of Neptune  Society filed May 9, 2000,
                    effecting  a  combination  of the  Corporation's  shares  of
                    common stock

         3.5(1)     Bylaws of Neptune Society

        10.1(1)     Form of Stock Option Plan

        10.2(1)     Share Purchase  Agreement dated for reference March 26, 1999
                    by and  between  Lari  Acquisition  Company,  Inc.,  Emanuel
                    Weintraub  Inter Vivos  Trust,  Emanuel  Weintraub,  Neptune
                    Management  Corp.,  Heritage  Alternatives,   Inc.,  Neptune
                    Pre-Need Plan, Inc. and Lari Corp.

        10.3(1)     Share Purchase  Agreement dated June 30, 1999 by and between
                    Lari  Acquisition  Company,  Inc.,  Lari Corp.  and  Stanley
                    Zicklin

        10.4(1)     Share Purchase  Agreement dated June 30, 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  June 30,
                    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  June 30,
                    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 June 30, 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  June 30,  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  June  30,  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 June 30, 1992 by and between
                    Heritage  Cremation  Services,  Inc., Joseph Estephan,  Elie
                    Estephan and Emanuel Weintraub


                                       28
<PAGE>

        Exhibit
        Number      Description
        ------      -----------
        10.17(1)    Form of Commissioned Contractor Agreement

        10.18(1)    Agency  Agreement  dated for reference  July 22, 1999 by and
                    between  Neptune  Society and  Standard  Securities  Capital
                    Corporation

        10.19(1)    Amendment  to Agency  Agreement  dated August 5, 1999 by and
                    between  Neptune  Society and  Standard  Securities  Capital
                    Corporation

        10.20(1)    Form of Subscription Agreement

        10.21(1)    Form of Registration Rights Agreement

        10.22(1)    Debenture and Warrant Purchase  Agreement dated November 24,
                    1999.

        10.23(1)    Form of Convertible Debenture

        10.24(1)    Asset  Purchase  Agreement  dated  December 31, 1999, by and
                    among  Neptune  Society,  Crematory  Society of  Washington,
                    Inc., and John C. Ayres.

        10.25(1)    Asset Purchase  Agreement dated March 15, 2000, by and among
                    Neptune  Society,  Cremation  Society  of Iowa,  Inc.,  Dave
                    Noftsger, and John Bethel

        10.26(1)    Asset Purchase Agreements and Merger Agreement dated July 5,
                    2000,  by and  among  Neptune  Society,  Heritage  Memorial,
                    Community  Memorial  Centers,  David Schroeder,  and Michael
                    Ashe

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

        10.27(2)    Employment  Agreement  by and  between the Company and Marco
                    Markin

        10.28(2)    Employment  Agreement  by and  between the Company and David
                    Schroeder

        10.29(2)    Employment  Agreement  by and between the Company and Rodney
                    M. Bagley

        10.30(2)    Memorandum of  Understanding  by and between the Company and
                    Private Investment Company

        10.31(2)    Loan Agreement

        10.32(2)    Warrant issued to Green Leaf

        10.33(2)    Guaranty issued to Green Leaf

        10.34(3)    Second Debt Restructuring Agreement

        10.35(3)    Third Debt Restructuring Agreement

        21.1(1)     List of Subsidiaries of the Registrant

---------------------

(1)  Previously filed on February 12, 2001.
(2)  Previously  filed as an exhibit to Form 10Q (for the Period  ended June 30,
     2001) on August 14, 2001.
(3)  Previously filed as an exhibit to Form 10Q/A (for the Period ended June 30,
     2001) on August 20, 2001.


     (b)  Reports on Form 8-K

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



                                       29
<PAGE>


                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant has duly caused this Form 10-Q,  period ending  September 30, 2001 to
be signed on its behalf by the undersigned duly authorized.

                                            THE NEPTUNE SOCIETY

                                            /s/ Marco Markin
November 14, 2001                   ------------------------------------------
                                      Marco Markin, Chief Executive Officer
                                           (Principal Executive Officer)


                                            /s/ Rodney M. Bagley
November 14, 2001                   -------------------------------------------
                                      Rodney M. Bagley, Chief Financial Officer
                                           (Principal Accounting Officer)










                                       30